SOURCE: CNH Global N.V.

April 23, 2007 03:00 ET

CNH First Quarter 2007 Net Income up 121 Percent From 2006

-- First Quarter Diluted EPS of $0.40 up 122% From 2006

-- Equipment Operations First Quarter Gross Margin up 2 Percentage Points

-- Full Year 2007 Outlook Stronger, With an Expected Range of Diluted EPS, net of Restructuring, of $2.15 to $2.30

LAKE FOREST, IL -- (MARKET WIRE) -- April 23, 2007 -- CNH Global N.V. (NYSE: CNH) today reported first quarter 2007 net income of $95 million, up 121 percent compared to net income of $43 million in the first quarter of 2006. Results included restructuring charges, net of tax, of $10 million in the first quarter of 2007, compared with $3 million in the first quarter of 2006. Net income excluding restructuring charges, net of tax, was $105 million, up 128 percent compared to $46 million in the prior year. First quarter diluted earnings per share were $0.40, compared with $0.18 per share in 2006. Before restructuring, net of tax, first quarter diluted earnings were $0.44 per share, compared with $0.20 per share in 2006.

"Our Equipment Operations gross margin rose 2 percentage points compared with the first quarter last year. It is a good start towards achieving the aggressive targets we have for 2007," said Harold Boyanovsky, CNH President and Chief Executive Officer. "Our brands are performing better and attracting more customers. This year's first quarter delivered a significant performance improvement, bringing us closer to our 2010 objectives. We are reaffirming our full year industrial operating margin target of between 7.6% and 8.4%."

Highlights for the first quarter include:

--  Industry and company retail unit volumes showed particular strength in
    higher horsepower agricultural tractors and combines, driven by increased
    demand from cash crop farmers in North America and the market recovery in
    Brazil.
--  Construction Equipment industry retail unit sales outside of North
    America were particularly strong, compensating for weaker industry unit
    sales in North America.
--  Continued improvement in product value positioning with customers
    enabled increased pricing compared with the first quarter last year.
--  Positive impacts of exchange rate changes offset economic-related cost
    increases, contributing to another quarter of positive net price recovery
    for both Agricultural and Construction Equipment operations.
--  Net Debt of Equipment Operations, at the end of March, 2007 was $6
    million, down from $263 million at year-end 2006.
--  Research and development spending increased 7% compared with the same
    period in 2006. At 2.8% of net sales of equipment, the same as in the first
    quarter 2006, this reflects CNH's continuing higher level of investments in
    product innovation and quality.
--  CNH acquired Kobelco-Case Machinery (Shanghai) Co. Ltd. which manages
    the Case Construction brand distribution network in China.
    
EQUIPMENT OPERATIONS -- First Quarter Financial Results

Net sales of equipment, comprising the company's agricultural and construction equipment businesses, were $3.2 billion for 2007, compared to $3.0 billion for the same period in 2006. Net of currency variations, net sales increased 6%.

Agricultural Equipment Net Sales

--  Agricultural equipment net sales increased 9% to $2.1 billion,
    compared with the prior year.  Excluding currency variations, net sales
    were up 5%.
--  Net sales, excluding currency variations, were up 43% in Latin
    America, 11% in Rest-of-World markets and 10% in Western Europe, but down
    6% in North America.
--  Sales increased due to favorable exchange rate changes, better volume
    and mix and higher pricing.
    
Construction Equipment Net Sales
--  Construction equipment net sales increased 11% to $1.1 billion,
    compared to the prior year.  Net sales were up 6% excluding currency
    variations.
--  Net sales increased 29% in Western Europe, 19% in Latin America and
    62% in Rest-of-World markets, and declined 16% in North America, excluding
    currency variations.
--  Net sales increased due to favorable exchange rate changes, better
    volume and mix and higher pricing.
    
Gross Margin

Equipment Operations gross margin (defined as net sales of equipment less cost of goods sold) for agricultural and construction equipment increased by 23% to $601 million, compared to the first quarter of 2006. As a percent of net sales, gross margin increased 2.0 percentage points to 18.5%.

--  Agricultural equipment gross margin increased in both dollars and as a
    percent of net sales compared to the prior year.  Higher volume and mix and
    positive net price recovery were the primary contributors to the
    improvement.
--  Construction equipment gross margin also increased both in dollars and
    as a percent of net sales.  Positive net price recovery and manufacturing
    efficiency improvements were the principal contributors.
    
Industrial Operating Margin

Equipment Operations industrial operating margin (defined as net sales of equipment, less cost of goods sold, SG&A and R&D costs) increased 42% to $219 million, or 6.8% of net sales, compared to $154 million or 5.2% of net sales in the first quarter of 2006. The higher gross margin noted above drove the improvement. SG&A costs increased for brand support at trade shows and equipment fairs for our dealers throughout the world, sales incentive and variable compensation programs and exchange rate variations. Investments in R&D also increased, to enhance product innovation and improve product quality, maintaining the 2.8% of net sales level of the first quarter last year.

FINANCIAL SERVICES -- First Quarter Financial Results

Financial Services operations reported a 25% increase in net income, to $65 million, reflecting increased asset backed securities transaction gains and higher receivables balances, primarily in Latin America and Europe.

NET DEBT AND OPERATING CASH FLOW

Equipment Operations Net Debt (defined as total debt less cash and cash equivalents, deposits in Fiat affiliates cash management pools and intersegment notes receivables) was $6 million on March 31, 2007, compared to $263 million on December 31, 2006 and $621 million on March 31, 2006.

In the quarter, net debt decreased by $257 million. Operating activities, primarily from earnings and changes in other assets and liabilities, generated $330 million of cash in the quarter. Working Capital (defined as accounts and notes receivable, excluding inter-segment notes receivable, plus inventories less accounts payables), net of currency variations, decreased by $64 million in the quarter compared to an increase of $81 million in the prior year, an improvement of $145 million. Capital expenditures, in the quarter, were $39 million.

At incurred currency rates, working capital on March 31, 2007 was $2,076 million, down $34 million from $2,110 million at December 31, 2006.

Financial Services Net Debt increased by $509 million to $4,977 million on March 31, 2007 from $4,468 million at December 31, 2006, driven primarily by additional transfers of receivables from Equipment Operations and higher levels of retail receivables.

FIRST QUARTER 2007 NEW PRODUCTS

--  New Holland Agricultural Equipment launched two important tractor
    lines in the 100 to 210 engine horsepower range, the T6000 Series and T7000
    Series tractors, which run on B20 biodiesel fuels. Also, in January, fully
    integrated factory installed SuperSuite™ deluxe cabs became available on
    New Holland's 40 and 45 horsepower Boomer™ compact tractors.  New
    Holland received the "Eye on Biodiesel" award for innovation at the
    National Biodiesel Board Conference in San Antonio, Texas. In Latin
    America, New Holland launched its CR 9060 TwinRotor™  combine in
    Argentina and started production in Brazil of the TT3840 tractor, a 55
    horsepower addition to its line of simple and reliable utility tractors in
    an affordable package.
--  Case IH Agricultural Equipment began shipping the new Puma™  Series
    tractors (135 to 180 PTO horsepower) as well as its new Axial-Flow® 7010
    Class 7 Combine Harvester. Case IH's line of STX Steiger® 4 wheel drive
    tractors earned a 2007 FinOvation award from Farm Industry News magazine.
--  New Holland Construction Equipment launched new Tier 3 products in
    Latin America during the quarter, including E215 and E330 crawler
    excavators, new skid steer loaders and backhoe loaders and, in Europe, an
    upgraded Tier 3 E245 crawler excavator.
--  Case Construction Equipment launched its new Tier 3 CX B Series of
    full sized hydraulic excavators offering a 20% improvement in fuel
    efficiency, a 25% improvement in productivity (measured in cubic yards of
    material per gallon of fuel) and noise levels inside the cab that set new
    standards of quietness for the industry at 68.6 decibels (dBa). Its E
    Series wheel loaders, first launched in the fourth quarter of 2006 (models
    721E & 821E), have become available in additional models -- the 921E and
    721E XT.
    
AGRICULTURAL EQUIPMENT MARKET OUTLOOK

U.S. farm income in 2007 should remain at 2006 levels, bolstered by the increased demand for corn for fuel ethanol. The North American market performed better than expected in the first quarter, for both over and under 40 horsepower tractors and for combines. For the full year, CNH expects North American industry retail sales of over-40 horsepower tractors to be flat to up slightly, compared with 2006, while sales of under-40 horsepower tractors are expected to be lower than in 2006. Industry retail unit sales of combines in North America should be up.

For the full year, we now expect industry retail unit sales of agricultural tractors outside of North America to be flat to up slightly, compared with 2006, while combines sales should be up, based on first quarter European and Latin American agricultural equipment markets which both performed better than expected; tractor industry sales were up in both markets and sales of sugar cane harvesters and combines also were up in Latin America.

In total, we expect the worldwide agricultural tractor industry unit retail sales to be flat to up as much as 5% compared with 2006 while combine sales could be up about 10%. (Details by region and major products for the estimated first quarter results and full year projections are included in the attachment.)

CONSTRUCTION EQUIPMENT MARKET OUTLOOK

For the full year, we expect North American industry retail unit sales of both heavy and light construction equipment to be down compared with 2006. North American construction industry sales of both heavy and light equipment declined more than expected in the first quarter, as housing starts and activity levels continued to decline.

For the year, we expect both heavy and light construction equipment industry retail unit sales outside of North America to be up, more than offsetting the decline in North America. Construction industry sales of both heavy and light equipment outside of North America were significantly stronger than expected in the first quarter, as construction activity levels continued to increase.

In total, we expect worldwide industry retail unit sales of both heavy and light construction equipment to be up about 5%. (Details by region and major products for the estimated first quarter results and full year projections are included in the attachment.)

CNH OUTLOOK FOR FULL YEAR 2007

Based on these agricultural and construction equipment market outlooks and the initiatives undertaken in the last two years designed to properly position our four main brands, CNH anticipates that 2007 diluted earnings per share, before restructuring, net of tax, should be in the range of $2.15 to 2.30, compared with $1.53 for the full year 2006.

Restructuring costs, net of tax, in 2007 are expected to be about $60 million primarily related to previously announced actions.

CNH Global N.V. is a world leader in the agricultural and construction equipment businesses. Supported by about 11,500 dealers in 160 countries, CNH brings together the knowledge and heritage of its Case and New Holland brand families with the strength and resources of its worldwide commercial, industrial, product support and finance organizations. CNH Global N.V., whose stock is listed at the New York Stock Exchange (NYSE: CNH), is a majority-owned subsidiary of Fiat S.p.A. (FIA.MI; NYSE:FIA). More information about CNH and its Case and New Holland products can be found online at www.cnh.com.

CNH management will hold a conference call later today to review its first quarter 2007 results. The conference call Webcast will begin at approximately 7:30 a.m. U.S. Central Time; 8:30 a.m. U.S. Eastern Time. This call can be accessed through the investor information section of the company's Web site at www.cnh.com and is being carried by CCBN.

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

Our outlook is predominantly based on our interpretation of what we consider key economic assumptions and involves risks and uncertainties that could cause actual results to differ. Crop production and commodity prices are strongly affected by weather and can fluctuate significantly. Housing starts and other construction activity are sensitive to interest rates and government spending. Some of the other significant factors for us include general economic and capital market conditions, the cyclical nature of our business, customer buying patterns and preferences, foreign currency exchange rate movements, our hedging practices, our and our customers' access to credit, actions by rating agencies concerning the ratings of our debt securities and asset backed securities and the ratings of Fiat S.p.A., risks related to our relationship with Fiat S.p.A., political uncertainty and civil unrest or war in various areas of the world, pricing, product initiatives and other actions taken by competitors, disruptions in production capacity, excess inventory levels, the effect of changes in laws and regulations (including government subsidies and international trade regulations), the results of legal proceedings, technological difficulties, results of our research and development activities, changes in environmental laws, employee and labor relations, pension and health care costs, relations with and the financial strength of dealers, the cost and availability of supplies from our suppliers, raw material costs and availability, energy prices, real estate values, animal diseases, crop pests, harvest yields, government farm programs and consumer confidence, housing starts and construction activity, concerns related to modified organisms and fuel and fertilizer costs. Additionally, our achievement of the anticipated benefits of our margin improvement initiatives depends upon, among other things, industry volumes as well as our ability to effectively rationalize our operations and to execute our brand strategy. Further information concerning factors that could significantly affect expected results is included in our Form 20-F for the year ended December 31, 2006.

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


CNH Global N.V.
Estimates of Worldwide Retail Industry Unit Sales Performance(1)


                     Worldwide     N.A.       W.E        L.A.       ROW
                      '07 B(W)   '07 B(W)   '07 B(W)   '07 B(W)   '07 B(W)
                     ---------  ---------  ---------  ---------  ---------

First Quarter 2007 Industry Unit Sales Estimated Actual Compared with First
 Quarter 2006 Actual Agricultural Equipment:
Agricultural Tractors:
- Under 40 horsepower      n/a         -4%       n/a        n/a        n/a
- Over 40 horsepower       n/a          6%       n/a        n/a        n/a
Total Tractors              -4%         1%         2%        17%       -11%
Combine Harvesters          12%        13%        -3%        32%        21%
Total Tractors and
 Combines                   -4%         1%         2%        19%       -11%

Construction Equipment:
Light Construction Equipment:
Tractor Loaders
 & Backhoes                 18%       -25%        35%        30%        59%
Skid Steer Loaders          -6%       -15%         0%        34%        29%
Other Light Equipment       14%       -11%        23%        36%        20%
Total Light Equipment       10%       -16%        22%        31%        29%
Total Heavy Equipment       10%       -11%        19%        35%        17%
Total Light & Heavy
 Equipment                  10%       -14%        21%        33%        23%



Full Year 2007 Industry Unit Sales Forecast Compared with Full Year 2006
 Estimated Actual Agricultural Equipment:
Agricultural Tractors      0-5%       0-2%      FLAT      10-15%       0-5%
Combine Harvesters         ~10%      5-10%        ~5%       ~35%      5-10%

Construction Equipment:
Total Light Equipment       ~5%    (10-15)%    10-15%      5-10%     15-20%
Total Heavy Equipment       ~5%     (5-10)%      ~15%       ~15%       ~10%

(1)  Excluding India



                     CNH Global N.V.
                 Revenues and Net Sales
        (Unaudited, in accordance with U.S. GAAP)


                                 Three Months Ended
                                      March 31,
                                                     %
                              2007       2006      Change
                            --------   --------   --------
                                    (In Millions)

Revenues:
  Net sales
    Agricultural equipment  $  2,117   $  1,935      9%
    Construction equipment     1,124      1,015     11%
                            --------   --------
        Total net sales        3,241      2,950     10%

  Financial services             254        223     14%
  Eliminations and other         (22)       (12)
                            --------   --------

  Total revenues            $  3,473   $  3,161     10%
                            ========   ========

Net sales:
  North America             $  1,291   $  1,434    (10%)
  Western Europe               1,049        833     26%
  Latin America                  322        229     41%
  Rest of World                  579        454     28%
                            --------   --------

  Total net sales           $  3,241   $  2,950     10%
                            ========   ========



                           CNH GLOBAL N.V.
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                     AND SUPPLEMENTAL INFORMATION
               (Unaudited, in accordance with U.S. GAAP)


                                            EQUIPMENT         FINANCIAL
                         CONSOLIDATED       OPERATIONS        SERVICES
                         Three Months      Three Months      Three Months
                            Ended             Ended             Ended
                           March 31,         March 31,         March 31,
                        2007     2006     2007     2006     2007     2006
                      -------  -------  -------  -------  -------  -------
                              (In Millions, except per share data)
Revenues
  Net sales           $ 3,241  $ 2,950  $ 3,241  $ 2,950  $     -  $     -
  Finance and
   interest income        232      211       39       40      254      223
                      -------  -------  -------  -------  -------  -------
Total                   3,473    3,161    3,280    2,990      254      223
                      -------  -------  -------  -------  -------  -------

Costs and Expenses
  Cost of goods sold    2,640    2,462    2,640    2,462        -        -
  Selling, general
   and administrative     345      307      292      250       53       57
  Research and
   development             90       84       90       84        -        -
  Restructuring            14        4       14        4        -        -
  Interest expense        141      139       73       81       90       77
  Interest
   compensation to
   Financial Services       -        -       55       50        -        -
  Other, net               88       97       57       66       15       15
                      -------  -------  -------  -------  -------  -------
Total                   3,318    3,093    3,221    2,997      158      149
                      -------  -------  -------  -------  -------  -------

Income (loss) before
 income taxes,
 minority interest
 and equity in
 income of
 unconsolidated
 subsidiaries and
 affiliates               155       68       59       (7)      96       74
Income tax provision       64       30       31        6       33       24
Minority interest           5        7        5        6        -        -
Equity in income of
 unconsolidated
 subsidiaries and
 affiliates:
  Financial Services        2        2       65       52        2        2
  Equipment
   Operations               7       10        7       10        -        -
                      -------  -------  -------  -------  -------  -------

Net income            $    95  $    43  $    95  $    43  $    65  $    52
                      =======  =======  =======  =======  =======  =======

Weighted average
 shares outstanding:
  Basic                 236.4    145.1
                      =======  =======
  Diluted               237.1    235.5
                      =======  =======

Basic and diluted
 earnings per share
 ("EPS"):
  Basic:
    EPS before
     restructuring,
     net of tax       $  0.44  $  0.32
                      =======  =======
    EPS               $  0.40  $  0.30
                      =======  =======
  Diluted:
    EPS before
     restructuring,
     net of tax       $  0.44  $  0.20
                      =======  =======
    EPS               $  0.40  $  0.18
                      =======  =======

  Dividends per share $     -  $     -
                      =======  =======

 See Notes to Condensed Financial Statements.



                             CNH GLOBAL N.V.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                      AND SUPPLEMENTAL INFORMATION
               (Unaudited, in accordance with U.S. GAAP)


                                            EQUIPMENT         FINANCIAL
                        CONSOLIDATED        OPERATIONS        SERVICES
                       March  December   March  December   March  December
                         31,      31,      31,      31,      31,      31,
                        2007     2006     2007     2006     2007     2006
                      -------  -------  -------  -------  -------  -------
                                         (In Millions)
Assets
  Cash and cash
   equivalents        $ 1,013  $ 1,174  $   594  $   703  $   419  $   471
  Deposits in Fiat
   affiliates cash
   management pools       732      497      731      496        1        1
  Accounts, notes
   receivable and
   other - net          7,118    6,549    1,341    1,314    5,943    5,344
  Intersegment
   notes receivable         -        -    1,619    1,445        -        -
  Inventories           3,037    2,735    3,037    2,735        -        -
  Property, plant and
   equipment - net      1,303    1,307    1,293    1,295       10       12
  Equipment on
   operating leases
   - net                  286      254        -        -      286      254
  Investment in
   Financial Services       -        -    1,866    1,788        -        -
  Investments in
   unconsolidated
   affiliates             479      457      372      354      107      103
  Goodwill and
   intangibles          3,136    3,144    2,987    2,998      149      146
  Other assets          2,160    2,157    1,403    1,386      757      771
                      -------  -------  -------  -------  -------  -------
Total Assets          $19,264  $18,274  $15,243  $14,514  $ 7,672  $ 7,102
                      =======  =======  =======  =======  =======  =======

Liabilities and Equity
  Short-term debt     $ 1,623  $ 1,270  $   588  $   488  $ 1,035  $   782
  Intersegment
   short-term debt          -        -        -        -    1,367    1,348
  Accounts payable      2,210    1,881    2,302    1,939       64       42
  Long-term debt        5,105    5,132    2,362    2,419    2,743    2,713
  Intersegment
   long-term debt           -        -        -        -      252       97
  Accrued and other
   liabilities          5,131    4,871    4,796    4,548      345      332
                      -------  -------  -------  -------  -------  -------
Total Liabilities      14,069   13,154   10,048    9,394    5,806    5,314
  Equity                5,195    5,120    5,195    5,120    1,866    1,788
                      -------  -------  -------  -------  -------  -------
Total Liabilities
 and Equity           $19,264  $18,274  $15,243  $14,514  $ 7,672  $ 7,102
                      =======  =======  =======  =======  =======  =======

Total debt less cash
 and cash equivalents,
 deposits in Fiat
 affiliates cash
 management pools
 and intersegment
 notes receivables
 ("Net Debt")         $ 4,983  $ 4,731  $     6  $   263  $ 4,977  $ 4,468
                      =======  =======  =======  =======  =======  =======

See Notes to Condensed Financial Statements.



                            CNH GLOBAL N.V.
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     AND SUPPLEMENTAL INFORMATION
               (Unaudited, in accordance with U.S. GAAP)


                                            EQUIPMENT          FINANCIAL
                        CONSOLIDATED       OPERATIONS         SERVICES
                        Three Months      Three Months      Three Months
                           Ended             Ended             Ended
                          March 31,         March 31,         March 31,
                        2007     2006     2007     2006     2007     2006
                      -------  -------  -------  -------  -------  -------
                                          (In Millions)

Operating Activities:
  Net income          $    95  $    43  $    95  $    43  $    65  $    52
  Adjustments to
   reconcile net
   income to net
   cash from
   operating
   activities:
    Depreciation and
     amortization          87       74       71       63       16       11
    Intersegment
     activity               -        -       23      (70)     (23)      70
    Changes in
     operating assets
     and liabilities     (234)    (281)     178       67     (412)    (348)
    Other, net             26       56      (37)      19       (2)     (15)
                      -------  -------  -------  -------  -------  -------
Net cash from
 operating activities     (26)    (108)     330      122     (356)    (230)
                      -------  -------  -------  -------  -------  -------

Investing Activities:
  Expenditures for
   property, plant
   and equipment          (39)     (25)     (39)     (24)       -       (1)
  Expenditures for
   equipment on
   operating leases       (55)     (28)       -        -      (55)     (28)
  Net (additions)
   collections from
   retail receivables
   and related
   securitizations         (5)     102        -        -       (5)     102
  Net (deposits in)
   withdrawals from
   Fiat affiliates
   cash management
   pools                 (230)      16     (230)      17        -       (1)
  Other, net              (28)      50      (34)      37        6       13
                      -------  -------  -------  -------  -------  -------
Net cash from
 investing activities    (357)     115     (303)      30      (54)      85
                      -------  -------  -------  -------  -------  -------

Financing Activities:
  Intersegment
   activity                 -        -     (174)    (132)     174      132
  Net increase
   (decrease) in
   indebtedness           208      (66)      34      (42)     174      (24)
  Dividends paid            -        -        -        -        -        -
  Other, net                -       (9)       -       (9)       -        -
                      -------  -------  -------  -------  -------  -------
Net cash from
 financing activities     208      (75)    (140)    (183)     348      108
                      -------  -------  -------  -------  -------  -------

Other, net                 14       17        4        -       10       17
                      -------  -------  -------  -------  -------  -------

Increase (decrease)
 in cash and cash
 equivalents             (161)     (51)    (109)     (31)     (52)     (20)
Cash and cash
 equivalents,
 beginning of period    1,174    1,245      703      858      471      387
                      -------  -------  -------  -------  -------  -------
Cash and cash
 equivalents, end of
 period               $ 1,013  $ 1,194  $   594  $   827  $   419  $   367
                      =======  =======  =======  =======  =======  =======

See Notes to Condensed Financial Statements.


CNH GLOBAL N.V.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Principles of Consolidation and Basis of Presentation -- The accompanying unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the consolidated results of CNH Global N.V. and its consolidated subsidiaries ("CNH" or the "Company") in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"); however, because of their condensed nature, they do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements. These financial statements should therefore be read in conjunction with the audited, consolidated financial statements and notes thereto for the year ended December 31, 2006 included in the Company's Annual Report on Form 20-F filed with the Securities and Exchange Commission ("SEC") on March 30, 2007.

CNH is controlled by Fiat Netherlands Holding N.V., a wholly owned subsidiary of Fiat S.p.A. ("Fiat"). As of December 31, 2006, Fiat owned approximately 90% of CNH's outstanding common shares.

The condensed consolidated financial statements include the accounts of CNH's majority-owned and controlled subsidiaries and reflect the interests of the minority owners of the subsidiaries that are not fully owned for the periods presented, as applicable. The operations and key financial measures and financial analysis differ significantly for manufacturing and distribution businesses and financial services businesses; therefore, management believes that certain supplemental disclosures are important in understanding the consolidated operations and financial results of CNH. The supplemental financial information captioned "Equipment Operations" includes the results of operations of CNH's agricultural and construction equipment operations, with the Company's financial services businesses reflected on the equity method basis. The supplemental financial information captioned "Financial Services" reflects the combination of CNH's financial services businesses.

Reclassifications

Certain reclassifications of prior year amounts have been made in order to conform to the current year presentation.

2. Stock-Based Compensation Plans -- In February, 2007, CNH granted approximately 1.5 million performance-based stock options (at targeted performance levels) which may result in an estimated expense over the vesting period of approximately $18 million under the CNH Equity Incentive Plan ("CNH EIP"). One-third of the options will vest if specified fiscal 2007 targets are achieved when 2007 results are approved by the Board of Directors in the first quarter of 2008 (the "Determination Date"). The remaining options will vest equally on the first and second anniversary of the initial vesting date. The actual number of shares vesting may exceed 1.5 million if CNH's performance exceeds targets; however, if minimum target levels are not achieved, the options will not vest. Options granted under the CNH EIP have a contractual life of five years from the Determination Date or approximately six years. The grant date fair value of $12.65 per option was determined using the Black-Scholes pricing model.

The assumptions used in this model were:

Risk-free interest rate         4.40%
Expected volatility            38.32%
Expected life               4.0 years
Dividend yield                  0.97%
The risk-free interest rate was based on the current U.S. Treasury rate for a bond of approximately the expected life of the options. The expected volatility was based on the historical activity of CNH's common shares looking back over a period equal to the expected life of the options. The expected life was based on the average of the vesting term of 72 months and the original contract term of approximately six years. The expected dividend yield was based on the annual dividend of $.25 per share which has been paid on CNH's common shares over the last several years.

3. Accounts and Notes Receivable -- In CNH's receivable asset securitization programs, retail finance receivables are sold to limited purpose, bankruptcy remote, consolidated subsidiaries of CNH. In turn, these subsidiaries establish separate trusts to which they transfer the receivables in exchange for the proceeds from asset-backed securities sold by the trusts. Due to the nature of the assets held by the trusts and the limited nature of each trust's activities, they are each classified as a qualifying special purpose entity ("QSPE") under Statement of Financial Accounting Standards ("SFAS") No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS No. 140"). In accordance with SFAS No. 140, assets and liabilities of the QSPEs are not consolidated in the Company's consolidated balance sheets.

The amounts outstanding under these programs were $5.1 billion and $4.9 billion at March 31, 2007 and December 31, 2006, respectively. In addition to the retail securitization programs, certain subsidiaries of CNH securitized or discounted wholesale receivables without recourse. As of March 31, 2007 and December 31, 2006, $3.6 billion and $3.7 billion, respectively remained outstanding under these programs.

Included in the securitized or discounted wholesale receivables without recourse amount above are amounts sold to CNH's European wholesale securitization program. Equipment Operations entities sell receivables into this program while a Financial Services subsidiary subscribes to notes representing undivided retained interests. At March 31, 2007 and December 31, 2006, the amounts outstanding under this program were $890 million and $827 million, respectively and Financial Services had an undivided retained interest of $302 million and $318 million, respectively. During the first quarter of 2007, an affiliate of Fiat began purchasing debt securities issued by this securitization program. At March 31, 2007, Fiat affiliates held approximately $436 million of these securities.

In March, 2007, programs to sell receivables from Equipment Operations to Financial Services were expanded to include certain export receivables that were previously held by Equipment Operations. As of March 31, 2007, approximately $262 million of these export receivables remained outstanding.

4. Inventories -- Inventories as of March 31, 2007 and December 31, 2006 consist of the following:

                            March 31,  December 31,
                               2007       2006
                            ---------   ---------
                                (in Millions)
Raw materials               $     649   $     591
Work-in-process                   309         267
Finished goods and parts        2,079       1,877
                            ---------   ---------
   Total Inventories        $   3,037   $   2,735
                            =========   =========
5. Goodwill and Intangibles -- The following table sets forth changes in carrying value of goodwill and intangibles for the three months ended March 31, 2007:
                                                      Additions,
                            Balance at                Currency   Balance at
                            January 1,               Translation  March 31,
                                2007    Amortization   and Other    2007
                            ----------  -----------  -----------  ---------
                                             (in Millions)
Goodwill                    $    2,365  $         -  $         1  $   2,366

Intangibles                        779          (17)           8        770
                            ----------  -----------  -----------  ---------
    Total Goodwill and
     Intangibles            $    3,144  $       (17) $         9  $   3,136
                            ==========  ===========  ===========  =========
As of March 31, 2007 and December 31, 2006, the Company's intangible assets and related accumulated amortization consisted of the following:

                                 March 31, 2007        December 31, 2006
                             ----------------------  ----------------------
                                    Accumu-                 Accumu-
                   Weighted          lated                   lated
                   Average          Amortiz-                Amortiz-
                    Life     Gross   ation     Net   Gross   ation     Net
                             ------ -------- ------  ------ -------- ------
                                              (in Millions)
Intangible assets
 subject to
 amortization:
  Engineering
   drawings          20      $  381 $    160 $  221  $  380 $    153 $  227
  Dealer network     25         216       63    153     216       61    155
  Software            5         269      180     89     248      157     91
  Other            10-30         55       20     35      55       21     34
                             ------ -------- ------  ------ -------- ------
                                921      423    498     899      392    507
                             ------ -------- ------  ------ -------- ------
Intangible assets
not subject to
 amortization:
  Trademarks                    272        -    272     272        -    272
                             ------ -------- ------  ------ -------- ------
                             $1,193 $    423 $  770  $1,171 $    392 $  779
                             ====== ======== ======  ====== ======== ======
CNH recorded amortization expense of approximately $17 million for the three months ended March 31, 2007. CNH recorded amortization expense of approximately $72 million for the year ended December 31, 2006. Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the years 2007 to 2011 is approximately $68 million.

Any adjustment related to valuation allowances recorded against deferred tax assets of Case Corporation and its subsidiaries (now known as CNH America LLC) as of the Case Corporation acquisition date have in the past and will in the future be treated as a reduction of goodwill and will not impact future periods' tax expense.

6. Debt -- The following table sets forth total debt and total debt less cash and cash equivalents, deposits in Fiat affiliates cash management pools and intersegment notes receivable ("Net Debt") as of March 31, 2007 and December 31, 2006:

                                            Equipment         Financial
                         Consolidated       Operations        Services
                      ----------------- ----------------- -----------------
                       March   December   March  December   March  December
                      31, 2007 31, 2006 31, 2007 31, 2006 31, 2007 31, 2006
                      -------- -------- -------- -------- -------- --------
                                           (in Millions)
Short-term debt:
   With Fiat
    Affiliates        $    855 $    438 $    210 $    260 $    645 $    178
   Other                   768      832      378      228      390      604
   Intersegment              -        -        -        -    1,367    1,348
                      -------- -------- -------- -------- -------- --------
Total short-term debt    1,623    1,270      588      488    2,402    2,130
                      -------- -------- -------- -------- -------- --------

Long-term debt:
   With Fiat
    Affiliates              46       52        -        -       46       52
   Other                 5,059    5,080    2,362    2,419    2,697    2,661
   Intersegment              -        -        -        -      252       97
                      -------- -------- -------- -------- -------- --------
Total long-term debt     5,105    5,132    2,362    2,419    2,995    2,810
                      -------- -------- -------- -------- -------- --------

Total debt:
   With Fiat
    Affiliates             901      490      210      260      691      230
   Other                 5,827    5,912    2,740    2,647    3,087    3,265
   Intersegment              -        -        -        -    1,619    1,445
                      -------- -------- -------- -------- -------- --------
Total debt               6,728    6,402    2,950    2,907    5,397    4,940
                      -------- -------- -------- -------- -------- --------
Less:
   Cash and cash
    equivalent           1,013    1,174      594      703      419      471
   Deposits in Fiat
    affiliates cash
    management pools       732      497      731      496        1        1
   Intersegment
    notes receivable         -        -    1,619    1,445        -        -
                      -------- -------- -------- -------- -------- --------
Net Debt              $  4,983 $  4,731 $      6 $    263 $  4,977 $  4,468
                      ======== ======== ======== ======== ======== ========

At March 31, 2007, CNH had approximately $3.9 billion available under $7.2 billion total lines of credit and asset-backed facilities.

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

7. Income Taxes -- In July 2006, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." FIN 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The FASB standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. For a tax position to be recognized, it must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The adoption of FIN 48 by CNH, which was effective as of January 1, 2007, resulted in a reduction of shareholders' equity in the first quarter of 2007 of approximately $49 million.

For the three months ended March 31, 2007 and 2006, effective income tax rates were 41.3% and 44.1%, respectively. For 2007, tax rates differ from the Dutch statutory rate of 25.5% due primarily to the higher tax rates in certain jurisdictions, provisioning of unrecognized tax benefits and the impact of tax losses in certain jurisdictions where no immediate tax benefit is recognized. For 2006, tax rates differ from the Dutch statutory rate of 29.6% due primarily to higher tax rates in certain jurisdictions and the impact of tax losses in certain jurisdictions where no immediate tax benefit is recognized.

8. Restructuring -- During the three months ended March 31, 2007 and 2006, CNH expense and utilization related to restructuring was as follows:


                                Three Months Ended
                                     March 31,
                                   2007   2006
                                   -----  -----
                                   (in Millions)
Balance, beginning of period       $  85  $  47
Expense                               14      4
Utilization                          (18)    (7)
Foreign currency translation and
 other                                 -      2
                                   -----  -----
Balance, end of period             $  81  $  46
                                   =====  =====
Restructuring expense primarily relates to severance and other costs incurred due to headcount reductions and plant closures. Utilization primarily represents benefit plan curtailments, payments of involuntary employee severance costs and costs related to the closing of facilities.

In 2006, CNH announced actions around the globe aimed at readjusting its organizational structure to evolving business needs. These actions include optimizing its North American Agricultural Equipment manufacturing footprint to drive efficiency and reduce salaried headcount. CNH anticipates that the cost of these actions, in total, will be approximately $100 million before tax. Approximately $50 million, before tax, was recognized in the fourth quarter of 2006 with the balance to be recognized in 2007 and beyond.

9. Commitment -- CNH pays for normal and extended warranty costs and the cost of major programs to modify products in the customers' possession within certain pre-established time periods. A summary of recorded activity as of and for the three months ended March 31, 2007 for this commitment is as follows:


Balance, January 1, 2007               $ 277
Current year provision                    82
Claims paid and other adjustments        (66)
                                       -----
Balance, March 31, 2007                $ 293
                                       =====
10. Shareholders' Equity -- Shareholders approved a dividend of $0.25 per common share at the Annual General Meeting on April 2, 2007. The dividend will be payable on April 30, 2007 to shareholders of record at the close of business on April 23, 2007.

Pursuant to their terms, the 8 million shares of Series A Preferred Stock automatically converted into 100 million newly issued CNH common shares on March 23, 2006 in a non-cash transaction.

As of March 31, 2007, CNH had 236.6 million common shares outstanding.

11. Earnings per Share -- The following table reconciles the numerator and denominator of the basic and diluted earnings per share computations for the three months ended March 31, 2007 and 2006:

                                                      Three Months Ended
                                                           March 31,
                                                         2007    2006
                                                        ------  ------
                                                     (in Millions, except
                                                        per share data)
Basic:
        Net income                                      $   95  $   43
                                                        ======  ======
        Weighted average common shares outstanding
         - basic                                         236.4   145.1
                                                        ======  ======

        Basic earnings per share                        $ 0.40  $ 0.30
                                                        ======  ======
Diluted:
        Net income                                      $   95  $   43
                                                        ======  ======
        Weighted average common shares outstanding
         - basic                                         236.4   145.1
        Effect of dilutive securities (when dilutive):
          Series A Preferred Stock                           -    90.0
          Stock-Based Compensation Plans                   0.7     0.4
                                                        ------  ------
        Weighted average common shares outstanding
         - diluted                                       237.1   235.5
                                                        ======  ======

        Diluted earnings per share                      $ 0.40  $ 0.18
                                                        ======  ======
12. Comprehensive Income (Loss) -- The components of comprehensive income (loss) for the three months ended March 31, 2007 and 2006 are as follows:
                                                        Three Months Ended
                                                             March 31,
                                                           2007    2006
                                                          ------  ------
                                                           (in Millions)

Net income                                                $   95  $   43
Other Comprehensive income (loss), net of tax
     Cumulative translation adjustment                        33       9
     Deferred gains (losses) on derivative financial
      instruments                                            (11)     35
     Unrealized gains (losses) on retained interests in
      securitized transactions                                (2)      -
     Unrecognized defined benefit plan obligations            (1)      -
     Additional minimum pension liability adjustment           -      (3)
                                                          ------  ------
     Total                                                $  114  $   84
                                                          ======  ======
13. Segment Information -- CNH has three reportable operating segments: Agricultural Equipment, Construction Equipment and Financial Services.

A reconciliation from consolidated trading profit reported to Fiat under International Financial Reporting Standards and International Accounting Standards (collectively "IFRS") to income before taxes, minority interest and equity in income of unconsolidated subsidiaries and affiliates under U.S. GAAP for the three months ended March 31, 2007 and 2006 is as follows:

                                                       Three Months Ended
                                                            March 31,
                                                          2007    2006
                                                         ------  ------
                                                          (in Millions)

Trading profit reported to Fiat under IFRS               $  248  $  165
Adjustments to convert from trading profit under IFRS
 to U.S. GAAP income before income taxes, minority
 interest and equity in income of unconsolidated
 subsidiaries and affiliates:
    Accounting for benefit plans                            (13)    (28)
Accounting for intangible assets, primarily development
 costs                                                      (12)     (2)
Restructuring                                               (14)     (4)
Net financial expense                                       (60)    (73)
Accounting for receivable securitizations and other           6      10
                                                         ------  ------
Income before income taxes, minority interest and
 equity in income of unconsolidated subsidiaries and
 affiliates under U.S. GAAP                              $  155  $   68
                                                         ======  ======
The following summarizes trading profit under IFRS by segment:
                                  Three Months Ended
                                       March 31,
                                     2007    2006
                                    ------  ------
                                    (in Millions)

Agricultural Equipment              $   97  $   44
Construction Equipment                  64      55
Financial Services                      87      66
                                    ------  ------
Trading profit under IFRS           $  248  $  165
                                    ======  ======
14. Reconciliation of Non-GAAP Financial Measures -- CNH, in its quarterly press release announcing results, utilizes various figures that are "Non- GAAP Financial Measures" as this term is defined under Regulation G as promulgated by the SEC. In accordance with Regulation G, CNH has detailed either the computation of these measures from multiple U.S. GAAP figures or reconciled these non-GAAP financial measures to the most relevant U.S. GAAP equivalent. Some of these measures do not have standardized meanings and investors should consider that the methodology applied in calculating such measures may differ among companies and analysts. CNH's management believes these non-GAAP measures provide useful supplementary information to investors in order that they may evaluate CNH's financial performance using the same measures used by our management. These non-GAAP financial measures should not be considered as a substitute for, nor superior to, measures of financial performance prepared in accordance with U.S. GAAP.

Net Income Before Restructuring and Earnings Per Share Before Restructuring, Net of Tax

CNH defines net income before restructuring, net of tax as U.S. GAAP net income, less U.S. GAAP restructuring charges, net of tax applicable to the restructuring charges.

The following table reconciles net income to net income before restructuring, net of tax and the related pro-forma computation of earnings per share:


                                                        Three Months Ended
                                                              March 31,
                                                           2007     2006
                                                          -------  -------
                                                       (in Millions, except
                                                           per share data)
Basic:
     Net income                                           $    95  $    43
                                                          -------  -------
     Restructuring, net of tax:
        Restructuring                                          14        4
        Tax benefit                                            (4)      (1)
                                                          -------  -------
          Restructuring, net of tax                            10        3
                                                          -------  -------
     Net income before restructuring, net of tax          $   105  $    46
                                                          =======  =======
     Weighted average common shares outstanding - basic     236.4    145.1
                                                          =======  =======
     Basic earnings per share before restructuring, net
      of tax                                              $  0.44  $  0.32
                                                          =======  =======

Diluted:
     Net income before restructuring, net of tax          $   105  $    46
                                                          =======  =======
     Weighted average common shares outstanding - basic     236.4    145.1
     Effect of dilutive securities (when dilutive):
        Series A Preferred Stock                                -     90.0
        Stock Compensation Plans                              0.7      0.4
                                                          -------  -------
     Weighted average common shares outstanding - diluted   237.1    235.5
                                                          =======  =======

     Diluted earnings per share before restructuring, net
      of tax                                              $  0.44  $  0.20
                                                          =======  =======

Industrial Gross and Operating Margin

CNH defines industrial gross margin as Equipment Operations net sales less cost of goods sold. CNH defines industrial operating margin as Equipment Operations gross margin less selling, general and administrative, and research and development costs. The following table summarizes the computation of Equipment Operations industrial gross and operating margin.

                                                Three Months Ended
                                                     March 31,
                                       -----------------------------------
                                             2007               2006
                                       ----------------   ----------------
                                                  (in Millions)
Net sales                              $ 3,241    100.0%  $ 2,950    100.0%
Less:
     Cost of goods sold                  2,640     81.5%    2,462     83.5%
                                       -------            -------
Gross margin                               601     18.5%      488     16.5%
Less:
     Selling, general and
      administrative                       292      9.0%      250      8.5%
     Research and development               90      2.8%       84      2.8%
                                       -------            -------
Industrial operating margin            $   219      6.8%  $   154      5.2%
                                       =======            =======

Net Debt

Net debt is defined as total debt less cash and cash equivalents, deposits in Fiat affiliates cash management pools and intersegment notes receivable. The calculation of net debt is shown below:


                              Equipment Operations      Financial Services
                          ----------------------------  ------------------
                          March 31, December  March 31, March 31, December
                            2007    31, 2006    2006      2007    31, 2006
                          --------  --------  --------  --------  --------
                                            (in Millions)
Total debt                $  2,950  $  2,907  $  3,204  $  5,397  $  4,940
Less:
     Cash and cash
      equivalent               594       703       827       419       471
     Deposits in Fiat
      affiliates cash
      management pools         731       496       557         1         1
     Intersegment
      notes receivables      1,619     1,445     1,199         -         -
                          --------  --------  --------  --------  --------
Net debt                  $      6  $    263  $    621  $  4,977  $  4,468
                          ========  ========  ========  ========  ========
Working Capital

Equipment Operations working capital is defined as accounts and notes receivable and other-net, excluding intersegment notes receivable, plus inventories less accounts payable. The U.S. dollar computation of working capital, as defined, is significantly impacted by exchange rate movements. To demonstrate the impact of these movements, we have computed working capital as of March 31, 2007 using December 31, 2006 exchange rates.

The calculation of Equipment Operations working capital is shown below:


                                            March 31,
                                            2007 at
                                            December
                                March 31,   31, 2006   December  March 31,
                                  2007      FX Rates   31, 2006    2006
                                ---------  ---------  ---------  ---------
                                              (in Millions)
Accounts, notes receivable
 and other - net - Third Party  $   1,310  $   1,293  $   1,300  $   1,269
Accounts, notes receivable
 and other - net - Intersegment        31         30         14         26
                                ---------  ---------  ---------  ---------
Accounts, notes receivable
 and other - net - Total            1,341      1,323      1,314      1,295
                                ---------  ---------  ---------  ---------
Inventories                         3,037      3,005      2,735      2,665
                                ---------  ---------  ---------  ---------
Accounts payable - Third Party     (2,171)    (2,152)    (1,848)    (1,750)
Accounts payable - Intersegment      (131)      (130)       (91)        (6)
                                ---------  ---------  ---------  ---------
Accounts payable - Total           (2,302)    (2,282)    (1,939)    (1,756)
                                ---------  ---------  ---------  ---------
Working capital                 $   2,076  $   2,046  $   2,110  $   2,204
                                =========  =========  =========  =========

Contact Information

  • For more information contact:

    Thomas Witom
    News and Information
    (847) 955-3939

    Albert Trefts, Jr.
    Investor Relations
    (847) 955-3821