CNH Industrial SEC Filings

6-K
CNH INDUSTRIAL N.V. filed this Form 6-K on 11/06/2017
Entire Document
 

Cost of Goods Sold

Cost of goods sold were $5,242 million for the third quarter of 2017 compared with $4,524 million for the third quarter of 2016. The increase of 15.9% was driven by the increase in revenues. As a percentage of net sales of Industrial Activities, cost of goods sold was 82.8% in the third quarter of both 2017 and 2016.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $559 million during the third quarter of 2017 (8.4% of net revenues), up $13 million compared to the third quarter of 2016 (9.5% of net revenues).

Research and Development Expenses

For the third quarter of 2017, research and development expenses were $243 million compared to $211 million for the third quarter of 2016. The expenses in both periods were primarily attributable to continued investment in new products.

Restructuring Expenses

Restructuring expenses for the third quarter of 2017 were $53 million compared to $6 million for the third quarter of 2016. The expenses in the third quarter of 2017 were primarily attributable to actions in Commercial Vehicles as part of the Efficiency Program launched in 2014. Specifically, at the end of the quarter, the Company initiated additional capacity realignments in its firefighting business. The Company recognized a total pre-tax restructuring charge of $47 million, of which $14 million is a non-cash charge. These actions will result in approximately $18 million of total annual pre-tax savings which the Company anticipates will be fully realized by 2019.

Interest Expense

Interest expense was $259 million for the third quarter of 2017 compared to $273 million for the third quarter of 2016. The interest expense attributable to Industrial Activities for the third quarter of 2017, net of interest income and eliminations, was $145 million compared to $153 million in the third quarter of 2016. In the third quarter of 2017, interest expense includes a charge of $39 million related to the CIFE 2017 Notes repurchase. In the third quarter of 2016, interest expense included a charge of $38 million related to the repurchase of $450 million of Case New Holland Industrial Inc.’s 7.875% Notes due 2017. Excluding the impact of these charges, interest expense decreased as a result of lower interest rates mainly due to the repurchase/early redemption of Case New Holland Industrial Inc. Notes in 2016 and 2017, and of the CIFE 2017 Notes repurchase in 2017 (which were replaced with lower rate notes), as well as lower average indebtedness.

Other, net

Other, net expenses were $174 million for the third quarter of 2017 compared to $131 million in 2016. The increase was primarily attributable to higher foreign exchange losses.

Income Taxes

 

 

Three Months Ended September 30,

 

 

 

2017

 

 

2016

 

 

 

(in millions, except percentages)

 

Income before income taxes and equity in income of unconsolidated subsidiaries and affiliates

 

$

100

 

 

$

58

 

Income tax (expense)

 

$

(64

)

 

$

(32

)

Effective tax rate

 

 

64.0

%

 

 

55.2

%

Income taxes totaled $64 million for the third quarter of 2017 compared to $32 million in the third quarter of 2016. The effective tax rate was 64.0% in the third quarter of 2017 compared to an effective tax rate of 55.2% in the third quarter 2016. Excluding the impact of restructuring and charges incurred on the repurchase/early redemption of Notes in both periods, the effective tax rate was 34% and 46% in the third quarter of 2017 and 2016, respectively. The improvement was primarily due to favorable changes in the jurisdictional profit mix.

 

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