EXHIBIT 99: PRESS RELEASE
[LOGO OF CASE CORPORATION]
CASE CORPORATION REPORTS SECOND QUARTER RESULTS
-CASE REPORTS OPERATING EARNINGS OF $83 MILLION AND NET INCOME OF $36
MILLION (EPS $.46).
-WORLDWIDE REVENUES OF $1.5 BILLION WERE LOWER DUE TO CONTINUED WEAK
DEMAND FOR AGRICULTURAL EQUIPMENT.
-DEALER RECEIVABLES $250 MILLION LOWER THAN PRIOR YEAR DUE TO ONGOING
SUPPLY CHAIN MANAGEMENT INITIATIVES. ADDITIONAL PRODUCTION CUTS PLANNED
FOR SECOND HALF OF 1999.
-PROPOSED CASE MERGER WITH NEW HOLLAND CONTINUES ON PLAN FOR COMPLETION
LATER THIS YEAR.
Racine, Wisconsin (July 20, 1999) -- Case Corporation (NYSE:CSE) today reported
operating earnings for the second quarter of $83 million and net income of $36
million, or $.46 per share, including expenses associated with the proposed
business merger of Case and New Holland N.V. (NYSE:NH). The results were in line
with expectations for the quarter despite continued declines in demand for
agricultural equipment.
In the prior year period, Case reported operating earnings of $199 million and
net income of $126 million, or $1.61 per share.
Second quarter revenues were $1.5 billion, down from $1.7 billion in the second
quarter of 1998.
Operating earnings for the second quarter were lower than the prior year due
primarily to lower sales volumes, particularly in higher margin, large
agricultural equipment, as well as unfavorable economics and exchange rates.
These factors offset improvements in the company's manufacturing performance,
higher earnings from Case Capital, savings from restructuring actions and higher
pricing year-over-year.
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For the first six months of 1999, the company recorded a net loss of $(12)
million, or $(.20) per share, compared with net income of $195 million, or $2.48
per share, for the same period last year. Revenues for the first six months of
1999 were $2.7 billion, versus $3.1 billion in 1998. Operating earnings were $45
million for the first six months of 1999, compared with $308 million last year.
"Over the last 12 months, we have adjusted production levels proactively in
accordance with reduced retail demand. As a result, we have kept inventories at
historically low levels for these market conditions, and we are positioned to
rebound strongly when the market recovers," said Jean-Pierre Rosso, Case
chairman and chief executive officer. "In managing production levels closely, we
significantly improved our ability to generate cash in the second quarter, while
also maintaining our pricing integrity in the market."
MANAGEMENT ACTIONS
The market for agricultural equipment continues to decline, particularly in
North America, as low commodity prices deter farmers from replacing older
equipment. Since the second quarter of last year, Case has proactively reduced
its production to eliminate high levels of field and company inventories. These
steps continued in the second quarter of 1999, as the company decreased
production of its agricultural equipment product lines.
Recent crop reports have raised expectations for another strong harvest this
year, and exports of farm commodities are expected to remain at low levels.
Based upon these factors, Case now expects demand for large-scale, production
agricultural equipment in North America to decline by approximately 35 percent
in 1999, and, accordingly, the company will further reduce its planned
production schedules to match the expected lower retail demand. This revised
production plan is expected to negatively impact 1999 earnings by approximately
$.50 per share, predominantly in the third quarter.
In addition to actively managing production schedules, Case continued to
successfully execute its previously announced restructuring program during the
second quarter. The plant in Hugo, Minnesota, that produced horizontal
directional drills for Case's construction equipment business was closed early
in the
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quarter. Timed with the introduction of new models, the production of
these units was moved to the Case facility in Wichita, Kansas. The Case
agricultural implement plant in Hamilton, Ontario, has largely been closed, with
final production to be completed by July 31, 1999. Implement product lines have
been moved from Hamilton to Case facilities in Goodfield, Illinois, and Fargo,
North Dakota. In addition, several lines have been outsourced to third party
suppliers. Case continues to be on target in 1999 to realize two-thirds of the
annual $95 - $100 million savings expected from this restructuring program.
EQUIPMENT SALES
CONSTRUCTION EQUIPMENT - Worldwide retail unit sales of Case construction
equipment in the second quarter declined by 3 percent, compared to the previous
year. In North America, gains in retail unit sales of trenchers, wheel loaders,
skid steers and telescopic handlers pushed retail sales of Case construction
equipment higher during the second quarter. The improvement was partially offset
by lower retail sales of loader/backhoes and excavators. In Europe, higher
retail sales of excavators were offset by declines in other product categories.
Retail sales in Latin America and the Asia Pacific region were also lower as
business conditions continued to be difficult.
AGRICULTURAL EQUIPMENT -- Case retail unit sales of agricultural equipment
around the world fell by 16 percent in the second quarter. The decline was more
pronounced in large-scale, production agricultural equipment where retail sales
were 26 percent lower than in the comparable period. The decreases were
strongest in North America, which continues to be impacted by low commodity
prices and weak exports. In Europe, sales of large row-crop tractors were up
significantly. This, combined with higher sales of cotton pickers, helped offset
declines in other categories, keeping second quarter retail sales approximately
even with a year ago. In Latin America, retail unit sales of Case row-crop
tractors were lower, while sales of four-wheel drive tractors and combines
improved. And in the Asia Pacific region, retail sales were down, with the
exception of small- and mid-sized, row-crop tractors.
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MARKET OUTLOOK
The market outlook for Case's agricultural and construction equipment and
financial services businesses continues to vary around the world.
Demand for agricultural equipment continued to decline during the second quarter
of 1999. This decline is the result of low commodity prices, driven by high
grain stock levels and lower exports of farm commodities to Asia and other
markets. The decline in exports has particularly affected large-scale,
production agriculture farmers. Strong spring plantings and favorable growing
conditions have resulted in an improved 1999 harvest outlook. In addition,
financing for equipment purchases in emerging markets is expected to remain
extremely difficult. As a result of these factors, the company now expects
retail sales of higher-margin, production agricultural equipment in North
America to decline by approximately 35 percent in 1999, while worldwide sales of
agricultural equipment are expected to continue to be approximately 8 to 10
percent lower than the previous year.
The global outlook for the construction equipment market differs by region. In
North America, demand is stable due to continued strong housing construction
activity and increased infrastructure spending in the United States. Interest
rate conditions remain favorable for construction activity. In Europe, the
market has improved over previous expectations as stronger market conditions in
France and the United Kingdom are expected to keep sales steady with last year,
despite declines in Germany and the Africa/Middle East region. In the Asia
Pacific region, business conditions have stabilized and the company expects
construction equipment sales to rise slightly from low 1998 levels. In Latin
America, construction activity continues to be markedly lower as government
spending and commercial privatization has slowed due to economic conditions
there, principally in Brazil. In total, worldwide construction equipment sales
in 1999 are expected to remain unchanged from 1998 levels.
THE INFORMATION INCLUDED IN THIS NEWS RELEASE CONTAINS FORWARD-LOOKING
STATEMENTS AND INVOLVES RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS. THE COMPANY'S
OUTLOOK IS PREDOMINANTLY BASED ON ITS INTERPRETATION OF WHAT IT CONSIDERS
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KEY ECONOMIC ASSUMPTIONS. 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 THE COMPANY INCLUDE GENERAL ECONOMIC
AND CAPITAL MARKET CONDITIONS, THE CYCLICAL NATURE OF ITS BUSINESS, FOREIGN
CURRENCY MOVEMENTS, THE COMPANY'S AND ITS CUSTOMERS' ACCESS TO CREDIT, POLITICAL
UNCERTAINTY AND CIVIL UNREST 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 REGULATION
(INCLUDING GOVERNMENT SUBSIDIES AND INTERNATIONAL TRADE REGULATIONS), THE EFFECT
OF CONVERSION TO THE EURO, TECHNOLOGICAL DIFFICULTIES (INCLUDING YEAR 2000),
CHANGES IN ENVIRONMENTAL LAWS, AND EMPLOYEE AND LABOR RELATIONS. FURTHER
INFORMATION CONCERNING FACTORS THAT COULD SIGNIFICANTLY IMPACT EXPECTED RESULTS
IS INCLUDED IN THE FOLLOWING SECTIONS OF THE COMPANY'S FORM 10-K ANNUAL REPORT
FOR 1998, AS FILED AND AMENDED WITH THE SECURITIES AND EXCHANGE COMMISSION:
BUSINESS - EMPLOYEES, BUSINESS - ENVIRONMENTAL MATTERS, BUSINESS - SIGNIFICANT
INTERNATIONAL OPERATIONS, BUSINESS - SEASONALITY AND PRODUCTION SCHEDULES,
BUSINESS - COMPETITION, LEGAL PROCEEDINGS, AND MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Case corporation is a leading worldwide designer, manufacturer and distributor
of agricultural and construction equipment, and offers a broad array of
financial products and services. Headquartered in Racine, Wisconsin, Case had
1998 revenues of $6.1 billion and sells its products in 150 countries through a
network of approximately 4,900 independent dealers.
THE FOLLOWING IS ISSUED IN CONJUNCTION WITH CASE CORPORATION'S 1999 SECOND
QUARTER RESULTS:
FOR MORE INFORMATION, CONTACT:
SANDRA J. LASCH
(414) 636-6473
FOR IMMEDIATE RELEASE
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CASE CAPITAL NET INCOME INCREASES 17 PERCENT
-Managed portfolio grows to a record $7.4 billion
-Net income up 17 percent to $21 million
-Diversified financing business increases significantly
Lincolnshire, Illinois (July 20, 1999) - Case Capital Corporation today
announced net income of $21 million for the second quarter, up 17 percent from
$18 million in the comparable period last year. Revenues increased 46 percent
over the prior year period to a record $117 million. For the first six months,
revenues increased 45 percent over the prior year to $226 million. Net income
for the first half was $41 million, an 11 percent increase over the comparable
period last year. These improvements in net income are attributed to higher
financing income from strong growth in receivables and leases. The increases
were partially offset by higher operating expenses, additional provisions for
loan losses to support the company's growth initiatives and a higher effective
tax rate.
Case Capital's managed portfolio grew to a record $7.4 billion as of June 30,
1999, a 28 percent increase year-over-year. This increase reflects the success
of Case Capital's strategy to grow and diversify its business.
"Once again, our strong performance attests to the strength of our business
strategy," stated Ted R. French, chairman, Case Capital. "Sustained, profitable
portfolio diversification and geographic growth outside of North America
continue to demonstrate our ability to execute that strategy successfully."
Case Capital continued to grow its diversified business significantly,
offsetting the impact of weak retail demand in the agricultural equipment
market. Diversified originations, generated primarily through Soris Financial,
were higher than anticipated for the quarter. Sustained geographic growth in
Europe and Australia also supported Case Capital's increased profitability
during the quarter.
"Given significant declines in our core agricultural market, we're proud to
report continued growth in both our portfolio and net income," stated Andrew E.
Graves, president, Case Capital.
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"The new initiatives we've introduced to grow and diversify our portfolio,
including our entry into the commercial vehicle and marine businesses, are
designed to ensure sustainable, long-term earnings growth for Case Capital."
Case Capital Corporation, a wholly owned subsidiary of Case Corporation,
provides broad-based financial services for the global marketplace. Case Capital
serves customers purchasing, leasing and insuring products through Case Credit
Corporation, Soris Financial and Case Credit Insurance Agency. Established in
1957, Case Credit markets its products through Case Corporation's established
dealer networks in North America, Australia and Europe. Soris offers its
products through diverse dealer networks located in North America. Based in
Lincolnshire, Illinois, Case Capital manages a $7.4 billion portfolio of
receivables and leases.
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CASE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
CONSOLIDATED CASE INDUSTRIAL CASE CAPITAL
THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
------------------ ----------------- ------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
Revenues
Net sales $1,346 $1,646 $1,346 $1,646 $ - $ -
Interest income and other 124 88 11 8 117 80
------ ------ ------ ------ ----- ----
Total 1,470 1,734 1,357 1,654 117 80
- -------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 1,094 1,274 1,094 1,274
Selling, general and
administrative 163 155 145 143 18 12
Research, development and
engineering 46 57 46 57
Interest expense 76 57 33 26 47 31
Other, net 28 9 10 (1) 18 10
------ ------ ------ ------ ----- ----
Total 1,407 1,552 1,328 1,499 83 53
- -------------------------------------------------------------------------------------------------------------
Income before taxes 63 182 29 155 34 27
Income tax provision 27 56 14 47 13 9
- -------------------------------------------------------------------------------------------------------------
36 126 15 108 21 18
Equity in income - Case Capital 21 18
- -------------------------------------------------------------------------------------------------------------
Net income $ 36 $ 126 $ 36 $ 126 $ 21 $ 18
====== ====== ====== ====== ===== =====
Preferred stock dividends 1 1
------ ------
Net income to common $ 35 $ 125
====== ======
- -------------------------------------------------------------------------------------------------------------
Earnings per Common Share (EPS):
Basic EPS $ 0.47 $ 1.68
Diluted EPS $ 0.46 $ 1.61
See Notes to Interim Financial Statements.
CASE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
CONSOLIDATED CASE INDUSTRIAL CASE CAPITAL
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
------------------ ----------------- ------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
Revenues
Net sales $2,430 $2,943 $2,430 $2,943 $ - $ -
Interest income and other 241 172 21 16 226 156
------ ------ ------ ------ ----- ----
Total 2,671 3,115 2,451 2,959 226 156
- -------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 2,026 2,293 2,026 2,293
Selling, general and
administrative 337 301 302 280 35 21
Research, development and
engineering 95 109 95 109
Interest expense 151 104 65 44 92 60
Other, net 58 24 24 6 34 18
------ ------ ------ ------ ----- ----
Total 2,667 2,831 2,512 2,732 161 99
- -------------------------------------------------------------------------------------------------------------
Income (loss) before taxes 4 284 (61) 227 65 57
Income tax provision (benefit) 16 89 (8) 69 24 20
- -------------------------------------------------------------------------------------------------------------
(12) 195 (53) 158 41 37
Equity in income - Case Capital 41 37
- -------------------------------------------------------------------------------------------------------------
Net income (loss) $ (12) $ 195 $ (12) $ 195 $ 41 $ 37
====== ====== ====== ====== ===== =====
Preferred stock dividends 3 3
------ ------
Net income (loss) to common $ (15) $ 192
====== ======
- -------------------------------------------------------------------------------------------------------------
Earnings (loss) per Common Share (EPS):
Basic EPS $(0.20) $ 2.59
Diluted EPS $(0.20) $ 2.48
See Notes to Interim Financial Statements.
CASE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(MILLIONS)
(UNAUDITED)
CONSOLIDATED CASE INDUSTRIAL CASE CAPITAL
JUNE 30, JUNE 30, JUNE 30,
------------- --------------- ---------------
1999 1998 1999 1998 1999 1998
----- ----- ----- ----- ----- -----
Assets
Cash and cash equivalents $ 120 $ 115 $ 86 $ 94 $ 34 $ 21
Accounts, notes receivable and other - net 4,837 4,352 1,764 2,011 3,053 2,324
Inventories 1,395 1,363 1,395 1,363
Property, plant and equipment - net 1,039 1,021 1,035 1,018 4 3
Equipment on operating leases - net 511 351 511 351
Investment in Case Capital 506 391
Goodwill and intangibles 343 327 343 327
Other assets 905 582 598 458 334 143
------ ------ ------- ------ ------ ------
Total $9,150 $8,111 $5,727 $5,662 $3,936 $2,842
===== ====== ====== ====== ====== ======
- -------------------------------------------------------------------------------------------------------------------------------
Liabilities and Equity
Current maturities of long-term debt $ 9 $ 5 $ 9 $ 5 $ - $ -
Short-term debt 1,487 2,047 739 690 748 1,357
Accounts payable and other accrued liabilities 1,467 1,470 1,396 1,414 78 58
Long-term debt 3,478 1,679 971 671 2,507 1,008
Other liabilities 605 490 508 462 97 28
------ ------ ------ ------ ------ ------
Total Liabilities 7,046 5,691 3,623 3,242 3,430 2,451
Equity 2,104 2,420 2,104 2,420 506 391
------ ------ ------ ------ ------ ------
Total $9,150 $8,111 $5,727 $5,662 $3,936 $2,842
====== ====== ====== ====== ====== ======
- -------------------------------------------------------------------------------------------------------------------------------
See Notes to Interim Financial Statements.
CASE CORPORATION
REVENUES AND NET SALES
JUNE 30, 1999
(MILLIONS)
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- --------------------------
% %
1999 1998 CHANGE 1999 1998 CHANGE
------- ------- ------- ------- ------- -------
Revenues:
Net sales
Agricultural equipment $ 756 $ 1,016 -26% $ 1,305 $ 1,799 -27%
Construction equipment 590 630 -6% 1,125 1,144 -2%
------- ------- ------- -------
Total net sales 1,346 1,646 -18% 2,430 2,943 -17%
Financial services 117 80 46% 226 156 45%
Other revenues 7 8 -13% 15 16 -6%
------- ------- ------- -------
Total revenues $ 1,470 $ 1,734 -15% $ 2,671 $ 3,115 -14%
======= ======= ======= =======
Net sales:
North America $ 722 $ 924 -22% $ 1,369 $ 1,694 -19%
Europe* 491 557 -12% 821 940 -13%
Asia Pacific 73 77 -5% 139 145 -4%
Latin America 60 88 -32% 101 164 -38%
------- ------- ------- -------
Total net sales $ 1,346 $ 1,646 -18% $ 2,430 $ 2,943 -17%
======= ======= ======= =======
* Includes Africa and Middle East
CASE CORPORATION
Notes to Interim Financial Statements
(1) The accompanying financial statements reflect the consolidated results of
Case Corporation and consolidated subsidiaries ("Case" or "the Company").
The financial information captioned "Case Industrial" in each of the
financial statements includes Case's agricultural and construction
equipment operations, with the Company's wholly owned retail credit
subsidiary ("Case Capital") reflected on the equity basis. The financial
information captioned "Case Capital" reflects the consolidation of Case's
retail credit subsidiaries. Case Capital provides financing for retail
installment sales contracts and leases, commercial lending within the
equipment industry, multiple lines of insurance products and offers a
private-label credit card. Certain reclassifications have been made to
conform the prior year's financial statements to the 1999 presentation.
(2) Case Corporation has three reportable operating segments: agricultural
equipment, construction equipment and financial services. Case evaluates
segment performance based on operating earnings. The Company defines
operating earnings as the income of Case Industrial before interest,
taxes, changes in accounting principles and extraordinary items, including
the income of Case Capital on an equity basis. A reconciliation of Case
Industrial's net income to operating earnings is as follows (in millions):
Three Six
Months Ended Months Ended
June 30, June 30,
-------- --------
1999 1998 1999 1998
---- ---- ---- ----
Net income (loss) $ 36 $126 $(12) $195
Income tax provision (benefit) 14 47 (8) 69
Interest expense 33 26 65 44
---- ---- ----- ----
Operating earnings $ 83 $199 $ 45 $308
==== ==== ==== ====
The following summarizes operating earnings by segment (in millions):
Three Six
Months Ended Months Ended
June 30, June 30,
------- -------
1999 1998 1999 1998
---- --- ---- ----
Agricultural equipment $ (5) $113 $(104) $154
Construction equipment 67 68 108 117
Financial services 21 18 41 37
---- ---- ---- ---
Operating earnings $ 83 $199 $ 45 $308
===== ==== ===== ====
(3) Case Industrial's effective income tax rate of 13% for the first six
months of 1999 was lower than the U.S. statutory rate of 35% primarily due
to losses in certain foreign jurisdictions for which no immediate tax
benefit was recognizable and foreign losses taxed at different rates,
partially offset by state tax benefits, research and development tax
credits, and reductions in the tax valuation reserves in certain foreign
jurisdictions. Case Industrial's effective tax rate of 30% for the first
six months of 1998 reflects the recognition of tax benefits from the
Company's foreign sales corporation, research and development tax credits,
and reductions in the tax valuation reserves in certain foreign
jurisdictions, partially offset by state income taxes and foreign income
taxed at different rates.
Case Capital's effective income tax rate of 37% for the first six months
of 1999 was slightly higher than the U.S. statutory tax rate primarily due
to foreign income taxed at different rates and state income taxes. For the
first six months of 1998, Case Capital's effective tax rate of 35% was
equal to the U.S. statutory rate.
CASE CORPORATION
Notes to Interim Financial Statements
(4) Earnings (loss) per common share ("EPS")
(in millions, except per share data): Three Six
Months Ended Months Ended
June 30, June 30,
------- -------
1999 1998 1999 1998
---- ---- ---- ----
Basic EPS
Net income (loss) to common $ 35 $125 $ (15) $192
Weighted-average shares
outstanding - Basic 73.1 73.9 73.0 73.9
Basic EPS $.47 $1.68 $(.20) $2.59
Diluted EPS
Net income (loss) $ 35 $126 $ (15) $195
Weighted-average shares
outstanding - Diluted 75.0 78.4 73.0 78.5
Diluted EPS * $ .46 $1.61 $(.20) $2.48
*Basic and Diluted EPS for the six months ended June 30, 1999 are the same
as the securities are antidilutive.
(5) On May 15, 1999, Fiat S.p.A., a company organized under the laws of the
Netherlands, and Fiat Acquisition Corporation, a Delaware corporation and
a wholly owned subsidiary of Fiat ("Merger Sub"), entered into an
Agreement and Plan of Merger whereby Merger Sub will merge (the "Merger")
with and into Case, with Case as the surviving corporation in the Merger
(the "Merger Agreement"). At the effective time of the Merger, each share
of common stock, par value $0.01 per share, of Case outstanding
immediately prior to the effective time of the Merger will be converted
into the right to receive $55 in cash. Consummation of the Merger is
subject to a number of conditions, including (1) the adoption of the
Merger Agreement by the stockholders of Case entitled to vote thereon, (2)
the expiration of all required regulatory waiting periods applicable to
the Merger, and (3) other customary conditions.
(6) On June 2, 1999, Case called for the redemption of all 1.5 million
outstanding shares of its Series A Cumulative Convertible Preferred Stock
("Series A Preferred Stock") on July 6, 1999. The Series A Preferred Stock
was issued as part of the capital structure created for Case at the time
of its initial public offering in 1994. All holders of Series A Preferred
Stock elected to convert each share of preferred stock for 2.2686 shares
of Case Common Stock.