CNH Industrial NV
For the period ended Dec 31, 2023. Filed Feb 29, 2024.
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FY2023 · Filed Feb 29, 2024
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Presentation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Presentation
CNH Industrial N.V. (“CNH” or the “Company”) is incorporated in, and under the laws of, the Netherlands. CNH is a leading company in the capital goods sector that, through its various businesses, designs, produces and sells agricultural equipment and construction equipment. In addition, CNH’s Financial Services segment offers 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.
Subsequent to December 31, 2021, the Company hadthree reportable segments consisting of: (i) Agriculture, which designs, produces and sells agricultural equipment (ii) Construction, which designs, produces and sells construction equipment and (iii) Financial Services, which provides financial services to the customers of the Company’s products. The Company’s worldwide agricultural equipment and construction equipment segments as well as corporate functions are collectively referred to as “Industrial Activities”.
The Company was formed as a result of the mergers of Fiat Industrial S.p.A. and its subsidiary CNH Global N.V. with and into CNH, effective September 29, 2013.
Spin-off of On-Highway Business
Until December 31, 2021, CNH Industrial N.V. owned and controlled the Commercial and Specialty Vehicles business, the Powertrain business, and the related Financial Services business (together the “Iveco Group Business” or the “On-Highway Business”), as well as the Agriculture business, the Construction business, and the related Financial Services business (collectively, the “Off-Highway Business”). Effective January 1, 2022, the Iveco Group Business was separated from CNH Industrial N.V. by way of a demerger under Dutch law (the "Demerger") to Iveco Group N.V. (the "Iveco Group"), and the Iveco Group became a public listed company independent from CNH with its common shares trading on the Euronext Milan, a regulated market organized and managed by Borsa Italiana S.p.A. In connection with the Demerger, shares of Iveco Group N.V. were distributed to shareholders in CNH Industrial N.V. on a pro rata basis. The On-Highway Business' financial results for the periods prior to the Demerger have been reflected in our Consolidated Statement of Operations, retrospectively, as discontinued operations.
In order to present the financial effects of a Discontinued Operation, revenues and expenses arising from intercompany transactions were eliminated. Eliminations from transactions between Continuing and Discontinued Operations are allocated in full to Discontinued Operations. However, no profit or loss is recognized for intercompany transactions within the Consolidated Statement of Operations. The amounts of income statement items included in Discontinued Operations is detailed in the following sections.
Intercompany transactions between Continuing and Discontinued Operations have been eliminated in the consolidated statement of financial position. The net balance between Assets held for distribution and Liabilities held for distribution represents the net equity of the Discontinued Operations. This amount corresponds to the reduction in the total equity of CNH due to the Demerger that occurred on January 1, 2022.
Details of Statement of Operations line items included in Discontinued Operations, after the eliminations, for the year ended December 31, 2021 are as follows:
| (in millions of dollars) | 2021 |
|---|---|
| Revenues | |
| Net sales | $14,743 |
| Finance, interest and other income | 194 |
| Total Revenues | 14,937 |
| Costs and Expenses | |
| Cost of goods sold | 12,765 |
| Selling, general and administrative expenses | 989 |
| Research and development expenses | 594 |
| Restructuring expenses | 39 |
| Interest expense | 129 |
| Other, net | 380 |
| Total Costs and Expenses | 14,896 |
| Income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates | 41 |
| Income tax (expense) benefit | (113) |
| Equity in income of unconsolidated subsidiaries and affiliates | 31 |
| Net Income (loss) from discontinued operations | $(41) |
All cash flows from Discontinued Operations are reported in the appropriate items for operating, investing and financing activities in the Statement of Cash Flows. The cash flows represent those arising from transactions with third parties. Cash flows from Discontinued Operations for the year ended December 31, 2021 are as follows:
| (in millions of dollars) | 2021 |
|---|---|
| Cash Flows from Operating Activities | |
| Net income (loss) of discontinued operations | $(41) |
| Adjustments to reconcile net income to net cash provided (used) by operating activities: | |
| Depreciation and amortization expense excluding depreciation and amortization of assets under operating lease | 316 |
| Depreciation and amortization expense of assets under operating lease | 296 |
| (Gain) loss on disposal of assets | (44) |
| Undistributed income of unconsolidated subsidiaries | (13) |
| Other non-cash items | 197 |
| Changes in operating assets and liabilities: | |
| Provisions | 87 |
| Deferred income taxes | 36 |
| Trade and financing receivables related to sales, net | 54 |
| Inventories, net | (216) |
| Trade payables | 25 |
| Other assets and liabilities | 187 |
| Cash flow from operating activities of discontinued operation | $884 |
| Cash Flows from Investing Activities | |
| Additions to retail receivables | $(42) |
| Collections of retail receivables | 50 |
| Proceeds from the sale of assets, net of assets under operating leases | — |
| Expenditures for property, plant and equipment and intangible assets excluding assets under operating leases | (348) |
| Expenditures for assets under operating leases | (763) |
| Other | 672 |
| Cash flow provided (used) by investing activities of discontinued operation | $(431) |
| Cash Flows from Financing Activities | |
| Proceeds from long-term debt | $3,459 |
| Payments of long-term debt | (3,602) |
| Net increase (decrease) in other financial liabilities | 97 |
| Dividends paid | — |
| Cash flow from financing activities of discontinued operation | $(46) |
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