EXHIBIT 99
CASE News Release
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CASE CORPORATION 700 STATE STREET RACINE, WI 53404 U.S.A.
HTTP://WWW.CASECORP.COM
For more information, contact:
William B. Masterson
(414) 636-5793
For Immediate Release
Case Corporation Announces First Quarter Results
. Worldwide revenues of $1.2 billion, down 13 percent, with a net
loss of $48 million or ($.68) per share for the quarter, primarily
due to significant sales declines in high-margin, large
agricultural equipment and unfavorable economic conditions in
Brazil
. Case Capital's managed portfolio grows to a record $7 billion
Racine, Wisconsin (April 19, 1999) - Case Corporation (NYSE:CSE) today
announced a net loss of $48 million or ($.68) per share in the first quarter of
1999. In the prior year period, Case reported net income of $69 million or $.88
per share.
The soft global economic picture continues to impact many of the markets
for Case's products, particularly in key segments. The company previously
announced production schedule adjustments, primarily in high-horsepower
machines, driven by the drop in demand for agricultural equipment and ongoing
economic uncertainties in several markets. As a result, revenues decreased 13
percent to $1.2 billion, down from $1.4 billion in the first quarter of 1998.
The decline was partially offset by the impact of acquisitions and higher price
realization in both the agricultural and construction equipment businesses.
Lower year-over-year earnings for the first quarter reflect significant
sales declines in high-margin, large agricultural equipment. In addition, the
ongoing unfavorable economic conditions in Brazil negatively impacted operating
earnings by $15 million or $.16 per share.
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Higher pricing, the execution of previously announced management actions, and
ongoing cost reduction initiatives partially offset these declines.
"We executed well in the face of the agricultural market downturn and the
resultant lower retail demand for agricultural equipment," said Jean-Pierre
Rosso, Case chairman and chief executive officer. "Our construction equipment
business continued to perform well, and our strategy to grow and diversify our
financial services business is increasingly successful."
Management Actions
Case is on target in its execution of a number of actions aimed at
maximizing the company's performance in the current agricultural equipment
market. The company continues to maintain lower production schedules to match
retail demand. In the first quarter, global production of agricultural equipment
was down 35 percent, as planned, compared to the prior year period. The
company's previously announced program to reduce headcount by a total of 3,400
people by year-end is also on target. The integration of the company's
agricultural implement business is progressing on schedule with the
consolidation of all product development and selected manufacturing of tillage
and soil preparation equipment at the Case DMI facility in Illinois. This
transfer facilitates the company's closure of its Hamilton, Ontario, plant which
is expected to be completed ahead of schedule. The company is also transferring
other products made in the Hamilton plant, including planting, seeding and
materials handling equipment, to the Case Concord plant in North Dakota, as well
as to existing company joint ventures and third-party partners. In addition,
the closure of the Hugo, Minnesota, facility is progressing as planned. Nearly
two-thirds of the anticipated $95 million to $100 million annual savings
resulting from these and other related actions will be realized in 1999.
Equipment Sales
Case's worldwide retail unit sales were down 6 percent from the prior year
period, driven by lower agricultural equipment sales around the world. As a
result of the lower retail demand and the aggressive production cuts taken last
year and into 1999, wholesale sales were down 16 percent compared to the first
quarter of 1998.
Construction Equipment - Retail unit sales of construction equipment were
flat when compared to the same period last year. Increases in retail sales of
loader/backhoes, trenchers and
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telescopic handlers in North America did not offset declines in other parts of
the world. Retail sales in Latin America were down 46 percent, with sharp
declines in loader/backhoes, wheel loaders and skid steers. In Europe, retail
unit sales of construction equipment were down modestly. In Asia Pacific, retail
unit sales of skid steers were up compared to the prior year period, partially
offsetting a decline in loader/backhoes.
During the first quarter, Case introduced the next generation of its wheel
loader line, the C Series. With new transmissions and a host of other
improvements, the C Series machines were designed in response to customer
requirements for optimum reliability and durability on the job site. In addition
to the C Series, the company also introduced the 90 Series excavator and several
XT skid steer models to markets in western Europe, Africa and the Middle East.
The company also expanded its construction equipment line with the introduction
of a new, high-lift telescopic handler and a new 7-ton excavator built for
contractors who want the versatility and productivity of a larger excavator, but
the maneuverability of a smaller unit.
Agricultural Equipment - As expected, retail unit sales of agricultural
equipment in the first quarter were down 14 percent as a result of declines in
most regions of the world, reflecting the ongoing soft conditions in the global
agricultural equipment market. Wholesale sales of agricultural equipment were
down 30 percent from the prior year period as a result of the company's lower
production schedules.
In North America, retail sales were lower in every product category, with
the largest declines coming in high-horsepower tractors and combines. In Latin
America, sales were lower in every product category reflecting the ongoing
economic uncertainties in that region. In Europe, decreases in agricultural
equipment retail sales overall were partially offset by gains in high-horsepower
tractors as a result of the introduction of the MX Magnum in this market. This
well-received tractor has set new industry standards for power and fuel
efficiency. An embedded controller-area network enables the tractor to
communicate with attached implements and automate on-the-go input changes
through a single connection.
Financial Services
Case Capital Corporation grew its managed portfolio in the first quarter to
a record $7 billion, a 32 percent increase from the same prior year period. Case
Capital announced net income of $20 million for the first quarter, up 5 percent
from $19 million in the prior year period.
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Revenues increased 43 percent over the prior year to $109 million. This
performance demonstrates the success of Case Capital's operating strategy to
grow and diversify its business. (Also see Case Capital Corporation's first
quarter press release.)
Market Outlook
The market outlook for Case's agricultural and construction equipment and
financial services businesses is substantially unchanged from the company's
outlook at the beginning of the year.
As expected, demand for agricultural equipment continued to decline during
the first quarter of 1999. This decrease is the result of low commodity prices,
driven principally by three consecutive years of strong-to-record harvests in
most major grain crops. Exports of farm commodities dropped substantially last
year, adversely affecting large-scale production agriculture farmers. Due to
unfavorable economic conditions in Brazil, the agricultural equipment market in
Latin America, primarily small tractors, is now projected to be down 10 to 15
percent in 1999. In addition, financing for equipment purchases in emerging
markets is expected to remain extremely difficult. As a result of these factors,
the company continues to expect that worldwide sales of agricultural equipment
will be down approximately 8 to 10 percent in 1999.
The global outlook for the construction equipment market varies by region.
In North America, demand should be stable due to a sustained level of housing
starts and a continued favorable interest rate environment. The U.S. Highway
Bill that will increase infrastructure spending supports this outlook. In
Europe, the market is expected to decline moderately in 1999 as anticipated
improvements in France and Spain will be offset by lower sales in the United
Kingdom, Africa and the Middle East. In Asia Pacific, economic conditions remain
weak, but there are indications that markets are stabilizing. Case is further
affected by a still weakened Australian dollar, impacting the overall economy
and construction activity there. In Latin America, the outlook has dampened
considerably given Brazil's currency devaluation. In total, worldwide
construction equipment sales in 1999 are expected to be flat to down slightly
when compared to the prior year.
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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 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.
# # #
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The following is issued in conjunction with Case Corporation's 1999 first
quarter results:
For more information, contact:
Sandra J. Lasch
(414) 636-6473
For Immediate Release
CASE CAPITAL CORPORATION REPORTS RECORD PORTFOLIO
. Managed portfolio grows to a record $7 billion
. Net income up 5 percent to $20 million
. Originations increase 16 percent for the quarter
. Diversified financing business increases significantly
Lincolnshire, Illinois (April 19, 1999) -- Case Capital Corporation today
announced net income of $20 million for the first quarter, up 5 percent from $19
million in the comparable period last year. Revenues increased 43 percent over
the prior year period to $109 million. The improvement in net income is
attributed to higher financing income from strong growth in receivables and
leases. The increase was partially offset by higher operating expenses and
additional provisions for loan losses to support the company's growth
initiatives.
Case Capital's managed portfolio grew to a record $7 billion as of March
31, 1999, a 32 percent increase year-over-year. Financing originations increased
16 percent in the first quarter, as compared to the prior year period. These
increases reflect the success of Case Capital's strategy to grow and diversify
its business.
"Our strong performance for the quarter once again demonstrates the
strength of our business strategy," stated Ted R. French, chairman, Case
Capital. "And, our ability to achieve sustained, profitable portfolio
diversification and geographic growth demonstrates that we continue to execute
that strategy successfully."
Significant growth in Case Capital's diversified business enabled the
company to increase its portfolio, more than offsetting the impact of weaker
retail demand in the agricultural equipment market. Diversified originations,
generated primarily through Soris Financial, were
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higher than anticipated for the quarter. Commercial marine financing, introduced
in late 1998 through the Cummins-Case Credit alliance, also exceeded
expectations during the period.
New and improved product offerings introduced to equipment dealers and
customers during the past two years also enabled Case Capital to grow its core
business. These products include commercial loans, credit cards, leasing and
insurance brokerage. A new credit life insurance program, introduced in January,
was the first in a series of steps designed to enhance Case Credit Insurance
Agency's total offerings and better meet the needs of equipment dealers and
their customers.
Geographic expansion also supported Case Capital's growth during the
quarter. Case Credit Europe's portfolio tripled year-over-year, and Case Credit
Australia's portfolio increased over 50 percent during the period.
"We continue to experience success in growing both our core business and
our diversified business," stated Andrew E. Graves, president, Case Capital. "As
we pursue new opportunities, we continue to take significant steps to maintain
our portfolio quality and 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 billion portfolio of
receivables and leases.
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Case Corporation
Revenues and Net Sales
March 31, 1999
(Millions)
Three Months Ended
------------------------
%
1999 1998 Change
------ ------ ------
Revenues:
Net sales
Agricultural equipment $ 549 $ 783 -30%
Construction equipment 535 514 4%
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Total net sales 1,084 1,297 -16%
Financial services 109 76 43%
Other revenues 8 8 -
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Total revenues $1,201 $1,381 -13%
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Net sales:
North America $ 647 $ 770 -16%
Europe* 330 383 -14%
Asia Pacific 66 68 -3%
Latin America 41 76 -46%
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Total net sales $1,084 $1,297 -16%
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*Includes Africa and Middle East
8
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
March 31, March 31, March 31,
------------------ ------------------ -------------------
1999 1998 1999 1998 1999 1998
-------- ------- ------- ------ ------- --------
Revenues
Net sales $1,084 $1,297 $1,084 $1,297 $ -- $ --
Interest income and other 117 84 10 8 109 76
------ ------ ------ ------ ---- ----
Total 1,201 1,381 1,094 1,305 109 76
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Costs and Expenses
Cost of goods sold 932 1,019 932 1,019
Selling, general and administrative 174 146 157 137 17 9
Research, development and engineering 49 52 49 52
Interest expense 75 47 32 18 45 29
Other, net 30 15 14 7 16 8
------ ------ ------ ------ ---- ----
Total 1,260 1,279 1,184 1,233 78 46
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Income (loss) before taxes (59) 102 (90) 72 31 30
Income tax provision (benefit) (11) 33 (22) 22 11 11
- ------------------------------------------------------------------------------------------------------------------------------
(48) 69 (68) 50 20 19
Equity in income - Case Capital 20 19
- ------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (48) $ 69 $ (48) $ 69 $ 20 $ 19
====== ====== ====== ====== ==== ====
Preferred stock dividends 2 2
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Net income (loss) to common $ (50) $ 67
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- ------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per Common Share (EPS):
Basic EPS $(0.68) $ 0.91
Diluted EPS $(0.68) $ 0.88
See Notes to Interim Financial Statements.
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CASE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions)
(Unaudited)
CONSOLIDATED CASE INDUSTRIAL CASE CAPITAL
March 31, March 31, March 31,
----------------- --------------- ---------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
Assets
Cash and cash equivalents $ 119 $ 152 $ 91 $ 125 $ 28 $ 27
Accounts, notes receivable and other - net 4,536 3,897 1,793 1,964 2,722 1,989
Inventories 1,465 1,251 1,465 1,251
Property, plant and equipment - net 1,048 991 1,045 988 3 3
Equipment on operating leases - net 495 208 495 208
Investment in Case Capital 482 378
Goodwill and intangibles 346 313 346 313
Other assets 854 576 604 464 276 126
------ ------ ------ ------ ------ ------
Total $8,863 $7,388 $5,826 $5,483 $3,524 $2,353
====== ====== ====== ====== ====== ======
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Liabilities and Equity
Current maturities of long-term debt $ 9 $ 8 $ 9 $ 8 $ -- $ --
Short-term debt 1,112 1,410 856 526 256 884
Accounts payable and other accrued liabilities 1,501 1,517 1,429 1,538 77 49
Long-term debt 3,591 1,681 981 667 2,610 1,014
Other liabilities 591 445 492 417 99 28
------ ------ ------ ------ ------ ------
Total Liabilities 6,804 5,061 3,767 3,156 3,042 1,975
Equity 2,059 2,327 2,059 2,327 482 378
------ ------ ------ ------ ------ ------
Total $8,863 $7,388 $5,826 $5,483 $3,524 $2,353
====== ====== ====== ====== ====== ======
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See Notes to Interim Financial Statements.
10
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) On a consolidated basis, the Company's effective income tax rate of 19% for
the first quarter 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 the recognition of tax benefits from the
Company's foreign sales corporation. For the first quarter of 1998, the
Company's consolidated effective tax rate of 32% was lower than the U.S.
statutory rate primarily due to reductions in the tax valuation reserves in
certain foreign jurisdictions, research and development tax credits and the
recognition of tax benefits from the Company's foreign sales corporation,
partially offset by state income taxes.
(3) 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
Months Ended
March 31,
------------------------
1999 1998
----------- -----------
Net income (loss) $ (48) $ 69
Income tax provision (benefit) (22) 22
Interest expense 32 18
------ ------
Operating earnings (loss) $ (38) $ 109
====== ======
The following summarizes operating earnings (loss) by segment (in
millions):
Three
Months Ended
March 31,
------------------------
1999 1998
----------- -----------
Agricultural equipment $ (99) $ 41
Construction equipment 41 49
Financial services 20 19
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Operating earnings (loss) $ (38) $ 109
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CASE CORPORATION
Notes to Interim Financial Statements
(4) Earnings (loss) per common share ("EPS")
(in millions, except per share data): Three
Months Ended
March 31,
-----------------------
1999 1998
----------- ----------
Basic EPS
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Net income (loss) to common $ (50) $ 67
Weighted-average shares outstanding - Basic 72.9 73.9
Basic EPS $(.68) $ .91
Diluted EPS
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Net income (loss) $ (48) $ 69
Weighted-average shares outstanding - Diluted 76.8 78.5
Diluted EPS * $(.68) $ .88
*Basic and Diluted EPS for the three months ended March 31, 1999 are the
same as the securities are antidilutive.
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