##### 









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




---

FORM 20-F



|    |                                                                    
|--- | -------------------------------------------------------------------
|[ ] | REGISTRATION STATEMENT PURSUANT TO SECTIONS
    12(b) OR (g) OF THE

SECURITIES EXCHANGE ACT OF 1934


or



|    |                                                                    
|--- | -------------------------------------------------------------------
|[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES

EXCHANGE ACT OF 1934


For the Fiscal Year Ended December 31,
2003

or



|    |                                                                        
|--- | -----------------------------------------------------------------------
|[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934


Commission File Number 1-14528

CNH GLOBAL N.V.

(Exact name of registrant as specified in its
charter)


Kingdom of The Netherlands

(State or other jurisdiction of


incorporation or organization)


World Trade Center, Amsterdam
Airport

Tower B, 10th Floor


Schiphol Boulevard 217


1118 BH Amsterdam


The Netherlands


(Address of principal executive offices)


Securities registered pursuant to
Section 12(b) of the Act:

|                                   |  |                        
|---------------------------------- |  | -----------------------
|                                   |  | Name of Each Exchange  
|Title of Each Class                |  | on which Registered    
|                                   |  |                        
|Common Shares, par value
    2.25 |  | New York Stock Exchange

Securities registered pursuant to
Section 12(g) of the Act: None

Securities for which there is a reporting
obligation pursuant to Section 15(d) of the Act:
None

Indicate
the number of outstanding shares of each of the issuers
classes of capital or common stock as of the close of the period
covered by the annual report: 132,797,008 Common Shares

Indicate
by check mark whether the registrant has (1) filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) been subject to
such filing requirements for the past
90 days. x

Indicate
by check mark which financial statement item the registrant has
elected to follow:
Item 17 o or
Item 18 x.





---






---



##### 










TABLE OF CONTENTS

|                                  |  |                                                                                  |     |      |     | 
|--------------------------------- |  | -------------------------------------------------------------------------------- | --- | ---- | --- | 
|                                  |  |                                                                                  |     | Page
|                                  |  |                                                                                  |     |     
|PART I                           
|                                 
|Item 1.                           |  | Identity of Directors,
    Senior Management and Advisers                        |     |      | 6   | 
|Item 2.                           |  | Offer Statistics and
    Expected Timetable                                      |     |      | 6   | 
|Item 3.                           |  | Key Information                                                                  |     |      | 6   | 
|Item 4.                           |  | Information on the
    Company                                                   |     |      | 19  | 
|Item 5.                           |  | Operating and Financial
    Review and Prospects                                 |     |      | 44  | 
|Item 6.                           |  | Directors, Senior Management
    and Employees                                   |     |      | 74  | 
|Item 7.                           |  | Major Shareholders and
    Related Party Transactions                            |     |      | 83  | 
|Item 8.                           |  | Financial Information                                                            |     |      | 85  | 
|Item 9.                           |  | The Offer and Listing                                                            |     |      | 86  | 
|Item 10.                          |  | Additional Information                                                           |     |      | 87  | 
|Item 11.                          |  | Quantitative and Qualitative
    Disclosures About Market Risk                   |     |      | 98  | 
|Item 12.                          |  | Description of Securities
    Other than Equity Securities                       |     |      | 100 | 
|PART II                          
|                                 
|Item 13.                          |  | Defaults, Dividend
    Arrearages and Delinquencies                              |     |      | 100 | 
|Item 14.                          |  | Material Modifications to
    the Rights of Security Holders and Use of Proceeds |     |      | 100 | 
|Item 15.                          |  | Controls and Procedures                                                          |     |      | 101 | 
|Item 16A.                         |  | Audit Committee Financial
    Expert                                             |     |      | 101 | 
|Item 16B.                         |  | Code of Ethics                                                                   |     |      | 101 | 
|Item 16C.                         |  | Principal Accountant Fees
    and Services                                       |     |      | 101 | 
|PART III                         
|Item 17.                          |  | Financial Statements                                                             |     |      | 102 | 
|Item 18.                          |  | Financial Statements                                                             |     |      | 103 | 
|Item 19.                          |  | Exhibits                                                                         |     |      | 103 | 
|Index to Financial
    Statements |  |                                                                                  | F-1 |     

2



---



##### 



PRESENTATION OF FINANCIAL AND CERTAIN OTHER
INFORMATION

CNH Global N.V., (CNH) formerly New
Holland N.V., is incorporated in The Netherlands under Dutch law.

CNH combines the operations of New Holland N.V.
(New Holland) and Case, LLC, formerly Case
Corporation (Case), as a result of their business
merger on November 12, 1999. Effective with the closing of
the merger, we changed our name to CNH Global N.V. In addition,
CNH may refer to New Holland for financial
information prior to the merger. We use CNH Capital
to refer to the Financial Services business of CNH.

As of December 31, 2003, Fiat S.p.A.
(Fiat) owned approximately 84% of CNHs common
shares through Fiat Netherlands Holding N.V. (Fiat
Netherlands), excluding the impact of a conversion of the
8 million shares of Series A Preference Shares
(Series A Preferred Stock) discussed below.
Fiat is engaged principally in the manufacture and sale of
automobiles, commercial vehicles and agricultural and
construction equipment. Fiat also manufactures, for use by its
automotive sectors and for sale to third parties, other products
and systems, principally components, metallurgical products and
production systems.

On April 1, 2003, CNH effected a 1-for-5
reverse stock split of its common shares. All references to
earnings per share and the number of shares in this annual
report on Form 20-F and the accompanying consolidated
financial statements and notes thereto have been retroactively
restated to reflect this reverse stock split.

On April 7 and 8, 2003, CNH Global issued a
total of 8 million shares of Series A Preferred Stock
to Fiat and an affiliate of Fiat in exchange for the retirement
of $2 billion in Equipment Operations indebtedness owed to
Fiat Group companies.

The Series A Preferred Stock will not accrue
dividends until January 1, 2005. Subsequently, the
Series A Preferred Stock will pay a dividend at the then
prevailing common dividend yield. However, should CNH achieve
certain defined financial performance measures, the annual
dividend will be fixed at the prevailing common dividend yield
plus an additional 150 basis points. Dividends will be payable
annually in arrears, subject to certain provisions that allow
for a deferral for a period not to exceed five consecutive
years. The Series A Preferred Stock has a liquidation
preference of $250 per share and each share is entitled to one
vote on all matters submitted to CNHs shareholders. The
Series A Preferred Stock will automatically convert into
100 million CNH common shares at a conversion price of $20
per share if the market price of the common shares, defined as
the average of the closing price per share for 30 consecutive
trading days, is greater than $24 at any time through and
including December 31, 2006 or $21 at any time on or after
January 1, 2007, subject to anti-dilution adjustment. On a
converted basis, this transaction would increase Fiats
ownership of our common stock to approximately 91% as of
December 31, 2003. In the event of dissolution or
liquidation, whatever remains of the companys equity,
after all its debts have been discharged, will first be applied
to distribute to the holders of the Series A Preferred
Stock the nominal amount of their preference shares and
thereafter the amount of the share premium reserve relating to
the Series A Preferred Stock. Any remaining assets will be
distributed to the holders of common shares in proportion to the
aggregate nominal amount of their common shares.

On August 1, 2003 and September 12,
2003, Case New Holland, Inc. (Case New Holland) a
direct wholly-owned subsidiary of CNH, issued a total of
$1.05 billion of 9 1/4% Senior Notes due 2011 (the
9 1/4% Senior Notes) which are fully and
unconditionally guaranteed by CNH and certain of its direct and
indirect subsidiaries. Case New Holland, indirectly through its
subsidiaries, owns substantially all of the U.S. assets of
CNH and certain of its non-U.S. assets.

CNH has prepared its annual consolidated
financial statements in accordance with generally accepted
accounting principles in the United States of America
(U.S. GAAP), and certain reclassifications have
been made to conform the historical New Holland financial
statements to the CNH presentation. The accompanying financial
statements reflect the historical operating results of CNH,
including the results of operations of Case since the merger
date. CNH has prepared its consolidated financial statements in

3



---



##### 



U.S. Dollars and, unless otherwise
indicated, all financial data set forth in this annual report is
expressed in U.S. Dollars.


Certain financial information in this annual
report has been presented separately by geographic area. CNH
defines its geographic areas as (1) North America,
(2) Western Europe, (3) Latin America and
(4) Rest of World. As used in this report, all references
to North America, Western Europe,
Latin America and Rest of World are
defined as follows:



| |   |                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | North
    America United States and
    Canada.                                                                                                                                                                       
|
| |  | Western
    Europe Austria, Belgium,
    Denmark, Finland, France, Germany, Greece, Iceland, Ireland,
    Italy, Luxembourg, The Netherlands, Norway, Portugal, Spain,
    Sweden, Switzerland and the United Kingdom.
|
| |  | Latin
    America Mexico, Central
    and South America, and the Caribbean Islands.                                                                                                                                   
|
| |  | Rest of
    World Those areas not
    included in North America, Western Europe and Latin America, as
    defined above.                                                                                              

Certain market and share information in this
report has been presented as worldwide, which
includes all countries, with the exception of India and China.
In this report, management estimates of market share information
are generally based on registrations of equipment in most of
Europe and on retail data collected by a central information
bureau from equipment manufacturers in North America and Brazil,
as well as on shipment data collected by an independent service
bureau. Not all agricultural and construction equipment is
registered, and registration data may thus underestimate actual
retail demand. In many countries, there may also be a period of
time between the delivery, sale and registration of a vehicle;
as a result, delivery or registration data for a particular
period may not correspond directly to retail sales in such a
period.

*     *     *     *     *

4



---



##### 



Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995

This report 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 report,
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, should, intend,
estimate, anticipate,
believe, continue, on track,
or similar technology.

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, 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), technological difficulties, results of our
research and development activities, changes in environmental
laws, employee and labor relations, pension and health care
costs, 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
profit improvement initiatives depends upon, among other things,
industry volumes as well as our ability to effectively
rationalize operations and to execute our multiple brand
strategy. Further information concerning factors that could
significantly affect expected results are included in this
Form 20-F for the year ended December 31, 2003.

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.

5



---



##### 






PART I




Item 1. Identity of Directors,
Senior Management and Advisers

Not applicable.




Item 2. Offer Statistics and
Expected Timetable

Not applicable.




Item 3. Key Information

A. Selected
Financial Data.

The following table sets forth summary historical
financial data for CNH for the periods indicated. The historical
financial data set forth below as of December 31, 2003 and
2002 and for the years ended December 31, 2003, 2002 and
2001 has been derived from the audited consolidated financial
statements of CNH included herein. Financial data as of
December 31, 2001, 2000 and 1999 and for the years ended
December 31, 2000 and 1999 has been derived from our
published financial statements.

CNH acquired Case on November 12, 1999,
which approximately doubled the annual revenues and asset base
of CNH. The accompanying selected financial data reflects the
historical operating results of CNH, including the results of
operations of Case since November 12, 1999. As a result of
this acquisition, the historical financial statements may not be
comparable from year to year.

CNH has presented the selected historical
financial data as of and for each of the five years ended
December 31, 2003 in accordance with U.S. GAAP.

|                                                                                             |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |      |       | 
|-------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------ | ----- | ------ | ---- | ----- | ----- | ----- | ---- | ----- | ----- | ----- | - | ----- | ----- | ------ | - | ----- | ---- | ----- | 
|                                                                                             |                                                                                                            |                                     
|                                                                                             |                                                                                                            | For the Years Ended December 31,    
|                                                                                             |                                                                                                            |                                     
|                                                                                             |                                                                                                            | 2003                                 |        | 2002  |        | 2001 |       | 2000  |       | 1999
|                                                                                             |                                                                                                            |                                      |        |       |        |      |       |       |       |     
|                                                                                             |                                                                                                            |                                     
|                                                                                             |                                                                                                            | (in millions, except per share data)
|Statements of Operations Data:                                                               |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |     
|Revenues:                                                                                    |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |     
|Net sales                                                                                    |                                                                                                            | $                                    | 10,069 |       |        | $    | 9,331 |       |       | $    | 9,030 |       |       | $ | 9,337 |       |        | $ | 5,949 |     
|Finance and interest income                                                                  |                                                                                                            |                                      | 597    |       |        |      | 609   |       |       |      | 685   |       |       |   | 704   |       |        |   | 324   |     
|                                                                                             |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |     
|                                                                                             |                                                                                                            | Total revenues                       |        | $     | 10,666 |      |       | $     | 9,940 |      |       | $     | 9,715 |   |       | $     | 10,041 |   |       | $    | 6,273 | 
|                                                                                             |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |     
|Net income (loss) before cumulative effect of
    change in accounting principle, net of tax |                                                                                                            | $                                    | (157   | )     |        | $    | (101  | )     |       | $    | (332  | )     |       | $ | (381  | )     |        | $ | 148   |     
|Cumulative effect of change in accounting
    principle, net of tax                          |                                                                                                            |                                      |       |       |        |      | (325  | )     |       |      |      |       |       |   |      |       |        |   |      |     
|                                                                                             |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |     
|Net income (loss)                                                                            |                                                                                                            | $                                    | (157   | )     |        | $    | (426  | )     |       | $    | (332  | )     |       | $ | (381  | )     |        | $ | 148   |     
|                                                                                             |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |     
|Per share data:                                                                              |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |     
|                                                                                             | Basic earnings (loss) per share before cumulative
    effect of change in accounting principle, net of tax |                                      | $      | (1.19 | )      |      | $     | (1.05 | )     |      | $     | (6.00 | )     |   | $     | (8.95 | )      |   | $     | 4.95 |      
|                                                                                             | Cumulative effect of change in accounting
    principle, net of tax                                        |                                      |        |      |        |      |       | (3.35 | )     |      |       |      |       |   |       |      |        |   |       |     |      
|                                                                                             |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |     
|                                                                                             | Basic earnings (loss) per share                                                                            |                                      | $      | (1.19 | )      |      | $     | (4.40 | )     |      | $     | (6.00 | )     |   | $     | (8.95 | )      |   | $     | 4.95 |      
|                                                                                             |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |     
|                                                                                             | Diluted earnings (loss) per share before
    cumulative effect of change in accounting principle           |                                      | $      | (1.19 | )      |      | $     | (1.05 | )     |      | $     | (6.00 | )     |   | $     | (8.95 | )      |   | $     | 4.85 |      
|                                                                                             | Cumulative effect of change in accounting
    principle, net of tax                                        |                                      |        |      |        |      |       | (3.35 | )     |      |       |      |       |   |       |      |        |   |       |     |      
|                                                                                             |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |     
|                                                                                             | Diluted earnings (loss) per share                                                                          |                                      | $      | (1.19 | )      |      | $     | (4.40 | )     |      | $     | (6.00 | )     |   | $     | (8.95 | )      |   | $     | 4.85 |      
|                                                                                             |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |     
|Cash dividends declared per common share                                                     |                                                                                                            | $                                    | 0.25   |       |        | $    | 0.50  |       |       | $    | 0.50  |       |       | $ | 2.75  |       |        | $ | 2.75  |     
|                                                                                             |                                                                                                            |                                      |        |       |        |      |       |       |       |      |       |       |       |   |       |       |        |   |       |     

6



---



##### 



|                                             |  |                    |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|-------------------------------------------- |  | ------------------ | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ |  |  | - | ------ | 
|                                             |  |                   
|                                             |  | As of December 31,
|                                             |  |                   
|                                             |  | 2003               |        | 2002 |  | 2001 |        | 2000 |  | 1999
|                                             |  |                    |        |      |  |      |        |      |  |     
|                                             |  |                   
|                                             |  | (in millions)     
|Balance Sheet Data:                          |  |                    |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|Total assets                                 |  | $                  | 18,661 |      |  | $    | 16,760 |      |  | $    | 17,212 |  |  | $ | 17,577 |  |  | $ | 17,678 | 
|                                             |  |                    |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|Short-term debt                              |  | $                  | 2,110  |      |  | $    | 2,749  |      |  | $    | 3,217  |  |  | $ | 4,186  |  |  | $ | 4,953  | 
|                                             |  |                    |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|Long-term debt, including current maturities |  | $                  | 4,886  |      |  | $    | 5,115  |      |  | $    | 6,646  |  |  | $ | 5,539  |  |  | $ | 4,558  | 
|                                             |  |                    |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|Common shares,
    2.25 par value           |  | $                  | 309    |      |  | $    | 305    |      |  | $    | 143    |  |  | $ | 143    |  |  | $ | 88     | 
|                                             |  |                    |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|Common shares outstanding                    |  |                    | 133    |      |  |      | 131    |      |  |      | 55     |  |  |   | 55     |  |  |   | 30     | 
|                                             |  |                    |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|Shareholders equity                         |  | $                  | 4,874  |      |  | $    | 2,761  |      |  | $    | 1,909  |  |  | $ | 2,514  |  |  | $ | 1,710  | 
|                                             |  |                    |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 



| |                                        
| | ---------------------------------------
| | B. Capitalization and
    Indebtedness.

Not applicable.



| |                                                  
| | -------------------------------------------------
| | C. Reasons for the Offer and Use of
    Proceeds.

Not applicable.



| |                 
| | ----------------
| | D. Risk Factors.

Risks Related to Our Business, Strategy and
Operations



| |                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------
| | We may not fully realize, or realize within
    the anticipated time frame, the benefits of our profit
    improvement initiatives.

CNH combines the operations of New Holland and
Case as a result of their merger on November 12, 1999. At
the time of the merger, we formulated a plan to integrate the
operations of the Case and New Holland businesses. The plan was
based on maintaining the dual distribution networks of Case and
New Holland to optimize worldwide market share of the combined
company. In order to remain cost competitive while maintaining
the two brands, management developed a plan to use common
platforms and major product components while developing
differentiated products that could satisfy the requirements of
the different distribution networks. Use of common components
and platforms allows for a reduction in product platforms,
consolidation of suppliers and a consolidation and
rationalization of manufacturing facilities and the parts depots
that serve both the manufacturing operations and the networks.

In total, our cost and efficiency actions for
2003 through 2006 should contribute approximately
$650 million in additional profit improvements as compared
with the base levels of revenues and costs incurred by CNH for
the full year 2002. This estimate is not based on any assumption
of an appreciable increase in industry volumes from 2002 levels.
In the year ended December 31, 2003, we achieved
$225 million of the $650 million of expected
additional profit improvements.

Our ability to realize the full extent of the
expected profit improvement levels depends on, among other
things, our ability to complete our cost-containment
initiatives. See Item 4.B. Business 
Profit Improvement Initiatives. Our failure to complete
these initiatives could cause us not to realize fully our
anticipated profit improvements, which could weaken our
competitive position and adversely affect our financial
condition and results of operations.



| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | Our success depends on the implementation
    of new product introductions, which will require substantial
    expenditures.

Our long-term results depend upon our ability to
introduce and market new products successfully. The success of
our new products will depend on a number of factors, including
the economy, product quality, competition, customer acceptance
and the strength of our dealer networks.

7



---



##### 



As both we and our competitors continuously
introduce new products or refine versions of existing products,
we cannot predict the market shares our new products will
achieve. Any manufacturing delays or problems with our new
product launches could adversely affect our operating results.
We have experienced delays in the introduction of new products
in the past and we cannot assure you that we will not experience
delays in the future. In addition, introducing new products
could result in a decrease in revenues from our existing
products. You should read the discussion under the heading
Item 4.B. Business  Products and
Markets for a more detailed discussion regarding our new
and existing products.

Consistent with our strategy of offering new
products and product refinements, we expect to continue to use a
substantial amount of capital for further product development
and refinement. We may need more capital for product development
and refinement than is available to us, which could adversely
affect our business, financial position or results of operations.



| |                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------
| | Production capacity constraints and
    inventory fluctuations could adversely affect our results of
    operations.

Changes in demand for our products and our
program to rationalize our manufacturing facilities and realign
our manufacturing process have at times resulted in, and may in
the future result in, temporary constraints upon our ability to
produce the quantities necessary to fill orders and thereby
deliver products in a timely manner. A prolonged delay in our
ability to fulfill orders on a timely basis could adversely
affect our operations. In addition, we rely upon single
suppliers for certain components, primarily those that require
joint development between us and our suppliers. An interruption
in the supply of, or a significant increase in, the price of any
component part could adversely affect our profitability or our
ability to obtain and fulfill orders. Moreover, our continuous
development and production of new products often involves the
retooling of existing manufacturing facilities. This retooling
may limit our production capacity at certain times in the
future, which could adversely affect our results of operations.

Our sales are influenced by the volume of
inventories of finished products maintained by us and our
dealers. Our management believes that we and our dealers have
generally managed inventories in a relatively prudent manner,
which could cause us to lose certain sales as a result of
product unavailability at certain locations during periods of
increased demand. However, in periods of sudden declines in
industry demand, larger inventories could lead to substantial
excesses in supply over demand, causing future reductions in our
manufacturing schedules and adversely affecting our operating
results.



| |                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our unionized labor force and our
    contractual and legal obligations under collective bargaining
    agreements and labor laws could subject us to greater risks of
    work interruption or stoppage and impair our ability to achieve
    cost savings.

Labor unions represent most of our production and
maintenance employees worldwide. Although we believe our
relations with our unions are positive, we cannot be certain
that future issues with labor unions will be resolved favorably
or that we will not experience a work interruption or stoppage
which could adversely affect our business.

In the United States, our contract with the
International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America (the UAW)
expires in May 2004. Negotiations began in the first quarter of
2004.

In Europe, our employees are protected by various
worker protection laws which afford employees, through local and
central works councils, rights of consultation with respect to
specific matters involving their employers business and
operations, including the downsizing or closure of facilities
and employment terminations.

These laws and the collective bargaining
agreements to which we are subject could impair our flexibility
in streamlining existing manufacturing facilities and in
restructuring our business.

8



---



##### 





| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | An increase in health care or pension costs
    could adversely affect our results of operations and financial
    position.

Health care inflation rates have increased
significantly, leading to higher costs for both active and
retired employees. Should such inflation rates continue, we may
record additional charges or make changes to our benefit plans.
In addition, fluctuations in the financial markets, primarily
during 2000 through 2002, had caused the valuation of the assets
in our defined benefit pension plans to decrease, while our
liability has increased, which has resulted in an under-funding
in some of our defined benefit pension plans and the recognition
of a minimum pension liability on our balance sheet.

As of December 31, 2003, our pension benefit
obligations were underfunded by $1.0 billion and our other
postretirement benefit obligations were underfunded by
$1.5 billion. Benefits for salaried employees under our
U.S. defined benefit plans were frozen for pay and service
as of December 31, 2000, and U.S. employees now
receive benefits only under our defined contribution plans. Our
U.S. and Canadian employees hired after January 1,
2001 and January 1, 2002, respectively, are not eligible
for postretirement health and life insurance under our plan.
Beginning in 2005, a defined dollar benefit will apply to
salaried retiree medical coverage. Once the defined dollar
benefit is reached, contributions paid by the retirees will
increase by an amount equal to any premium cost increases above
that amount. Despite these measures, we cannot assure you that
future fluctuations in the financial markets will not result in
additional under-funding of our defined benefit pension plans
and require contributions by us that could adversely affect our
results of operations and financial position.



| |                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------
| | Future unanticipated events may require us
    to take additional reserves relating to our non-core financing
    activities.

Beginning in 1998, as part of a diversification
strategy for its Financial Services operations, Case expanded
into the financing of trucks and trailers, marine vessels and
agricultural and construction equipment sold through its
competitors dealers. As a result of a deterioration in
these markets, we recorded significant losses in 2000, 2001 and
2002 in our Financial Services operations. Non-core financing
activities were discontinued during 2001. During 2002 and 2003,
the non-core portfolio decreased 39% and 41% respectively due to
liquidations and write-offs. We believe we have established
adequate reserves for possible losses on these receivables from
our non-core financing activities; however, future unanticipated
events may affect our customers ability to repay their
obligations or reduce the value of the underlying assets and
therefore require us to increase our reserves, which could
materially adversely affect our financial position and results
of operations.



| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | We are subject to currency exchange rate
    fluctuations and interest rate changes, which could adversely
    affect our financial performance.

We conduct operations in many areas of the world
involving transactions denominated in a variety of currencies.
We are subject to currency exchange rate risk to the extent that
our costs are denominated in currencies other than those in
which we earn revenues. Similarly, changes in interest rates
affect our results of operations by increasing or decreasing
borrowing costs and finance income. In 2003, the generally lower
interest rate environment in our principal currencies had a
favorable impact on our profitability; however, they were offset
by a less favorable debt mix and by higher spreads on our
borrowings. We mitigate these risks, which arise in the ordinary
course of business, through the use of financial hedging
instruments. We have historically entered into, and expect to
continue to enter into hedging arrangements, a substantial
portion of which are with counterparties that are members of the
Fiat Group. As with all hedging instruments, there are risks
associated with the use of foreign currency forward exchange
contracts, as well as interest rate swap agreements and other
risk management contracts. While the use of such hedging
instruments provides us with protection from certain
fluctuations in currency exchange and interest rates, we
potentially forego the benefits that might result from favorable
fluctuations in currency exchange and interest rates. In
addition, any default by the counterparties to these
transactions, including by counterparties that are members of
the Fiat Group, could adversely affect us.

9



---



##### 



Despite our use of financial hedging
transactions, we cannot assure you that currency exchange rate
or interest rate fluctuations will not adversely affect our
results of operations, cash flows or financial position.



| |                                                                                                       
| | ------------------------------------------------------------------------------------------------------
| | We are exposed to political, economic and
    other risks from operating a multinational
    business.

Our business is multinational and subject to the
political, economic and other risks that are inherent in
operating in numerous countries. These risks include those of
adverse government regulation, including the imposition of
import and export duties and quotas, currency restrictions,
expropriation and potentially burdensome taxation. We cannot
predict with any degree of certainty the costs of compliance or
other liability related to such laws and regulations in the
future and such future costs could significantly affect our
business, financial position and results of operations.

Political developments and government regulations
and policies in the countries in which we operate directly
affect the demand for agricultural equipment. For example, a
decrease or elimination of current price protections for
commodities in the European Union or of subsidy payments for
farmers in the United States would likely result in a decrease
in demand for agricultural equipment. A decrease in the demand
for agricultural equipment could adversely affect our sales,
growth and results of operations.



| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| | You are unlikely to be able to seek
    remedies against Arthur Andersen LLP, our former independent
    auditor.

The audited consolidated financial statements and
schedules of CNH for the year ended December 31, 2001
included in this Annual Report have been audited by Arthur
Andersen LLP, independent accountants, whose report thereon is
also included in this Annual Report. On June 15, 2002,
Arthur Andersen was convicted of a federal obstruction of
justice charge arising from the federal governments
investigation of Enron Corporation. On August 31, 2002,
Arthur Andersen ceased practicing before the SEC. SEC rules
require us to present our audited financial statements in
various SEC filings, along with Arthur Andersens consent
to our inclusion of its audit report on our financial statements
for 2001 included in this Annual Report, and we do not expect to
receive Arthur Andersens consent in any filing that we
make with the SEC. Without this consent, it may become more
difficult for you to seek remedies against Arthur Andersen.
Furthermore, relief in connection with claims, which may be
available to investors under the federal securities laws against
auditing firms may not be available as a practical matter
against Arthur Andersen. You are unlikely to be able to exercise
effective remedies or judgments against Arthur Andersen.

Risks Particular to the Industries in Which We
Operate



| |                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------
| | We operate in a highly cyclical industry,
    which could adversely affect our growth and results of
    operations.

Our business depends upon general activity levels
in the agricultural and construction industries. Historically,
these industries have been highly cyclical. Our Equipment
Operations and Financial Services operations are subject to many
factors beyond our control, such as:



| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | the credit quality, availability and prevailing
    terms of credit for customers, including interest rates;
|
| |  | our access to credit;                                                                                       
|
| |  | adverse geopolitical, political and economic
    developments in our existing markets;                      
|
| |  | the effect of changes in laws and regulations;                                                              
|
| |  | the response of our competitors to adverse
    cyclical conditions; and                                     
|
| |  | dealer inventory management.                                                                                

10



---



##### 



In addition, our operating profits are
susceptible to a number of industry-specific factors, including:



| |                                
| | -------------------------------
| | Agricultural Equipment Industry



| |   |                                                                     
| | - | --------------------------------------------------------------------
| |  | changes in farm income and farmland value;                          
|
| |  | the level of worldwide farm output and demand for
    farm products;
|
| |  | commodity prices;                                                   
|
| |  | government agricultural policies and subsidies;                     
|
| |  | animal diseases and crop pests;                                     
|
| |  | limits on agricultural imports; and                                 
|
| |  | weather.                                                            



| |                                
| | -------------------------------
| | Construction Equipment Industry



| |   |                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------
| |  | prevailing levels of construction, especially
    housing starts, and levels of industrial production;
|
| |  | public spending on infrastructure;                                                                    
|
| |  | volatility of sales to rental companies;                                                              
|
| |  | real estate values; and                                                                               
|
| |  | consumer confidence.                                                                                  



| |                   
| | ------------------
| | Financial Services



| |   |                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | cyclical nature of the above-mentioned
    agricultural and construction equipment industries which are the
    primary markets for our financial services;
|
| |  | interest rates;                                                                                                                                            
|
| |  | general economic and capital market conditions;
    and                                                                                                    
|
| |  | used equipment prices.                                                                                                                                     

The nature of the agricultural and construction
equipment industries is such that a downturn in demand can occur
suddenly, resulting in excess inventories and production
capacity and reduced prices for new and used equipment. These
downturns may be prolonged and may result in significant losses
to us during affected periods. Equipment manufacturers,
including us, have responded to downturns in the past by
reducing production and discounting product prices. These
actions have resulted in restructuring charges and lower
earnings for us in past affected periods. In the event of future
downturns, we may need to undertake additional restructuring.
Our profit improvement initiatives will require additional
restructuring charges in future periods.



| |                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------
| | Changes in European agricultural policy
    could adversely affect industry sales of agricultural
    equipment.

Government subsidies are a key income driver for
farmers raising certain commodity crops. The Common Agricultural
Policy (CAP) of the European Union was last revised
in 2000 and typically is revised approximately every seven
years, depending on the timing of changes to U.S. farm
policy and negotiations conducted by the World Trade
Organization (WTO). The CAP revision of 2000 brought
no dramatic lowering of subsidies but shifted emphasis towards
production of higher quality, value-added crops and support for
rural development and rural quality of life. In June 2003, the
farm ministers from EU member nations reached an agreement to
fundamentally change the CAP, in particular by making payments
to farmers much less dependent than before on the amounts that
farmers produce. Under the new system, the amount spent on the
CAP  approximately
43 billion
per year  would not be reduced below previously
projected levels.

11



---



##### 



However, the way in which the money is
distributed would be altered. Under the new program,
single farm payments would go to farmers based on
the size of their farms rather than their output, although the
old system would be permitted to continue in limited
circumstances, particularly for cereal grains and beef, if there
is a risk of farmers abandoning the land. We do not expect any
change in the CAP for 2004. The revisions to the Common
Agricultural Policy delegates to individual states of the EU15
more control over the structure and level of agricultural
subsidy payments. The EU15 countries may individually decide to
defer implementation from 2005 to 2007, may fully or partially
decouple payments from production and may divert a proportion of
funds to rural development. Given the disparate structure and
production of farm holdings in Europe, the impact of this CAP
reform will only become clear as individual governments
determine in detail how and when they will implement changes.


Transition plans for the ten countries joining
the EU in 2004 are in place and are not affected by this reform.
However, there can be no assurances that the reforms will
successfully curb the overproduction and dumping of crop
surpluses by European nations or that the implementation of the
reforms will not cause severe dislocations within the farming
industry as farmers shift production to take advantage of the
various provisions of the new program. With the uncertainty
created by these changes, farmers could delay purchasing
agricultural equipment, causing a further decline in industry
unit volumes.



| |                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Significant competition in the industries
    in which we operate may result in our competitors offering new
    or better products and services or lower prices, which could
    result in a loss of customers and a decrease in our
    revenues.

The agricultural equipment industry is highly
competitive, particularly in North America, Europe, Australia
and Latin America. We compete primarily with large global
full-line suppliers, including Deere & Company and
AGCO/VALTRA; manufacturers focused on particular industry
segments, including Kubota Corporation and various implement
manufacturers; regional manufacturers in mature markets,
including Claas KgaA/Renault, ARGO Group and SAME Duetz-Fahr
Group, that are expanding worldwide to build a global presence;
and local, low cost manufacturers in individual markets,
particularly in emerging markets such as Eastern Europe, India
and China.

The construction equipment industry is highly
competitive, worldwide. We compete primarily with global
full-line suppliers with a presence in every market and a broad
range of products that cover most customer needs, including
Caterpillar, Komatsu Construction Equipment, TEREX and Volvo
Construction Equipment Corporation; regional full-line
manufacturers, including Deere & Company, J.C. Bamford
Excavators Ltd. and Liebherr-Holding GmbH and product
specialists operating on either a global or a regional basis,
including Ingersoll-Rand Company (Bobcat), Hitachi Ltd.,
Sumitomo Construction, Manitou B.F., Merlo UK Ltd., Gehl
Company, Mustang Manufacturing Company, Inc., Yanmar
Agricultural Equipment Co. Ltd. and Kubota Corporation.

In 2002, we terminated our European alliance with
Hitachi Construction Machinery, Ltd. (Hitachi) and
finalized our global alliance with Kobelco Construction
Machinery Co. Ltd. (Kobelco Japan). Our alliance
with Kobelco Japan has led to an increase in competition with
Hitachi. We have entered into various alliances with other
entities. We enter into these alliances to reinforce our
international competitiveness. While we expect our alliances to
be successful, if differences were to arise among the parties
due to managerial, financial or other reasons, such alliances
may result in losses which in turn could adversely affect our
results of operations and financial conditions.

Banks, finance companies and other financial
institutions compete with our Financial Services operations. We
may be unable to compete successfully in our Financial Services
operations with larger companies that have substantially greater
resources or that offer more services than we do.

Competitive pricing pressures, overcapacity,
failure to develop new product designs and technologies for our
products, as well as other factors could cause us to lose
existing business or opportunities to generate new business and
could result in decreased profitability. These factors could
have a material adverse effect on our business, financial
condition and results of operations.

12



---



##### 





| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | Structural declines in the demand for
    agricultural or construction equipment could adversely affect
    our sales and results of operations.

The agricultural equipment business, in North
America and Western Europe, experienced a period of major
structural decline in the number of tractors and combines sold
and substantial industry-wide overcapacity during the 1970s,
1980s and early 1990s followed by a period of consolidation
among agricultural equipment manufacturers. This unit decline
was consistent with farm consolidation and the decline in the
number of farms and the corresponding increase in average farm
size and machinery capacity. Industry volumes reached a low in
North America in 1992 and in Western Europe in 1993.

In North America, prior to the early 1990s, under
40 horsepower tractors were principally used for farming
applications. However, beginning in the early 1990s a new
non-farm customer began to emerge in the market for the under
40-horsepower tractors. These new customers included homeowners,
turf and land care industries, commercial contractors, public
agencies, rental businesses, golf courses, hobby and part-time
farmers and industrial plants. Market demand for under 40
horsepower tractors has continued to increase dramatically, from
about 29,000 units in 1992 to over 130,000 units in
2003. These same customers have started to demand higher
horsepower tractors in the 40- to under 100-horsepower segment,
in which industry volumes in North America also have tended to
increase since 1992. Market demand in this segment increased
until 1998 then declined slightly in 1999. Since 1999 demand has
continued to increase through 2003. For higher horsepower
tractors and combines, which generally have the highest margins,
market demand peaked in 1997. Demand dropped sharply in 1998 and
1999 with a further slight decline in 2000. Demand increased
slightly in 2001 but declined in 2002 and was essentially stable
in 2003.

In Western Europe, industry unit sales of
tractors last hit a low in 1993 and then increased steadily
through the mid-1990s, peaking in 1999. Since 1999
industry sales of tractors generally have been declining except
for a slight up-tick in 2002. Industry unit sales in 2003 were
approximately 13% below the 1999 peak. Industry unit sales of
combines peaked in 1998 from the last trough in 1994. From 1998
to 2001 industry unit sales of combines dropped about 40%,
recovering slightly in 2002, but declining again in 2003.

In Latin America tractor industry volumes
increased from 1996 thru 2002, but declined in 2003. Combine
industry unit volumes also have increased since 1995 and volumes
in 2003 were the highest in at least the last ten years. In
markets in the rest of the world tractor volumes peaked in 2000,
declined sharply in 2001, but have recovered in 2002 and again
in 2003. Combine volumes peaked in 1997, declined in 1998 and
remained low through 2000, recovering in 2001 and 2002 but
declined again in 2003.

In total, worldwide demand for agricultural
tractors hit a low in 1992 and has been on an increasing trend
since. Volumes reached a peak in 2000 but declined in 2001.
Volumes increased in 2002 and again in 2003, reaching levels
higher than in 2000. Combine industry volumes reached a low
point in 1991, increasing to a high in 1998 and then dropping in
1999. Since 1999 worldwide combine industry volumes have
remained relatively flat, in total.

In response to the lower market levels of higher
horsepower tractors and combines particularly in North America
and Western Europe, many companies, including us, have
undertaken restructuring programs to reduce capacity. We cannot
assure you that industry sales of higher horsepower tractors and
combines in North America and Western Europe will not continue
to experience declines or that unit sales of the higher
horsepower tractors and combines will ever return to levels
experienced in the 1998  1999 period.

The construction equipment business in North
America generally increased from 1992 through the late
1990s. Industry sales of heavy equipment peaked in 1998
and sales of light equipment peaked in 2000. Industry sales of
both product segments have been in general decline since the
peaks, although sales of both heavy and light equipment
increased in 2003 compared with 2002. In Western Europe industry
sales of both heavy and light equipment increased from the
trough of 1993 until peaking in 2000. Industry sales have
declined since, except for industry sales of heavy equipment
which improved slightly in 2003. The construction equipment
markets in Latin America are very small compared with those in
North America and Western Europe. Rest of world markets, and in
particular the Asia-Pacific Rim markets are similar in size to
the

13



---



##### 



Western European or North American markets but
CNH does not have a significant direct presence in those
markets. As with the agricultural equipment industry, we cannot
assure you that the North American and Western European
construction equipment industry will return to their peak demand
levels of 1998 or 2000.


In 2002, we recorded a one-time, non-cash charge
of approximately $325 million to reduce the carrying value
of goodwill attributed to our Construction Equipment reporting
unit. This charge primarily reflected the decline in the
construction equipment market that we and our competitors
experienced from the time of the merger through 2001. With the
improvement in the construction equipment market in 2002 and
2003, no additional impairment has occurred. We cannot assure
you that further decreases in demand will not result in
additional impairment charges by our various reporting units in
the future.

A decrease in industry-wide demand for
agricultural and construction equipment or a lack of recovery in
the number of unit sales could result in lower sales of our
equipment and hinder our ability to operate profitably.

We have a significant deferred tax asset recorded
as a result of U.S. Federal tax loss carryforwards, which
we believe it is more likely than not that we will utilize. This
determination was based, in part, on the expectation of
sufficient future U.S. taxable income prior to the years in
which the carryforwards expire. A further decrease in demand, a
lack of recovery in unit sales or other factors could affect the
operating results of our various reporting units. This could
result in us determining that it is more likely than not that
some or all of the deferred tax assets currently recorded will
not be realized. This would adversely affect our results of
operations and financial position.



| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | An oversupply of used and rental equipment
    may adversely affect our sales and results of
    operations.

In recent years, short-term lease programs and
commercial rental agencies for agricultural and construction
equipment have expanded significantly in North America. In
addition, there has been consolidation of some commercial rental
agencies into nationwide rental conglomerates, some of which
have experienced financial distress and sought bankruptcy
protection. These larger rental companies have become sizeable
purchasers of new equipment and can have a significant impact on
total industry sales, particularly in light construction
equipment.

When this equipment comes off lease or is
replaced with newer equipment by rental agencies, there may be a
significant increase in the availability of late-model used
equipment which could adversely impact used equipment prices. If
used equipment prices decline significantly, sales of new
equipment could be depressed. As a result, an oversupply of used
equipment could adversely affect demand for, or the market
prices of, our new and used equipment. In addition, a decline in
used equipment prices could have an adverse effect on residual
values for leased equipment, which could adversely affect our
results of operations and financial position.



| |                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The agricultural equipment industry is
    highly seasonal, and seasonal fluctuations may cause our results
    of operations and working capital to fluctuate significantly
    from quarter to quarter.

The agricultural equipment business is highly
seasonal, because farmers traditionally purchase agricultural
equipment in the spring and fall in connection with the main
planting and harvesting seasons. Our net sales and income from
operations have historically been the highest in the second
quarter reflecting the spring selling season and lowest in the
third quarter when many of our production facilities experience
summer shut down periods, especially in Europe. Seasonal
conditions also affect our construction equipment business, but
to a lesser extent.

Our production levels are based upon estimated
retail demand. These estimates take into account the timing of
dealer shipments, which occur in advance of retail demand,
dealer inventory levels, the need to retool manufacturing
facilities to produce new or different models and the efficient
use of manpower and facilities. We adjust our production levels
to reflect changes in estimated demand, dealer inventory levels,
labor disruptions and other matters within our control. However,
because we spread our production and wholesale

14



---



##### 



shipments throughout the year to take into
account the factors described above, wholesale sales of
agricultural equipment products in any given period may not
reflect the timing of dealer orders and retail demand.


Estimated retail demand may exceed or be exceeded
by actual production capacity in any given calendar quarter
because we spread the production throughout the year. If retail
demand is expected to exceed production capacity for a quarter,
then we may schedule higher production in anticipation of the
expected retail demand. Often we anticipate that spring selling
season demand may exceed production capacity in that period and
schedule higher production, company and dealer inventories and
wholesale shipments to dealers in the first quarter of the year.
Thus our working capital and dealer inventories are generally at
their highest levels during the February to May period, and
decline to the end of the year as both company and dealers
inventories are reduced.

As economic, geopolitical, weather and other
conditions may change during the year and as actual industry
demand might differ from expectations, we cannot assure you that
sudden or significant declines in industry demand would not
adversely affect our working capital and debt levels, financial
position or results of operations.



| |                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are subject to extensive environmental
    laws and regulations, and our costs related to compliance with,
    or our failure to comply with, existing or future laws and
    regulations could adversely affect our business, financial
    position and results of operations.

Our operations and products are subject to
increasingly stringent environmental laws and regulations in the
countries in which we operate. Such laws and regulations govern,
among other things, emissions into the air, discharges into
water, the use, handling and disposal of hazardous substances,
waste disposal and the remediation of soil and groundwater
contamination. We regularly expend significant resources to
comply with regulations concerning the emissions levels of our
manufacturing facilities and the emissions levels of our
manufactured equipment. In addition, we are currently conducting
environmental investigations or remedial activities involving
soil and groundwater contamination at a number of properties.
Our management estimates and maintains a reserve for potential
environmental liabilities for remediation, closure and related
costs, and other claims and contingent liabilities and
establishes reserves to address these potential liabilities.
Although we believe our reserves are adequate based on existing
information, we cannot guarantee that our ultimate liability
will not exceed our reserves. We expect to make environmental
and related capital expenditures in connection with reducing the
emissions of our existing facilities and our manufactured
equipment in the future, depending on the levels and timing of
new standards. Our costs of complying with existing or future
environmental laws and regulations may be significant. In
addition, if we fail to comply with existing or future laws and
regulations, we may be subject to governmental or judicial fines
or sanctions.

Risks Related to Our Indebtedness



| |                                                                     
| | --------------------------------------------------------------------
| | Our indebtedness could adversely affect our
    financial condition.

As of December 31, 2003, we have an
aggregate of $7.0 billion of outstanding total consolidated
indebtedness, and our shareholders equity was
$4.9 billion. In addition, we are heavily dependent on
ABS transactions, both term and asset backed commercial
paper transactions, to fund our Financial Services activities in
North America and Australia.

Our level of debt could have important
consequences to our investors, including:



| |   |                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we may not be able to secure additional funds for
    working capital, capital expenditures, debt service requirements
    or general corporate purposes;                                                                   
|
| |  | we will need to use a substantial portion of our
    projected future cash flow from operations to pay principal and
    interest on our debt, which will reduce the amount of funds
    available to us for other purposes;

15



---



##### 





| |   |                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we may be more highly leveraged than some of our
    primary competitors, which could put us at a competitive
    disadvantage;                                                                                            
|
| |  | we may not be able to adjust rapidly to changing
    market conditions, which may make us more vulnerable in the
    event of a downturn in general economic conditions or our
    business; and                           
|
| |  | we may not be able to access the ABS markets
    on as favorable terms, which may adversely affect our ability to
    fund our Financial Services business and have an unfavorable
    impact on our results of operations.



| |                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Servicing our debt obligations requires a
    significant amount of cash, and our ability to generate cash
    depends on many factors that may be beyond our
    control.

Our ability to satisfy our debt service
obligations will depend, among other things, upon our future
operating performance and our ability to refinance indebtedness
when necessary. Each of these factors largely depends on
economic, financial, competitive and other factors beyond our
control. If, in the future, we cannot generate sufficient cash
from our operations to meet our debt service obligations, we may
need to reduce or delay capital expenditures or curtail
anticipated operating improvements. In addition, we may need to
refinance our debt, obtain additional financing or sell assets,
which we may not be able to do on commercially reasonable terms,
if at all. Our business may not generate sufficient cash flow to
satisfy our debt service obligations, and we may not be able to
obtain funding sufficient to do so. In addition, any refinancing
of our debt could be at higher interest rates and may require us
to comply with more onerous covenants, which could further
restrict our business operations. The failure to generate
sufficient funds to pay our debts or to successfully undertake
any of these actions could, among other things, materially
adversely affect our business.



| |                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------
| | Restrictive covenants in our debt
    instruments could limit our financial and operating flexibility
    and subject us to other risks.

The indenture governing our 9 1/4% Senior
Notes, include certain covenants that restrict the ability of us
and our subsidiaries to, among other things:



| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| |  | incur additional debt;                                                       
|
| |  | pay dividends on our capital stock or repurchase
    our capital stock;      
|
| |  | make certain investments;                                                    
|
| |  | enter into certain types of transactions with
    affiliates;                
|
| |  | restrict dividend or other payments by our
    restricted subsidiaries to us;
|
| |  | use assets as security in other transactions;                                
|
| |  | enter into sale and leaseback transactions; and                              
|
| |  | sell certain assets or merge with or into other
    companies.               

In addition, certain of the agreements governing
our subsidiaries indebtedness contain covenants limiting
their incurrence of secured debt or debt that is structurally
senior debt to the 9 1/4% Senior Notes. The agreements
governing our other indebtedness include certain covenants that
restrict, among other things:



| |   |                                                                                     
| | - | ------------------------------------------------------------------------------------
| |  | sales and leaseback of assets above certain
    levels of tangible assets;          
|
| |  | the creation of certain liens; and                                                  
|
| |  | consolidations, mergers and transfers of all or
    substantially all of our assets.

These restrictions may limit our ability to
operate our businesses and may prohibit or limit our ability to
enhance our operations or take advantage of potential business
opportunities as they arise. The breach of any of these
covenants by us or the failure by us to meet any of these
conditions could result in a default under any

16



---



##### 



or all of such indebtedness. As of
December 31, 2003, we are in compliance with the covenants
and restrictions contained in our debt agreements. However, our
ability to continue to comply with such agreements may be
affected by events beyond our control, including prevailing
economic, financial and industry conditions. In addition, upon
the occurrence of an event of default under our debt agreements,
all of the amounts outstanding thereunder, together with accrued
interest, could become immediately due and payable. In addition,
these restrictions may limit our ability to take full advantage
of the treasury and debt financing arrangements that Fiat has
committed to provide to CNH for so long as it controls CNH and,
in any event, at least until December 31, 2004.




| |                                                                                                              
| | -------------------------------------------------------------------------------------------------------------
| | Credit downgrades of us and Fiat have
    affected our ability to borrow funds and may continue to do
    so.

Our ability to borrow funds and our cost of
funding depend on our and Fiats credit ratings, as Fiat
currently provides us with direct funding, as well as guarantees
in connection with some of our external financing arrangements.

Beginning in the fourth quarter of 2000, Case,
Case Credit Corporation and New Holland Credit Company suffered
a series of credit rating downgrades, which resulted in all
three companies being rated below investment grade. The
immediate impact of these ratings downgrades was to preclude us
from accessing the commercial paper market through the New
Holland Credit Company, Case Credit Corporation and Case
programs. On a longer term basis, as we have renewed a number of
borrowing facilities since these ratings downgrades, we have
found that the terms offered to us have been adversely impacted.

On June 26, 2003, Fiat announced the
Industrial and Financial Plan to Relaunch the Fiat Group (the
Fiat Relaunch Plan). Following this announcement,
Standard & Poors announced that it was placing the BB
corporate credit ratings of CNH and Case, as well as
Fiats BB+ corporate credit rating, on credit watch
with negative implications.

On July 7, 2003, Moodys downgraded
Fiats long-term senior unsecured debt ratings to Ba3 from
Ba1, with a negative outlook. At the same time, Moodys
assigned Fiat a Ba3 senior implied rating, also with a negative
outlook. Also on July 7, 2003, Moodys lowered the
senior debt ratings of Case and Case Credit Corporation to Ba3
from Ba2, with a negative outlook. On July 8, 2003, Fitch
Ratings downgraded Fiats senior unsecured debt rating to
BB from BB+, with a negative outlook.

On July 11, 2003, Standard & Poors
lowered its corporate credit ratings on CNH and related entities
to BB- from BB, with a stable outlook, and removed them from
credit watch. Also on July 11, 2003, Standard &
Poors lowered Fiats long-term corporate credit
rating to BB- from BB+, with a stable outlook, and removed it
from credit watch.

In February 2004, Moodys reaffirmed their
Ba3 rating of Fiats long-term unsecured debt, with a
negative outlook.

We cannot assure you that the rating agencies
will not further downgrade our or Fiats credit ratings.
These downgrades have already affected our ability to borrow
funds, and further ratings downgrades of either our or
Fiats debt could adversely affect our ability to access
the capital markets or borrow funds at current rates and
therefore could put us at a competitive disadvantage.



| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | We are exposed to Fiat credit risk due to
    our participation in the Fiat Groups cash management
    system.

Like other companies that are part of
multinational groups, we participate in a group-wide cash
management system with other members of the Fiat Group. Under
this system, which is operated by Fiat in a number of
jurisdictions, the cash balances of Fiat Group members,
including us, are aggregated at the end of each business day to
a central pooling account. Our positive cash balances, if any,
at the end of any given business day may be applied by Fiat to
offset negative balances of other Fiat Group members and vice
versa. Alternatively, in certain other jurisdictions where cash
balances are not aggregated daily, third-party lenders to other
participating Fiat Group members may be entitled to rights to
set off against Fiat Group member funds present in the cash
management pool or may benefit from guarantees of payment by
certain Fiat Group

17



---



##### 



members. As a result, we are exposed to Fiat
Group credit risk to the extent that Fiat is unable to return
any such offset amounts at the beginning of the following
business day, and in the event of a bankruptcy or insolvency of
Fiat (or any other Fiat Group member in the jurisdictions with
set off agreements) we may be unable to secure the return of
such funds to the extent they belong to us, and we may be viewed
as a creditor of such Fiat entity with respect to such funds. We
cannot assure you that in the future the operation of this cash
management system may not adversely impact our ability to
recover our funds to the extent one or more of the
above-described events were to occur.




| |                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------
| | The performance of our Financial Services
    business is dependent on access to funding at competitive
    rates.

Access to funding at competitive rates is key to
the growth of our Financial Services business and expansion of
our financing activities into new product and geographic
markets. Further ratings downgrades of either our or Fiats
debt could adversely affect our Financial Services
business ability to continue to offer attractive financing
to its dealers and end-user customers. In particular, the levels
of asset collateralization and fees that we pay in connection
with these programs are subject to increase as a result of
further ratings downgrades and may have a material impact on our
Financial Services results of operations and financial position.
On a global level, we will continue to evaluate alternatives to
ensure that our Financial Services business continues to have
access to capital on favorable terms in support of our business,
including, without limitation, through equity investments by
global or regional partners in joint venture or partnership
opportunities, new funding arrangements or a combination of any
of the foregoing.

In the event that we were to consummate any of
the above-described alternatives relating to our Financial
Services business, it is likely that there would be a material
impact on our Financial Services results of operations,
financial position, liquidity and capital resources.

Risks Related to Our Relationship with
Fiat



| |                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Fiat owns a significant majority of our
    capital stock and controls the outcome of any shareholder vote,
    and its interests may conflict with those of the other holders
    of our debt and equity securities.

Fiat owns, indirectly through Fiat Netherlands,
approximately 84% of our outstanding common shares as of
December 31, 2003. Additionally, Fiat and an affiliate of
Fiat own a total of 8 million shares of Series A
Preferred Stock. In total, Fiat voting power approximates 85% of
our outstanding capital stock. If the Series A Preferred
Stock were converted to common stock as of December 31,
2003, Fiats ownership of our common stock would rise to
approximately 91%. For at least as long as Fiat continues to own
shares representing more than 50% of the combined voting power
of our capital stock, it will be able to direct the election of
all of the members of our board of directors and determine the
outcome of all matters submitted to a vote of our shareholders,
including matters involving:



| |   |                                          
| | - | -----------------------------------------
| |  | mergers or other business combinations;  
|
| |  | the acquisition or disposition of assets;
|
| |  | the incurrence of indebtedness; and      
|
| |  | the payment of dividends on our shares.  

Circumstances may occur in which the interests of
Fiat could be in conflict with the interests of our other debt
and equity security holders. In addition, Fiat may pursue
certain transactions that in its view will enhance its equity
investment, even though such transactions may not be in the
interest of our other debt and equity security holders.



| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | Fiats ownership of our capital stock
    may create conflicts of interest between Fiat and
    CNH.

We rely on Fiat to provide us with financial
support, and we purchase goods and services from Fiat. Fiat owns
a substantial majority of our capital stock and is able to
direct the election of all of the members of our board of
directors. The New York Stock Exchange listed company guidelines
require that we maintain a

18



---



##### 



minimum of two independent directors on our board
of directors. We currently have six independent directors.
Nevertheless, Fiats ownership of our capital stock and
ability to direct the election of our directors could create, or
appear to create, potential conflicts of interest when Fiat is
faced with decisions that could have different implications for
Fiat and us.




| |                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the event that Fiat is unable to
    continue to finance our operations or provide us with financial
    products and services, our costs could increase, which would
    adversely affect our financial position and results of
    operations.

We currently rely on Fiat to provide either
guarantees or funding in connection with some of our external
financing needs, including certain short-term credit facilities.
Fiat has agreed to maintain its existing treasury and debt
financing arrangements with us for as long as it maintains
control of us and, in any event, at least until
December 31, 2004. After that time, Fiat has committed that
it will not terminate our access to these financing arrangements
without affording us an appropriate time period to develop
suitable substitutes. The terms of any alternative sources of
financing may not be as favorable as those provided or
facilitated by Fiat. We also rely on Fiat to provide us with
some other financial products to hedge our foreign exchange and
interest rate risk, cash management services and other
accounting and administrative services. The terms of any
alternative sources of these products or services may not be as
favorable as those provided or facilitated by Fiat.






|        |                           
|------- | --------------------------
|Item 4. | Information on the Company



| |                                               
| | ----------------------------------------------
| | A. History and Development of the
    Company.

CNH Global N.V. is a corporation organized under
the laws of the Kingdom of The Netherlands, with a registered
office in the World Trade Center, Amsterdam Airport,
Tower B, 10th Floor, Schiphol Boulevard 217,
1118 BH Amsterdam, The Netherlands (telephone number:
+(31)-20-46-0429). It was incorporated on August 30, 1996.
CNHs agent for purposes of service of process in the
United States is Mr. Roberto Miotto, 100 South Saunders
Road, Lake Forest, Illinois 60045 (telephone number:
+(1)-847-955-3910).

We combine the operations of New Holland and Case
as a result of their business merger on November 12, 1999.
Effective with the closing of the merger, New Holland changed
its name to CNH. As used in this report, all references to
New Holland or Case refer to
(1) the pre-merger business and/or operating results of
either New Holland or Case on a stand-alone basis, or
(2) the continued use of the New Holland and Case product
brands.



| |                      
| | ---------------------
| | B. Business Overview.

General

We believe that we are one of the largest
manufacturers of agricultural equipment in the world based on
units sold, one of the largest manufacturers of construction
equipment based on units sold and have one of the
industrys largest equipment finance operations. We
organize our operations into three business segments:
agricultural equipment, construction equipment and financial
services.

We market our products globally through our two
highly recognized brand families, Case and New Holland. The Case
agricultural brand family includes the Case IH and Steyr brand
names, while the Case construction equipment brand family is
represented by the Case brand name. The New Holland agricultural
brand family is represented by the New Holland name, and the New
Holland construction equipment brand family includes the New
Holland Construction, Fiat Kobelco, FiatAllis, Kobelco and
O&K brand names. We manufacture our products in 45
facilities throughout the world and distribute our products in
approximately 160 countries through an extensive network of over
12,000 dealers and distributors.

We are the only global, full-line company in both
the agricultural and construction equipment industries, with
strong and usually leading positions in most significant
geographic and product categories in both

19



---



##### 



businesses. Our global scope and scale includes
integrated engineering, manufacturing, marketing and
distribution of equipment on five continents.


In agricultural equipment, we believe we are one
of the leading global manufacturers of agricultural tractors and
combines based on units sold, and we have leading positions in
hay and forage equipment and specialty harvesting equipment. In
construction equipment, we have leading positions in backhoe
loaders, and in skid steer loaders in North American and a
leading position in crawler excavators in Western Europe. In
addition, we provide a complete range of replacement parts and
services to support our equipment. For the year ended
December 31, 2003, our sales of agricultural equipment
represented approximately 67% of our net revenues, sales of
construction equipment represented approximately 27% of our net
revenues and Financial Services represented approximately 6% of
our net revenues.

We believe that we are the most geographically
diversified manufacturer and distributor of agricultural
equipment in the industry. For the year ended December 31,
2003, approximately 41% of our net sales of agricultural
equipment were generated from sales in North America,
approximately 35% in Western Europe, approximately 8% in Latin
America and approximately 16% in the Rest of World. For the same
period, approximately 44% of our net sales of construction
equipment were generated in North America, approximately 41% in
Western Europe, approximately 5% in Latin America and
approximately 10% in the Rest of World. Our broad manufacturing
base includes facilities in Europe, Latin America, North
America, Australia, China, India and Uzbekistan.

In North America, we offer a range of Financial
Services products, including, among others, retail financing for
the purchase or lease of new and used CNH and other equipment
manufacturers products. To facilitate the sale of our
products, we offer wholesale financing to dealers. Wholesale
financing consists primarily of floor plan financing and allows
dealers to maintain a representative inventory of products. Our
retail financing alternatives are intended to be competitive
with financing available from third parties. We offer retail
financing in Brazil and Australia through wholly-owned
subsidiaries and in Western Europe through our joint venture
with BNP Paribas Lease Group (BPLG). We believe that
these activities are a core component of our business. As of
December 31, 2003, our total managed receivables were
approximately $12 billion.

Recent Developments

Our Board of Directors recommended a dividend of
$0.25 per common share on March 19, 2004. The dividend
will be payable on May 25, 2004 to shareholders of record
at the close of business on May 18, 2004. Declaration of
the dividend is subject to approval at our Annual General
Meeting, which will be held on April 26, 2004.

Industry Overview



| |                       
| | ----------------------
| | Agricultural Equipment

The operators of food, livestock and grain
producing farms, as well as independent contractors that provide
services to such farms, purchase most agricultural equipment.
The key factors influencing sales of agricultural equipment are
the level of total farm cash receipts and, to a lesser extent,
general economic conditions, interest rates and the availability
of financing. Farm cash receipts are impacted by the volume of
acreage planted, commodity and/or livestock prices, crop yields,
farm operating expenses, including fuel and fertilizer costs,
and government subsidies or payments. Farmers tend to postpone
the purchase of equipment when the farm economy is depressed,
and to increase their purchases when economic conditions
improve. Weather conditions are a major determinant of crop
yields and therefore also affect equipment buying decisions. In
addition, the geographical variations in weather from season to
season may result in one market contracting while another market
is experiencing growth. Government policies affect the market
for our agricultural equipment by regulating the levels of
acreage planted and with direct subsidies affecting specific
commodity prices.

20



---



##### 



Demand for agricultural equipment also varies
seasonally by region and product, primarily due to differing
climates and farming calendars. Peak retail demand for tractors
and tillage machines occurs in the March through June months in
the Northern Hemisphere and in the September through November
months in the Southern Hemisphere. Equipment dealers generally
order harvesting equipment in the Northern Hemisphere in the
fall and winter so they can receive inventory during the winter
and spring prior to the peak equipment selling season, which
begins in May and June. Similarly, in the Southern Hemisphere,
equipment dealers generally order between September and November
for the primary selling season, which extends from November
through February. For combine harvesters and hay and forage
equipment, the retail selling season is concentrated in the few
months around harvest time. Furthermore, manufacturers may
choose to space their production and dealer shipments throughout
the year so that wholesale sales of these products in a
particular period are not necessarily indicative of retail
demand.

Customer preferences regarding product types and
features vary by region. In North America, Europe, Australia and
other areas where soil conditions, climate, economic factors and
population density allow for intensive mechanized agriculture,
farmers demand high capacity, sophisticated machines equipped
with current technology. In Europe, where farms are generally
smaller than those in North America and Australia, there is
greater demand for somewhat smaller, yet sophisticated,
machines. In the developing regions of the world where labor is
abundant and infrastructure, soil conditions and/or climate are
not adequate for intensive agriculture, customers prefer simple,
robust and durable machines with lower purchase and operating
costs. In many developing countries, tractors are the primary,
if not the sole, type of agricultural equipment used, and much
of the agricultural work in such countries that cannot be
performed by tractor is carried out by hand. A growing number of
part-time farmers, hobby farmers and customers engaged in
landscaping, municipality and park maintenance, golf course and
roadside mowing in Western Europe and North America also prefer
simple, low-cost agricultural equipment. Our position as the
most geographically diversified manufacturer of agricultural
equipment and our broad geographic network of dealers allows us
to supply customers in each of these significant markets in
accordance with their specific equipment requirements.

Government subsidies are a key income driver for
farmers raising certain commodities in the United States and
Western Europe. The level of support can range from 30% to over
50% of the annual income for these farms in years of low global
commodity prices or natural disasters. The existence of a high
level of subsidies in these markets for agricultural equipment
reduces the effects of cyclicality in the agricultural equipment
business. The ability to forecast the effect of these subsidies
on agricultural equipment demand depends on the U.S. Farm
Bill (typically revised every five years), the Common
Agricultural Policy of the European Union (typically revised
every seven years) and WTO negotiations. On May 13,
2002, President Bush signed into law the Farm Security and Rural
Investment Act of 2002. This law increases subsidies to the
U.S. farming industry by $31 billion over
six years. Additionally, Brazil subsidizes the financing of
agricultural equipment for various periods of time, as
determined by government legislation. These programs can greatly
influence sales in the region.

The Common Agricultural Policy of the European
Union was last revised in 2000 and typically is revised about
every seven years, depending on the timing of changes to
U.S. farm policy and negotiations conducted by the WTO. The
CAP revision of 2000 brought no dramatic lowering of
subsidies but shifted emphasis towards production of higher
quality, value added crops and support for rural development and
rural quality of life. In June 2003, the farm ministers from
EU member nations reached an agreement to fundamentally
change the CAP, in particular by making payments to farmers much
less dependent than before on the amounts that farmers produce.
Under the new system, the amount spent on the CAP 
approximately
43 billion
per year  would not be reduced below previously
projected levels. However, the way in which the money is
distributed would be altered. Under the new program,
single farm payments would go to farmers based on
the size of their farms rather than their output, although the
old system would be permitted to continue in limited
circumstances, particularly for cereal grains and beef, if there
is a risk of farmers abandoning the land. There will be no
change in the CAP for 2004. The new program will be introduced
in 2005 and will be gradually phased in over two years. The
current available information on the EU reforms is general in
nature, and it will take time for the European Commission and
national governments to determine

21



---



##### 



and enact the precise changes to the CAP program.
However, there can be no assurances that the reforms will
successfully curb the overproduction and dumping of crop
surpluses by European nations or that the implementation of the
reforms will not cause severe dislocations within the farming
industry as farmers shift production to take advantage of the
various provisions of the new program. Also, it is unclear how
this new program will apply to the ten new member countries
joining the EU in 2004. With the uncertainty created by these
changes and the continuing negotiations of the Doha round of the
WTO talks, farmers could delay purchasing agricultural
equipment, causing a further decline in industry unit volumes.


The following graph sets forth retail unit sales
in North America and Western Europe of certain agricultural
equipment during the periods indicated:

(AGRICULTURAL EQUIPMENT SHIPMENTS GRAPH)

[AGRICULTURAL EQUIPMENT SHIPMENTS GRAPH]

|     |  |               |        |               |  |                |       |               |  |                |        |  |  |  |       |  |  |  |       | 
|---- |  | ------------- | ------ | ------------- |  | -------------- | ----- | ------------- |  | -------------- | ------ |  |  |  | ----- |  |  |  | ----- | 
|     |  |               |        | North America |  |                |       |               |  |               
|     |  | North America |        | Over 40 HP    |  | Western Europe |       | North America |  | Western Europe
|     |  | Tractors      |        | Tractor       |  | Tractors       |       | Combines      |  | Combines      
|     |  |               |        |               |  |                |       |               |  |               
|1991 |  |               | 106426 |               |  |                | 67845 |               |  |                | 175366 |  |  |  | 11227 |  |  |  | 10864 | 
|1992 |  |               | 99029  |               |  |                | 62704 |               |  |                | 154553 |  |  |  | 10469 |  |  |  | 8647  | 
|1993 |  |               | 110517 |               |  |                | 69992 |               |  |                | 142976 |  |  |  | 11388 |  |  |  | 6737  | 
|1994 |  |               | 119228 |               |  |                | 73423 |               |  |                | 154389 |  |  |  | 11097 |  |  |  | 6638  | 
|1995 |  |               | 121014 |               |  |                | 75334 |               |  |                | 163780 |  |  |  | 11277 |  |  |  | 7117  | 
|1996 |  |               | 128856 |               |  |                | 78357 |               |  |                | 180793 |  |  |  | 11966 |  |  |  | 9081  | 
|1997 |  |               | 144616 |               |  |                | 89046 |               |  |                | 178885 |  |  |  | 12965 |  |  |  | 10246 | 
|1998 |  |               | 150594 |               |  |                | 88121 |               |  |                | 180949 |  |  |  | 12441 |  |  |  | 11399 | 
|1999 |  |               | 153629 |               |  |                | 76061 |               |  |                | 185562 |  |  |  | 6584  |  |  |  | 9433  | 
|2000 |  |               | 165359 |               |  |                | 78313 |               |  |                | 173479 |  |  |  | 6909  |  |  |  | 7454  | 
|2001 |  |               | 181663 |               |  |                | 85679 |               |  |                | 161547 |  |  |  | 7585  |  |  |  | 6579  | 
|2002 |  |               | 183292 |               |  |                | 81384 |               |  |                | 169543 |  |  |  | 6044  |  |  |  | 7477  | 
|2003 |  |               | 219271 |               |  |                | 88342 |               |  |                | 161197 |  |  |  | 5887  |  |  |  | 6966  | 





---

|         |                                                                                                                                                                                                              
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Sources: | North America  Association of
    Equipment Manufacturers; Canadian Farm and Industrial Equipment
    Institute. Western Europe  Management estimates based
    on equipment registrations in each country.

Major trends in the North American and Western
European agricultural industries include a growth in farm size
and machinery capacity, concurrent with a decline in the number
of farms and units of equipment sold. The agricultural equipment
industry, in most markets, began to experience an increase in
demand in the early 1990s as a result of both higher
commodity prices from an increased demand for food and low
levels of grain stocks worldwide. The amount of land under
cultivation also increased as government agricultural support
programs shifted away from mandatory set-aside programs. This
trend was maintained through 1997, but in North America the
market started to decline in 1998 as a result of unfavorable
economic conditions in certain parts of the world, lower
commodity prices and reduced aid to developing countries.
Worldwide industry unit demand for over-40 horsepower tractors
peaked in 1999, as global prices for agricultural commodities
continued to decline. However, demand for combines in Western
Europe and North America declined significantly. In 2000, total
worldwide demand continued to increase based on the strength of
the

22



---



##### 



demand for the under-40 horsepower tractors, but
demand for over-40 horsepower tractors started to decline and
combine sales also declined. Since 2000 worldwide market demand
for tractors has continued to increase, on the strength of the
under-40 horsepower tractor demand. Market demand for higher
horsepower tractors and combines has remained below 2000 levels
although demand for tractors did improve somewhat in 2003.


In North America, and to a lesser extent in
certain other regions, there has been significant growth in the
under 40-horsepower tractor industry. In 2003, approximately
145,200 under 40-horsepower tractors were sold worldwide,
compared to approximately 116,500 in 2002, 93,900 sold in 1999
and 36,300 sold in 1992. The growth in this segment has been due
primarily to the generally favorable economic conditions in
North America, which accounted for 130,900 of the under-40
horsepower tractors sold in 2003.

In North America, prior to the early 1990s,
under-40 horsepower tractors were principally used for farming
applications. However, beginning in the early 1990s a new
non-farm customer began to emerge in the market for the under
40-horsepower tractors. These new customers included homeowners,
turf and land care industries, commercial contractors, public
agencies, rental businesses, golf courses, hobby and part-time
farmers and industrial plants. Market demand for under-40
horsepower tractors has continued to increase dramatically, from
about 29,000 units in 1992 to over 130,000 units in 2003. These
same customers have started to demand higher horsepower tractors
in the 40- to under 100-horsepower segment, in which industry
volumes in North America also have tended to increase since
1992. Market demand in this segment increased until 1998 then
declined slightly in 1999. Since 1999 demand has continued to
increase through 2003. For higher horsepower tractors and
combines, which generally have the highest margins, market
demand peaked in 1997. Demand dropped sharply in 1998 and 1999
with a further slight decline in 2000. Demand increased slightly
in 2001 but declined in 2002 and was essentially stable in 2003.
Purchasers of these products also use a large number of
attachments such as front-end loaders, mowers and snow blowers.
Customers often purchase multiple attachments, which can provide
additional revenue and margin opportunities for suppliers of the
core products.

In Western Europe, industry unit sales of
tractors last reached their low point in 1993 and then increased
steadily through the mid-1990s, peaking in 1999. Since
1999 industry sales of tractors generally have been declining
except for a slight up-tick in 2002. Industry unit sales in 2003
were approximately 13% below the 1999 peak. Industry unit sales
of combines peaked in 1998 from the last trough in 1994. From
1998 to 2001 industry unit sales of combines dropped about 40%,
recovering slightly in 2002, but declining again in 2003.

In Latin America tractor industry volumes
increased from 1996 thru 2002, but declined in 2003. Combine
industry unit volumes also have increased since 1995 and volumes
in 2003 were the highest in at least the last ten years. In
markets in the rest of the world tractor volumes peaked in 2000,
declined sharply in 2001, but have recovered in 2002 and again
in 2003. Combine volumes peaked in 1997, declined in 1998 and
remained low through 2000, recovering in 2001 and 2002 but
declined again in 2003.

In total, worldwide demand for agricultural
tractors hit bottom in 1992 and have been on an increasing trend
since. Volumes reached a peak in 2000 but declined in 2001.
Volumes increased in 2002 and again in 2003, reaching levels
higher than in 2000. Combine industry volumes reached their low
point in 1991, increasing to a high in 1998 and then dropping in
1999. Since 1999 worldwide combine industry volumes have
remained relatively flat, in total.



| |                       
| | ----------------------
| | Construction Equipment

We divide construction equipment into
two principal segments: heavy construction equipment, which
is over 12 metric tons, and light construction equipment,
which is under 12 metric tons. Purchasers of heavy
construction equipment include construction companies,
municipalities, local governments, rental fleet owners,
quarrying and mining companies, waste management companies and
forestry related concerns. Purchasers of light construction
equipment include contractors, rental fleet owners, landscapers,
logistics companies and farmers.

The principal factor influencing sales of light
construction equipment is the level of residential and
commercial construction, remodeling and renovation, which in
turn is influenced by interest rates. Other major factors
include the level of light infrastructure construction such as
utilities, cabling and piping and

23



---



##### 



maintenance expenditures. The principal use of
light construction equipment is to replace relatively high cost
manual work. Product demand in the United States and Europe has
generally tended to mirror housing starts, but with lags of six
to 12 months. However, the recent financial difficulties
and restructuring of national rental companies in North America
have adversely influenced demand despite relatively strong
levels of housing starts. In areas where the cost of labor is
inexpensive relative to other inputs such as Africa, China and
Latin America, the light construction equipment market segment
is virtually non-existent. These areas represent potential
growth areas for light equipment in the medium to long-term as
the cost of labor rises relative to the cost of equipment.


Sales of heavy construction equipment are
particularly dependent on the level of major infrastructure
construction and repair projects such as highways, dams and
harbors, which is a function of government spending and economic
growth. Furthermore, demand for mining and quarrying equipment
applications is linked more to the general economy and commodity
prices, while growing demand for environmental equipment
applications is becoming less sensitive to the economic cycle.

The heavy equipment industry in North America, as
well as in Europe, is primarily a replacement market that
follows cyclical economic patterns. Cycles in the United States
and Western Europe tend to be about ten years in duration.
The industry in emerging markets generally exhibits an overall
growth trend, but with unpredictable and volatile cycles. In
prior years, demand for heavy construction equipment in North
America had been increasing as interest rates remained
relatively stable and the level of government spending on
infrastructure projects increased. In Europe, demand had also
been increasing, primarily as a result of higher spending by
European governments.

The equipment rental business is a significant
factor in the construction equipment industry. With the
exception of the U.K. and Japanese markets, where there is a
long history of machine rentals due to the structure of the
local tax codes, the rental market started with short period
rentals of light equipment to individuals or small contractors
who could not afford to purchase the equipment. In this
environment, the backhoe loader in North America and the
mini-excavator in Western Europe were the principal rental
products. As the market evolved, a greater variety of light
equipment products as well as many types of heavy equipment has
become available to rent. In addition, rental companies have
allowed contractors to rent machines for longer periods instead
of purchasing the equipment, which allows contractors to
complete specific job requirements with greater flexibility and
cost control. Furthermore, in some countries, longer term
rentals also benefit from favorable tax treatment. The rapid
consolidation of local and regional rental companies in North
America into national and large regional companies combined with
the economic and financial market declines created financial
pressures on these market participants. They have, in turn,
substantially reduced their new equipment purchases, despite a
relatively solid level of general economic activity. Overall,
this trend toward higher levels of rental activity in the market
may tend to reduce the correlation of industry unit demand for
new equipment with the basic economic industry drivers. On the
other hand, increased rental market activity could lead to more
pronounced demand cyclicality in the industry, as rental
companies rush to adjust the size of their fleets as demand or
rental rates change. In North America, captive rental fleets
appeared to be increasing their fleets during the second half of
2003.

Seasonal demand fluctuations for construction
equipment are somewhat less significant than for agricultural
equipment. Nevertheless, in North America and Western Europe,
housing construction generally slows during the winter months.
North American and European industry retail demand for
construction equipment is generally strongest in the second and
fourth quarters.

Worldwide customer preferences for construction
equipment products are similar to preferences for agricultural
equipment products. In developed markets, customers tend to
favor more sophisticated machines equipped with the latest
technology and comfort features. In developing markets,
customers tend to favor equipment that is more basic with
greater perceived durability. Customers in North America and
Europe, where operator cost often exceeds fuel cost and machine
depreciation, place strong emphasis on product reliability. In
other markets, customers often continue to use a particular
piece of equipment even after its performance and efficiency
begins to diminish. Customer demand for power capacity does not
vary

24



---



##### 



significantly from one market to another.
However, in many countries, restrictions on the weight or
dimensions of the equipment, such as road regulations or job
site constraints, may limit demand for large machines.


In general, most construction equipment sold in
mature markets such as North America and Europe replaces older
equipment. In contrast, demand in less mature markets includes
replacements as well as net increases in equipment demand for
new products. In these markets, equipment demand also is
partially covered by used equipment sourced from the more
developed and mature markets including: used heavy construction
equipment from North America in the Latin American markets; both
heavy and light used equipment from Western Europe in Central
and Eastern European, North African and Middle Eastern markets;
both heavy and light used equipment from Japan in other
Southeast Asian markets; and excavators from the Japanese market
in almost every other market in the world. These flows of used
equipment are highly influenced by exchange rates and the weight
and dimensions of the sourced equipment, which limit the market
for large equipment due to road regulations and job site
constraints.

The following graph sets forth heavy and light
construction equipment retail unit sales in North America and
Western Europe during the periods indicated:

(CONSTRUCTION EQUIPMENT INDUSTRY SHIPMENT GRAPH)

[CONSTRUCTION EQUIPMENT INDUSTRY SHIPMENT GRAPH]

|     |  |                     |        |                      |  |                     |       |                      |  |  |       |  |  |  |       | 
|---- |  | ------------------- | ------ | -------------------- |  | ------------------- | ----- | -------------------- |  |  | ----- |  |  |  | ----- | 
|     |  | North America Light |        | Western Europe Light |  | North America Heavy |       | Western Europe Heavy
|     |  | CE                  |        | CE                   |  | CE                  |       | CE                  
|     |  |                     |        |                      |  |                     |       |                     
|1991 |  |                     | 46234  |                      |  |                     | 57684 |                      |  |  | 29116 |  |  |  | 26992 | 
|1992 |  |                     | 45524  |                      |  |                     | 57684 |                      |  |  | 25425 |  |  |  | 26992 | 
|1993 |  |                     | 56485  |                      |  |                     | 51543 |                      |  |  | 31312 |  |  |  | 20903 | 
|1994 |  |                     | 68732  |                      |  |                     | 58846 |                      |  |  | 39114 |  |  |  | 26411 | 
|1995 |  |                     | 76244  |                      |  |                     | 65621 |                      |  |  | 43783 |  |  |  | 29957 | 
|1996 |  |                     | 84947  |                      |  |                     | 65418 |                      |  |  | 44218 |  |  |  | 23943 | 
|1997 |  |                     | 97314  |                      |  |                     | 70781 |                      |  |  | 50570 |  |  |  | 26367 | 
|1998 |  |                     | 110375 |                      |  |                     | 74640 |                      |  |  | 56516 |  |  |  | 33256 | 
|1999 |  |                     | 117935 |                      |  |                     | 89791 |                      |  |  | 54330 |  |  |  | 36912 | 
|2000 |  |                     | 123007 |                      |  |                     | 99256 |                      |  |  | 49415 |  |  |  | 41746 | 
|2001 |  |                     | 107037 |                      |  |                     | 93706 |                      |  |  | 44267 |  |  |  | 38012 | 
|2002 |  |                     | 94275  |                      |  |                     | 87978 |                      |  |  | 41605 |  |  |  | 33668 | 
|2003 |  |                     | 101587 |                      |  |                     | 86001 |                      |  |  | 46554 |  |  |  | 36025 | 





---

|         |                                                                                                                                                                                                    
|-------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Sources: | North America  Association of
    Equipment Manufacturers; Canadian Farm and Industrial Equipment
    Institute. Western Europe  Management estimates based
    on shipment data in each country.

Major trends in the construction equipment
industry include the transition in machinery usage from crawler
dozers to modern hydraulic excavators and wheel loaders in
excavation and material handling applications. In addition, the
light equipment sector has experienced significant growth as
more manual labor is being replaced on construction sites by
machines with a myriad of attachments for each specialized
application, such as skid steer loaders in North America and
mini-excavators in the Rest of World.

Recent low levels of public spending on new
infrastructure, particularly in North America and Western
Europe, have limited recent growth in the heavy equipment
segments of the market and consequently, the market for light
equipment has grown as a percentage of total construction
equipment sales.

25



---



##### 



The construction equipment business in North
America generally increased from 1992 through the late
1990s. Industry sales of heavy equipment peaked in 1998
and sales of light equipment peaked in 2000. Industry sales of
both product segments have been in general decline since the
peaks, although sales of both heavy and light equipment
increased in 2003 compared with 2002. In Western Europe industry
sales of both heavy and light equipment increased from the
trough of 1993 until peaking in 2000. Industry sales have
declined since, except for industry sales of heavy equipment
which improved slightly in 2003. The construction equipment
markets in Latin America are very small compared with those in
North America and Western Europe. Rest of world markets, and in
particular the Asia-Pacific Rim markets are similar in size to
the Western European or North American markets but CNH does not
have a significant direct presence in those markets.

Our Competitive Strengths

We believe that we have a number of competitive
strengths that enable us to focus on markets and products with
growth potential while attempting to maintain and improve our
position in the markets in which we are already established. We
believe our competitive strengths include:

Well-Recognized Brands.We market our products globally
through our two highly recognized brand families, Case and New
Holland. The Case agricultural brand family includes the Case IH
and Steyr brand names, while the Case construction equipment
brand family is represented by the Case brand name. The New
Holland agricultural brand family is represented by the New
Holland name, and the New Holland construction equipment brand
family includes the New Holland Construction, Fiat Kobelco,
FiatAllis, Kobelco and O&K brand names. All of our brands
have strong histories of quality and superior performance. We
will continue to leverage these strengths in the future.

Full Range of Competitive Products.In agricultural equipment, we believe
we are one of the leading global manufacturers of agricultural
tractors, combines, hay and forage equipment and specialty
harvesting equipment. In construction equipment, we are the
world leader in backhoe loaders, second in the world in skid
steer loaders and the market leader in Western Europe in crawler
excavators. In addition, we provide a complete range of
replacement parts and services to support both our agricultural
and construction equipment offerings.

Global Presence and Distribution Network.We manufacture our products in 45
facilities throughout the world and distribute our products in
approximately 160 countries through an extensive network of over
12,000 dealers and distributors. We are the only global,
full-line company in both the agricultural and construction
equipment industries, with strong and usually leading positions
in most significant geographic and product categories in both
businesses. Our global scope and scale include integrated
engineering, manufacturing, marketing and distribution of
equipment on five continents.

Strong Financial Services Capabilities.In North America, we offer a range of
Financial Services products, including, among others, retail
financing for the purchase or lease of new and used CNH and
other equipment manufacturers products sold by our
dealers. To further facilitate the sale of our products, we also
offer wholesale financing to dealers. Wholesale financing
consists primarily of floor plan financing and allows dealers to
maintain a representative inventory of products. The principal
objective of our retail financing operations is to facilitate
the sale of our equipment and provide competitive alternatives
to financing available from third parties. We offer retail
financing in Brazil and Australia through wholly-owned
subsidiaries and in Western Europe through our joint venture
with BPLG.

Support of the Fiat Group.Our operations have the strong support
of the Fiat Group, one of the largest industrial groups in the
world with major operations in auto and truck making, automotive
components and other non-automotive sectors. Fiats
management has stated that it considers the global production
and sale of agricultural and construction equipment to be a
primary focus of the Fiat Group and a significant component of
Fiats global strategy. Fiats truck-making
subsidiary, IVECO, is a partner with CNH and Cummins in a joint
venture that designs and produces the next generation of diesel
engines to meet evolving emission requirements. Shared services
provided by Fiat, such as purchasing, accounting, information
technology,

26



---



##### 



treasury and cash management, lower our
administrative costs by leveraging Fiats economies of
scale. Cash pooling leverages Fiat and Fiat Group financial
resources while minimizing banking and transaction costs and
reducing cross-border financing costs and potential penalties,
such as withholding taxes. As of December 31, 2003, Fiat
provided us with approximately $2.4 billion in debt, which
is an important source of liquidity for our operations. Fiat has
agreed to maintain its existing treasury and debt financing
arrangements with us for as long as it maintains control of us
and in any event until December 31, 2004. While no
extension of this agreement was formalized as of
December 31, 2003 or as of the date of this report, we
believe that it is not the current intention of Fiat to withdraw
its support of CNH. After that time, Fiat has committed that it
will not terminate our access to these financing arrangements
without affording us an appropriate time period to develop
suitable substitutes.


CNH Business Strategy

As a global full-line competitor in both the
agricultural and construction equipment markets, we plan to grow
our business through market expansion and increasing our product
offerings. We expect that our commitment to cost controls and
more efficient use of resources will create value for our
shareholders through improved profitability and an enhanced
financial position. We believe that our focus on further
improving our products, distribution and services will lead to
increased customer satisfaction and loyalty, promoting future
financial stability and improved returns.

Our strategic objectives are to:



| |   |                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | generate cash through improved earnings, reduced
    working capital and improved asset utilization, and use that
    cash to reduce our debt and strengthen our consolidated balance
    sheet;                                                                                                                     
|
| |  | deliver profitability throughout the cycle and
    achieve higher margins than either Case or New Holland earned
    prior to the merger by realizing profit improvements, continuing
    sales growth and increasing customer satisfaction; and                                                                     
|
| |  | continue to position CNH to take advantage of
    future opportunities for product and market expansion, both in
    the short to medium-term in areas such as Latin America and
    Eastern Europe and through our global alliance with Kobelco
    Japan and, in the longer term, in areas such as China and India.

The following are the key elements of our
strategy:



| |                    
| | -------------------
| | Dual Brand Families

We capitalize on our world-class brand names,
Case, Case IH, New Holland, New Holland Construction,
Steyr, Fiat Kobelco, FiatAllis, Kobelco and O&K, which
represent our dual brand families, Case and New Holland.

The Case and New Holland distribution networks
optimize our position in all principal existing markets, and we
enhance growth opportunities by entering new market segments,
filling out the product lines offered within each brand family.
We believe this strategy will maintain a high level of dealer
and customer loyalty, enhance our global market position and
leverage the combined product portfolio and geographic strength
to create cross-selling opportunities among brands.

A key element of this strategy is to strengthen
our dealer networks, moving towards dealers that are more
focused on particular brands. We believe that more focused
dealers tend to be more dedicated to enhancing their
brands market position and building their own customer
service capabilities in order to increase customer loyalty and
earn a larger share of their customers equipment and
service expenditures.



| |                                                          
| | ---------------------------------------------------------
| | Develop Common Components/ Platforms for New
    Products

We have developed and are continuing to develop
global product lines to support our dual brand families. By
using common design elements and sharing capital-intensive
components, we are reducing the total number of tractor, combine
and construction equipment platforms while maintaining strong
brand identities

27



---



##### 



based on precision of handling, productivity,
operation controllability, product serviceability, color and
styling. Agricultural Equipment platforms are being reduced from
66 to 35 and Construction Equipment platforms are being reduced
from 77 to 39 without reducing the number of final product
lines. We intend to use a smaller number of global product
platforms with differentiated product features for our different
brands. This should permit us to lower product development and
manufacturing costs and complexity and increase production
efficiencies, while reducing inventories, order-to-delivery
cycle times and invested capital requirements.


For the year ended December 31, 2003,
approximately 64% of our revenues from the sale of agricultural
equipment products and 66% of our revenues from the sale of
construction equipment products were derived from new products
developed with common components since the merger. By 2005, we
anticipate that substantially all of our product revenue,
excluding parts, will be from products introduced since the
merger. To retain existing customers and attract new customers,
we plan to continue to invest in product development to
strengthen and broaden our product lines. We plan to:



| |   |                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | introduce products with leading-edge technology,
    such as the new Axial-Flow combines and new lines of backhoe
    loaders and skid steer loaders;
|
| |  | tailor product offerings for entering new
    geographic markets and customer segments;                                                              
|
| |  | continue emphasis on improved quality,
    reliability and product simplification; and                                                               
|
| |  | pursue complementary product lines through
    strategic partnerships, joint ventures and acquisitions.                                              



| |                               
| | ------------------------------
| | Profit Improvement Initiatives

CNH combined the operations of New Holland and
Case as a result of their merger on November 12, 1999. At
the time of the merger, we formulated a plan to integrate the
operations of the Case and New Holland businesses. The plan was
based on maintaining the dual distribution networks of Case and
New Holland to optimize worldwide market share of the combined
company. In order to remain cost competitive while maintaining
the two brands, management developed a plan to use common
platforms and major product components while developing
differentiated products that could satisfy the requirements of
the different distribution networks. Use of common components
and platforms would allow for a reduction in product platforms,
consolidation of suppliers and a consolidation and
rationalization of manufacturing facilities and the parts depots
that serve both the manufacturing operations and the networks.
In addition, management planned to integrate systems and
processes allowing for significant reductions in overhead costs.

In 2002 and again in 2003, we expanded on and
extended our original goals. Through year-end 2002, our
cumulative merger-related profit improvements totaled
approximately $600 million as compared to the base levels
of revenues and costs incurred in the combined equipment
operations of New Holland and Case for the full year 1999. These
improvements resulted from selling, general and administrative
(SG&A) savings ($244 million), purchasing
savings ($182 Million), manufacturing rationalization
savings ($81 million), and the contributions from
cross-selling existing products ($40 million) and margin
improvements from new products ($52 million).

We believe that the continuation of these actions
through 2006 will result in additional savings of approximately
$650 million. Margin improvements from our new products,
further SG&A reductions, research and development
efficiencies and further manufacturing and depot system
efficiencies will comprise the majority of the savings. These
actions represent improvements as compared with the base levels
of revenues and costs incurred by CNH for the full year 2002.
This estimate is not based on any assumption of an appreciable
increase in industry volumes from 2002 levels. In the year ended
December 31, 2003, we achieved $225 million of the
$650 million of additional profit improvements expected by
2006.

Our consolidated worldwide employment level has
declined from approximately 36,000 at the time of the merger in
late 1999 to approximately 26,800 at December 31, 2003.
This decline of over 26% was achieved despite the addition of
employees from acquisitions occurring subsequent to the merger.

28



---



##### 



Restructure Manufacturing
Process By consolidating
and rationalizing our manufacturing activities, we are reducing
excess capacity and firmly focusing each facility, creating a
lean, flexible manufacturing system. In addition to downsizing
certain of our facilities, we continue to reduce our number of
plants, both through required and voluntary divestitures or
closures, from 60 at the time of the merger to 39 by the end of
2004, excluding new acquisitions. At December 31, 2003,
excluding two new plants obtained via acquisitions, we had 43
plants. In the process, we are redistributing production of
various products among the remaining plants to firmly focus each
facility on either the production of components or the assembly
of one product category across brand families. We are
concentrating on certain key technologies or competencies while
outsourcing other non-core activities.

During 2003, we recorded $271 million in
restructuring costs for the CNH Merger Integration Plan,
including $268 million in Equipment Operations and
$3 million in Financial Services. These restructuring costs
relate to severance and other employee-related costs, write-down
of assets, loss on the sale of assets and businesses, costs
related to closing, selling, and downsizing existing facilities.
See Note 13, Restructuring to the Consolidated
Financial Statements for a detailed analysis of our
restructuring programs.

Manufacturing
Capacity We have sought a
balance between high capacity utilization and responsiveness to
growth opportunities. We have sized our manufacturing capacity
to a flat market demand while introducing modularization of both
product and process design to add flexibility to the
manufacturing process. Our lean manufacturing techniques also
improve flexibility by reducing exposure to rapidly changing
market demands. We also manage the business cycle by
establishing flexible work rules and setting staffing levels
that are supported by temporary employees. Manufacturing
capacity utilization is projected to increase from approximately
62% utilization at the end of 2003 to approximately 73%
utilization by the end of 2006.

Global
Outsourcing Our global
outsourcing improves efficiency and competitiveness in several
ways. The benefits of outsourcing include: allowing our
investments to focus on core competency operations; leveraging
the expertise of our supply base; simplifying manufacturing
complexity; reducing exposure to business cycles; and mitigating
capital expenditures due to new technology or changes in
regulation. Our use of global outsourcing also extends to
non-core services such as information systems and maintenance.

Focused Manufacturing
Facilities Our more
focused manufacturing strategy will capitalize on facilities
that are focused on manufacturing a single product, to the
extent possible. We believe that this approach achieves
economies of scale and improved quality.

Presence Close to
Market We continue to
utilize regional manufacturing locations that are strategically
located close to our primary markets. This geographic proximity
impacts all areas of the supply chain and enhances our
responsiveness to changing market demands.

Maintain/ Improve
Quality Throughout the
manufacturing capacity rationalization process, our primary
focus has been on maintaining and improving product quality by
embedding key quality improvement activities into the process,
such as global product development and current product
management processes.

Reduce Purchasing
Costs Our global sourcing
strategy calls for a reduction in the number of our global
suppliers and the use of common components on our product
platforms to continue to reduce our purchasing costs. This will
increase the volumes sourced from each supplier, permitting us
to reduce our costs and allowing suppliers to realize economies
of scale. We have initiated a plan to reduce the number of our
suppliers from 6,000 at the time of the merger to 3,000 by the
end of 2004. As of December 31, 2003, we have reduced the
number of our suppliers to approximately 3,500.

We have been able to achieve cost savings on
materials in a number of ways. The merger has permitted us to
benefit from the savings associated with higher volume materials
purchases on a global basis. In addition, we have reevaluated
our global supplier network and, in some cases, changed
suppliers to enhance cost savings. Our manufacturing
reengineering initiatives have further reduced materials costs
through the more efficient design of some of our components. For
purposes of this target, our management has classified all
materials cost savings as part of our profit improvement
initiatives. Materials cost savings were approximately
$8.4 million in 2003.

29



---



##### 



Consolidate Parts Distribution
Network We are reducing
distribution complexity and costs by reducing the number of
global parts depots from 45 to 24 and instituting a new global
common parts system. As of December 31, 2003, we had
reduced the number of parts depots to 43, excluding two depots
added in the Kobelco Japan alliance and our Shanghai joint
venture with Chinas leading producer of agricultural
tractors, Shanghai Tractor. Also, under our new global parts
packaging system, some high volume common parts have been
distinctly packaged for each brand or brand family while most
other parts are beginning to utilize common CNH packaging. This
is further reducing our costs of servicing new products by
capitalizing on the common spare parts requirements of the
common components in the new products.

Integrate Systems and Processes to Create a
Lean Structure We have
completed our plan to reduce SG&A costs to less than 8.5% of
net sales of Equipment Operations two years ahead of schedule.
This compares to 10.8% in the first year of operations after the
merger, and has been achieved by eliminating duplicative
functions and streamlining processes. In addition, with the
completion of the majority of the new common platforms for our
agricultural products, we will be able to achieve greater
efficiencies in our research and development activities. Going
forward, we intend to maintain our SG&A costs at
approximately 2003 levels as a percentage of net sales. We
realized profit improvements from SG&A reductions of
approximately $95 million in 2003.

Improved Margins from New
Products With the launch
of our first all new products based on our common platform
strategy, we anticipate realizing further profit improvements in
the form of higher margins. In addition, our common product
platforms have enabled us to offer through all of our dealer
networks certain products previously available only through
certain dealers. We estimate we have realized incremental profit
margin contributions of approximately $78 million in 2003
from new products, the majority of which are on common platforms.



| |                               
| | ------------------------------
| | Expand Globally to New Markets

We view geographic expansion as an additional
opportunity for future growth and will consider the profitable
expansion into markets characterized by rapidly increasing food,
housing and infrastructure demand. On the construction equipment
side, our commitment to growth is evidenced by the global
alliance with Kobelco Japan. This alliance opened Japan and the
other markets of the Asia-Pacific region to CNH-built heavy and
light equipment. We have demonstrated our commitment to
expansion in our agricultural business through our Shanghi New
Holland Agricultural Machinery Corp. Ltd. (Shanghi)
joint venture. See Note 3, Acquisitions and
Divestitures of Business and Investments to the
Consolidated Financial Statements.



| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Expand Support of Dealers and Customers
    Through Our Refocused Financial Services Operations

Our Financial Services operations are focused on
the core business of supporting agricultural and construction
equipment sales to our base of equipment dealers and retail
customers throughout the world. We have exited the commercial
lending and retail financing activities outside our own dealer
networks and reduced the scope of our operating lease business.
These actions are expected to generate approximately
$400 million in positive cash flow through asset runoff
between 2004 and 2006. We are concentrating on maintaining and
enhancing the quality of our core portfolio through a focus on
fundamental underwriting, processing and monitoring
capabilities, augmented by intensive follow-up and remarketing
efforts in troubled situations. Our continued access to the
U.S., Canadian and Australian ABS markets is evidence of the
quality of our retail receivables portfolio, and we seek to
broaden our access to other retail and wholesale ABS
opportunities. We believe we are maintaining a conservative
capital structure while continuing to pay dividends to Equipment
Operations out of current Financial Services earnings. Finally,
we are continually pursuing further systems and process
efficiencies, striving to reduce our Financial Services SG&A
costs to less than one percent of managed assets.

We plan to expand our support to dealers and
customers in as many areas of the world as is feasible using
minimal amounts of invested capital. Partnerships similar to our
arrangement entered into in 2002 with

30



---



##### 



BPLG, which broadened our product offerings
throughout Europe and significantly reduced our current and
future capital requirements, will continue to be evaluated in
other regions.


In total, we believe these actions should result
in an improvement in the results of our Financial Services
activities through 2006.

Restructuring

Our management formulated a plan to integrate the
operations of the Case and New Holland businesses at the time of
the merger. Our goal was to divest or close more than 30% of our
manufacturing locations, including those required to be divested
by the regulatory authorities, and integrate our manufacturing
systems, reduce capacity and increase capacity utilization. In
addition, we planned to close approximately 14 of our
45 parts depots while migrating to one global parts
system and common parts packaging for parts that could be
utilized by multiple brands or distribution networks. As of
December 31, 2003, we have closed 17 plants and
11 parts depots. Through the consolidation of all
functional areas, and including the Kobelco Japan alliance and
our Shanghai joint venture, our employment levels are down from
approximately 36,000 at the time of the merger to approximately
26,800 at December 31, 2003, a reduction of approximately
26%.

Competition

The agricultural equipment industry is highly
competitive, particularly in North America and Europe. We
compete primarily with large global full-line suppliers,
including Deere & Company and AGCO/ VALTRA;
manufacturers focused on particular industry segments, including
Kubota Corporation and various implement manufacturers; regional
manufacturers in mature markets, including Claas KgaA/Renault,
ARGO Group and SAME Duetz-Fahr Group, that are expanding
worldwide to build a global presence; and local, low cost
manufacturers in individual markets, particularly in emerging
markets such as Eastern Europe, India and China.

The construction equipment industry is highly
competitive, particularly in Western Europe, North America,
Latin America and the Asia-Pacific region. We compete primarily
with global full-line suppliers with a presence in every market
and a broad range of products that cover most customer needs,
including Caterpillar, Komatsu Construction Equipment, TEREX and
Volvo Construction Equipment Corporation; regional full-line
manufacturers, including Deere & Company,
J.C. Bamford Excavators Ltd. and Liebherr-Holding GmbH and
product specialists operating on either a global or a regional
basis, including Ingersoll-Rand Company (Bobcat), Hitachi Ltd.,
Sumitomo Construction, Manitou B.F., Merlo UK Ltd., Gehl
Company, Mustang Manufacturing Company, Inc., Yanmar
Agricultural Equipment Co. Ltd. and Kubota Corporation.

We believe that multiple factors influence a
buyers choice of equipment. These factors include brand
loyalty, product performance, availability of a full product
range, the strength and quality of a companys dealers, the
quality and pricing of products, technological innovations,
product availability, financing terms, parts and warranty
programs, resale value, customer service and satisfaction and
timely delivery. We continually seek to improve in each of these
areas, but focus primarily on providing high-quality and
high-value products and supporting those products through our
dealer networks. In both the agricultural and construction
equipment industries, buyers tend to favor brands based on
experience with the product and the dealer. Customers
perceptions of value in terms of product productivity,
reliability, resale value and dealer support are formed over
many years.

The financial services industry is highly
competitive. We compete primarily with banks, finance companies
and other financial institutions. Typically, this competition is
based upon customer service, financial terms and interest rates
charged.

31



---



##### 



Products and Markets



| |                       
| | ----------------------
| | Agricultural Equipment

Our primary product lines of agricultural
equipment, sold under the Case IH and New Holland brands,
include tractors, combine harvesters, hay and forage equipment,
seeding and planting equipment, tillage equipment, sprayers, and
grape, cotton, coffee and sugar cane harvesters. In addition,
large numbers of Construction Equipment products, such as
telehandlers, skid steer loaders and backhoe loaders, are sold
to agricultural equipment customers. We also sell tractors under
the Steyr brand in Western Europe.

In order to capitalize on customer loyalty to
dealers and our company, relative distribution strengths and
historical brand identities, we continue to use the Case IH,
Steyr (tractors only) and New Holland brands, and to produce
equipment in the historical colors of each brand. We believe
that these brands enjoy high levels of brand identification and
loyalty among both customers and dealers. Although new
generation tractors will have a higher percentage of common
mechanical components, each brand and product remains
significantly differentiated by color, interior and exterior
styling, internal operator features and model designation. In
addition, flagship products such as row crop tractors and large
combine harvesters have significantly greater differentiation.
Distinctive features that are specific to a particular brand
such as the Supersteer® axle for New Holland, the Case IH
tracked four wheel drive tractor, Quadtrac®, and front axle
mounted hitch for Steyr have been retained as part of each
brands identity.

Tractors
Tractors are used to pull, push and provide power for farm
machinery and other agricultural equipment. Tractors are
classified by horsepower size. We manufacture and market a broad
range of tractors under the Case IH, New Holland and Steyr
brands. Tractors represented approximately 48% of our sales of
agricultural equipment in 2003.

Combine Harvestors Combine harvesters are large,
self-propelled machines used for harvesting coarse and cereal
grain crops, primarily soybeans, corn, wheat, barley, oats and
rice. These machines cut, convey, thresh and clean grain. We
offer two basic harvesting technologies, rotary and
conventional, each of which possesses advantages with respect to
certain crops and conditions. Our recently launched CX
conventional combine and CR rotary combine are the first of a
new generation of modular combines designed so that either of
the two different threshing systems can be installed in the same
basic combine frame.

Other Key Product Lines Hay and forage equipment is used
primarily to harvest and mow, package and condition hay and
forage crops for livestock feed. This product line includes:
self-propelled windrowers and tractor-powered mower/
conditioners, hay tedders and rakes, round balers, square
balers, and forage harvesters which may be either self-propelled
or pulled by a tractor. We also produce and market a full line
of seeding and planting equipment; tillage equipment; sprayers;
grape harvesters; sugar cane harvesters; and cotton pickers.

Parts
Support We offer a full
line of parts for all of our various agricultural equipment
product lines.



| |                       
| | ----------------------
| | Construction Equipment

Our present brand and product portfolio is the
heritage of many companies that have been merged into the global
Case or New Holland brand families. Case Construction provides a
full line of products on a global scale. The New Holland family
has a regionalized focus capitalizing on heritage brand names
and customer relationships. For example, Fiat Kobelco focuses on
the Japanese-technology segment of the European market, O&K
focuses on the segment of the Western European market that
prefers German-developed technology and FiatAllis has a strong
full-line offering, which serves the Latin American market.

Our new generation products, currently being
developed and introduced, share common components to achieve
economies of scale in research and development
(R&D) and manufacturing. We differentiate these
products based on the relative product value and volume in areas
such as precision of handling, productivity, operator
controllability, product serviceability, color and styling to
preserve the unique identity of each brand.

32



---



##### 





| |                             
| | ----------------------------
| | Heavy Construction Equipment

Crawler
Excavators Crawler
excavators are anthropomorphic machines on a 360-degree rotating
crawler tread base equipped with one arm that can perform a wide
variety of applications with extremely precise control by the
operator. Excavators are classified by the weight of the machine
and heavy crawler excavators weigh more than 12 metric tons.
Excavators are versatile machines that can utilize a wide
variety of attachments and are very efficient in terms of
operating cost per ton of earth moved. Generally, the crawler
excavator is the principal heavy construction equipment product
that draws customers into dealerships. Upon purchasing a
particular excavator, they tend to purchase additional heavy
construction products of the same brand to simplify maintenance
and service requirements. Crawler excavators are the most
popular construction equipment machine in the Asia-Pacific
market.

Wheeled
Excavators Wheeled
excavators are a specialty excavator product on a wheeled base
rather than a crawler base, typically used in the Western
European market. Wheeled excavators, like backhoes, are
self-transporting, while crawler excavators must be transported
by truck from location to location.

Wheel
Loaders Wheel loaders are
four wheel drive articulated machines equipped with a front
loader bucket. The engine is located behind the driver for
better operator visibility. Wheel loaders are classified by
engine horsepower and we offer a broad product range from
80-horsepower to 450-horsepower. One of the more traditional
earth moving machines, wheel loaders also are popular for
non-construction applications such as bulk material handling,
waste management and snow removal, contributing to a more stable
level of industry demand for these products. We believe that we
hold the number four position in the world wheel loader market.

Other Key Product Lines In addition, we offer a full range of
heavy equipment product lines including wheeled excavators,
graders for all applications, dozers, and both articulated and
rigid dumpers.

Parts
Support We offer a full
line of parts for all of our various heavy construction
equipment product lines.



| |                             
| | ----------------------------
| | Light Construction Equipment

Backhoe
Loaders Backhoe loaders,
based on a tractor shaped chassis, combine two of the most
important operations of earth-moving equipment, loading and
excavating. Our backhoe loaders range from the newest
mini-backhoe loader designed for light maintenance and
landscaping activities to the largest four wheel drive, four
wheel steering machine, which combines the excavating capability
of a mini-excavator with the loading capacity and
maneuverability of a compact wheel loader. The backhoe loader is
one of the most popular light equipment products in the North
American market, with a fundamental role in construction
applications where flexibility and mobility are required.

Skid Steer
Loaders The skid steer
loader is a versatile, compact four-wheeled machine. It can be
considered a tool carrier with a wide array of tool-type
attachments that can be utilized for a variety of operations,
such as loading, digging, cleaning, snow removal, boring,
lifting, transporting, towing or planting trees. Skid steer
loaders are classified by their lifting capacity. Our products
cover all market segments from 500 pounds to over 3,100 pounds
lifting capacity. We are the second largest producer of skid
steer loaders in the world and offer industry leading products
in each of the two different lifting arm designs, parallel lift
and radial lift. North America is the largest market for this
product, accounting for over 75% of the world demand.

Mini-Excavators
Mini-excavators include all excavators that weigh less than 12
tons. Mini-excavators are the most popular light equipment
product in the Western European and Japanese markets. Our new
global alliance partner, Kobelco Japan, is a world leader in
mini-excavators and is the developer of the short radius
technology, which allows the machines arm to turn 360
degrees within the space of its own tracks. This flexibility
creates additional opportunities for machine usage in extremely
tight working conditions.

Other Key
Products In addition, we
offer a full range of compact wheel loaders and telehandlers,
which are four wheel drive, four wheel steering machines popular
in Europe, equipped with a telescoping arm

33



---



##### 



designed for lifting, digging and loading.
Smaller telehandler machines are often used in agricultural
applications while larger machines are often used for industrial
and construction applications. Both can accommodate a wide range
of attachments.


Parts
Support We offer a full
line of parts for all of our various light construction
equipment product lines.



| |                         
| | ------------------------
| | New Products and Markets

We continuously review opportunities for the
expansion of our product lines and the geographic range of our
activities. To this end, we are enhancing our new product
development program by using common components for our different
product lines. Using common components allows us to balance the
benefits of product differentiation with the efficiency achieved
through greater manufacturing volumes. Common components allow
us to preserve the strengths of the various brands, while
reducing the total number of product platforms and generating
significant cost savings.

In 2003, 64% of our revenues from the sale of
agricultural equipment products and 66% of our revenues from the
sale of construction equipment products were derived from new
products developed with common components since the merger. In
2002, these percentages were 30% and 53%, respectively. The
primary application of this strategy in 2003 was the new high
horsepower all-purpose tractors, the Case IH MXU line and the
New Holland TS-A line. These all-new tractor ranges are
differentiated to appeal to their respective customer bases, but
share significant common componentry.

To increase our global presence and gain access
to technology, we participate in a number of international
manufacturing joint ventures and strategic partnerships. We are
integrating our manufacturing facilities and joint ventures into
a global manufacturing network designed to source products from
the most economically advantageous locations and to reduce our
exposure to any particular market.

See Item 5. Operating and Financial
Review and Prospects, A. Operating Results for information
concerning the principal markets in which CNH competes,
including the breakdown of total revenues by geographic market
for each of the last three years.

Suppliers

We purchase a number of materials and components
from third-party suppliers. In general, we are not dependent on
any single supplier or exposed in any substantial way to price
fluctuations in respect of the materials or commodities we
purchase.

We are currently rationalizing our supply chain
to substantially reduce the number of our global suppliers from
over 6,000 at the time of the merger to approximately 3,000. In
implementing this program, we are building mutually beneficial
partnerships with long-term suppliers based on increased volumes
and shared product development activities. We believe that a
reduction in the number of suppliers will result in more
cost-effective arrangements, lower investment requirements,
greater access to technological developments and lower per-unit
costs. Although we are increasing our dependence on our
remaining suppliers, most of the products that we purchase from
our suppliers are available from other sources. As of
December 31, 2003, we have reduced the number of our
suppliers to approximately 3,500.

In addition to the equipment manufactured by our
joint ventures and us, we also purchase both agricultural and
construction equipment from other sources for resale to our
dealers. The terms of purchase from an original equipment
manufacturer (OEM), allow us to market the equipment
under our brands. As part of our normal course of business,
under these arrangements we generally forecast our equipment
needs based on market demand for periods of two to four months
and thereafter are effectively committed to purchase such
equipment for those periods. Certain manufactured components are
also purchased on an OEM basis. OEM purchases allow us to offer
a broader line of products and range of models to our dealer
network and global customer base. In 2003, the total value of
OEM purchases comprised less than 11% of our total purchases.

34



---



##### 



Distribution and Sales

We possess one of the industrys most
extensive dealer networks. We sell and distribute our products
through over 12,000 dealers and distributors in approximately
160 countries worldwide. Dealers typically sell either
agricultural equipment or construction equipment, although some
dealers sell both types of equipment. Construction equipment
dealers tend to be fewer in number, larger in size, better
capitalized and located in more urban areas. Agricultural
dealers tend to be greater in number, but smaller in size and
located in rural areas.

Large construction equipment dealers often
complete their product offering with products from more than one
manufacturer due to historical relationships that have persisted
through the consolidation of the industry.

In connection with our program of promoting our
unified brand names and identity, we generally seek to have our
dealers sell a full line of our products (such as tractors, crop
production and crop harvesting). Generally, we achieve greater
market penetration where each of our dealers sells the full line
of products from only one CNH brand. Although appointing dealers
that sell more than one of our brands is not part of our
business model, some joint dealers exist, either for historical
reasons or in limited markets where it is not feasible to have
separate dealers for each CNH brand. In some limited cases,
dealerships are operated under common ownership with separate
facilities for each of our brands.

Exclusive, dedicated dealers generally provide a
higher level of market penetration. Therefore, such dealers
complement our strategy of full product lines for all global
brands. Some of our dealers in the United States, Germany and
Australia may sell more than one brand of equipment, including
models sold by our competitors. Elsewhere, our dealers are
generally exclusive, but may share complementary products
manufactured by other suppliers in other product categories in
order to complete their product offerings, or where there was a
historical relationship with another product line that existed
before that product was available through us. This is
particularly true of specialty products, such as equipment
adapted for particular crops or uses.

In the United States, Canada, Mexico, most of
Western Europe, Brazil and Australia, the distribution of our
products is generally accomplished directly through the dealer
network. In other parts of the world, our products are sold
initially to distributors who then resell them to dealers in an
effort to take advantage of such distributors expertise
and to minimize our marketing costs. Generally, each of our
distributors has responsibility for an entire country.

We believe that it is generally more
cost-effective to distribute our products through independent
dealers, and therefore we maintain company-owned dealerships
only in markets where we have experienced difficulty in
establishing satisfactory independent dealer relationships. At
December 31, 2003, we operated 28 company-owned
dealerships, located in the United States, Canada, Germany,
Austria and Spain. In the mature markets, we expect a decrease
in the number of our dealers in the coming years, as the process
of farm consolidation pressures dealers financial
positions. In North America, we operate a dealer development
program that allows approved dealer candidates to purchase
dealerships from us over a fixed period of time, with payments
being made from the dealers profits.

A strong dealer network with wide geographic
coverage is a critical element in the success of any
manufacturer of agricultural and construction equipment. We
possess one of the industrys broadest dealer networks and
are working to further enhance the network through the expansion
of our lines of products and customer services, including
enhanced Financial Services, and an increased focus on dealer
support. To assist our dealers in building rewarding
relationships with their customers, we have introduced focused
customer satisfaction programs and seek to incorporate customer
input into our product development and service delivery
processes.

As the equipment rental business becomes a more
significant factor in both agricultural and construction
equipment markets, we are continuing to support our dealer
network by facilitating sales of equipment to the local,
regional and national rental companies through our dealers as
well as by encouraging dealers to develop their own rental
activities. We believe that a strong dealer service network is
required to maintain the rental

35



---



##### 



equipment and to insure that the equipment
remains at peak performance levels both during its life as
rental equipment and afterward when resold into the second hand
market. As a leader in light construction equipment and the most
requested rental products, our product performance is key to
maintaining our quality reputation, its attractiveness to the
rental customer and its resale value on the used equipment
markets. We have launched several programs to support our dealer
service and rental operations including training, improved
dealer standards, financing, and advertising. Also, as the
rental market is a capital-intensive activity and sensitive to
variations in construction demand, we believe that any such
activities should be expanded gradually, with special attention
to managing the resale of rental units into the secondary market
by our dealers, who can utilize this opportunity to improve
their customer base and generate additional parts business.


In the United States and Canada, we are
contractually obligated to repurchase new equipment, new parts,
business signs and manuals from former dealers following our
termination of the dealership if the former dealer so elects.
Outside of North America, repurchase obligations and practices
vary by region. In addition to the contractual repurchase
obligation, certain jurisdictions have agricultural and
construction equipment dealership laws that require us to
repurchase new equipment and new parts at statutory amounts.

In Japan, CNH owns 50% of New Holland HFT Japan
Inc. (HFT), which distributes our products in that
country. HFT imports and sells a full range of New
Hollands agricultural equipment through approximately 50
retail sales and service centers located throughout Japan. In
order to complete its product offering, HFT also sells certain
equipment manufactured by other producers. HFT is the leading
importer of agricultural tractors in the highly competitive
Japanese market and has a leading share of the Japanese markets
for combine harvesters and self-propelled forage harvesters.

Pricing and Promotion

The actual retail price of any particular piece
of equipment is determined by the individual dealer or
distributor and generally depends on market conditions, features
and options. Actual retail sales prices may be lower than the
suggested list prices. We sell equipment to our dealers and
distributors at wholesale prices, which reflect a discount from
the suggested list price. In the ordinary course of our
business, we engage in promotional campaigns that may include
price incentives or preferential credit terms on the purchase of
certain products.

We regularly advertise our products to the
community of farmers, contractors, builders and agricultural and
construction contractors, as well as to distributors and dealers
in each of our major markets. To reach our target audience, we
use a combination of general media, specialized design and trade
magazines, the internet and direct mail. We also regularly
participate in major international and national trade shows and
engage in co-operative advertising programs with major
distributors and dealers. The promotion strategy of the Case IH
and New Holland brands varies according to our customer targets
for those brands.

Parts and Services

The replacement parts and associated service
business is a major source of revenue for both our company and
our dealers. The quality and timely availability of parts and
service are important competitive factors, as they are
significant elements in overall customer satisfaction and strong
contributors to the original equipment purchase decision. Our
sales of parts represented approximately 19% of our total net
sales in 2003.

We supply a complete range of parts, many of
which are proprietary, to support items in our current product
line as well as for products that we have sold in the past. As
many of the products that we sell can have economically
productive lives of up to 20 years when properly
maintained, each unit that is retailed into the marketplace has
the potential to produce a long-term revenue stream for both CNH
and our dealers. Sales of replacement parts have historically
been less subject to sharp changes in demand than sales of new
equipment and typically generate higher gross margins than sales
of new equipment.

In order to improve the distribution of
replacement parts and the efficiency of our parts and services
network, we have entered into arrangements with two major
suppliers of warehousing services. TNT Logistics,

36



---



##### 



a subsidiary of TPG N.V., provides
warehousing services in Latin America, and in North America,
Caterpillar Logistics Services, Inc., a subsidiary of
Caterpillar Inc., provides warehousing services to us on a fee
for service basis. We handle logistical arrangements directly
with respect to parts operations in other areas of the world.


At December 31, 2003, we operated and
administered 45 parts depots worldwide, either directly or
through arrangements with our warehouse service providers,
including 24 in North America, 13 in Europe, 2 in Latin America
and 4 in Australia and New Zealand and two resulting from our
Kobelco Japan and Shanghi joint ventures. These depots supply
parts to dealers and distributors, which are responsible for
sales to retail customers. Management believes that these parts
depots and our parts delivery systems provide our customers with
timely access to substantially all of the parts required to
support our equipment.

Through the establishment of common platforms and
systems for various product lines, we have enhanced the
efficiency and cost effectiveness of our parts business by
centralizing the production of these components.

As part of the expansion of our product range and
the renewal of most of our agricultural and construction
equipment product lines, many new parts have entered or will
enter into our parts system. To take advantage of the
significant number of shared parts being designed for the new
common component system, we have developed a new common parts
packaging system for parts that can be used by any of our
multiple brands. A small number of high volume parts will be
distinctly packaged for each brand or brand family, even if the
parts are identical. These would typically be the parts that a
customer might see in a dealers showroom. All remaining
parts will utilize common CNH packaging to minimize costs and
distribution complexity.

The development of a common global parts system
for all products and brands is another key merger profit
improvement action that is facilitating the depot
rationalization program. We also expect the new parts system to
improve parts inventory management and customer service levels.
The new system was launched for the North American market in
January 2003 and we are developing systems integration and
implementation plans for Western Europe.

Service and Warranty

Our products are warranted to the end-user to
ensure confidence in design, workmanship and material quality.
Warranty lengths vary depending on competitive standards
established within individual markets. In general, warranties
tend to be for one to three years, with some as short as six
months, and cover all parts and labor for non-maintenance
repairs and wear items, provided operator abuse, improper use or
negligence did not necessitate the repair. Warranty on some
products is limited by hours of use, and a purchased warranty is
available on most products in major markets. Dealers submit
claims for warranty reimbursement to us and are credited for the
cost of repairs if the repairs meet our prescribed standards.
Warranty expense is accrued at the time of sale, and purchased
warranty revenue is deferred and amortized over the life of the
warranty contract.

Our distributors and dealers provide service
support outside of the warranty period. Our service engineers or
service training specialists train service personnel in one of
several CNH training facilities around the world or on location
at dealerships.

Seasonality and Production Schedules

Seasonal industry conditions affect our sales of
agricultural equipment and, to a lesser extent, construction
equipment. Our production levels are based upon estimated retail
demand. These estimates take into account the timing of dealer
shipments, which are in advance of retail demand, dealer
inventory levels, the need to retool manufacturing facilities to
produce new or different models and the efficient use of
manpower and facilities. We adjust our production levels to
reflect changes in estimated demand, dealer inventory levels,
labor disruptions and other matters not within our control.
However, because we spread our production and wholesale
shipments throughout the year to take into account the factors
described above, wholesale sales of

37



---



##### 



agricultural equipment products in any given
period may not reflect the timing of dealer orders and retail
demand.


Financial Services



| |         
| | --------
| | Overview

CNH Capital is the captive financing arm of CNH,
providing financial services to dealers and customers in North
America, Australia and Brazil. Through our joint venture with
BPLG, CNH Capital provides customer financing in Western Europe.
The principal products offered on a worldwide basis are retail
loans to final customers and wholesale financing to our dealers.
As of December 31, 2003, CNH Capital had total managed
assets of approximately $12 billion, including assets
managed for our joint venture in Western Europe. The United
States accounts for 55% of the serviced portfolio, Western
Europe 22%, Canada 11%, Brazil 7% and Australia 5%. CNH Capital
provides retail loans, leases and insurance products to end-user
customers as the local market requires and provides a variety of
wholesale and insurance products to our dealer network.

CNH Capitals mission is to improve the
effectiveness of its finance activities in supporting the growth
of our equipment sales and contribute to building dealer and
end-user loyalty. Its strategy for meeting these objectives is
to grow its core financing business through higher financing
penetration of our equipment sales, expansion of its services
offering, new product development and marketing promotions and
events. In addition, CNH Capital is focused on improving credit
quality and service levels and increasing operational
effectiveness. CNH Capital also plans to grow significantly its
financing business in Western Europe as it leverages its joint
venture arrangement with BPLG to broaden its financing
activities to cover CNH-branded products in all the countries it
services. CNH Capital also seeks to expand its financing of used
equipment through our dealers and related services, including
expanded insurance offerings.

Access to funding at competitive rates is key to
the growth of CNH Capitals core business and expansion of
its financing activities into new and existing geographic
markets with new retail and wholesale product offerings. On a
global level, we will continue to evaluate alternatives to
ensure that CNH Capital continues to have access to capital on
favorable terms in support of its business, including through
equity investments by global or regional partners in joint
venture or partnership opportunities, new funding arrangements
or a combination of any of the foregoing. Joint venture or
partnerships, similar to the BPLG arrangement entered in 2002,
allow us to be more responsive to customer needs, introduce a
wider range of products more rapidly and to enter geographic and
product markets at a faster pace. Additional joint ventures may
also reduce uncertainty and operational risks while utilizing
the partners balance sheet strength and credit rating to
support CNH Capitals funding requirements on more
advantageous terms.



| |                   
| | ------------------
| | Finance Operations

In North America, CNH Capital offers a wide
variety of financial products including wholesale equipment
financing for our dealers and end users, retail loans, finance
leases, operating leases, credit cards, rental programs and
insurance products. We have established separate sales and
underwriting groups to service the Agricultural Equipment and
Construction Equipment businesses. This distinction allows CNH
Capital to strengthen customer service and reduce risk by
deploying industry-specific expertise in each of these
businesses.

In the past, in North America, we provided
financing options to dealers and non-captive third parties to
finance inventory, working capital, real estate acquisitions,
construction and remodeling, business acquisitions, dealer
systems and service and maintenance equipment. We also offered a
broad range of retail and wholesale financing products,
including equipment and commercial loans and leases for other
North American manufacturers products, dealers,
distributors and their customers. Due to the higher credit
losses in these businesses, CNH Capital discontinued all of the
diversified retail financing business in the marine, trucking
and forestry industries and in dealer financing not related to
its wholesale equipment sales. We are focused on being a captive
Financial Services company dedicated solely to the support of
our dealers and customers

38



---



##### 



across all our brands. Despite discontinuing new
diversified retail financing in 2001, CNH Capital continues to
service its existing non-core portfolio, which represents less
than 5% of CNH Capitals current managed portfolio. CNH
Capital also strengthened its organization by hiring personnel
with specific expertise in our Equipment Operations industries,
and by creating a special work-out team to manage troubled
accounts more effectively.


Outside of North America, CNH Capital is
developing its capabilities to service our dealers and customers
in more stable markets as legal regulations, business and
funding conditions and market and economic conditions permit.
Building on our experience in North America, we are introducing
products developed in North America into other markets to expand
the product offerings and customer service capabilities in those
markets. CNH Capital continues to evaluate and implement what it
believes to be the most efficient cost structures for expanding
its Financial Services business outside of North America.
Through joint venture agreements, such as the BPLG arrangement
in Western Europe, we seek to leverage our partners
established expertise, cost efficiencies, access to low cost
sources of funding and established market presence.

Today, CNH Capital is focusing primarily on
efficient risk management, operational efficiency and strong
customer service. We have significantly expanded our risk
management procedures at all stages of the financing process,
including definition, underwriting, remarketing and recovery.
CNH Capital has a dedicated team to address operational
improvement opportunities, including the complete re-engineering
of some key processes. CNH and its predecessors have a long
history of successful financing relationships with North
American agricultural and construction equipment customers. We
leverage our strong relationships with our existing financing
customers to implement innovative customer tools and higher
service standards. In 2003, new initiatives implemented
included: risk-adjusted pricing on retail originations to
maintain overall portfolio margin and enhance financing
penetration on high credit quality customers, behavioral scoring
to improve efficiencies within the collections process for
retail customers and focus on origination of receivables that
are self-financing via the global asset-backed markets.

At the retail level, CNH Capital sells retail
financial products primarily through our dealers, whom we train
in the use of the various financial products. Our sales force
may assist directly with some of the larger or more complex
financing proposals. Dedicated credit analysis teams perform
retail credit underwriting.

At the dealer financing level in North America,
CNH Capital provides wholesale floor plan financing for our
dealers, which allows dealers to maintain a representative
inventory of products. CNH Capital also provides some working
capital and real estate loans on a limited basis. For our floor
plan financing, we generally provide a fixed period of
free financing for the dealers, during which the
manufacturer of the equipment on the floor pays the finance
charges. This practice helps to level fluctuations in factory
demand and provides a buffer from the impact of seasonal sales.
After the free period, if the equipment remains
unsold, the dealer pays for interest costs.

A wholesale underwriting group reviews dealer
financials and payment performance to establish credit lines for
each dealer. In setting these credit lines, we seek to meet the
reasonable requirements of each dealer while controlling our
exposure to any one dealer. The credit lines are secured by the
dealers unsold equipment assets and are used to facilitate
wholesale sales. The dealer credit agreements include a
requirement to pay at the time of the retail sale. CNH Capital
employees or third-party contractors conduct periodic stock
audits at each dealership to confirm that financed equipment is
still in inventory. The frequency of these audits varies by
dealer and depends on the dealers financial strength,
payment history and prior performance.

Marketing personnel from CNH Capital work with
our equipment operations commercial staff to develop and
structure financial products that will optimize equipment sales
and generate Financial Services income. CNH Capital also
develops products to finance non-CNH equipment sold through our
dealer network or within the core businesses of agricultural or
construction equipment. This equipment includes used equipment
taken in trade on new CNH product or equipment used in
conjunction with or attached to our equipment.

39



---



##### 



We compete primarily with banks, finance
companies and other financial institutions. Typically, this
competition is based upon customer service and finance rates
charged to the borrower. CNH Capital finances the majority of
our new equipment sales in the regions where it is present due
to its ability to offer, in some circumstances, below market
finance rates as part of special marketing programs offered by
our commercial organization. Long-term profitability in our
Financial Services operations is largely dependent on the
cyclical nature of the agricultural and construction equipment
industries, interest rate volatility and access to low-cost
funding sources. CNH Capital relies on the financial markets,
asset-backed securitizations, intercompany lending and cash
flows to provide funding for its activities. Currently, CNH
Capitals funding strategy in North America is threefold;
i) access capital markets through asset backed
securitization transactions, ii) expand the use of
asset-backed commercial paper securitization financing to other
portfolios such as credit cards and finance leases, and
iii) liquidation of the existing portfolio of discontinued
business to reduce overall funding requirements and reliance on
intercompany and intersegment funding.



| |                             
| | ----------------------------
| | Asset-Backed Securitizations

CNH Capital periodically accesses the public
asset-backed securities market in the United States, Canada and
Australia, and will continue to rely on the availability of
liquidity through that market to fund its retail financing
programs. We anticipate that, depending on continued market
interest and other economic factors, CNH Capital will continue
to securitize its retail receivables in the United States,
Canadian and Australian markets. CNH Capitals access to
the asset-backed securities market will depend in part upon its
financial condition, portfolio performance and market
conditions. These factors can be negatively affected by cyclical
swings in the industries we serve. CNH Capital typically has
entered into two securitization transactions per year in the
United States and one to two a year in Canada. CNH Capital
securitizes retail receivables every six to twelve months.
Securitization transactions in the United States are typically
about $1.0 billion in size and in Canada are generally
C$200 million to C$400 million in size. CNH Capital
applies the proceeds of the securitizations to repay outstanding
debt that was funding the receivables while on our consolidated
balance sheet.

Insurance

We maintain insurance with third-party insurers
to cover various risks resulting from our business activities
including, but not limited to, risk of loss or damage to our
facilities, business interruption losses, general liability,
automobile liability and directors and officers liability
insurance. We believe that our present level of insurance
coverage is adequate to cover such potential losses arising out
of these and other insurable risks. We use a broker that is an
affiliate of Fiat to purchase a portion of our insurance
coverage.

Legal Proceedings and Regulation

We are party to various legal proceedings in the
ordinary course of its business, including, product warranty,
dealer disputes, workers compensation, patent
infringement, and customer and employment matters. The ultimate
outcome of all of these other legal matters pending against us
or our subsidiaries cannot be predicted, and although such
lawsuits are not expected individually to have a material
adverse effect on us, such lawsuits could have, in the
aggregate, a material adverse effect on our consolidated
financial condition, cash flows or results of operations.



| |                  
| | -----------------
| | Product Liability

Product liability claims against CNH arise from
time to time in the ordinary course of business. There is an
inherent uncertainty as to the eventual resolution of unsettled
claims. However, in the opinion of management, any losses with
respect to these existing claims will not have a material
adverse effect on CNHs financial position or results of
operations.

40



---



##### 





| |                 
| | ----------------
| | Other Litigation

In December 2002, six named individuals filed a
purported class action lawsuit in the Federal District Court for
the Eastern District of Michigan against El Paso Tennessee
Pipeline Co. (formerly Tenneco, Inc.) (El Paso) and
Case. (Yolton, et. al v. El Paso Tennessee Pipeline Co., and
Case Corporation a/k/a/ Case Power Equipment Corporation, Docket
number 02-74276). The lawsuit alleged breach of contract and
violations of various provisions of the Employee Retirement
Income Security Act arising due to alleged changes in health
insurance benefits provided to employees of the Tenneco, Inc.
agriculture and construction equipment business who retired
before selected assets of that business were transferred to us
in June 1994. The changes resulted from an agreement between an
El Paso subsidiary and the UAW to cap (prior to the transfer of
the agricultural and construction equipment business to us) the
amount of retiree health insurance costs (the Cap).
The UAW retirees were to bear the costs above the Cap. El Paso
administers the health insurance programs for the purported
plaintiff class, and we and El Paso are parties to a 1994
agreement under which El Paso has agreed to indemnify us for the
costs of the health insurance program. The lawsuit arose after
El Paso notified the retirees that the retirees will be required
to pay a portion of the cost of those benefits because the Cap
had been reached. The plaintiffs also filed a motion for
preliminary injunction, asking the court to prevent El Paso
and/or us from requesting the retirees to pay a portion of the
health benefits. On December 31, 2003, the court entered a
preliminary injunction order requiring El Paso to pay the full
costs of health insurance benefits for the purported plaintiff
class. El Paso filed a motion for reconsideration. On
March 9, 2004, the court entered an order granting
plaintiffs motion for preliminary injunction. Pursuant to
the March 9, 2004 order, the court vacated its
December 31, 2003 order and ordered Case to pay the full
costs of health insurance benefits for the purported plaintiff
class from March 2004. However, El Paso has not disputed its
responsibility to pay amounts up to the Cap. We have filed a
motion with the court seeking to have the preliminary injunction
stayed and the order reconsidered because we believe El Paso is
primarily responsible for the costs of the health insurance
benefits including amounts over the Cap and, in any event, we
should not be responsible for amounts up to the Cap. We also
have filed a motion for summary judgment that El Paso indemnify
us pursuant to the terms of the 1994 agreement. Until the court
rules on our motion to reconsider and our summary judgment
motion, we are obligated to pay the amounts above the Cap. While
we are unable to predict the outcome of this proceeding, we
believe we have good legal and factual defenses and we will
continue to vigorously defend against this lawsuit.



| |                                 
| | --------------------------------
| | C. Organizational
    Structure.

As of December 31, 2003, Fiat Netherlands, a
wholly owned subsidiary of Fiat, owns approximately 84% of
CNHs outstanding common shares and all of our outstanding
Series A Preferred Stock. Fiat was founded in Turin on
July 11, 1899.

The Fiat Group is a global industrial
manufacturer with a primary focus on the production and sale of
automobiles, agricultural and construction equipment and
commercial vehicles. The Fiat Group also manufactures products
and systems for use by its automotive sectors and for sale to
third parties, principally components, metallurgical products
and production systems. In addition, the Fiat Group is involved
in other sectors, including publishing and communications and
service operations.

As of December 2003, Fiat is one of the
worlds largest industrial groups, operating in 58
countries. Fiat employs over 162,000 people worldwide.

The Fiat Groups operations are currently
conducted through nine operating sectors: Automobiles,
Agricultural and Construction Equipment, Commercial Vehicles,
Ferrari, Components, Production Systems, Metallurgical Products,
Services, Publishing and Communications. These companies include
Fiat Auto Holdings, CNH, Iveco, Ferrari, Magneti Marelli,
Comau, Teksid, Business Solutions and Itedi.

At December 31, 2002, the Group also
included Insurance and Aviation sectors, which Fiat divested in
2003.

A listing of our significant directly and
indirectly owned subsidiaries as of December 31, 2003 is
set forth in an exhibit to this Form 20-F.

41



---



##### 





| |                                       
| | --------------------------------------
| | D. Property, Plants and
    Equipment.

Our facilities are well maintained, in good
operating condition and are suitable for their present purposes.
These facilities, including the planned restructuring actions
and planned capital expenditures, are expected to meet our
manufacturing needs in the foreseeable future. Planned capacity
is adequate to satisfy anticipated retail demand and the
operations are designed to be flexible enough to accommodate the
planned product design changes required to meet market
conditions and new product programs.

The following table provides information about
our principal manufacturing, engineering and administrative
facilities, as of December 31, 2003:

|                 |  |                                                                            |  |               |       |                  |  |  |               |   
|---------------- |  | -------------------------------------------------------------------------- |  | ------------- | ----- | ---------------- |  |  | ------------- | --
|                 |  |                                                                            |  | Approximate   |       |                 
|Location         |  | Primary Functions                                                          |  | Covered Area* |       | Ownership Status
|                 |  |                                                                            |  |               |       |                 
|United States    |  |                                                                            |  |               |       |                  |  |  |               |   
|Belleville, PA   |  | Hay and Forage                                                             |  |               | 540   |                  |  |  | Owned         |   
|Benson, MN       |  | Agricultural Sprayers                                                      |  |               | 219   |                  |  |  | Owned         |   
|Burlington, IA   |  | Backhoe Loaders; Fork Lift Trucks                                          |  |               | 989   |                  |  |  | Owned         |   
|Burr Ridge, IL   |  | Technology (Engineering) Center                                            |  |               | 549   |                  |  |  | Owned         |   
|Calhoun, GA      |  | Crawler Excavators and Dozers                                              |  |               | 267   |                  |  |  | Owned         | **
|Dublin, GA       |  | Compact Tractors                                                           |  |               | 60    |                  |  |  | Owned         |   
|East Moline, IL  |  | Combine Harvesters; Cotton Pickers                                         |  |               | 2,375 |                  |  |  | Owned         |   
|Fargo, ND        |  | Tractors; Wheel Loaders                                                    |  |               | 531   |                  |  |  | Owned         |   
|Goodfield, IL    |  | Soil Management (Tillage Equipment)                                        |  |               | 233   |                  |  |  | Owned         |   
|Grand Island, NE |  | Combine Harvesters                                                         |  |               | 680   |                  |  |  | Owned         |   
|Lake Forest, IL  |  | Global Management Offices                                                  |  |               | 65    |                  |  |  | Leased        |   
|New Holland, PA  |  | Administrative Facilities; Hay and                                         |  |               | 1,190 |                  |  |  | Owned         |   
|                 |  | Forage; Engineering Center                                                 |  |               |       |                  |  |  |               |   
|Racine, WI       |  | Administrative Facilities; Tractor Assembly;
    Transmissions and Foundry |  |               | 1,343 |                  |  |  | Owned/ Leased |   
|Wichita, KS      |  | Skid Steer Loaders                                                         |  |               | 455   |                  |  |  | Owned         |   
|Italy            |  |                                                                            |  |               |       |                  |  |  |               |   
|Imola            |  | Backhoe Loaders; Emergency Center                                          |  |               | 384   |                  |  |  | Owned         |   
|Jesi             |  | Tractors                                                                   |  |               | 710   |                  |  |  | Owned         |   
|Lecce            |  | Construction Equipment; Engineering Center                                 |  |               | 1,550 |                  |  |  | Owned         |   
|Modena           |  | Components                                                                 |  |               | 1,150 |                  |  |  | Owned         |   
|San Matteo       |  | Research and Development                                                   |  |               | 540   |                  |  |  | Owned         |   
|San Mauro        |  | Crawler Excavators                                                         |  |               | 590   |                  |  |  | Owned         | **
|France           |  |                                                                            |  |               |       |                  |  |  |               |   
|Coex             |  | Grape Harvesters; Engineering Center                                       |  |               | 280   |                  |  |  | Owned         |   
|Crepy-En-Valois  |  | Excavators                                                                 |  |               | 676   |                  |  |  | Owned         |   
|Croix            |  | Cabs                                                                       |  |               | 466   |                  |  |  | Owned         |   
|Tracy-Le-Mont    |  | Hydraulic Cylinders                                                        |  |               | 204   |                  |  |  | Owned         |   
|United Kingdom   |  |                                                                            |  |               |       |                  |  |  |               |   
|Basildon         |  | Tractors; Components; Engineering Center;                                  |  |               | 1,390 |                  |  |  | Owned         |   
|                 |  | Administrative Facilities                                                  |  |               |       |                  |  |  |               |   
|Germany          |  |                                                                            |  |               |       |                  |  |  |               |   
|Berlin           |  | Construction Equipment; Engineering Center                                 |  |               | 1,113 |                  |  |  | Leased        |   
|Dortmund         |  | Administrative Facilities; Test and Parts                                  |  |               | 348   |                  |  |  | Leased        |   
|                 |  | Centers                                                                    |  |               |       |                  |  |  |               |   
|Heidelberg       |  | Administrative and Warehouse Facilities                                    |  |               | 162   |                  |  |  | Owned         |   
|Neustadt         |  | Combine Harvesters                                                         |  |               | 515   |                  |  |  | Owned         |   

42



---



##### 



|                           |  |                                                  |  |               |       |                  |  |  |        |   
|-------------------------- |  | ------------------------------------------------ |  | ------------- | ----- | ---------------- |  |  | ------ | --
|                           |  |                                                  |  | Approximate   |       |                 
|Location                   |  | Primary Functions                                |  | Covered Area* |       | Ownership Status
|                           |  |                                                  |  |               |       |                 
|Brazil                     |  |                                                  |  |               |       |                  |  |  |        |   
|Belo Horizonte             |  | Construction Equipment; Engineering Center       |  |               | 510   |                  |  |  | Owned  |   
|Curitiba                   |  | Tractors; Combine Harvesters; Engineering Center |  |               | 760   |                  |  |  | Owned  |   
|Piracicaba                 |  | Sugar Cane Harvesters                            |  |               | 108   |                  |  |  | Owned  |   
|Canada                     |  |                                                  |  |               |       |                  |  |  |        |   
|Saskatoon                  |  | Air-Seeding Equipment; Engineering Center        |  |               | 750   |                  |  |  | Owned  |   
|Belgium                    |  |                                                  |  |               |       |                  |  |  |        |   
|Antwerp                    |  | Components                                       |  |               | 645   |                  |  |  | Leased |   
|Zedelgem                   |  | Combine Harvesters; Hay and Forage;              |  |               | 1,655 |                  |  |  | Owned  |   
|                           |  | Engineering Center                               |  |               |       |                  |  |  |        |   
|Others                     |  |                                                  |  |               |       |                  |  |  |        |   
|Bundaberg, Australia       |  | Sugar Cane and Coffee Harvesters                 |  |               | 206   |                  |  |  | Owned  |   
|St. Valentin, Austria      |  | Tractors                                         |  |               | 398   |                  |  |  | Leased |   
|Shanghai, China            |  | Tractors                                         |  |               | 775   |                  |  |  | Leased | **
|New Delhi, India           |  | Tractors; Engineering Center                     |  |               | 360   |                  |  |  | Owned  |   
|Plock, Poland              |  | Combine Harvesters                               |  |               | 1,020 |                  |  |  | Owned  |   
|Amsterdam, The Netherlands |  | Administrative                                   |  |               | 2     |                  |  |  | Leased |   




|  |                            
|- | ---------------------------
|* | in thousands of square feet



|   |                           
|-- | --------------------------
|** | consolidated joint venture

In addition, we own or lease a number of other
manufacturing and non-manufacturing facilities, including office
facilities, parts depots and dealerships, worldwide.

Environmental Matters

Our operations and products are subject to
extensive environmental laws and regulations in each of the
countries in which we operate. We have an ongoing Pollution
Prevention Program to reduce industrial waste, air emissions and
water usage. We also have a program designed to implement
environmental management practices and compliance, to promote
continuing environmental improvements and to identify and
evaluate environmental risks at manufacturing and other
facilities worldwide.

Our engines and equipment are subject to
extensive statutory and regulatory requirements that impose
standards with respect to air emissions. Further emissions
reductions in the future from non-road engines and equipment
have been promulgated or are contemplated in the United States
as well as by non-U.S. regulatory authorities in many
jurisdictions throughout the world. We expect that we may make
significant capital and research expenditures to comply with
these standards now and in the future. We anticipate that these
costs are likely to increase as emissions limits become more
stringent. At this time, however, we are not able to quantify
the dollar amount of such expenditures as the levels and timing
are not agreed by the regulatory bodies. The failure to comply
with these emission limits could result in adverse effects on
future financial results.

Capital expenditures for environmental control
and compliance in 2003 was approximately $2 million and
projections for 2004 are approximately $3 million. The
Clean Air Act Amendments of 1990 and European Commission
directives affect directly the operations of all of our
manufacturing facilities in the United States and Europe
currently and in the future. The manufacturing processes
affected include painting, coating and foundry operations.
Although capital expenditures for environmental control
equipment and compliance costs in future years will depend on
legislative, regulatory and technological developments that
cannot accurately be predicted at this time, we anticipate that
these costs are likely to increase as environmental requirements

43



---



##### 



become more stringent. We believe that these
capital costs, exclusive of product-related costs, will not have
a material adverse effect on our business, financial position or
results of operations.


Pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA),
which imposes strict and, under certain circumstances, joint and
several liability for remediation and liability for natural
resource damages, and other federal and state laws that impose
similar liabilities, we have received inquiries for information
or notices of our potential liability regarding 45 non-owned
sites at which hazardous substances allegedly generated by us
were disposed (Waste Sites). Of the Waste Sites, 19
are on the National Priority List promulgated pursuant to
CERCLA. At 40 of the Waste Sites, the monetary amount or extent
of our liability has been resolved, we have not been named as a
potentially responsible party (PRP), or our
liability is likely de minimis. Because estimates of
remediation costs are subject to revision as more information
becomes available about the extent and cost of remediation and
because settlement agreements can be reopened under certain
circumstances, our potential liability for remediation costs
associated with the 45 Waste Sites could change. Moreover,
because liability under CERCLA and similar laws can be joint and
several, we could be required to pay amounts in excess of our
pro rata share of remediation costs. However, when appropriate,
our understanding of the financial strength of other PRPs has
been considered in the determination of our potential liability.
We believe that the costs associated with the Waste Sites will
not have a material adverse effect on our business, financial
position or results of operations.

We are conducting environmental investigatory or
remedial activities at certain properties that are currently or
were formerly owned and/or operated or which are being
decommissioned. We believe that the outcome of these activities
will not have a material adverse effect on our business,
financial position or results of operations.

The actual costs for environmental matters could
differ materially from those costs currently anticipated due to
the nature of historical handling and disposal of hazardous
substances typical of manufacturing and related operations, the
discovery of currently unknown conditions, and as a result of
more aggressive enforcement by regulatory authorities and
changes in existing laws and regulations. As we have in the
past, we will fund our costs of environmental compliance from
operating cash flows.






|        |                                                 
|------- | ------------------------------------------------
|Item 5. | Operating and Financial Review and
    Prospects

We have prepared our financial statements in
accordance with generally accepted accounting principles in the
United States (U.S. GAAP).

Our agricultural and construction equipment
businesses are collectively referred to as our Equipment
Operations. Our financial services businesses are collectively
referred to as Financial Services. Unless otherwise indicated,
all financial data set forth herein is expressed in
U.S. Dollars.

The Consolidated data in this section
includes CNH Global N.V. and its consolidated subsidiaries and
conforms to the requirements of Statement of Financial
Accounting Standards (SFAS) No. 94. In the
supplemental consolidating data in this section, Equipment
Operations (with Financial Services on the
equity basis) include primarily CNH Global N.V.s
agricultural and construction equipment operations. The
supplemental Financial Services consolidating data
in this section include primarily CNH Global N.V.s
financial services business. Transactions between
Equipment Operations and Financial
Services have been eliminated to arrive at the
Consolidated data. This presentation is consistent
with the other consolidated and supplemental financial
information presented throughout this report.

44



---



##### 





| |                      
| | ---------------------
| | A. Operating Results.



| |                      
| | ---------------------
| | 2003 Compared to 2002



| |         
| | --------
| | Revenues

Consolidated revenues for 2003 totaled
approximately $10,666 million as compared to approximately
$9,940 million in 2002. Adjusted for variations in foreign
exchange rates (approximately $810 million) and 2002
acquisitions (approximately $60 million), consolidated
revenues were down slightly compared to 2002 despite a
strengthening equipment market as we continued efforts to reduce
dealer inventory levels. The largest component of our
consolidated revenues is our net sales of agricultural and
construction equipment, which were $10,069 million in 2003
as compared to approximately $9,331 million in 2002.
Adjusted for the impact of variations in foreign exchange rates
and acquisitions, net sales of equipment were down slightly from
2002 levels.



| |                       
| | ----------------------
| | Net Sales of Equipment

Net sales of our Equipment Operations for the
years ended December 31, 2003 and 2002 by geographic area
were as follows:

|          |                |                 |   |       |        |  |   |       |       | 
|--------- | -------------- | --------------- | - | ----- | ------ |  | - | ----- | ----- | 
|          |                | 2003            |   | 2002 
|          |                |                 |   |      
|          |                |                
|          |                | (in millions)  
|Net sales |                |                 |   |       |        |  |   |      
|          | North America  |                 | $ | 4,206 |        |  | $ | 4,140 |      
|          | Western Europe |                 |   | 3,739 |        |  |   | 3,317 |      
|          | Latin America  |                 |   | 712   |        |  |   | 638   |      
|          | Rest of World  |                 |   | 1,412 |        |  |   | 1,236 |      
|          |                |                 |   |       |        |  |   |      
|          |                | Total net sales |   | $     | 10,069 |  |   | $     | 9,331 | 
|          |                |                 |   |       |        |  |   |      

Net sales of equipment were up 8% in 2003,
$800 million of which was due to currency variances and
approximately $60 million which was related to the impact
of 2002 acquisitions. The increase in sales was primarily the
result of increases in sales of agricultural equipment.



| |                       
| | ----------------------
| | Agricultural Equipment

|          |                |                 |   |       |       |  |   |       |       | 
|--------- | -------------- | --------------- | - | ----- | ----- |  | - | ----- | ----- | 
|          |                | 2003            |   | 2002 
|          |                |                 |   |      
|          |                |                
|          |                | (in millions)  
|Net sales |                |                 |   |       |       |  |   |      
|          | North America  |                 | $ | 2,893 |       |  | $ | 2,803 |      
|          | Western Europe |                 |   | 2,543 |       |  |   | 2,141 |      
|          | Latin America  |                 |   | 579   |       |  |   | 486   |      
|          | Rest of World  |                 |   | 1,110 |       |  |   | 975   |      
|          |                |                 |   |       |       |  |   |      
|          |                | Total net sales |   | $     | 7,125 |  |   | $     | 6,405 | 
|          |                |                 |   |       |       |  |   |      

Net sales of agricultural equipment in 2003 were
approximately 11% higher than in 2002. Approximately 8% of this
increase resulted from the effects of currency translation, as
the Euro and the Australian dollar were approximately 20%
stronger in 2003 than in 2002, the Canadian dollar was
approximately 12% stronger, the British pound about
9% stronger while the Yen was about 7% stronger. Additional
revenue from new products launched during the year and higher
pricing, especially in Brazil, contributed approximately
$250 million, while declining volume and mix was a partial
offset.

Overall in 2003, world market demand for major
agricultural equipment product lines was approximately
7% higher than in 2002. Worldwide demand for tractors, on a
unit basis, increased by about 7% as increases of approximately
20% in North America and 14% in Rest of World markets were
partially offset by declines of

45



---



##### 



approximately 14% in Latin America and 5% in
Western Europe. Worldwide demand for combines was approximately
equal to 2002. Demand in North America declined by about 3%
while demand in Western Europe declined by about 7% and in Rest
of World markets demand declined by about 20%. Combine demand in
Latin America, however, was up approximately 25%. On a unit
basis, our agricultural equipment sales penetration declined
slightly, as our overall tractor market share declined by about
one-half of a percentage point from 2002, partially offset by an
increase in our combine market share of approximately one and
one-half percentage points. In total, we under produced retail
demand by about 7% in order to reduce company and dealer
inventories. At year-end total company and dealer inventories
had declined by slightly more than one-half of one months
supply, on a forward months supply basis.


In North America, net sales of agricultural
equipment increased by about 3% in 2003 compared with 2002,
reflecting increases related to exchange rate changes of
approximately 2% and all other increases of about 1%. Wholesale
unit sales of tractors and combines increased by almost 1%.
Total market demand for agricultural tractors in North America
increased by about 7%. Demand for under 40 horsepower
tractors increased by 28%. Industry demand for mid-sized (40 to
100 horsepower) tractors increased by about 10%; demand for
large two wheel drive tractors over 100 horsepower
increased by approximately 3% while demand for four wheel drive
articulated tractors increased by 19%. Combine market demand
declined by about 3%. Our market penetration declined by about
two percentage points principally related to under-40 horsepower
tractors, while our combine market penetration increased by more
than five percentage points.

In Western Europe, net sales of agricultural
equipment increased by 19%, principally reflecting the 20%
increase in the average value of the Euro and the 9% increase in
the average value of the British Pound, in each case as compared
with the U.S. Dollar from 2003 to 2002. Overall tractor
market demand, as measured in units, declined by about 5% in
2003 and overall combine market demand declined by about 3%. Our
wholesale unit sales increased slightly as market penetration
increased slightly for tractors and by about three percentage
points for combines.

In Latin America, net sales of agricultural
equipment in 2003 were 19% higher than in 2002. Pricing was
strong and more than offset the decline of approximately 5% in
the average value of the Brazilian Real in 2003 compared with
2002. In addition, while market demand for tractors declined by
approximately 14%, demand for combines increased by 25%,
resulting in essentially no change, year-over-year in our unit
wholesale volumes, but with a substantially improved mix of
higher valued combines. This richer combine sales mix was the
prime contributor to the revenue increase in addition to
pricing. The decline in total market demand for agricultural
tractors in Latin America was led by an almost 11% decline in
market demand for tractors in Brazil, based on reported unit
sales. Tractor market demand in Argentina, however, increased
significantly from the low levels experienced in 2002 after its
devaluation. The substantial increase in total market demand for
combines was almost totally accounted for by the resurgence of
the Argentine combine market as it rebounded from less than
1,000 units in 2002 to over 3,500 units in 2003, while
total industry unit sales of combines in Brazil declined by
about 4%.

In markets throughout the Rest of the World, net
sales of agricultural equipment in 2003 increased by
approximately 14% compared to 2002. Variations in exchange
rates, in particular the 20% strengthening of the Australian
dollar, accounted for about 11% of the increase. Wholesale unit
sales of tractors and combines in 2003 were lower than in 2002.
Stronger parts sales and improved product mix accounted for the
balance of the increase.

46



---



##### 





| |                       
| | ----------------------
| | Construction Equipment

|          |                |                 |   |       |       |  |   |       |       | 
|--------- | -------------- | --------------- | - | ----- | ----- |  | - | ----- | ----- | 
|          |                | 2003            |   | 2002 
|          |                |                 |   |      
|          |                |                
|          |                | (in millions)  
|Net sales |                |                 |   |       |       |  |   |      
|          | North America  |                 | $ | 1,313 |       |  | $ | 1,337 |      
|          | Western Europe |                 |   | 1,196 |       |  |   | 1,176 |      
|          | Latin America  |                 |   | 133   |       |  |   | 152   |      
|          | Rest of World  |                 |   | 302   |       |  |   | 261   |      
|          |                |                 |   |       |       |  |   |      
|          |                | Total net sales |   | $     | 2,944 |  |   | $     | 2,926 | 
|          |                |                 |   |       |       |  |   |      

Net sales of construction equipment increased by
approximately 1% in 2003 compared with 2002. Excluding
acquisitions, net sales decreased by approximately 1%. This
increase was more than accounted for by the effects of currency
translation, as the Euro and the Australian dollar were
approximately 20% stronger in 2003 than in 2002, the
Canadian dollar was approximately 12% stronger, the British
pound about 9% stronger and the Yen was about
7% stronger. Pricing was slightly positive, but wholesale
unit volumes declined as we under-produced retail demand by 7%
to reduce company and dealer inventories. At year-end total
company and dealer inventories had declined by slightly more
than one-half of one months supply, on a forward months
supply basis.

World market demand for major construction
equipment product lines in which we compete, on a unit basis,
increased by about 11% in 2003 compared with 2002. Market demand
increased in both North America and in Rest of World markets in
all of our major product categories. These increases were
partially offset by declines in demand in both Western European
and Latin American markets, in all of our major product lines.
World market demand for backhoe loaders, on a units basis,
increased by about 6% while demand for skid steer loaders
increased by about 1%. Worldwide demand for our heavy
construction equipment product lines increased by approximately
19%. On a unit basis, our construction equipment market
penetration declined by approximately three percentage points,
with declines in all of our major product categories in nearly
every market.

In North America, net sales of construction
equipment decreased by approximately 2% in 2003 compared with
2002. Variations in exchange rates, principally the Canadian
dollar, increased net sales by about 1%. Wholesale unit sales
declined by almost 9% and production was approximately 11% lower
than retail in order to reduce dealer and company inventories.
Wholesale unit sales of backhoe loaders and skid steer loaders
declined, while unit sales of heavy construction equipment
products increased. The total North American market demand for
construction equipment increased by about 8%, including
increases of 8% for backhoe loaders, 4% for skid steer loaders
and 12% for heavy construction equipment.

In Western Europe, net sales of construction
equipment increased by 2%. Excluding the acquisition of Kobelco
Europe in the third quarter of 2002, net sales declined by 3%.
Variations in exchange rates, principally the 20% increase in
the average value of the Euro and the 9% increase in the average
value of the British Pound, as compared with the
U.S. Dollar from 2003 to 2002, increased revenue by
approximately 16%. Offsetting the increases due to currency, our
net sales reflected 18% lower wholesale unit sales, resulting
from a decline in overall market demand, as measured in units,
by approximately 4% in 2003, a 2% reduction in production versus
retail sales in order to reduce company and dealer inventories,
and difficulties associated with the companys transition
from the Fiat-Hitachi association and dealer network to the
Fiat-Kobelco network.

In Latin America, net sales of construction
equipment decreased by 13% in 2003 compared with 2002. Excluding
the impact of the 5% decline in the average value of the
Brazilian Real in 2003, our sales in Latin America were down
approximately 3%, while our wholesale unit sales declined by
approximately 24%. Total Latin American market demand, as
measured in units, declined by about 18%, including a 23%
decline in market demand for backhoe loaders, a 17% decline in
demand for heavy construction equipment and a 10%

47



---



##### 



decline in market demand for skid steer loaders.
We also slightly under-produced retail sales to control
inventories in this declining market.


In markets throughout the Rest of World, where we
have a minimal presence, net sales of construction equipment
increased by 16% in 2003 compared with 2002. Approximately 13%
of the increase is due to variations in exchange rates. Our
wholesale unit sale increased by approximately 7% and production
was in-line with retail sales.



| |                            
| | ---------------------------
| | Finance and Interest Income

Consolidated finance and interest income
decreased from $609 million in 2002 to $597 million in
2003 largely due to the decrease in Financial Services revenues.
Revenues for Financial Services totaled $621 million in
2003, a decrease of $20 million from the $641 million
reported in 2002. The decrease in revenues was primarily caused
by lower average receivable balances resulting from the
successful completion of asset-backed securitization
transactions, lower yields on certain on-book portfolios due to
reduced market interest rates and lower operating lease revenues.



| |                   
| | ------------------
| | Costs and Expenses

Costs of goods sold increased by
$688 million to $8,590 million in 2003, but as a
percentage of net sales of equipment increased from 84.7% in
2002 to 85.3% in 2003. Gross margin (net sales of equipment less
cost of goods sold), expressed as a percentage of net sales of
equipment, was 14.7% in 2003 as compared to 15.3% in 2002. This
decrease in gross margin percentage reflected an increase in the
gross margin of construction equipment from 11.5% in 2002 to
12.5% in 2003, which was more than offset by a decline in the
gross margin of agricultural equipment from 17.1% in 2002 to
15.6% in 2003. In total, the gross margin increase, expressed in
dollars, was more than accounted for by favorable changes in the
exchange rates, increased pricing, our profit improvement
actions and margin increases from new products. Partial offsets
were adverse volume and mix, production, labor and other
inefficiencies caused by the launch of new products, labor
economics and increased pension and post-retirement benefit
costs.

In 2003, consolidated SG&A expenses decreased
by $52 million to $1,042 million from
$1,094 million in the prior year, as those expenses
decreased in both Equipment Operations and Financial Services.
In Equipment Operations, SG&A expenses decreased by
$45 million to $839 million in 2003 from
$884 million in 2002, or expressed as a percentage of net
sales of equipment, a decrease from 9.5% in 2002 to 8.3% in
2003. The decrease in SG&A expenses in Equipment Operations
was driven primarily by the reduction during the year in total
salaried headcount by almost 1,000 persons, from
approximately 11,250 at the end of 2002 to approximately 10,250
at the end of 2003. Approximately 900 of the reductions in
salaried personnel were at Equipment Operations. The remaining
100 reductions occurred at Financial Services. These
reductions were part of the plan to achieve an additional
$650 million of profit improvements and additional margins
from new products by 2006. Savings resulting from these actions
were partially offset by higher employee pension and
post-retirement benefit costs, by the impacts of inflation and
the $70 million impact of the strengthening Euro, British
Pound and Australian Dollar on overseas SG&A expenses.

At Financial Services, SG&A expenses
decreased by $7 million. Costs declined primarily due to a
lower loan loss provisions of approximately $12 million,
which was mainly due to a reduction in losses in the non-core
portfolio and improvements in the credit quality of the core
portfolios. These reductions were partially offset by increased
costs in Europe resulting from the management of an increasing
European wholesale receivables portfolio.

Although we believe that the cessation of
originations in these non-core portfolios has significantly
reduced the potential for additional future charges, we may need
to record additional loan loss provisions if there is a further,
unanticipated deterioration in market conditions affecting the
underlying industries. The

48



---



##### 



following information summarizes the significance
of these North American non-core portfolios relative to our
total loan portfolios and certain performance-related data as of
December 31, 2003, 2002 and 2001:


|                              |  |               |        |      |  |      |       |  |  |   |       | 
|----------------------------- |  | ------------- | ------ | ---- |  | ---- | ----- |  |  | - | ----- | 
|                              |  | 2003          |        | 2002 |  | 2001
|                              |  |               |        |      |  |     
|                              |  |              
|                              |  | (in millions)
|Non-core portfolio            |  | $             | 330    |      |  | $    | 570   |  |  | $ | 939   | 
|Percentage of total portfolio |  |               | 3%     |      |  |      | 5%    |  |  |   | 10%   | 
|Delinquency percentage*       |  |               | 29%    |      |  |      | 28%   |  |  |   | 25%   | 
|Annual loss percentage        |  |               | 15.40% |      |  |      | 8.66% |  |  |   | 6.45% | 
|Loss provision provided       |  | $             | 68     |      |  | $    | 63    |  |  | $ | 110   | 



---

|  |                                                                                                
|- | -----------------------------------------------------------------------------------------------
|* | Calculated as the percentage of loans in the
    relevant portfolio more than 30 days past due.

By comparison, delinquency percentages for our
North American core portfolio were 2.9% and 3.9% for 2003 and
2002, respectively, and annual loss percentages for the North
American core portfolio increased to 1.0% at December 31,
2003 from 0.8% at December 31, 2002.

Ongoing R&D expenses decreased by
$24 million from $283 million in 2002 to
$259 million in 2003. Expressed as a percentage of net
sales of equipment, R&D expenses decreased to 2.6% in
2003 compared with 3.0% in 2002. These reductions were part of
the plan to achieve an additional $650 million of profit
improvements and additional margins from new products by 2006.
Savings resulting from these actions were partially offset by
increased pension and post-retirement benefit costs and by the
impacts of inflation and the strengthening Euro,
British pound and Australian dollar on overseas
R&D expenses.

Our consolidated worldwide employment level has
declined by approximately 1,700 persons from approximately
28,500 at the end of 2002 to approximately 26,800 at the end of
2003. As indicated above, year-end 2003 salaried headcount
declined from approximately 11,250 at year-end 2002 to
approximately 10,250 at year-end 2003.

During 2003, we recorded $271 million in
restructuring costs, including $268 million in Equipment
Operations and $3 million in Financial Services. These
restructuring costs primarily relate to severance, benefit plan
curtailments and other costs incurred due to headcount
reductions and facility closings under the CNH Merger
Integration Plan. See Note 13, Restructuring to
the Consolidated Financial Statements for a detailed analysis of
our restructuring programs.

The reduction in consolidated interest
expense  Fiat affiliates from $236 million in
2002 to $113 million in 2003 was principally due to lower
borrowings resulting from the April 2003 issuance of
8 million shares of Series A Preferred Stock to Fiat
and an affiliate of Fiat in exchange for the retirement of
$2 billion in Equipment Operations indebtedness owed to
Fiat Group companies.

The decline in interest expense  Fiat
affiliates was partially offset by an increase in interest
expense  other which was the direct effect of the
August and September 2003 issuance of a total of
$1.05 billion of the 9 1/4% Senior Notes.

Interest expense  Fiat affiliates in
Equipment Operations decreased to $85 million in 2003 from
$198 million in 2002 primarily as a result of the
Series A Preferred Stock exchange for debt. Interest
expense  other increased from $192 million to
$236 million, primarily as a result of the
9 1/4% Senior Notes transactions described above. The
decrease in Financial Services interest expense 
other, of $22 million to $182 million was mainly due
to lower average funding costs and to lower average borrowing
levels supporting the approximately $400 million lower
average balances of on-book retail and wholesale receivables and
operating leases. During 2003 Financial Services repaid
approximately $800 million of borrowings from Equipment
Operations primarily due to the runoff of the old non-core
portfolio assets and operating leases.

Financial Services provides interest free floor
plan financing to our Equipment Operations dealers, primarily in
North America, to support wholesale net sales of equipment to
those dealers. During 2003 and

49



---



##### 



2002, Equipment Operations incurred approximately
$79 million and $76 million, respectively, of interest
compensation to Financial Services for the cost of providing
interest free floor plan financing to our Equipment Operations
dealers.


Other, net increased to $241 million in 2003
from $182 million in 2002. The increase in other expenses
was primarily attributable to higher pension and post-retirement
benefit costs for retired, inactive employees, lower gains on
the sale of fixed assets, higher product liability accruals and
higher franchise taxes.

During 2003, total equity in income (loss) of
unconsolidated subsidiaries and affiliates was a net profit of
$19 million, the same as 2002. Financial Services equity in
income of unconsolidated subsidiaries increased $2 million
during 2003 due primarily to 2003 reflecting a full year of
results from our joint venture with BPLG in Europe which was
formed in mid-2002. Equity in income from our unconsolidated
Equipment Operations activities decreased from a profit of
$15 million in 2002 to a profit of $13 million in
2003. Profits declined as improved results in Japan and Pakistan
did not offset deteriorations in Turkey and Mexico.



| |                         
| | ------------------------
| | Tax Rates  Consolidated

Our effective tax rate was approximately 25% in
2003. Our effective tax rate was 3% in 2002. Excluding the
impact of the cumulative effect of a change in accounting
principle recognized in 2002, our effective tax rate, was
approximately 13%. For an analysis of the principal factors
affecting our effective tax rate, see Note 12, Income
Taxes to the Consolidated Financial Statements.



| |           
| | ----------
| | Net Income

For the year ending December 31, 2003, our
consolidated net loss, after pre-tax restructuring charges of
$271 million, was $157 million. This compares to a
2002 consolidated net loss, after pre-tax restructuring charges
of $51 million and a $325 million after tax charge for
the cumulative effect of a change in accounting principle of
$426 million. On a diluted basis, losses per share were
$1.19 and $4.40 per share in 2003 and 2002, respectively,
based on diluted weighted average shares outstanding of
132.0 million and 96.9 million, respectively.

Based on the jurisdictions impacted by our
restructuring actions, we utilized an effective tax rate of 31%
and 25%, respectively in 2003 and 2002 to evaluate the results
of our operations, net of these restructuring costs.
Additionally, as our goodwill is not deductible for income tax
purposes, there was no tax impact on 2002 results from the
related cumulative effect of a change in accounting principle.



| |                               
| | ------------------------------
| | Effect of Currency Translation

For financial reporting purposes, we convert the
financial results of each of our operating companies into
U.S. Dollars, using average exchange rates calculated with
reference to those rates in effect during the year. As a result,
any change from year to year in the U.S. Dollar value of
the other currencies in which we incur costs or receive income
is reflected in a currency translation effect on our financial
results.

The impact of currency translation on the results
of Financial Services operations is minimal, reflecting the
geographic concentration of such operations within the United
States. For Equipment Operations, the impact of currency
translation on net sales generally is largely offset by the
translation impact on costs and expenses.

During 2003, most of the currencies of our major
operations, as compared with the U.S. Dollar, strengthened.
Specifically the euro (20%), the Australian dollar (20%), the
British pound (9%), the Canadian dollar (12%) and the Japanese
yen (7%) all strengthened when compared to the U.S. dollar
while the Brazilian real (5%) weakened. The impact of these
movements increased net sales by approximately $800 million
or 8.6% and increased the absolute gross margin by approximately
$95 million or 6.6%. However, the impact on net income was
a decrease of approximately $10 million, as SG&A and
R&D costs increased by approximately $83 million and
other income/ expense net, interest expense and taxes also
increased.

50



---



##### 





| |                      
| | ---------------------
| | 2002 Compared to 2001



| |         
| | --------
| | Revenues

Consolidated revenues for 2002 totaled
approximately $9,940 million as compared to approximately
$9,715 million in 2001. Adjusted for the favorable impact
of foreign exchange rates ($55 million) and acquisitions
($305 million), consolidated revenues were essentially flat
compared to 2001 despite a declining equipment market. The
largest component of our consolidated revenues is our net sales
of agricultural and construction equipment, which were
$9,331 million in 2002 as compared to approximately
$9,030 million in 2001. Adjusted for the impact of
favorable exchange rates and acquisitions, net sales of
equipment were essentially unchanged from 2001 levels.



| |                       
| | ----------------------
| | Net Sales of Equipment

Net sales of our Equipment Operations for the
years ended December 31, 2002 and 2001 by geographic area
were as follows:

|          |                |                 |   |       |       |  |   |       |       | 
|--------- | -------------- | --------------- | - | ----- | ----- |  | - | ----- | ----- | 
|          |                | 2002            |   | 2001 
|          |                |                 |   |      
|          |                |                
|          |                | (in millions)  
|Net sales |                |                 |   |       |       |  |   |      
|          | North America  |                 | $ | 4,140 |       |  | $ | 4,197 |      
|          | Western Europe |                 |   | 3,317 |       |  |   | 3,168 |      
|          | Latin America  |                 |   | 638   |       |  |   | 587   |      
|          | Rest of World  |                 |   | 1,236 |       |  |   | 1,078 |      
|          |                |                 |   |       |       |  |   |      
|          |                | Total net sales |   | $     | 9,331 |  |   | $     | 9,030 | 
|          |                |                 |   |       |       |  |   |      

Net sales of equipment were up 3% in 2002
reflecting approximately $55 million in favorable currency
translation impacts, and acquisitions which accounted for a
further increase of $305 million. Overall in 2002, world
market demand for major agricultural equipment product lines was
approximately 5% higher than in 2001. Increased worldwide demand
for tractors and increased demand for combines in Western Europe
and Latin America more than offset declines in the North
American and Rest of World markets. Our mix of agricultural
equipment sales remained relatively constant as our overall
tractor market share was essentially unchanged from 2001 while
our combine market share increased slightly. World market demand
for major construction equipment product lines declined in 2002,
reflecting decreased demand in North America and Western Europe
partially offset by increases in demand in Latin American and
Rest of World markets. World market demand for backhoe loaders
and skid steer loaders declined while demand for heavy
construction equipment increased. Our mix of sales weakened
slightly as our overall backhoe loader and skid steer loader
market shares declined, partially offset by an improvement in
our heavy construction equipment market share.



| |                       
| | ----------------------
| | Agricultural Equipment

|          |                |                 |   |       |       |  |   |       |       | 
|--------- | -------------- | --------------- | - | ----- | ----- |  | - | ----- | ----- | 
|          |                | 2002            |   | 2001 
|          |                |                 |   |      
|          |                |                
|          |                | (in millions)  
|Net sales |                |                 |   |       |       |  |   |      
|          | North America  |                 | $ | 2,803 |       |  | $ | 2,876 |      
|          | Western Europe |                 |   | 2,141 |       |  |   | 1,970 |      
|          | Latin America  |                 |   | 486   |       |  |   | 420   |      
|          | Rest of World  |                 |   | 975   |       |  |   | 807   |      
|          |                |                 |   |       |       |  |   |      
|          |                | Total net sales |   | $     | 6,405 |  |   | $     | 6,073 | 
|          |                |                 |   |       |       |  |   |      

Net sales of agricultural equipment in 2002 were
approximately 5% higher than in 2001. This increase was due
primarily to increases in wholesale unit sales of tractors and
combines and the favorable effects of currency translation,
pricing and acquisitions ($55 million). Overall worldwide
tractor market demand in 2002, as measured in units, increased
by about 5% from 2001 levels, and overall combine demand
increased by

51



---



##### 



about 1%. Our overall worldwide retail market
share of major agricultural equipment products was less than
one-half of a percentage point lower in 2002 compared with 2001.


In North America, net sales of agricultural
equipment decreased by about 3% in 2002 compared with 2001,
reflecting lower wholesale tractor and combine unit sales. Total
market demand for agricultural tractors in North America
increased by about 1%. Demand for under 40 horsepower tractors
increased by 6%. Industry demand for mid-sized (40 to 100
horsepower) tractors decreased by about 1%, demand for large two
wheel drive tractors over 100 horsepower decreased by
approximately 15% while demand for four wheel drive tractors
decreased by almost 19%. Combine market demand decreased by
about 20%.

In Western Europe, net sales of agricultural
equipment increased by 9%, reflecting lower tractor but higher
combine wholesale unit sales and the 5% increase in the average
value of the Euro and the 4% increase in the average value of
the British Pound, in each case as compared with the
U.S. Dollar from 2002 to 2001. Overall tractor market
demand, as measured in units, increased by about 5% in 2002 and
overall combine market demand increased by about 14%.

In Latin America, net sales of agricultural
equipment in 2002 were 16% higher than in 2001. Wholesale unit
sales increased by about 21% and pricing and mix were favorable,
but the average value of the Brazilian Real declined by
approximately 20% in 2002 compared with 2001. Total market
demand for agricultural tractors in Latin America increased by
14%, led by approximately 18% higher market demand for tractors
in Brazil, based on unit sales, as the Brazilian government
sustained its programs to assist farmers in purchasing
equipment. Total market demand for combines rose by about 25%,
with total industry unit sales of combines in Brazil increasing
by about 38%.

In markets throughout the Rest of the World, net
sales of agricultural equipment in 2002 increased by
approximately 21% compared to 2001. Wholesale unit sales of
tractors in 2002 were higher than in 2001, while unit sales of
combines declined slightly. The increase in Rest of World
markets was also due partially to an increase in the value of
the Australian Dollar as compared with the U.S. Dollar by
about 5% from 2001 to 2002.



| |                       
| | ----------------------
| | Construction Equipment

|          |                |                 |   |       |       |  |   |       |       | 
|--------- | -------------- | --------------- | - | ----- | ----- |  | - | ----- | ----- | 
|          |                | 2002            |   | 2001 
|          |                |                 |   |      
|          |                |                
|          |                | (in millions)  
|Net sales |                |                 |   |       |       |  |   |      
|          | North America  |                 | $ | 1,337 |       |  | $ | 1,321 |      
|          | Western Europe |                 |   | 1,176 |       |  |   | 1,198 |      
|          | Latin America  |                 |   | 152   |       |  |   | 167   |      
|          | Rest of World  |                 |   | 261   |       |  |   | 271   |      
|          |                |                 |   |       |       |  |   |      
|          |                | Total net sales |   | $     | 2,926 |  |   | $     | 2,957 | 
|          |                |                 |   |       |       |  |   |      

Net sales of construction equipment decreased by
approximately 1% in 2002 compared with 2001. Excluding
acquisitions, sales declined by approximately 9%. The decline in
net sales reflects lower wholesale unit sales of backhoe loaders
and skid steer loaders in the North American and Western
European markets, partially offset by higher unit sales of heavy
construction equipment products in the North American and Rest
of World markets. Our overall unit sales decreased in 2002 by
about 10%. Overall worldwide market demand as measured in units
decreased by about 4% from 2001 to 2002, led by a 10% decline in
the worldwide market demand for skid steer loaders for which we
are the second largest producer in the industry, followed
closely by an 8% decline in worldwide market demand for backhoe
loaders, for which we are the industry leader. Worldwide market
demand for heavy construction equipment increased by
approximately 2%. Our overall worldwide retail market share
declined by less than two percentage points in 2002 compared
with 2001.

In North America, net sales of construction
equipment increased by approximately 1% in 2002 compared with
2001, reflecting primarily the acquisition of Kobelco America,
which occurred in the first quarter of 2002.

52



---



##### 



Excluding Kobelco America, wholesale unit sales
of backhoe loaders and skid steer loaders declined while unit
sales of heavy construction equipment products increased. The
total market demand for construction equipment decreased by
about 12%, including a 17% decline in demand for backhoe
loaders, a 14% decline in demand for skid steer loaders and a
12% decline in demand for heavy construction equipment.


In Western Europe, net sales of construction
equipment decreased by 2% including the acquisition of Kobelco
Europe in the third quarter of 2002. Excluding Kobelco Europe,
the decline in our net sales reflected 10% lower wholesale unit
sales, partially offset by the 5% increase in the value of
the Euro and the 5% increase in the value of the British
Pound from 2001 to 2002. Overall market demand, as measured in
units, decreased by approximately 9% in 2002.

In Latin America, net sales of construction
equipment decreased by 9% in 2002 compared with 2001. The
decrease in net sales was principally due to the decline in the
average value of the Brazilian Real by approximately 20% in 2002
compared with 2001, and a decrease of 9% in wholesale unit sales
in that region. Total market demand, as measured in units,
increased by about 2%, including a 4% increase in market
demand for backhoe loaders, a 2% increase in Latin American
market demand for heavy construction equipment and flat market
demand for skid steer loaders.

In markets throughout the Rest of World, where we
have a minimal presence, net sales of construction equipment
decreased by 4% in 2002 compared with 2001. The reduction in net
sales is primarily due to the sale of our construction equipment
operations in Australia and China to Kobelco Japan.



| |                            
| | ---------------------------
| | Finance and Interest Income

Consolidated finance and interest income declined
from $685 million in 2001 to $609 million in 2002
largely due to the decrease in Financial Services revenues.
Revenues for Financial Services totaled $641 million in
2002, down $98 million from the $739 million reported
in 2001. The decline in revenues was primarily caused by an
approximately $110 million decrease in finance and interest
income earned on retail and wholesale receivables in 2002 due
principally to a 1.21% decrease in the average yield and a
decrease in the average balance of outstanding retail and
wholesale receivables of approximately $320 million.
Securitization related revenues remained essentially unchanged.
As a partial offset, revenues from operating leases increased
slightly.



| |                   
| | ------------------
| | Costs and Expenses

Costs of goods sold increased by
$316 million to $7,902 million in 2002, but as a
percentage of net sales of equipment increased slightly from
84.0% in 2001 to 84.7% in 2002. Gross margin (net sales of
equipment less cost of goods sold), expressed as a percentage of
net sales of equipment, was 15.3% in 2002 as compared to 16.0%
in 2001. This decline in gross margin reflected a decline in the
gross margin of construction equipment from 15.3% in 2001 to
11.4% in 2002, which was only partially offset by an increase in
the gross margin of agricultural equipment from 16.4% in 2001 to
16.9% in 2002. In total, gross margin deterioration was
principally due to lower absorption of fixed costs, pricing
pressures and unfavorable mix, all primarily related to
construction equipment, that was partially offset by favorable
agricultural equipment volume and pricing, the favorable impact
of the Shanghai joint venture and the global alliance with
Kobelco Japan completed during the year and a total of
$76 million of merger-related profit improvements,
primarily related to lower material costs.

In 2002, consolidated SG&A expenses declined
by $130 million to $1,094 million from
$1,224 million in the prior year, as those expenses
declined in both Equipment Operations and Financial Services. In
Equipment Operations, SG&A expenses declined by
$31 million to $884 million in 2002 from
$915 million in 2001, or expressed as a percentage of net
sales of equipment, a decrease from 10.1% in 2001 to 9.5% in
2002. The decrease in SG&A expenses in Equipment
Operations was driven primarily by the reduction in
pre-acquisition salaried headcount by approximately
700 persons. These reductions were principally due to the
ongoing cost reduction initiatives and merger integration profit
improvement activities initiated by us totaling approximately
$38 million and by reductions in bad debt expense. These
actions were partially offset by higher

53



---



##### 



employee medical and pension costs, the impacts
of inflation and the strengthening euro, British pound and
Australian dollar on overseas SG&A expenses and by the
inclusion in 2002 of SG&A costs from our Shanghai joint
venture, Kobelco America and Kobelco Europe, which increased
year-end salaried headcount by approximately 500 persons.
SG&A expenses in Financial Services decreased by
$104 million due to lower loan loss provisions of
approximately $106 million, on a pre-tax basis, which were
mainly due to a reduction in loans in the non-core businesses
and reductions in the impairment charge related to retained
interests in ABS trust facilities.


Non-core financing activities were discontinued
during 2001. During 2002, the non-core portfolio decreased 39%
due to liquidations and write-offs, and the non-core portfolio
loss provision also decreased.

Although we believe that the cessation of
originations in these non-core portfolios has significantly
reduced the potential for additional future charges, we may need
to record additional loan loss provisions for these portfolios
if there is a further, unanticipated deterioration in market
conditions affecting the underlying industries. The following
information summarizes the significance of these North American
non-core portfolios relative to our total loan portfolios and
certain performance-related data as of December 31, 2002
and 2001:

|                              |  |               |       |      |  |   |       | 
|----------------------------- |  | ------------- | ----- | ---- |  | - | ----- | 
|                              |  | 2002          |       | 2001
|                              |  |               |       |     
|                              |  |              
|                              |  | (in millions)
|Non-core portfolio            |  | $             | 570   |      |  | $ | 939   | 
|                              |  |               |       |      |  |   |       | 
|Percentage of total portfolio |  |               | 5%    |      |  |   | 10%   | 
|                              |  |               |       |      |  |   |       | 
|Delinquency percentage*       |  |               | 28%   |      |  |   | 25%   | 
|                              |  |               |       |      |  |   |       | 
|Annual loss percentage        |  |               | 8.66% |      |  |   | 6.45% | 
|                              |  |               |       |      |  |   |       | 
|Loss provision provided       |  | $             | 63    |      |  | $ | 110   | 
|                              |  |               |       |      |  |   |       | 




|  |                                                                                                
|- | -----------------------------------------------------------------------------------------------
|* | Calculated as the percentage of loans in the
    relevant portfolio more than 30 days past due.

By comparison, delinquency percentages for our
North American core portfolio were 3.9% and 4.3% for 2002 and
2001, respectively, and annual loss percentages for the North
American core portfolio remained constant at 0.8% for both 2002
and 2001.

Ongoing R&D expenses declined by
$23 million from $306 million in 2001 to
$283 million in 2002. Expressed as a percentage of net
sales of equipment, R&D expenses declined slightly to
3.0% in 2002 compared with 3.4% in 2001 due to the timing of
costs related to various phases of new model development
programs and new product launches in the two years.

Our consolidated worldwide employment level has
increased by approximately 400 persons from approximately
28,100 at the end of 2001 to approximately 28,500 at the end of
2002. This includes an increase of approximately
1,500 persons related to the Kobelco Japan global alliance
and Shanghai joint venture, which were completed during 2002.
Excluding acquisitions, consolidated worldwide employment levels
have been reduced to approximately 27,100 in 2002 compared with
28,100 at the end of 2001 and approximately 36,000 at the time
of the merger in late 1999. On this basis, total employment has
now been reduced by approximately 8,900, or 25%, since the
merger; salaried employment has been reduced by approximately
30% from approximately 15,200 at the time of the merger to
approximately 10,700 at year-end 2002. Including acquisitions,
year-end 2002 salaried headcount also declined from
approximately 11,400 at year-end 2001 to approximately 11,200 at
year-end 2002.

During 2002, we recorded $51 million in
restructuring costs for the CNH Merger Integration Plan,
including $50 million in Equipment Operations and
$1 million in Financial Services. These restructuring costs
relate to severance and other employee-related costs, write-down
of assets, loss on the sale of assets and businesses, costs
related to closing, selling, and downsizing existing facilities.
The CNH Merger Integration Plan realized $114 million in
annual profit improvements related to product offerings made
available through

54



---



##### 



our multiple distribution channels in 2002 in
addition to the $430 million realized in 2000 and 2001. See
Note 13, Restructuring to the Consolidated
Financial Statements for a detailed analysis of our
restructuring programs.


The reduction in consolidated interest expense
from $726 million in 2001 to $554 million in 2002 was
principally due to lower borrowings resulting from the June 2002
public offering of common shares and the concurrent conversion
of debt with Fiat to equity and lower average interest rates.
Interest expense in Equipment Operations decreased to
$466 million in 2002 from $585 million in 2001
primarily as a result of the Fiat debt conversion described
above. The decrease in Financial Services interest expense of
$97 million from $339 million in 2001 to
$242 million in 2002 was mainly due to lower average
funding costs and to lower average borrowing levels supporting
the approximately $400 million lower average balances of
on-book retail and wholesale receivables and operating leases.
In 2002, we incurred $236 million in consolidated interest
expense relating to financing from Fiat as compared to
$358 million in 2001.

Other, net decreased to $182 million in 2002
from $193 million in 2001. The decrease in other expenses
was primarily attributable to the adoption of
SFAS No. 142, which requires companies to stop
amortizing goodwill and certain intangible assets with an
indefinite useful life. Thus, the expense incurred in 2001 as a
result of amortizing such goodwill and intangibles did not recur
in 2002. The decrease in goodwill was partially offset by higher
pension and medical benefit costs for retired, inactive
employees.

During 2002, total equity in income (loss) of
unconsolidated subsidiaries and affiliates increased by
$27 million to a net profit of $19 million as compared
to net loss of $8 million in 2001. Financial Services
equity in income of unconsolidated subsidiaries decreased
$2 million during 2002 due primarily to the liquidation of
pre-merger joint venture activities in Europe and start-up costs
related to the new BPLG joint venture in Europe. Equity in
income from our unconsolidated Equipment Operations activities
increased from a loss of $14 million in 2001 to a profit of
$15 million in 2002. The improvement was primarily due to
the non-recurrence of the devaluation of the Turkish Lira that
occurred in the first quarter of 2001.



| |                                                                      
| | ---------------------------------------------------------------------
| | Cumulative Effect of a Change in Accounting
    Principle, Net of Tax

In January 2002, we adopted
SFAS No. 142, which requires companies to stop
amortizing goodwill and certain intangible assets with an
indefinite useful life. Instead, SFAS No. 142 requires
that goodwill and intangible assets deemed to have an indefinite
useful life be reviewed for impairment upon the adoption of
SFAS No. 142 on January 1, 2002 and annually
thereafter.

We identified three reporting units under the
criteria set forth by SFAS No. 142: Agricultural
Equipment, Construction Equipment and Financial Services. To
determine fair value, we relied on two valuation models:
guideline company method and discounted cash flow.

Upon adoption of SFAS No. 142 and
effective in the first quarter of 2002, we recorded a one-time,
non-cash charge of approximately $325 million, including
approximately $6 million related to an equity method joint
venture, to reduce the carrying value of goodwill attributed to
our Construction Equipment reporting unit. Such charge is
reflected as a cumulative effect of change in accounting
principle, net of tax, in the accompanying consolidated
statements of operations.

The impairment was associated principally with
goodwill recorded in connection with New Hollands
acquisition of Case in 1999. The impairment was primarily a
result of the decline in the construction equipment market
experienced by CNH and its competitors since the acquisition.



| |                         
| | ------------------------
| | Tax Rates  Consolidated

Our effective tax rate was approximately 3% in
2002. Excluding the impact of the cumulative effect of a change
in accounting principle, our effective tax rate, was
approximately 13% in 2002 compared to 24% in 2001. For an
analysis of the principal factors affecting our effective tax
rate, see Note 12, Income Taxes to the
Consolidated Financial Statements.

55



---



##### 





| |           
| | ----------
| | Net Income

The consolidated net loss in 2002 was
$426 million, compared with a net loss of $332 million
in 2001. On a diluted basis, losses per share were $4.40 and
$6.00 per share in 2002 and 2001, respectively, based on
diluted weighted average shares outstanding of 96.9 million
and 55.4 million in 2002 and 2001, respectively.



| |                               
| | ------------------------------
| | Effect of Currency Translation

For financial reporting purposes, we convert the
financial results of each of our operating companies into
U.S. Dollars, using average exchange rates calculated with
reference to those rates in effect during the year. As a result,
any change from year to year in the U.S. Dollar value of
the other currencies in which we incur costs or receive income
is reflected in a currency translation effect on our financial
results.

The impact of currency translation on the results
of Financial Services operations is minimal, reflecting the
geographic concentration of such operations within the United
States. For Equipment Operations, the impact of currency
translation on net sales generally is largely offset by the
translation impact on costs and expenses.

During 2002, the average change in the currencies
of our major operations as compared with the U.S. Dollar
were increases in the average values of the Euro by 5.1%, the
Australian Dollar by 5.1% and the British Pound by 4.1%. The
average value of the Canadian Dollar declined by 1.4%, the value
of the Japanese Yen declined by 3.2% and the Brazilian Real by
19.5%. The impact of these movements increased net sales by
approximately $55 million or 0.6% and reduced the absolute
gross margin by $52 million or 3.6%. The impact on net
income was approximately $46 million unfavorable, as the
impact on overhead costs was favorable.

Application of Critical Accounting
Policies

The preparation of our financial statements in
conformity with generally accepted accounting principles in the
United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
as the date of the financial statements and the reported amounts
of revenues and expenses during the reported periods. Actual
results may differ from these estimates under different
assumptions or conditions. Our senior management has discussed
the development and selection of the critical accounting
policies, related accounting estimates and the disclosure set
forth below with the Audit Committee of our Board of Directors.
We believe that our most critical accounting policies, which are
those that require managements most difficult, subjective
and complex judgments, are summarized below.



| |                                
| | -------------------------------
| | Allowance for Doubtful Accounts

Our wholesale and retail note receivables have
significant concentration of credit risk in the agricultural and
construction equipment industry and are subject to potential
credit losses. We have reserved for the expected credit losses
based on past experience with similar receivables including
current and historical past due amounts, dealer termination
rates, write-offs and collections. We believe that our reserves
are adequate; however, if the financial condition of our
customers deteriorates resulting in an impairment of their
ability to make payments, additional allowances may be required.



| |                                                 
| | ------------------------------------------------
| | Equipment on Operating Lease Residual
    Values

Our Financial Services segment purchases
equipment that is leased to retail customers under operating
leases from dealers. Income from these operating leases is
recognized over the term of the lease. Financial Services
investment in operating leases is based upon estimated residual
values of the leased equipment, which are calculated at the
lease inception date. Realization of the residual values is
dependent on Financial Services future ability to market
the equipment under the then prevailing market conditions. We
continually evaluates whether events and circumstances have
occurred which impact the estimated residual values of

56



---



##### 



equipment on operating leases. Although
realization is not assured, management believes that the
estimated residual values are realizable.




| |                            
| | ---------------------------
| | Off Balance Sheet Financing

In connection with our securitization of retail
receivables, we retain interest only strips and other interests
in the securitized receivables. Interest-only strips represent
rights to future cash flows arising after the investors in the
securitization trust have received the return for which they
contracted and other expenses of the trust are paid. Our
retained interests are subordinate to the investors
interests. Gain or loss on sale of receivables depends in part
on the fair value of the retained interests at the date of
transfer. Additionally, retained interests after transfer are
measured for impairment based on the fair value of the retained
interests at the measurement date. We estimate fair value based
on the present value of future expected cash flows using our
estimate of key assumptions  credit losses,
prepayment spreads, and discount rates commensurate with the
risks involved. While we use our best estimates, there can be
significant differences between those estimates and actual
results. See Note 4, Accounts and Notes
Receivables to the Consolidated Financial Statements for
sensitivity information.



| |                 
| | ----------------
| | Sales Allowances

We grant certain sales incentives to stimulate
sales of our products to retail customers. The expense for such
incentive programs is reserved for and recorded as a deduction
in arriving at net sales at the time of sales to the dealer. The
amounts of incentives to be paid are estimated based upon future
market demand for our products, competitive pricing and interest
rates, among other things. If market conditions were to decline,
we may take actions to increase customer incentives possibly
resulting in an increase in the reduction of net sales at the
time the incentive is offered.



| |                                    
| | -----------------------------------
| | Recoverability of Long-lived Assets

Long-lived assets includes property, plant and
equipment, goodwill and other intangible assets such as patents
and trademarks. Reference is made to Note 2, Summary
of Significant Accounting Policies, to the Consolidated
Financial Statements for further information on our accounting
practices related to Long-lived assets. Our estimates of
undiscounted cash flow related to recoverability of assets other
than goodwill and intangible assets with indefinite lives may
differ from actual cash flow due to, among other things,
technological changes, economic conditions and the achievement
of the anticipated benefits of our profit improvement
initiatives. Upon adoption of SFAS No. 142 in 2002, we
recorded a one-time, non-cash charge of approximately
$325 million, net of tax, to reduce the carrying value of
goodwill attributed to its Construction Equipment reporting
unit. Each year, goodwill and indefinite-lived intangible assets
are tested for impairment, and they will be tested for
impairment between annual tests if an event occurs or
circumstances change that would indicate the carrying amount may
be impaired.



| |                                   
| | ----------------------------------
| | Realization of Deferred Tax Assets

We have deferred tax assets of $3.0 billion
and a valuation allowance against these assets of
$1.2 billion as of December 31, 2003. Of this amount,
$1.6 billion of the deferred tax assets and a corresponding
valuation allowance of $739 million relate to tax loss
carryforwards.

We have recorded a valuation allowance to reduce
our deferred tax assets to the amount that we believe is more
likely than not to be realized. In completing this
determination, we generally evaluate by taxing jurisdiction
recent losses after considering the impact of nonrecurring
items, the impact of the cyclical nature of the business on past
and future profitability, our expectations of sufficient future
taxable income prior to the years in which the carryforwards
expire as well as the impact of our profit improvement
initiatives on future earnings. Our expectations of future
profitability were based on assumptions regarding our market
share, the profitability of new model introductions and the
benefits from our capital and operating restructuring actions.

57



---



##### 



Reference is made to Note 12, Income
Taxes, of our Consolidated Financial Statements for
further information on our accounting practices related to the
realizability of deferred tax assets.



| |                                             
| | --------------------------------------------
| | Modification Programs and Warranty
    Costs

Our warranty obligation is affected by component
failure rates, replacement costs and dealer service costs,
partially offset by recovery from certain of our vendors. If
actual failure rates or costs to replace and install new
components differ from our estimates, a revision in the
modification and warranty liability would be required. Reference
is made to Note 2, Summary of Significant Accounting
Policies and Note 16, Commitments and
Contingencies of the Consolidated Financial Statements for
further information on our accounting practices and recorded
obligations related to modification programs and warranty costs.



| |                                                               
| | --------------------------------------------------------------
| | Defined Benefit Pension and Other
    Post-Retirement Benefits

We sponsor pension and other retirement plans in
various countries. In the United States and the United Kingdom,
we have major defined benefit pension plans that are separately
funded. Our pension plans in Germany are not funded. Benefits
for salaried employees in the U.S. plan were frozen for pay
and service as of December 31, 2000. Several statistical
and judgmental factors, which attempt to anticipate future
events, are used in calculating the expense and liability
related to the plans. These factors include assumptions about
the discount rate, expected return on plan assets, rate of
future compensation increases and health care cost trend rates,
as determined by us within certain guidelines. In addition, we,
with the assistance of our actuarial consultants, also use
subjective factors such as withdrawal and mortality rates to
estimate these factors. The actuarial assumptions used by us may
differ materially from actual results due to changing market and
economic conditions, higher or lower withdrawal rates, longer or
shorter life spans of participants and changes in actual costs
of health care. These differences may result in a significant
impact to the amount of pension and other post-retirement
benefit expenses recorded by us. Due to the poor performance of
equity markets in 2000, 2001 and 2002, the value of CNH pension
fund assets declined. Since U.S. plan assets earned a rate
of return of less than the assumed rate of 9% in these years,
our management reevaluated this assumption. Although not a
guarantee of future results, the average annual return of key
indices, allocated in a fashion similar to our U.S. plan
assets, reflect a return of 10.25% over the last ten years and
12.06% over the past 20 years. After considering all
relevant factors, management reduced its estimate of the
expected long-term rate of return on plan assets, beginning in
2003, to 8.75% from 9% for our U.S. plans. Return on asset
rates have also been reduced for non-U.S. plans to between
6.00% and 7.50%. We will continue to review and update this
assumption on an annual basis.

The expected long-term rate of return on plan
assets reflects managements expectations of long-term
average rates of earnings on funds invested to provide for
benefits included in the projected benefit obligations. The
return is based on the outlook for inflation, fixed income
returns and equity returns, while also considering the
plans historical returns, their asset allocation and
investment strategies, as well as the views of investment
managers and other large pension plan sponsors.

Additionally, we have experienced a continuing
high level of other post-retirement employee benefit costs,
principally related to healthcare, during 2003. Consequently, we
will maintain the 2003 initial annual estimated rate of increase
in the per capita cost of healthcare at 10% for 2004 despite
earlier expectations that this rate would decrease.

58



---



##### 



The following table summarizes the effects of a
one percentage-point change in our primary defined benefit
pension and other post-retirement benefit actuarial assumptions
on 2003 pension and other post-retirement benefit costs and
obligations:

|                                  |                                                  |                   |   |                             |   |                 |   |                 |   |  |   |        |   |  |   |        |  
|--------------------------------- | ------------------------------------------------ | ----------------- | - | --------------------------- | - | --------------- | - | --------------- | - |  | - | ------ | - |  | - | ------ | -
|                                  |                                                  |                   |   |                            
|                                  |                                                  | 2003 Benefit Cost |   | Year End Benefit Obligation
|                                  |                                                  | (income)/expense  |   | increase/(decrease)        
|                                  |                                                  |                   |   |                            
|                                  |                                                  | One Percentage-   |   | One Percentage-             |   | One Percentage- |   | One Percentage-
|                                  |                                                  | Point Increase    |   | Point Decrease              |   | Point Increase  |   | Point Decrease 
|                                  |                                                  |                   |   |                             |   |                 |   |                
|                                  |                                                  |                  
|                                  |                                                  | (in millions)    
|Pension benefits  U.S.:          |                                                  |                   |   |                             |   |                 |   |                 |   |  |   |        |   |  |   |       
|                                  | Assumed discount rate                            |                   | $ | (8.4                        | ) |                 | $ | 9.8             |   |  | $ | (81.6  | ) |  | $ | 98.2   |  
|                                  | Expected long-term rate of return on plan assets |                   |   | (4.8                        | ) |                 |   | 4.8             |   |  |   | N/A    |   |  |   | N/A    |  
|Pension benefits  International: |                                                  |                   |   |                             |   |                 |   |                 |   |  |   |        |   |  |   |       
|                                  | Assumed discount rate                            |                   |   | (14.6                       | ) |                 |   | 15.1            |   |  |   | (182.9 | ) |  |   | 215.7  |  
|                                  | Expected rate of compensation increase           |                   |   | 8.4                         |   |                 |   | (5.9            | ) |  |   | 49.2   |   |  |   | (34.0  | )
|                                  | Expected long-term rate of return on plan assets |                   |   | (7.3                        | ) |                 |   | 7.3             |   |  |   | N/A    |   |  |   | N/A    |  
|Other post-retirement benefits:   |                                                  |                   |   |                             |   |                 |   |                 |   |  |   |        |   |  |   |       
|                                  | Assumed discount rate                            |                   |   | (14.4                       | ) |                 |   | 15.2            |   |  |   | (134.9 | ) |  |   | 151.6  |  
|                                  | Assumed health care cost trend rate              |                   |   | 22.0                        |   |                 |   | (19.0           | ) |  |   | 142.0  |   |  |   | (120.0 | )

On December 8, 2003, the Medicare
Prescription Drug, Improvement and Modernization Act of
2003 (the Act) was signed into law. The Act
introduced a prescription drug benefit program under Medicare as
well as a federal subsidy to sponsors of retiree health care
benefit plans. Certain accounting issues raised by the Act, such
as how to account for the federal subsidy, are not explicitly
addressed by FASB Statement No. 106 Employers
Accounting for Postretirement Benefits Other Than Pensions.

The FASB issued FASB Staff Position
(FSP) No. FAS 106-1, Accounting and
Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003,
(FSP No. 106-1) that allows sponsors to elect
to defer recognition of the effects of the Act.

In accordance with FSP No. 106-1, we have
elected to defer recognition of the effects of the Act.
Accordingly, the financial statements in this report do not
reflect the effects of the Act.



| |                    
| | -------------------
| | Revenue Recognition

Our Equipment Operations segment records sales of
equipment and replacement parts when title and all risks of
ownership have transferred to the independent dealer or other
customer. For further information related to when risk of loss
transfers in various countries, see Note 2, Summary
of Significant Accounting Policies of the Consolidated
Financial Statements. Managements judgments and estimates
in reserving for collectability of receivables, sales incentives
and product warranties related to sales, are discussed in
further detail in the discussion above of our other critical
accounting policies.

Our Financial Services segment records earned
finance charges (interest income) on retail and other notes
receivables and finance leases using the effective interest
method.

New Accounting Pronouncements

In December 2003, the FASB issued FASB
Interpretation No. 46, (Revised December 2003),
Consolidation of Variable Interest Entities, an
interpretation of ARB No. 51 (Interpretation
No. 46R) This standard replaces FASB Interpretation
No. 46, Consolidation of Variable Interest
Entities (FIN 46) that was issued in
January 2003. Interpretation No. 46R modifies or clarifies
various provisions of FIN 46. Interpretation No. 46R
addresses the consolidation by business enterprises of variable
interest entities (VIEs), as defined by
Interpretation No. 46R. Interpretation No. 46R exempts
certain entities from its

59



---



##### 



requirements and provides for special effective
dates for entities that have fully or partially applied
FIN 46 prior to issuance of Interpretation No. 46R.
Otherwise, application of Interpretation No. 46R is
required in financial statements of public entities that have
interest in structures commonly referred to as special purpose
entities for periods ending after December 15, 2003.
Application by public entities, other than small business
issuers, for all other types of VIEs is required in financial
statements for periods ending after March 15, 2004. The
Company will adopt the provisions of Interpretation No. 46R
during the quarter ended March 31, 2004.


As disclosed in Note 4, Accounts and
Notes Receivables, our Financial Services operation uses
certain special purpose entities (SPE) in the
securitization and sale of its receivables. These SPEs meet the
criteria of qualified special purpose entities
(QSPE) as defined by FASB Statement No. 140,
Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities, which are exempt from
consolidation as SPEs under Interpretation No. 46R. The
Company is currently evaluating its other VIEs, but does not
believe the adoption of the remaining provisions of
Interpretation No. 46R will have a material effect on the
Companys financial condition or results of operations.

In April 2003, the FASB issued
SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities
(SFAS No. 149). SFAS No. 149
amends and clarifies financial accounting and reporting for
derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities under
FASB Statement No. 133 Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 149
was implemented for contracts entered into or modified after
June 30, 2003 and the disclosure requirements are reflected
in the accompanying Consolidated Financial Statements.

In May 2003, the FASB issued
SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and
Equity (SFAS No. 150).
SFAS No. 150 establishes standards for how an issuer
classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that
an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances) when
many of those instruments were previously classified as equity.
Adoption of SFAS No. 150 in 2003 did not have a
material impact on our Consolidated Financial Statements.

In December 2003, the FASB issued
SFAS No. 132 (Revised 2003), Employers
Disclosures about Pensions and Other Postretirement
Benefits (SFAS No. 132) which
retains the disclosures originally required by
SFAS No. 132, in addition to new disclosures relating
to types of plan assets, investment strategy, measurement dates,
plan obligations, cash flows and components of net periodic
benefit cost recognized in interim periods of defined benefit
pension plans and other defined benefit postretirement plans.
The provisions of SFAS No. 132 are effective for
domestic plans in financial statements issued for years ending
after December 15, 2003 and for interim periods beginning
after December 15, 2003 at which time the additional
disclosures will be included. Full implementation is required
for financial statements issued for years ending after
December 15, 2004. CNH, a Netherlands based entity, has
provided the required disclosure information for its U.S. and
U.K. plans in advance of the required implementation date. We
have no plans in the Netherlands. The U.S. and U.K. plans make
up the majority of our defined benefit obligation. We do not
anticipate that final adoption of this statement will have a
significant effect on our reported financial position, results
of operations or cash flows.

In December 2003, the Act became law. In January
2004, the FASB issued FSP No. 106-1. FSP No. 106-1
allows a plan sponsor to elect to defer recognition of the
effects of the Act in accounting for its plan and in providing
related disclosures, until authoritative guidance on the
accounting for the federal subsidy is issued, or until certain
other events, as defined, occur. We have elected to defer
recognition of the Act in accordance with the provisions of FSP
No. 106-1.

60



---



##### 





| |                                        
| | ---------------------------------------
| | B. Liquidity and Capital
    Resources.

The discussion of liquidity and capital resources
focuses on the balance sheets, statements of cash flows and
off-balance sheet financing. Our operations are capital
intensive and subject to seasonal variations in financing
requirements for dealer receivables and inventories. Whenever
necessary, funds from operating activities are supplemented from
external sources. We expect to have available to us cash from
operations and from sources of debt financing that are
sufficient to fund our working capital requirements, capital
expenditures, including acquisitions, and debt service at least
through the end of 2004.

Beginning in 2002, we have taken actions to
recapitalize our balance sheet, reducing our net debt to net
capitalization ratio of our Equipment Operations from 73% at
December 31, 2001 to 28% at December 31, 2003. On
June 11, 2002, we sold 10 million common shares to the
public (as adjusted for the 1-for-5 reverse stock split of our
common shares on April 1, 2003). The proceeds were used to
repay a portion of our outstanding debt and for other general
corporate purposes. Concurrently with the offering of common
shares, Fiat and one of its subsidiaries contributed
$1.3 billion principal amount of our debt to us in exchange
for 65 million of our common shares (as adjusted for the
reverse stock split). On April 7 and 8, 2003, we issued a
total of 8 million shares of Series A Preferred Stock
to Fiat and an affiliate of Fiat in exchange for the retirement
of $2 billion in Equipment Operations indebtedness owed to
Fiat Group companies. On August 1, 2003 and
September 12, 2003 Case New Holland issued a total of
$1.05 billion of 9 1/4% Senior Notes due 2011
which are fully and unconditionally guaranteed by us and certain
of our direct and indirect subsidiaries.



| |                  
| | -----------------
| | Consolidated Debt

As of December 31, 2003, our consolidated
debt was $7.0 billion compared to $7.9 billion as of
December 31, 2002. Consolidated long-term debt as of
December 31, 2003 was $4.9 billion, including
$843 million of current maturities, compared to
$5.1 billion and $1.1 billion respectively, as of the
end of the prior year.

Net Debt is defined as total debt less
intersegment notes receivable and cash and cash equivalents
(Net Debt). We believe that Net Debt, as defined, is
a useful analytical tool for measuring our effective borrowing
requirements while our ratio of Net Debt to Net Capitalization
provides useful supplementary information to investors so that
they may evaluate our financial performance using the same
measures we use.

The calculation of Net Debt and Net Debt to Net
Capitalization as of December 31, 2003 and 2002 is shown
below:

|                               |                                |                                   |       |                      |  |                    |       |      |  |      |       |       |  |   |       |       |  |   |       |     |  |   |       |     | 
|------------------------------ | ------------------------------ | --------------------------------- | ----- | -------------------- |  | ------------------ | ----- | ---- |  | ---- | ----- | ----- |  | - | ----- | ----- |  | - | ----- | --- |  | - | ----- | --- | 
|                               |                                |                                   |       |                      |  |                   
|                               |                                | Consolidated                      |       | Equipment Operations |  | Financial Services
|                               |                                |                                   |       |                      |  |                   
|                               |                                | 2003                              |       | 2002                 |  | 2003               |       | 2002 |  | 2003 |       | 2002 
|                               |                                |                                   |       |                      |  |                    |       |      |  |      |       |      
|                               |                                |                                  
|                               |                                | (in millions, except percentages)
|Total Debt                     |                                | $                                 | 6,996 |                      |  | $                  | 7,864 |      |  | $    | 4,715 |       |  | $ | 5,776 |       |  | $ | 3,293 |     |  | $ | 4,225 |    
|Less:                          |                                |                                   |       |                      |  |                    |       |      |  |      |       |       |  |   |       |       |  |   |       |     |  |   |       |    
|                               | Cash and cash equivalents      |                                   |       | 1,944                |  |                    |       | 775  |  |      |       | 1,801 |  |   |       | 469   |  |   |       | 143 |  |   |       | 306 | 
|                               | Intersegment notes receivables |                                   |       |                     |  |                    |       |     |  |      |       | 1,012 |  |   |       | 1,783 |  |   |       |    |  |   |       | 354 | 
|                               |                                |                                   |       |                      |  |                    |       |      |  |      |       |       |  |   |       |       |  |   |       |     |  |   |       |    
|Net Debt                       |                                |                                   | 5,052 |                      |  |                    | 7,089 |      |  |      | 1,902 |       |  |   | 3,524 |       |  |   | 3,150 |     |  |   | 3,565 |    
|Equity                         |                                |                                   | 4,874 |                      |  |                    | 2,761 |      |  |      | 4,874 |       |  |   | 2,761 |       |  |   | 1,241 |     |  |   | 1,019 |    
|                               |                                |                                   |       |                      |  |                    |       |      |  |      |       |       |  |   |       |       |  |   |       |     |  |   |       |    
|Net Capitalization             |                                | $                                 | 9,926 |                      |  | $                  | 9,850 |      |  | $    | 6,776 |       |  | $ | 6,285 |       |  | $ | 4,391 |     |  | $ | 4,584 |    
|                               |                                |                                   |       |                      |  |                    |       |      |  |      |       |       |  |   |       |       |  |   |       |     |  |   |       |    
|Net Debt to Net Capitalization |                                |                                   | 51%   |                      |  |                    | 72%   |      |  |      | 28%   |       |  |   | 56%   |       |  |   | 72%   |     |  |   | 78%   |    
|                               |                                |                                   |       |                      |  |                    |       |      |  |      |       |       |  |   |       |       |  |   |       |     |  |   |       |    

As of December 31, 2003, we had
$1.9 billion of cash and cash equivalents available,
compared to $775 million as of December 31, 2002.
Consolidated Net Debt was $5.1 billion as of
December 31, 2003, compared to $7.1 billion a year
earlier.

The year-over-year decline in Consolidated Net
Debt was mainly due to the exchange of $2 billion in
Equipment Operations indebtedness, including $1.2 billion
of long term debt, for 8 million shares of Series A

61



---



##### 



Preferred Stock described below. The reduction of
long term debt reflects the $1.2 billion exchange of
Equipment Operations indebtedness for Series A Preferred
Stock, the maturity of certain notes outstanding, and the
offsetting effect of the issuance of $1.05 billion of
9 1/4% Senior Notes maturing in 2011 and of other long
term notes to affiliates. The increase in cash and cash
equivalents reflects cash generated by Financial Services, the
residual proceeds from the issuance of the
9 1/4% Senior Notes in August and September and
additional borrowings from Fiat.


Equipment Operations Net Debt was
$1.9 billion at December, 31, 2003, compared to
$3.5 billion for the prior year. The decline primarily
reflects the effect of the issuance of the Series A
Preferred Stock in exchange for debt. At exchange rates
comparable to those at December 31, 2002, Consolidated Net
Debt for Equipment Operations as of December 31, 2003 would
have been $1.8 billion. Equipment Operations long-term debt
as of December 31, 2003 was $3.2 billion, including
$88 million of current maturities, compared to
$3.5 billion and $824 million respectively, as of the
end of the prior year. The reduction of long term debt reflects
the exchange of $1.2 billion of debt for shares of
Series A Preferred Stock, the maturity of certain notes
outstanding, and the offsetting effect of the issuance of
$1.05 billion of 9 1/4% Senior Notes maturing in
2011 and of other long term notes to affiliates. As of
December, 31, 2003, short term debt and current maturities
of long term debt declined to approximately 34% of total debt
compared to 53% in the prior year, while cash and cash
equivalents at December 31, 2003 of $1.8 billion
exceed short term debt plus current maturities.

Financial Services Net Debt was $3.1 billion
at December 31, 2003, compared to $3.6 billion as of
December 31, 2002, reflecting the use of cash generated by
the reduction of receivables carried by our operations,
primarily in non-core activities. At comparable exchange rates,
Net Debt for Financial Services as of December 31, 2003
would have been $2.9 billion. Financial Services
long-term debt as of December 31, 2003 was
$2.4 billion, including $755 million of current
maturities, compared to $2.3 billion and $294 million
of current maturities respectively, as of the end of the prior
year. The increase in long term debt primarily reflects funding
the expansion of the Financial Services retail portfolio in
Brazil.



| |                                                 
| | ------------------------------------------------
| | Debt and cash and cash equivalents with
    Fiat

On December 31, 2003, our outstanding
consolidated debt with Fiat and its affiliates was
$2.4 billion, or approximately 35% of our consolidated
debt, compared to $3.9 billion or approximately 50% as of
December 31, 2002. The reduction reflects the exchange of
$2 billion of debt with Fiat for 8 million shares of
Series A Preferred Stock, offset by additional short and
long term borrowings utilized primarily for working capital
requirements.

An additional $1.4 billion of consolidated
third party debt outstanding under certain facilities was
guaranteed by Fiat or a Fiat subsidiary at December 31,
2003. In 2003, we paid guarantee fees to Fiat of between
0.03125% per annum and 0.0625% per annum on the
average amount outstanding under these facilities. Fiat has
agreed to maintain its existing treasury and debt financing
arrangements with us for as long as it maintains control of CNH
and, in any event, at least until December 31, 2004. After
that time, Fiat has committed that it will not terminate our
access to these financing arrangements without affording us an
appropriate time period to develop suitable substitutes.

Like other companies that are part of
multinational groups, we participate in a group-wide cash
management system with other members of the Fiat Group. Under
this system, which is operated by Fiat in a number of
jurisdictions, the cash balances of Fiat Group members,
including us, are aggregated at the end of each business day to
a central pooling account. Our positive cash balances, if any,
at the end of any given business day may be applied by Fiat to
offset negative balances of other Fiat Group members and vice
versa. On December 31, 2003, our outstanding consolidated
cash balances with Fiat and its affiliates were
$1.3 billion, compared to $544 million at
December 31, 2002, reflecting our generally higher cash
equivalent levels, excluding proceeds from the
9 1/4% Senior Notes which were invested with third
parties.

62



---



##### 





| |               
| | --------------
| | Credit Ratings

On June 26, 2003, Fiat announced the Fiat
Relaunch Plan. Following this announcement, Standard &
Poors announced that it was placing the BB corporate
credit ratings of CNH and Case, as well as Fiats BB+
corporate credit rating, on credit watch with negative
implications.

On July 7, 2003, Moodys downgraded
Fiats long-term senior unsecured debt ratings to Ba3 from
Ba1, with a negative outlook. At the same time, Moodys
assigned Fiat a Ba3 senior implied rating, also with a negative
outlook. Also on July 7, 2003, Moodys lowered the
senior debt ratings of Case and Case Credit Corporation to Ba3
from Ba2, with a negative outlook. On July 8, 2003, Fitch
Ratings downgraded Fiats senior unsecured debt rating to
BB from BB+, with a negative outlook.

On July 11, 2003, Standard &
Poors lowered its corporate credit ratings on CNH and
related entities to BB-from BB, with a stable outlook, and
removed them from credit watch. Also on July 11, 2003,
Standard & Poors lowered Fiats long-term
corporate credit rating to BB- from BB+, with a stable outlook,
and removed it from credit watch.

At December 31, 2003 and as of the date of
this report, our long-term unsecured debt was rated BB- by
Standard & Poors and Ba3 by Moodys.
Fiats long-term unsecured debt was rated on par with ours,
by both Moodys and Standard and Poors. In addition,
our long term unsecured debt was rated BB (high) by Dominion
Bond Ratings Service.

In February 2004, Moodys reaffirmed their
Ba3 rating of Fiats long-term unsecured debt, with a
negative outlook.

We cannot assure you that the rating agencies
will not further downgrade our or Fiats credit ratings.
These downgrades have already affected our ability to borrow
funds, and further ratings downgrades of either our or
Fiats debt could adversely affect our ability to access
the capital markets or borrow funds at current rates.

Cash Flows



| |                                     
| | ------------------------------------
| | Cash Flows from Operating Activities

|                     |  |                     |     |      |  |      |       |   |  |   |      |  
|-------------------- |  | ------------------- | --- | ---- |  | ---- | ----- | - |  | - | ---- | -
|                     |  |                    
|                     |  | For the Years Ended
|                     |  | December 31,       
|                     |  |                    
|                     |  | 2003                |     | 2002 |  | 2001
|                     |  |                     |     |      |  |     
|                     |  |                    
|                     |  | (in millions)      
|Equipment Operations |  | $                   | 66  |      |  | $    | 485   |   |  | $ | (468 | )
|Financial Services   |  |                     | 560 |      |  |      | 693   |   |  |   | 286  |  
|Eliminations         |  |                     | (22 | )    |  |      | (3    | ) |  |   |     |  
|                     |  |                     |     |      |  |      |       |   |  |   |      |  
|Consolidated         |  | $                   | 604 |      |  | $    | 1,175 |   |  | $ | (182 | )
|                     |  |                     |     |      |  |      |       |   |  |   |      |  

In 2003, consolidated cash flows from operating
activities were $604 million compared to $1.2 billion
in 2002 with decreases resulting in both Equipment Operations
and Financial Services.

The decline in year over year cash flows from
operating activities for Equipment Operations is due principally
to increased cash utilized for working capital (defined by CNH
as receivables and inventory less accounts payable), offset by
improved Equipment Operations operating results for the year.

The overall decline in cash flows from operating
activities for Financial Services is attributable to increased
operating results being more than offset by the increased use of
cash for receivables, intersegment activity with Equipment
Operations and other assets.

63



---



##### 





| |                                    
| | -----------------------------------
| | Cash Flow from Investing Activities

|                     |  |                     |      |      |  |      |      |   |  |   |      |  
|-------------------- |  | ------------------- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                     |  |                    
|                     |  | For the Years Ended
|                     |  | December 31,       
|                     |  |                    
|                     |  | 2003                |      | 2002 |  | 2001
|                     |  |                     |      |      |  |     
|                     |  |                    
|                     |  | (in millions)      
|Equipment Operations |  | $                   | (221 | )    |  | $    | (473 | ) |  | $ | (169 | )
|Financial Services   |  |                     | 94   |      |  |      | (59  | ) |  |   | (158 | )
|Eliminations         |  |                     | 54   |      |  |      | 73   |   |  |   | 55   |  
|                     |  |                     |      |      |  |      |      |   |  |   |      |  
|Consolidated         |  | $                   | (73  | )    |  | $    | (459 | ) |  | $ | (272 | )
|                     |  |                     |      |      |  |      |      |   |  |   |      |  

Consolidated cash used by investing activities
was $73 million in 2003 compared to $459 million in
2002. The reduction in cash used resulted from decreases at both
Equipment Operations and Financial Services.

During 2003, cash used by investing activities at
Equipment Operations declined to $221 million from
$473 million in 2002. The decline is principally attributed
to the completion of the Kobelco and Shanghi acquisitions in
2002. During 2003, no acquisitions of a similar magnitude
occurred. Other uses from investing activities remained
relatively consistent with prior year levels. These expenditures
were principally related to capital expenditures to acquire the
property, plant and equipment necessary to introduce new
products, enhance manufacturing efficiency, further integrate
our operations and expand environmental and safety programs.

Cash flows from investing activities at Financial
Services changed from a use of $59 million for the year
ended December 31, 2002 to source of $94 million for
the year ended December 31, 2003. This change is attributed
to a decrease in cash used to fund operating lease activities.



| |                                    
| | -----------------------------------
| | Cash Flow from Financing Activities

|                     |  |                     |       |      |  |      |      |   |  |   |      |  
|-------------------- |  | ------------------- | ----- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                     |  |                    
|                     |  | For the Years Ended
|                     |  | December 31,       
|                     |  |                    
|                     |  | 2003                |       | 2002 |  | 2001
|                     |  |                     |       |      |  |     
|                     |  |                    
|                     |  | (in millions)      
|Equipment Operations |  | $                   | 1,403 |      |  | $    | 87   |   |  | $ | 441  |  
|Financial Services   |  |                     | (833  | )    |  |      | (593 | ) |  |   | (123 | )
|Eliminations         |  |                     | (32   | )    |  |      | (70  | ) |  |   | (55  | )
|                     |  |                     |       |      |  |      |      |   |  |   |      |  
|Consolidated         |  | $                   | 538   |      |  | $    | (576 | ) |  | $ | 263  |  
|                     |  |                     |       |      |  |      |      |   |  |   |      |  

Cash provided by financing activities in 2003
were principally the result of the issuance, on August 1,
2003 and September 12, 2003, of a total $1.05 billion
of 9 1/4% Senior Notes due 2011. The
9 1/4% Senior Notes are fully and unconditionally
guaranteed by CNH and certain of its direct and indirect
subsidiaries and contain certain covenants that restrict our
ability to, among other things, incur additional debt; pay
dividends on our capital stock or repurchase our capital stock;
make certain investments; enter into certain types of
transactions with affiliates; restrict dividend or other
payments by our restricted subsidiaries; use assets as security
in other transactions; enter into sale and leaseback
transactions; and sell certain assets or merge with, or into,
other companies. In addition, certain of the related agreements
governing our subsidiaries indebtedness contain covenants
limiting their incurrence of secured debt or structurally senior
debt.

Additionally, on April 7 and 8, 2003
CNH completed a non-cash financing transaction by issuing
8 million shares of Series A Preferred Stock in
exchange for $2 billion in Equipment Operations
indebtedness owed to Fiat Group companies, of which
approximately $1.2 billion was debt maturing in 2003. The
Series A Preferred Stock will not accrue dividends until
January 1, 2005. Subsequently, the Series A Preferred
Stock will pay a dividend at the then prevailing common dividend
yield. However, should we achieve certain defined financial
performance measures, the annual dividend will be fixed at the
prevailing common dividend yield, plus an additional
150 basis points. Dividends will be payable annually in
arrears, subject to certain provisions

64



---



##### 



that allow for a deferral for a period not to
exceed five consecutive years. The Series A Preferred Stock
has a liquidation preference of $250 per share and each
share is entitled to one vote on all matters submitted to
CNHs shareholders. The Series A Preferred Stock will
convert into 100 million CNH common shares at a conversion
price of $20 per share automatically if the market price of
the common shares, defined as the average of the closing price
per share for 30 consecutive trading days, is greater than $24
at any time through and including December 31, 2006 or $21
at any time on or after January 1, 2007, subject to
anti-dilution adjustment. In the event of dissolution or
liquidation, whatever remains of the companys equity,
after all its debts have been discharged, will first be applied
to distribute to the holders of the Series A Preferred
Stock the nominal amount of their preference shares and
thereafter the amount of the share premium reserve relating to
the Series A Preferred Stock. Any remaining assets will be
distributed to the holders of common shares in proportion to the
aggregate nominal amount of their common shares.


Cash provided by financing activities for
Equipment Operations in 2003 was $1.4 billion primarily as
a result of the issuance of the 9 1/4% Senior Notes,
and a net reduction of $484 million of intersegment loans
to Financial Services resulting from our strategy to reduce the
dependence of Financial Services on Equipment Operations
funding. Financial Services used $833 million of cash for
financing activities by repaying third-party and intersegment
debt, reflecting cash available from operating and investing
activities.

Sources of Funding



| |               
| | --------------
| | Funding Policy

Our policy is to maintain a high degree of
flexibility in our funding and investment activities, by using a
broad variety of financial instruments to maintain our desired
level of liquidity.

In managing our liquidity requirements, we are
pursuing a financing strategy that includes maintaining
continuous access to a variety of financing sources, including
U.S. and international capital markets and commercial bank lines
and funding Financial Services with a combination of receivables
securitizations and on-book financing. A significant portion of
our financing has historically come from Fiat and Fiat
affiliates.

A summary of our strategy is:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | To fund our Equipment Operations short-term
    financing requirements and to ensure near-term liquidity, we
    rely primarily on bank facilities, predominantly through
    uncommitted credit facilities and receivables discounting lines;
    we also maintain a funding relationship with Fiat through the
    cash pooling arrangements operated by Fiat in a number of
    jurisdictions. We manage our aggregate short-term borrowings so
    as not to exceed availability under our lines of credit with
    banks and Fiat.                                                                                                                                                                                                                                                                                                     
|
| |  | As funding needs of our Equipment Operations are
    determined to be of a longer-term nature, we access medium-and
    long-term debt markets, as appropriate, to refinance short-term
    borrowings and replenish our short-term liquidity; we have
    relied in the past, and may, from time to time, continue to rely
    on our relationship with Fiat to obtain term funding as a
    complement to our access to banks and capital markets.                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | We maintain sufficient unutilized committed lines
    of credit and other liquidity facilities, complemented by
    available cash and cash equivalents, to cover our expected
    funding needs on both a short-term and long-term basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Increasingly, the most significant source of
    liquidity for our Financial Services business has been the
    ability to finance the receivables we originate in the secondary
    markets through loan securitizations. We complement this funding
    strategy as appropriate with access to bank facilities, both
    short and long term, to the capital markets and to Fiat funding
    via its cash pooling arrangements. Our Financial Services
    business has relied in the past on intersegment notes from
    Equipment Operations to offset the unavailability of commercial
    paper funding in certain jurisdictions following our credit
    rating downgrades; however, it is our policy to reduce such
    dependency over time and ensure that our Financial Services
    business can directly fund their operations.

65



---



##### 



Certain events might impair our ability to
successfully execute our funding strategy.

Our liquidity needs could increase in the event
of an extended economic slowdown or recession. Reduced commodity
prices and farm cash receipts, as well as decreased levels of
commercial, residential and major infrastructure construction or
other adverse economic conditions, would impair the ability of
our dealers and retail end users to meet their payment
obligations. Higher industry levels of used equipment may affect
resale prices and result in decreased cash flows. In addition,
in an economic slowdown or recession, our servicing and
litigation costs would increase. Any sustained period of
increased delinquencies, losses or costs would have an adverse
effect on our liquidity. Further ratings downgrades of either
our or Fiats debt could adversely affect our ability to
access the capital markets or borrow funds at current rates.

Adverse changes in the securitization market
could impair our ability to originate, purchase and sell
receivables or other assets on a favorable or timely basis, as
well as affect the interest rate spreads we earn on the
receivables we originate, and could have an adverse effect on
our asset-backed liquidity facilities. These facilities
typically provide financing of a certain percentage of the
underlying collateral and are subject to the availability of
eligible collateral and, in many cases, the willingness of our
banking partners to continue to provide financing. Some of these
agreements provide for annual terms, which are extended by
mutual agreement of the parties for an additional annual term.
Although we expect to replace our financing when our current
facilities expire, there can be no assurance that we will obtain
financing on favorable terms, if at all. To the extent that we
are unable to arrange any third party or other financing, our
loan origination activities would be adversely affected, which
could have a material adverse effect on our operations,
financial results and cash position.

Access to funding at competitive rates is key to
the growth of our Financial Services core business and expansion
of its financing activities into new product and geographic
markets. Further ratings downgrades of either our or Fiats
debt could adversely affect our Financial Services ability to
continue to offer attractive financing to our dealers and
end-user customers. On a global level, we will continue to
evaluate alternatives to ensure that our Financial Services
business continues to have access to capital on favorable terms
in support of their business, including through equity
investments by global or regional partners in joint venture or
partnership opportunities, new funding arrangements or a
combination of any of the foregoing, similar to our arrangement
entered in 2002 with BPLG, which broadened our product offerings
throughout Europe.



| |               
| | --------------
| | Long term debt

As of December 31, 2003, our consolidated
long-term debt was $4.9 billion, including
$843 million of current maturities, compared to
$5.1 billion and $1.1 billion respectively as of the
end of the prior year.

Equipment Operations long-term debt as of
December 31, 2003 was $3.2 billion, including
$88 million of current maturities, compared to
$3.5 billion and $824 million respectively, as of the
end of the prior year. The reduction of long term debt reflects
the exchange of $1.2 billion of debt for shares of the
Series A Preferred Stock, the maturity of certain notes
outstanding, and the offsetting effect of the issuance of
$1.05 billion of 9 1/4% Senior Notes maturing in
2011 and of other long term notes to affiliates.

Equipment Operations long-term debt consisted, as
of December 31, 2003, of $1.5 billion in bonds and
medium term notes, $1.3 billion of affiliated notes with
Fiat and $210 million of medium term loans with third
parties. The remaining $109 million related to drawings
maturing beyond December 31, 2004 under committed credit
lines with banks discussed below.

Financial Services long-term debt as of
December 31, 2003 was $2.4 billion, including
$755 million of current maturities, compared to
$2.3 billion and $294 million respectively as of the
end of the prior year. The increase in long term debt primarily
reflects funding the expansion of the Financial Services retail
portfolio in Brazil.

As of December 31, 2003, Financial Services
long-term debt consisted of $719 million of borrowings
maturing beyond December 31, 2004 under committed credit
lines with banks related to our activities in Brazil and
$500 million of drawings under a line of credit maturing in
December 2004 as discussed below; in

66



---



##### 



addition, Financial Services has
$700 million of intersegment term notes payable in 2006,
$351 million of affiliated notes with Fiat and
$123 million in bonds and medium term notes maturing in
2007.




| |                 
| | ----------------
| | Commercial paper

Given our current credit ratings, we have not had
access to the commercial paper market since 2000. During 2003 we
have formally begun the cancellation of our commercial paper
programs. We anticipate canceling all remaining programs in 2004.



| |                                
| | -------------------------------
| | Credit and liquidity facilities

As of December 31, 2003, we had
approximately $4.5 billion available under our
$7.9 billion total lines of credit, including the asset
backed liquidity facilities described below. Approximately
$1.3 billion drawn under such lines were classified as long
term, while approximately $2.1 billion was classified as
short term debt.

Our ability to incur additional debt may be
limited by certain covenants in the 9 1/4% Senior
Notes as discussed above.

The following table summarizes our credit
facilities at December 31, 2003:

|                                                                                   |                         |          |         |               |  |            |       |           |  |       |     |           |  |           |       |       |  |   |       |       |  |   |       |       |  |  |      |  | 
|---------------------------------------------------------------------------------- | ----------------------- | -------- | ------- | ------------- |  | ---------- | ----- | --------- |  | ----- | --- | --------- |  | --------- | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- |  |  | ---- |  | 
|                                                                                   |                         |          |         |               |  |            |       |           |  |      
|                                                                                   |                         |          |         |               |  | Drawn      |       |           |  |      
|                                                                                   |                         |          |         |               |  |            |       |           |  |      
|                                                                                   |                         |          |         |               |  | Equipment  |       | Financial |  |       |     |           |  |          
|                                                                                   |                         | Maturity |         | Amount        |  | Operations |       | Services  |  | Total |     | Available |  | Guarantor
|                                                                                   |                         |          |         |               |  |            |       |           |  |       |     |           |  |          
|                                                                                   |                         |          |         |               |  |           
|                                                                                   |                         |          |         | (in millions) |  |           
|Committed Lines:                                                                   |                         |          |         |               |  |            |       |           |  |       |     |           |  |           |       |       |  |   |       |       |  |   |       |       |  |  |      | 
|Revolving syndicated backup credit facility                                        |                         |          | 2005    |               |  | $          | 1,800 |           |  | $     |    |           |  | $         |      |       |  | $ |      |       |  | $ | 1,800 |       |  |  | Fiat | 
|Backup credit facilities with third parties
    shared with some Fiat subsidiaries |                         |          | 2004-5  |               |  |            | 275   |           |  |       |    |           |  |           |      |       |  |   |      |       |  |   | 275   |       |  |  | Fiat | 
|Other backup facilities with third parties                                         |                         |          | 2004-6  |               |  |            | 150   |           |  |       |    |           |  |           |      |       |  |   |      |       |  |   | 150   |       |  |  | Fiat | 
|Other committed lines guaranteed by Fiat                                           |                         |          | various |               |  |            | 55    |           |  |       | 55  |           |  |           |      |       |  |   | 55    |       |  |   |      |       |  |  | Fiat | 
|Revolving credit facility (Fin.Serv., USA)                                         |                         |          | 2004    |               |  |            | 500   |           |  |       |    |           |  |           | 500   |       |  |   | 500   |       |  |   |      |       |  |  | Fiat | 
|Other committed lines (Fin.Serv., Brazil)                                          |                         |          | various |               |  |            | 866   |           |  |       |    |           |  |           | 719   |       |  |   | 719   |       |  |   | 147   |       |  |  | Fiat | 
|Revolving credit facility with Fiat affiliate                                      |                         |          | 2004    |               |  |            | 1,000 |           |  |       | 403 |           |  |           | 294   |       |  |   | 697   |       |  |   | 303   |       |  |  | Fiat | 
|Other committed lines                                                              |                         |          | various |               |  |            | 230   |           |  |       | 155 |           |  |           | 53    |       |  |   | 208   |       |  |   | 22    |       |  |  |     | 
|                                                                                   |                         |          |         |               |  |            |       |           |  |       |     |           |  |           |       |       |  |   |       |       |  |   |       |       |  |  |      | 
|                                                                                   | Total committed lines   |          |         |               |  |            |       | 4,876     |  |       |     | 613       |  |           |       | 1,566 |  |   |       | 2,179 |  |   |       | 2,697 |  |  |      |  | 
|Uncommitted Lines                                                                  |                         |          |         |               |  |            | 1,112 |           |  |       | 871 |           |  |           | 131   |       |  |   | 1,002 |       |  |   | 110   |       |  |  |     | 
|Asset-backed Programs                                                              |                         |          | 2004    |               |  |            | 1,931 |           |  |       | 147 |           |  |           | 83    |       |  |   | 230   |       |  |   | 1,701 |       |  |  |     | 
|                                                                                   |                         |          |         |               |  |            |       |           |  |       |     |           |  |           |       |       |  |   |       |       |  |   |       |       |  |  |      | 
|                                                                                   | Total credit facilities |          |         |               |  |            | $     | 7,919     |  |       | $   | 1,631     |  |           | $     | 1,780 |  |   | $     | 3,411 |  |   | $     | 4,508 |  |  |      |  | 
|                                                                                   |                         |          |         |               |  |            |       |           |  |       |     |           |  |           |       |       |  |   |       |       |  |   |       |       |  |  |      | 
|Total Credit facilities with Fiat affiliates or
    guaranteed by Fiat affiliates  |                         |          |         |               |  | $          | 4,646 |           |  | $     | 458 |           |  | $         | 1,513 |       |  | $ | 1,971 |       |  | $ | 2,675 |       |  |  |      | 
|                                                                                   |                         |          |         |               |  |            |       |           |  |       |     |           |  |           |       |       |  |   |       |       |  |   |       |       |  |  |      | 



| |                          
| | -------------------------
| | Committed lines of credit

As of December 31, 2003, we had
approximately $2.7 billion available under our
$4.9 billion total committed lines of credit. The majority
of such lines are supported by a guarantee from Fiat.

The $1.8 billion syndicated credit facility
represents the amount allocated to us under a $2 billion
Fiat syndicated facility maturing July 2005. This facility is
available to us and certain of our Financial Services
subsidiaries; its original purpose was as a backup to our
commercial paper programs in the U.S., and it now provides
backup liquidity to our drawings under uncommitted credit lines.
An additional $425 million of unutilized credit facilities
are available to us for the same purpose, in certain cases under
Fiat umbrella lines which are available to other Fiat affiliates
as well.

67



---



##### 



Our Financial Services business has certain
dedicated committed credit facilities available to them which
are mostly utilized. In particular, a $500 million
revolving credit facility available to us in the U.S. was fully
utilized at year end 2003 and 2002. Approximately
$719 million was drawn by our Brazilian Financial Services
subsidiary under long term facilitated financing arrangements
provided by the Banco Nacional de Desenvolvimento Ecomomico e
Social (BNDES), supported by the Brazilian
government under agricultural development programs.

The $1.0 billion revolving facility with
Fiat matures on October 1, 2004 and serves as the umbrella
under which we borrow from Fiat for day-to-day liquidity needs
under the cash pooling arrangements operated by Fiat. We do not
expect Fiat to cancel such pooling arrangements, and the
corresponding credit facility under which they operate.



| |                            
| | ---------------------------
| | Uncommitted lines of credit

Our $1.1 billion uncommitted lines of credit
primarily reflect facilities available to us in Europe and
certain other jurisdictions, under which we discount or factor
certain wholesale receivables primarily for our Equipment
Operations business, on a with recourse basis.



| |                      
| | ---------------------
| | Asset-backed programs

We also have access to asset-backed commercial
paper (ABCP) liquidity facilities through which we
may sell retail receivables generated in the United States,
Canada and Australia. We utilize these facilities to fund new
receivable generations prior to selling such receivables in the
term ABS markets. Under these facilities, the maximum amount of
proceeds that can be accessed at one time is $1.7 billion.

The following table summarizes our asset-backed
commercial paper liquidity facilities at December 31, 2003:

|                                         |       |               |       |              |  |   |       |       | 
|---------------------------------------- | ----- | ------------- | ----- | ------------ |  | - | ----- | ----- | 
|                                         |       | Program       |       |             
|                                         |       | Size          |       | Availability
|                                         |       |               |       |             
|                                         |       |              
|                                         |       | (in millions)
|United States (expiring in January 2004) |       | $             | 1,200 |              |  | $ | 1,135 |      
|Canada (expiring in June 2004)           |       |               | 234   |              |  |   | 215   |      
|Australia (expiring in 2008)             |       |               | 301   |              |  |   | 301   |      
|                                         |       |               |       |              |  |   |       |      
|                                         | Total |               | $     | 1,735        |  |   | $     | 1,651 | 
|                                         |       |               |       |              |  |   |       |      

Subsequent to December 31, 2003, we have
extended the U.S. facility through January 2005.

In addition, as of December 31, 2003 we had
available an asset backed,
155 million
facility under which we were selling certain receivables
generated in the U.K., France, Germany and Spain. This facility
has been amortizing during the first quarter of 2004 and will
terminate on April 8, 2004. Receivables previously sold
under this facility have progressively been funded by available
liquidity, including liquidity available from the
$1.05 billion 9 1/4% Senior Notes due 2011 which were
issued in 2003. During 2004, we plan on establishing a new ABCP
liquidity facility for wholesale receivables in Europe, with
approximately
600 million
of conduit capacity; this facility would enable us to reduce the
utilization of the uncommitted lines of credit discussed above.



| |                      
| | ---------------------
| | Other Short Term Debt

As of December 31, 2003, an additional
$26 million of other short term debt for our Financial
Services subsidiaries was outstanding.

68



---



##### 



Securitization

The following table summarizes the principal
amount of our retail and wholesale asset-backed securitization
programs in the United States, Canada and Australia as well as
receivables discounted without recourse and classified as off
balance sheet at December 31, 2003 and 2002:

|                                          |       |               |       |       |  |   |       |       | 
|----------------------------------------- | ----- | ------------- | ----- | ----- |  | - | ----- | ----- | 
|                                          |       | 2003          |       | 2002 
|                                          |       |               |       |      
|                                          |       |              
|                                          |       | (in millions)
|Wholesale receivables                     |       | $             | 1,550 |       |  | $ | 1,164 |      
|Retail and other notes and finance leases |       |               | 4,503 |       |  |   | 4,264 |      
|Receivables discounted without recourse   |       |               | 174   |       |  |   | 171   |      
|                                          |       |               |       |       |  |   |       |      
|                                          | Total |               | $     | 6,227 |  |   | $     | 5,599 | 
|                                          |       |               |       |       |  |   |       |      



| |       
| | ------
| | Retail

We securitize and transfer financial assets,
using financial asset securitization procedures, as an
alternative funding source to borrowing. Securitization of
assets allows us to diversify funding sources while contributing
to lower our overall cost of funds. We use trusts that are SPEs
in securitization transactions to achieve, for the benefit of
securitization investors, segregation of the receivables
securing the securities issued by the SPE so that they would be
beyond the reach of our creditors. This allows the SPE to issue
highly-rated securities in a highly liquid and efficient market,
thereby providing us with a cost-effective source of funding.
Termination of the activities described below would reduce the
number of funding resources currently available to us for
funding our finance activities. Any such reduction of funding
sources could increase our cost of funds and reduce our profit
margins, which could materially adversely affect our results of
operations.

We maintain access to the asset-backed term
market in the United States, Canada and Australia. During 2003,
SPE affiliates of our U.S. credit companies executed
$2,477 million in retail asset-backed transactions, SPE
affiliates of our Canadian credit companies executed
C$455 million in retail asset-backed transactions and SPE
affiliates of our Australian credit companies executed
A$402 million in retail asset-backed transactions. The
securities in each of these transactions are backed by
agricultural and construction equipment retail receivables
contracts and finance leases originated through our dealerships.
CNH Capital applied the proceeds from the securitizations to
repay outstanding debt.

Our receivable asset securitization program is
further described in Note 4 Accounts and Notes
Receivables, to our Consolidated Financial Statements. In
the program, 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 and make payments on the securities. At
December 31, 2003, $4.5 billion of asset-backed
securities issued to investors out of U.S., Canadian and
Australian SPEs were still outstanding with a weighted average
remaining maturity of between 16 to 17 months.

Due to the nature of the assets held by the SPEs
and the limited nature of each SPEs activities, they are
each classified as a QSPE under SFAS No. 140. In accordance
with SFAS No. 140, assets and liabilities of QSPEs are not
consolidated in our consolidated balance sheets.

We agree to service the receivables transferred
to the QSPEs for a fee and earn other related ongoing income
customary with the programs and in accordance with generally
accepted accounting principles. We also may retain all or a
portion of subordinated interests in the QSPEs; these interests
are reported as assets in our Consolidated Balance Sheets. The
amount of the fees earned and the levels of retained interests
that we maintain are quantified and described in Note 4,
Accounts and Notes Receivable to the Consolidated
Financial Statements.

No recourse provisions exist that allow holders
of the asset-backed securities issued by the QSPEs to put those
securities back to us. Moreover, we do not guarantee any
securities issued by the QSPEs. Our exposure related to these
QSPEs is limited to the cash deposits held for the benefit of
the holders of the asset-backed

69



---



##### 



securities issued by the QSPEs including the
retained interests in the QSPEs, which are reported in our
consolidated Balance Sheets. The QSPEs have a limited life and
generally terminate upon final distribution of amounts owed to
investors or upon exercise of a cleanup-call option by us, in
our role as Servicer, when the servicing of the sold contracts
becomes burdensome.


We intend to continue our financing activity in
the United States, Canadian and Australian asset-backed term
markets as long as it continues to provide low rate financing.



| |          
| | ---------
| | Wholesale

CNH also sells wholesale receivables on a
revolving basis to privately and publicly structured
securitization facilities. The receivables are initially sold to
wholly owned SPE, which are consolidated by CNH, but legally
isolate the receivables from the creditors of CNH. These
transactions are utilized as an alternative to the issuance of
debt and allow CNH to realize a lower cost of funds due to the
asset-backed nature of the receivables and the credit
enhancements offered to investors.

Upon the sale of receivables to a SPE in a
securitization transaction, receivables are removed from the
balance sheet and proceeds are received for the difference
between the receivables sold and the undivided interests in
receivables that are required to be retained by us. In the event
of a reduction in the receivables pool sold caused by
charge-offs, the investors in the facility have recourse against
our retained interests in the sold receivables. These retained
interests fluctuate with the size of the sold portfolio as they
are specified as percentages of the sold receivables. Investors
have no recourse to us in excess of these retained interests. We
continue to service the sold receivables and receive a fee,
which approximates the fair value of the servicing obligation.

The facilities consist of a 364-day,
C$325 million facility that is renewable annually (June
2004) upon agreement of the parties and a new facility
established for the U.S. wholesale receivables portfolio.
During 2003, CNH established a new wholly owned
bankruptcy-remote SPE, which in turn established a new master
trust facility to replace the privately structured facilities
that existed at December 31, 2002. The new master trust
facility consists of $522 million term senior and
subordinated asset-backed notes with a 2 year maturity,
$522 million term senior and subordinated asset-backed
notes with a 3 year maturity and a 364-day,
$500 million conduit facility that is renewable annually
(September 2004) at the sole discretion of the purchasers.

At December 31, 2003, C$325 million and
$1,297 million were outstanding under these facilities,
consisting of C$441 million and $1,525 million of
wholesale receivables sold less our retained undivided interest
of C$116 million and $228 million. At
December 31, 2002, $958 million was outstanding under
the former U.S. facilities, consisting of
$1,153 million of wholesale receivables sold less our
retained undivided interest of $195 million. For the
Canadian facility at December 31, 2002, C$325 million
was outstanding, consisting of C$382 million of wholesale
receivables sold less our retained undivided interest of
C$57 million. Additional information regarding these
transactions is described in Note 4, Accounts and
Notes Receivable to the Consolidated Financial Statements.



| |      
| | -----
| | Other

In addition to the securitizations described
above, certain foreign subsidiaries of CNH securitized or
discounted receivables without recourse. For the year ended
December 31, 2003 and 2002, $174 million and
$171 million of wholesale receivables remained outstanding
under these programs. CNH records a discount each time
receivables are sold to the counterparties in the facilities.
This discount, which reflects the difference between interest
income earned on the receivables sold and interest expense paid
to the investors in the facilities, along with related
transaction expenses, is computed at the then prevailing market
rates as stated in the sale agreement.

In Europe, our joint venture with BPLG, held
approximately $1.2 billion and approximately
$700 million of receivables from CNH related transactions
as of December 31, 2003 and 2002, respectively.

70



---



##### 



Pension and Other Post-Retirement
Benefits

Due to the poor performance of equity markets in
2000, 2001 and 2002, the value of our pension fund assets, which
principally relate to plans in the United States and United
Kingdom, declined. SFAS No. 87, Employers
Accounting for Pensions requires recognition of an
additional minimum liability if the market value of plan assets
is less than the accumulated benefit obligation at the end of
the plan year. At December 31, 2003, this resulted in a
decrease in accumulated other comprehensive income, a component
of shareholders equity, of approximately
$398 million, net of tax of $222 million. These
amounts are essentially unchanged from December 31, 2002.

A key factor in determining our pension
obligation is the expected long-term rate of return on plan
assets, which reflects managements expectations of
long-term average rates of earnings on funds invested to provide
for benefits included in the projected benefit obligations. The
return is based on the outlook for inflation, fixed income
returns and equity returns, while also considering the
plans historical returns, their asset allocation and
investment strategy, as well as the views of investment managers
and other large pension plan sponsors. The average annual return
of key indices, allocated in a fashion similar to our U.S. plan
assets, was 10.25% over the last ten years and 12.06% over the
past 20 years. After considering all relevant factors,
management reduced its estimate of the expected long-term rate
of return on plan assets. CNH used an assumed long-term rate of
return of 8.75% for the U.S. plans and between 6.00% and 7.50%
for non-U.S. plans beginning in 2003.

We have experienced a continuing high level of
other post-retirement employee benefit costs, principally
related to health care, during 2003. Consequently, we will
maintain the 2003 initial annual estimated rate of increase in
the per capita cost of healthcare at 10% for 2004 despite
earlier expectations that this rate would decrease.

Overall, we anticipate that expense related to
employee medical and pension costs will increase by
approximately $30 million in 2004. During 2003, we
contributed $75 million to our U.S. pension plans and we
anticipate that we will make contributions in 2004 of up to
$155 million. We anticipate that cash flows for other
post-retirement employee benefit costs will rise somewhat in
2004 compared to 2003, but not significantly.

Effective January 31, 2003, we began
providing matching contributions to the CNH defined contribution
plans in the form of CNH common shares rather than cash.

In March 2003, a temporary interest rate relief
bill was enacted by Congress that mitigated the impact of a
decline in interest rates used in pension funding calculations
required by the U.S. Government. Congress is currently
considering legislation that would extend interest rate relief
beyond 2003. The planned employer contributions in 2004 for
CNHs U.S. defined benefit plans are currently based on the
assumption that this legislation will be enacted. In the event
the pending legislation does not become law, employer
contributions required by CNH in 2004 and later years could
increase significantly.



C. Research and Development, Patents
and Licenses, etc.

Our research, development and engineering
personnel design, engineer, manufacture and test new products,
components and systems. We incurred $259 million,
$283 million and $306 million of research, development
and engineering costs in the years ended December 31, 2003,
2002, and 2001, respectively.

We also benefit from the research, development
and engineering expenditures of our joint ventures, which are
not included in our research, development and engineering
expenditure figures, and from the continuing engineering efforts
of our suppliers.

Patents and Trademarks

Agricultural
Equipment We are promoting
the New Holland, Case IH and Steyr brands and logos as the
primary brand names for our agricultural equipment products. We
sell some products under heritage brand names or sub-brand names
such as Braud, FiatAllis, Flexi-Coil, Austoft, Concord, DMI and
Tyler.

71



---



##### 



Construction
Equipment For construction
equipment under New Holland, we are promoting the New Holland
Construction, O&K, Kobelco and FiatAllis brands in
particular regions of the world. For construction equipment
under Case, we are promoting the Case construction brand name
and logo.

Most of these brand names have been registered as
trademarks in the principal markets in which we use them. Other
than the New Holland, Case, IH and Case IH trademarks, we do not
believe that our business is materially dependent on any single
patent or trademark or group of patents or trademarks.

We, through New Holland and Case, have a
significant tradition of technological innovation in the
agricultural and construction equipment industries. We hold over
3,000 patents, and over 800 additional applications
are pending. We believe that we are among the market leaders for
patented innovations in the product classes in which we compete.



| |                     
| | --------------------
| | D.Trend Information.

Agricultural equipment market outlook for
2004 We expect North
American industry sales of combines and over-40 horsepower
tractors to show a 3 to 5 percent improvement from 2003
levels, with most of the increase in tractor sales likely in the
first half of the year. In Europe, industry sales of tractors
and combines are expected to decline by as much as 3 to
5 percent for the year. In Latin America, tractor sales may
be off slightly, while combine sales are expected to decline
moderately following an exceptionally strong performance in 2003.

Construction equipment market outlook for
2004 Industry sales of
both heavy and light construction equipment are expected to
increase slightly in North America in 2004. In Europe where
there is no clear sign of recovery as yet, we believe that
industry sales of both light and heavy construction equipment
should be flat.

CNH Outlook for
2004 In 2004, we expect
the bottom line contribution from new products launched in 2002
and 2003 to grow, through both higher volumes and improved
pricing realization. The new products launched in 2003 should
position us to take full advantage of the expected growth in the
markets. Continued progress on our profit improvement
initiatives are also expected to yield tangible results with
most of the benefits in 2004 coming from our global sourcing and
footprint rationalization actions.

These gains are expected to be partially offset
by an increase in medical costs for active employees and
retirees of about $30 million for the year. Our profit
performance may also be impacted should the dollar weaken
further against the euro and yen.

In 2004, we expect to incur restructuring charges
of about $100 million, pretax, as we should complete most
of our restructuring initiatives. These initiatives, begun in
2000, have helped position us for continued bottom line growth
in 2004.

Through a combination of margin improvement and
top line growth, we expect to achieve a 2004 improvement in the
bottom line comparable to that of 2003, excluding restructuring
charges.



| |                                      
| | -------------------------------------
| | E.Off Balance Sheet
    Arrangements.

We have incorporated a discussion of our off
balance sheet arrangements into our discussion of liquidity and
capital resources. Please see
Item 5. B. Liquidity and Capital
Resources for a detailed description of our off balance
sheet arrangements.

72



---



##### 





| |                               
| | ------------------------------
| | F.Contractual
    Obligations.

The following table sets forth the aggregate
amounts of our contractual obligations and commitments with
definitive payment terms that will require significant cash
outlays in the future. The commitment amounts as of
December 31, 2003 are as follows:

|                    |                                    |                        |       |           |  |           |     |           |  |               |       |       |  |   |     |     |  |   |       |       | 
|------------------- | ---------------------------------- | ---------------------- | ----- | --------- |  | --------- | --- | --------- |  | ------------- | ----- | ----- |  | - | --- | --- |  | - | ----- | ----- | 
|                    |                                    |                       
|                    |                                    | Payments Due by Period
|                    |                                    |                       
|                    |                                    |                        |       | Less than |  |          
|                    |                                    | Total                  |       | 1 year    |  | 1-3 years |     | 4-5 years |  | After 5 years
|                    |                                    |                        |       |           |  |           |     |           |  |              
|                    |                                    |                       
|                    |                                    | (in millions)         
|Long-Term Debt      |                                    | $                      | 4,886 |           |  | $         | 843 |           |  | $             | 2,319 |       |  | $ | 385 |     |  | $ | 1,339 |      
|Operating Leases(1) |                                    |                        | 199   |           |  |           | 43  |           |  |               | 50    |       |  |   | 34  |     |  |   | 72    |      
|                    |                                    |                        |       |           |  |           |     |           |  |               |       |       |  |   |     |     |  |   |       |      
|                    | Total Contractual Cash Obligations |                        | $     | 5,085     |  |           | $   | 886       |  |               | $     | 2,369 |  |   | $   | 419 |  |   | $     | 1,411 | 
|                    |                                    |                        |       |           |  |           |     |           |  |               |       |       |  |   |     |     |  |   |       |      



---

|    |                            
|--- | ---------------------------
|(1) | Minimum rental commitments.

We expect that our Other Long-Term Liabilities
and Purchase Obligations, described below, will be funded with
cash flows from operations and additional borrowings under our
credit facilities.

Other Long-Term Liabilities

Financial Services private label credit cards had
various commitments to extend credit, net of balances
outstanding of approximately $2.7 billion and
$2.8 billion for the years ended December 31, 2003 and
2002, respectively.

In the normal course of business, CNH and its
subsidiaries issue guarantees in the form of bonds guaranteeing
the payment of value added taxes, performance bonds, custom
bonds, bid bonds and bonds related to litigation. As of
December 31, 2003, total commitments of this type total
approximately $201 million.

As of December 31, 2003, we have
restructuring reserves totaling approximately $72 million.
Of this total, approximately $50 million will ultimately be
settled in cash. We anticipate this settlement will occur in
2004.

While our funding policy requires contributions
to our defined benefit plans equal to the amounts necessary to,
at a minimum, satisfy the funding requirements as prescribed by
the laws and regulations of each country, we do make
discretionary contributions when management determines it is
prudent to do so. For 2004, we project total contributions to
our defined benefit plans of approximately $220 million,
including currently anticipated discretionary contributions of
up to $155 million to our U.S. plans.

Our post-retirement health and life insurance
plans are unfunded. We are required to make contributions equal
to the amount of current plan expenditures, less participant
contributions. For 2004, we anticipate contributions to our
post-retirement health and life insurance plans of approximately
$65 million.

As of December 31, 2003, we have accrued
income taxes payable in 2004 of approximately $15 million.
Income tax payments beyond 2004 are contingent on many variable
factors and can not be reasonably predicted.

Based on current and projected debt levels, we
anticipate cash payments for interest expense in 2004 of
approximately $250 million and $175 million for
Equipment Operations and Financial Services, respectively.
Interest expense payments beyond 2004 are contingent on many
variable factors and can not be reasonably predicted.

73



---



##### 



Purchase Obligations

We estimate that for 2004, expenditures for
property, plant and equipment and other investments to support
our profit improvement initiatives, our new product programs and
other requirements will be approximately $210 million.

The Kobelco Japan alliance allows for CNH to
increase its interest in Kobelco Japan from 20% to 35% by the
third quarter of 2004 for $63 million.

Purchase orders made in the ordinary course of
business are excluded from this section. Any amounts for which
we are liable under purchase orders are reflected in our
Consolidated Balance Sheets as accounts payable.




Item 6. Directors, Senior Management
and Employees



| |                                       
| | --------------------------------------
| | A.Directors and Senior
    Management.

As of March 31, 2004, our directors and our
executive officers are as set forth below:

|                       |  |                                                          |  |               |      | 
|---------------------- |  | -------------------------------------------------------- |  | ------------- | ---- | 
|                       |  |                                                          |  | Director/    
|                       |  |                                                          |  | Executive    
|Name                   |  | Position with CNH                                        |  | Officer Since
|                       |  |                                                          |  |              
|Jean-Pierre Rosso      |  | Director and Chairman                                    |  |               | 1999 | 
|Alfredo Diana          |  | Director                                                 |  |               | 1999 | 
|Edward A. Hiler        |  | Director                                                 |  |               | 2002 | 
|Katherine M. Hudson    |  | Director                                                 |  |               | 1999 | 
|Kenneth Lipper         |  | Director                                                 |  |               | 1996 | 
|Paolo Monferino        |  | Director, President and Chief Executive Officer          |  |               | 2000 | 
|Giuseppe Morchio       |  | Director                                                 |  |               | 2003 | 
|Michael E. Murphy      |  | Director                                                 |  |               | 2002 | 
|James L.C. Provan      |  | Director                                                 |  |               | 1995 | 
|Michel Lecomte         |  | Chief Financial Officer                                  |  |               | 2000 | 
|Harold D. Boyanovsky   |  | President, Construction Equipment Business               |  |               | 1999 | 
|Mario Ferla            |  | President of CNH Capital Corporation                     |  |               | 2003 | 
|William J. McGrane III |  | Vice President, Corporate Controller                     |  |               | 2003 | 
|Roberto Miotto         |  | Senior Vice President, General Counsel and
    Secretary |  |               | 1991 | 
|Giovanni B. Ravina     |  | Senior Vice President, Human Resources                   |  |               | 2000 | 
|Roland Sundén          |  | President, Agricultural Equipment Business               |  |               | 2004 | 

Directors are elected for an indefinite term and
serve until their removal, resignation or termination.

Jean-Pierre Rosso, Director and Chairman, born on
July 11, 1940, has served as Chairman of the Board of
Directors of CNH since November 12, 1999 and as its Chief
Executive Officer until November 7, 2000. Prior to this,
Mr. Rosso served as Chairman and Chief Executive Officer of
Case from October 1997 until November 1999. From March 1996
through October 1997, he served as Cases Chairman,
President and Chief Executive Officer, and from April 1994
through March 1996, he served as its President and Chief
Executive Officer. Prior to April 1994, Mr. Rosso served in
various capacities with Honeywell, Inc., a producer of advanced
technology products, including as President of the Home and
Building Control Business from 1992 through April 1994, and as
President of its European operations from 1987 through 1991.
Mr. Rosso is also director of ADC Telecommunications, Inc.
and Medtronic, Inc.

Alfredo Diana, Director, born on June 2,
1930, has served as a director of CNH since November 1999. Prior
to that, Mr. Diana served as the Italian governor of the
International Fund for Agricultural Development from 1977 to
1999. He was an elected member of the European Parliament in
1979, and an elected senator of the Italian Republic in 1983.
Mr. Diana held several government positions, including
President of the General Federation of Agriculture, Commissioner
and President of the Experimental Institute for fruit-growing,
Vice President of the National Council of Economy and Labour,
President of the National Council for Forestry and Timber, and
Minister of Agriculture and Forestry in the first Amato and
Ciampi governments. He was also

74



---



##### 



President of Tecnagro, an association for
innovations in agriculture, and president of Montedison
agricultural services. Mr. Diana is also the president of
the Italian Agricultural Society.


Dr. Edward A. Hiler, Director, born on
May 14, 1939, was elected a director of CNH on May 7,
2002. Dr. Hiler presently serves the Texas A&M
University System as Vice Chancellor for Agriculture and Life
Sciences and dean of the College of Agriculture and Life
Sciences. He is also Director of the Texas Agricultural
Experiment Station. Since joining the faculty of
Texas A&M as an assistant professor in 1966,
Dr. Hiler has held a series of positions including
professor and head of the Universitys Department of
Agricultural Engineering, and deputy chancellor for Academic and
Research Programs of the Texas A&M University system.
Dr. Hiler earned his Ph.D. in Agricultural Engineering at
Ohio State University. He has served as President of the
American Society of Agricultural Engineers and is an elected
member of the National Academy of Engineering. He consults on
aspects of water conservation, environmental quality, and energy
from biological processes to various government agencies and the
U.S. Congress. A licensed professional engineer,
Dr. Hiler is the author of over 100 professional
publications.

Katherine M. Hudson, Director, born on
January 19, 1947, has served as a director of CNH since
November 1999. Ms. Hudson served as the President and Chief
Executive Officer of Brady Corp., an international
manufacturer of identification and material solution products,
from January 1994 to April 2003. Prior to assuming her position
with that company, she was Vice President and General Manager of
the Professional, Printing and Publishing Imaging Division of
Eastman Kodak Company. Prior to the business merger of New
Holland and Case, Ms. Hudson served as a director of Case
since 1996. Ms. Hudson is also a Director of Charming
Shoppes, Inc.

Kenneth Lipper, Director, born on June 19,
1941, has served as a director of CNH since 1996. He is the
Chairman of Lipper & Company, Inc., since 1987.
Previously, he was the Deputy Mayor of the City of New York
under Mayor Edward Koch from 1983 to 1985. He was a managing
director and an associate and general partner of Salomon
Brothers during the years 1976-1982 and an associate and general
partner at Lehman Brothers during the years 1969-1975.
Mr. Lipper was the Director of Industrial Policy for the
Office of Foreign Direct Investment at the U.S. Department
of Commerce from 1968 to 1969. Mr. Lipper was an associate
lawyer with the law firm of Fried, Frank, Harris,
Shriver & Jacobson from 1967 to 1968.

Paolo Monferino, Director, President and Chief
Executive Officer, born on December 15, 1946, served as
President and Chief Operating Officer of CNH from March 24,
2000 to November 7, 2000. On November 8, 2000,
Mr. Monferino was appointed a director and President and
Chief Executive Officer, leading the overall management of CNH,
including the execution of the Companys wide-ranging
integration plan. Mr. Monferino has more than 20 years
of experience in the agricultural and construction equipment
business beginning in the United States with FiatAllis, a joint
venture between Fiats construction equipment business and
Allis Chalmers. In 1983, he was named Chief Executive Officer of
FiatAllis Latin American operations in Brazil. Two years
later, he was appointed Chief Operating Officer at FiatAllis and
in 1987 was named the Chief Operating Officer at FiatAgri, the
farm machinery division of the Fiat Group. Following Fiat
Geotechs 1991 acquisition of Ford New Holland, Monferino
was named executive vice president of the new company
headquartered in London. He was responsible for strategy and
business development, including product, marketing and
industrial policies.

Giuseppe Morchio, Director, born on
November 20, 1947, was appointed director on March 27,
2003. Mr. Morchio was appointed Chief Executive Officer of
Fiat in February 2003. Prior to becoming Chief Executive Officer
of Fiat, Mr. Morchio served as Chairman and Chief Executive
Officer of Pirelli Cavi e Sistemi S.p.A Holding Worldwide
in Energy and Telecommunications Systems and from 1993 to 1995
he was Chief Executive Officer of Pirelli Cavi S.p.A.
Mr. Morchio joined the Pirelli Group in 1980, holding a
number of key positions, including vice president,
manufacturing, quality and logistics for Pirelli Tire, before
becoming the Chief Executive Officer for its operations in Spain
and then North America. Mr. Morchio is also on the board of
directors of Banco di Desio e della Brienza.

Michael E. Murphy, Director, born on
October 16, 1936, has served as a director of CNH since
September 2002. From 1994 to 1997, Mr. Murphy served as
Vice Chairman and Chief Administrative Officer

75



---



##### 



of Sara Lee Corporation. Mr. Murphy also
served as a director of Sara Lee from 1979 through October 1997.
Mr. Murphy joined Sara Lee in 1979 as Executive Vice
President and Chief Financial and Administrative Officer and,
from 1993 until 1994, also served as Vice Chairman.
Mr. Murphy is also a director of Basset Furniture
Industries, Inc., Civic Federation, Big Shoulders Fund,
Chicago Cultural Center Foundation, GATX Corporation,
Payless Shoe Source, Inc. and Coach Inc. He is also a
member of the Board of Trustees of Northern Funds (a family of
mutual funds). Mr. Murphy holds a Bachelor of Science
degree in Business Administration from Boston College and an
MBA degree from the Harvard Business School.


James L. C. Provan, Director, born on
December 19, 1936, has served as director of CNH, and
previously of New Holland, since 1995. A farmer in Scotland,
Mr. Provan was elected to the European Parliament in 1979
where he is currently Vice-President (Deputy Speaker) and chairs
the Conciliation Committee to the Council of Ministers and the
Internal Audit Committee. He has also served on the Agriculture
Committee, the Environment and Consumer Affairs Committee and
the Transport and Tourism Committee. Mr. Provan has been
Chairman of the Board of the Rowett Research Institute,
Aberdeen, one of Europes leading nutritional research
centers, for ten years. Mr. Provan was Chairman of McIntosh
Donald & McIntosh of Dyce (food company in Scotland)
from 1989 to 1994 and Chairman of Baxters (Milnathort) Ltd.
(agricultural engineering and distribution) from 1965 to 1975.

Michel Lecomte, Chief Financial Officer, born on
January 27, 1949, was appointed Chief Financial Officer and
President, Financial Services and President, CNH Capital on
November 8, 2000. Prior to joining CNH, Mr. Lecomte
served as Chief Financial Officer of Iveco, a sector of the Fiat
Group and Transolver, Ivecos financial services business.
From 1989 to 1996, he served as Chief Financial Officer of the
Framatome Group based in France. Mr. Lecomte also served as
Chief Financial Officer of CertainTeed Corporation in the United
States from 1984 to 1989.

Harold D. Boyanovsky, President, Construction
Equipment Business, born on August 15, 1944, was appointed
President, Construction Equipment Business on September 1,
2002. He served as President, Worldwide Agricultural Equipment
Products of CNH from November 1999  October 2002.
Prior to the business merger of New Holland and Case, he served
as a Senior Vice President of Case from May 1997 to November
1999. Between December 1966 and November 1999,
Mr. Boyanovsky served in a variety of executive positions
with Case and International Harvester.

Mario Ferla, President, CNH Capital, born on
September 28, 1946, was appointed President, CNH Capital in
2003 and Chief Operating Officer for CNH Capital in 2001.
Mr. Ferla served as Executive Vice President of Fremont
General Credit Corporation, a commercial and real estate lending
operation in Santa Monica, California, from 1997 to 2001. From
1975 to 1997, Mr. Ferla held a variety of positions with
General Electric Company, including various officer positions
with GE Capital Corporation from 1988 to 1997.

William J. McGrane III, Vice President, Corporate
Controller of CNH America LLC, born on October 26, 1969,
was appointed Vice President, Corporate Controller in March
2003. He served as the Vice President and Controller of CNH
Capital from June 2001 until March 2003. Prior to joining CNH,
Mr. McGrane held the position of Controller for GE Capital
Corporations Auto Financial Services business, where he
was employed from December 1998 until June 2001. From 1992 to
1998, he held a variety of positions with Arthur Andersen LLP.
Mr. McGrane holds Bachelors of Science degrees in Finance
and Accountancy from the University of Illinois and a Masters of
Management degree from the J.L. Kellogg Graduate School of
Management.

Roberto Miotto, Senior Vice President, General
Counsel and Secretary, born on December 15, 1946, has
served as Senior Vice President, General Counsel and Secretary
of CNH since November 1999. Prior to the business merger of New
Holland and Case, Mr. Miotto served as Vice President,
General Counsel and Secretary of New Holland. Prior to that,
Mr. Miotto served in a variety of executive positions with
the Fiat Group.

Giovanni B. Ravina, Senior Vice President,
Human Resources, born on April 21, 1951, was appointed
Senior Vice President, Human Resources of CNH, effective
December 1, 2000. Prior to joining CNH, he

76



---



##### 



served as Managing Director, Fiat India. Between
September 1978 and December 2000, Mr. Ravina served in a
variety of executive positions with the Fiat Group.


Roland Sundén, President, Agricultural
Equipment Business, born on August 20, 1953, was appointed
President, Agricultural Equipment Business on January 12,
2004. Prior to joining CNH, Mr. Sundén served as
Executive Vice President for Volvo Construction Equipment in
Belgium from April 2000 until December 2003.
Mr. Sundén began his career with Volvo in 1978 as a
Design Engineering Specialist. In 1981 he spent two years as a
Project Manager and Senior Development Engineer at Allied Signal
in the U.S. Mr. Sundén returned to Volvo in 1983 as a
Program Manager for Flygmotors Rocket Engine Program. He
subsequently held a broad range of management and executive
positions  including Director of Space Technology at
Volvo Flygmotor from October 1985 until March 1990; Vice
President and General Manager, Space Propulsion at Volvo Aero
Corporation from April 1990 until December 1993; Senior Vice
President, Military Engines at Volvo Aero Corporation from
January 1994 until January 1998; Executive Vice President at
Volvo Aero Corporation in 1998; and President & CEO of
the U.S.-based Volvo Bus North America Operations from October
1998 until April 2000.



| |                 
| | ----------------
| | B. Compensation.

Directors Compensation

The following table summarizes remuneration paid
to or accrued for Directors for the year ended December 31,
2003, excluding directors who are employees of Fiat and are not
compensated by CNH:

|                               |                  |       |   |         |  |              |        |         |  |            |        |           |  |            |        |             |  |           |        |        |  |   |        |        |  |   |        |        |  |   |         |         |  |   |           |           |  |   |           |           | 
|------------------------------ | ---------------- | ----- | - | ------- |  | ------------ | ------ | ------- |  | ---------- | ------ | --------- |  | ---------- | ------ | ----------- |  | --------- | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ |  | - | ------- | ------- |  | - | --------- | --------- |  | - | --------- | --------- | 
|                               |                  | Grant |   | Alfredo |  | Katherine M. |        | Kenneth |  | James L.C. |        | Edward A. |  | Michael E. |        | Jean-Pierre |  | Paolo     |        |       
|                               |                  | Price |   | Diana   |  | Hudson       |        | Lipper  |  | Provan     |        | Hiler     |  | Murphy     |        | Rosso       |  | Monferino |        | Total 
|                               |                  |       |   |         |  |              |        |         |  |            |        |           |  |            |        |             |  |           |        |       
|Periodic Remuneration in Cash: |                  |       |   |         |  |              |        |         |  |            |        |           |  |            |        |             |  |           |        |        |  |   |        |        |  |   |        |        |  |   |         |         |  |   |           |           |  |   |           |          
|                               | Salary           |       |   |         |  |              | $      |        |  |            | $      |          |  |            | $      |            |  |           | $      |       |  |   | $      |       |  |   | $      |       |  |   | $       | 446,007 |  |   | $         | 1,864,435 |  |   | $         | 2,310,442 | 
|                               | Meeting Fees     |       |   |         |  |              |        | 28,750  |  |            |        | 22,500    |  |            |        | 13,750      |  |           |        | 28,750 |  |   |        | 21,250 |  |   |        | 21,250 |  |   |         |        |  |   |           |          |  |   |           | 136,250   | 
|                               | Annual Fees      |       |   |         |  |              |        | 10,000  |  |            |        |          |  |            |        | 20,000      |  |           |        |       |  |   |        | 20,000 |  |   |        | 15,000 |  |   |         |        |  |   |           |          |  |   |           | 65,000    | 
|Common Shares Granted:         |                  |       |   |         |  |              |        |         |  |            |        |           |  |            |        |             |  |           |        |        |  |   |        |        |  |   |        |        |  |   |         |         |  |   |           |           |  |   |           |          
|                               | 1/31/03          |       | $ | 15.70   |  |              |        |        |  |            |        |          |  |            |        |            |  |           |        | 8,745  |  |   |        |       |  |   |        | 5,244  |  |   |         |        |  |   |           |          |  |   |           | 13,989    | 
|                               | 5/07/03          |       |   | 9.15    |  |              |        |        |  |            |        |          |  |            |        |            |  |           |        | 8,757  |  |   |        |       |  |   |        | 5,252  |  |   |         |        |  |   |           |          |  |   |           | 14,009    | 
|                               | 8/04/03          |       |   | 9.90    |  |              |        | 5,000   |  |            |        |          |  |            |        |            |  |           |        | 9,999  |  |   |        |       |  |   |        | 5,999  |  |   |         |        |  |   |           |          |  |   |           | 20,998    | 
|                               | 11/03/03         |       |   | 13.49   |  |              |        | 5,005   |  |            |        |          |  |            |        |            |  |           |        | 9,996  |  |   |        |       |  |   |        | 6,003  |  |   |         |        |  |   |           |          |  |   |           | 21,004    | 
|Future Remuneration:           |                  |       |   |         |  |              |        |         |  |            |        |           |  |            |        |             |  |           |        |        |  |   |        |        |  |   |        |        |  |   |         |         |  |   |           |           |  |   |           |          
|                               | Pension Plan     |       |   |         |  |              |        |        |  |            |        |          |  |            |        |            |  |           |        |       |  |   |        |       |  |   |        |       |  |   |         | 58,400  |  |   |           | 84,421    |  |   |           | 142,821   | 
|Allowance Upon Termination     |                  |       |   |         |  |              |       |         |  |            |       |           |  |            |       |             |  |           |       |        |  |   |       |        |  |   |       |        |  |   |        |         |  |   | 162,157   |           |  |   | 162,157   |          
|Bonus:                         |                  |       |   |         |  |              |        |         |  |            |        |           |  |            |        |             |  |           |        |        |  |   |        |        |  |   |        |        |  |   |         |         |  |   |           |           |  |   |           |          
|                               | Cash             |       |   |         |  |              |        |        |  |            |        |          |  |            |        |            |  |           |        |       |  |   |        |       |  |   |        |       |  |   |         | 352,800 |  |   |           | 620,934   |  |   |           | 973,734   | 
|                               | Restricted Stock |       |   |         |  |              |        |        |  |            |        |          |  |            |        |            |  |           |        |       |  |   |        |       |  |   |        |       |  |   |         | 138,690 |  |   |           | 267,723   |  |   |           | 406,413   | 
|Loans:                         |                  |       |   |         |  |              |       |         |  |            |       |           |  |            |       |             |  |           |       |        |  |   |       |        |  |   |       |        |  |   |        |         |  |   |          |           |  |   |          |          
|                               |                  |       |   |         |  |              |        |         |  |            |        |           |  |            |        |             |  |           |        |        |  |   |        |        |  |   |        |        |  |   |         |         |  |   |           |           |  |   |           |          
|Total                          |                  |       |   |         |  | $            | 48,755 |         |  | $          | 22,500 |           |  | $          | 33,750 |             |  | $         | 66,247 |        |  | $ | 41,250 |        |  | $ | 58,748 |        |  | $ | 995,897 |         |  | $ | 2,999,670 |           |  | $ | 4,266,817 |          
|                               |                  |       |   |         |  |              |        |         |  |            |        |           |  |            |        |             |  |           |        |        |  |   |        |        |  |   |        |        |  |   |         |         |  |   |           |           |  |   |           |          

Outside directors also may elect to have a
portion of their compensation paid in stock options. See
CNH Outside Directors, Compensation Plan and
Share Ownership below. Directors who are employees
of Fiat do not receive compensation from CNH.

Other Executive Officers
Compensation

The aggregate amount of compensation paid to or
accrued for executive officers that held office during 2003 was
approximately $5.2 million.

Certain executives participate in a special plan
approved by the Board of Directors of Fiat and CNH (the
Individual Top Hat Scheme), which provides a lump
sum to be paid in installments if an executive, in certain
circumstances, leaves Fiat and/or its subsidiaries before the
age of 65. Contributions to the Individual Top Hat Scheme
totaled $745,000, $446,000 and $1,717,000 in 2003, 2002 and
2001, respectively. The aggregate amount paid or set aside by
CNH with respect to pension and similar benefits during 2003,
including $275,000 related to the Individual Top Hat Scheme,
totaled approximately $499,000.

77



---



##### 



Certain CNH officers were a party to Change
in Control agreements in 1999 that provided for severance
benefits if the officers employment terminated other than
for cause within 12 months following a
potential change in control or within 24 to 36 months
following a change in control. Those agreements were either
exercised or amended in 2000. The amendment included three
annual installment payments, the first of which was paid in
2000. The aggregate amounts paid by CNH to its current executive
officers under these agreements were approximately $350,000 in
2002, 2001 and 2000, respectively. The aggregate amounts paid by
CNH to all officers under these agreements were approximately
$750,000 in 2002, 2001 and 2000, respectively.

CNH Outside Directors Compensation
Plan

The CNH Global N.V. Outside Directors
Compensation Plan (CNH Directors Plan), which
was amended in 2003, provides for (1) the payment of an
annual retainer fee of $40,000 and committee chair fee of $5,000
(collectively, the Annual Fees) to independent
outside members of the Board in the form of common shares of CNH
by way of quarterly stock grants at the end of each Plan Year
Quarter; (2) an annual grant of 20,000 options to purchase
common shares of CNH that vest on the third anniversary of the
grant date (Annual Automatic Stock Option);
(3) in lieu of the quarterly stock grants, an opportunity
to receive all or a portion of their Annual Fees in cash
(Cash Election); (4) an opportunity to convert
all or a portion of their Annual Fees into stock options
(Stock Option Election); and (5) on May 8,
2003, each outside director received a one time grant of an
amount of options equal to 20% of the Annual Automatic Stock
Options and 15% of the elective stock options each outside
director was granted prior to May 6, 2002. Each of our
outside directors is paid a fee of $1,250 plus expenses for each
Board of Directors and committee meeting attended. The Stock
Option Election gives the outside directors the option to
purchase common shares at a purchase price equal to the fair
market value of the common shares on the date that the Annual
Fees would otherwise have been paid to the director. The number
of shares subject to such an option will be equal to the amount
of fees that the director elected to forego, multiplied by four
and divided by the fair market value of a common share on the
date the fees would otherwise have been paid to the director.
Stock options granted as a result of such an election vest
immediately upon grant, but the shares purchased under the
option cannot be sold for six months following the date of
grant. The exercise price of all options granted under the CNH
Directors Plan is equal to or greater than the fair market
value of our common shares on the date of grant. There are
1 million common shares reserved for issuance under this
plan. As of February 28, 2004, there were 848,694 common
shares available for issuance under the CNH Directors
Plan. Outside directors do not receive benefits upon termination
of their service as directors.

The following table reflects option activity
under the CNH Directors Plan for the years ended
December 31, 2003, 2002 and 2001:

|                                 |           |        |         |          |  |        |       |          |  |        |        |          |   |   |       |       |  |  |        |        |   |   |       |       | 
|-------------------------------- | --------- | ------ | ------- | -------- |  | ------ | ----- | -------- |  | ------ | ------ | -------- | - | - | ----- | ----- |  |  | ------ | ------ | - | - | ----- | ----- | 
|                                 |           |        |         |          |  |       
|                                 |           | 2003   |         | 2002     |  | 2001  
|                                 |           |        |         |          |  |       
|                                 |           |        |         | Exercise |  |        |       | Exercise |  |        |        | Exercise
|                                 |           | Shares |         | Price*   |  | Shares |       | Price*   |  | Shares |        | Price*  
|                                 |           |        |         |          |  |        |       |          |  |        |        |         
|Outstanding at beginning of year |           |        | 82,464  |          |  | $      | 33.10 |          |  |        | 48,314 |          |   | $ | 42.00 |       |  |  | 24,151 |        |   | $ | 59.25 |      
|                                 | Granted   |        |         | 60,036   |  |        |       | 10.28    |  |        |        | 39,322   |   |   |       | 21.35 |  |  |        | 28,456 |   |   |       | 30.20 | 
|                                 | Forfeited |        |         |         |  |        |       |         |  |        |        | (5,172   | ) |   |       | 29.35 |  |  |        | (4,293 | ) |   |       | 60.45 | 
|                                 |           |        |         |          |  |        |       |          |  |        |        |          |   |   |       |       |  |  |        |        |   |   |       |      
|Outstanding at end of year       |           |        | 142,500 |          |  |        | 22.76 |          |  |        | 82,464 |          |   |   | 33.10 |       |  |  | 48,314 |        |   |   | 42.00 |      
|                                 |           |        |         |          |  |        |       |          |  |        |        |          |   |   |       |       |  |  |        |        |   |   |       |      
|Exercisable at end of year       |           |        | 95,009  |          |  |        | 25.68 |          |  |        | 61,954 |          |   |   | 31.80 |       |  |  | 31,814 |        |   |   | 31.80 |      
|                                 |           |        |         |          |  |        |       |          |  |        |        |          |   |   |       |       |  |  |        |        |   |   |       |      



---

|  |                 
|- | ----------------
|* | Weighted-average

78



---



##### 



The following table summarizes outstanding stock
options under the CNH Directors Plan at December 31,
2003:

|                        |  |                     |        |                     |  |          |     |             |  |          |       |  |  |  |        |  |  |   |       | 
|----------------------- |  | ------------------- | ------ | ------------------- |  | -------- | --- | ----------- |  | -------- | ----- |  |  |  | ------ |  |  | - | ----- | 
|                        |  |                     |        |                    
|                        |  | Options Outstanding |        | Options Exercisable
|                        |  |                     |        |                    
|                        |  | Shares              |        |                     |  | Exercise |     | Shares      |  | Exercise
|Range of Exercise Price |  | Outstanding         |        | Contractual Life*   |  | Price*   |     | Exercisable |  | Price*  
|                        |  |                     |        |                     |  |          |     |             |  |         
|$ 9.15 - $26.20.        |  |                     | 97,984 |                     |  |          | 9.0 |             |  | $        | 13.52 |  |  |  | 55,460 |  |  | $ | 13.47 | 
|$26.21 - $40.00.        |  |                     | 24,657 |                     |  |          | 7.4 |             |  |          | 30.31 |  |  |  | 19,690 |  |  |   | 30.39 | 
|$40.01 - $56.00.        |  |                     | 5,882  |                     |  |          | 6.8 |             |  |          | 49.31 |  |  |  | 5,882  |  |  |   | 49.31 | 
|$56.01 - $77.05.        |  |                     | 13,977 |                     |  |          | 6.3 |             |  |          | 63.04 |  |  |  | 13,977 |  |  |   | 63.04 | 



---

|  |                 
|- | ----------------
|* | Weighted-average



| |                          
| | -------------------------
| | CNH Equity Incentive Plan

As amended, the CNH Equity Incentive Plan (the
CNH EIP) provides for grants of various types of
awards to officers and employees of CNH and its subsidiaries.
There are 5,600,000 common shares reserved for issuance
under this plan. Certain options vest ratably over four years
from the award date, while certain performance-based options
vest subject to the attainment of specified performance criteria
but no later than seven years from the award date. All options
expire after ten years. Except as noted below, the exercise
prices of all options granted under the CNH EIP are equal to or
greater than the fair market value of CNH common shares on the
respective grant dates. During 2001, we granted stock options
with an exercise price less than the quoted market price of our
common shares at the date of grant. The 2001 exercise price was
based upon the average official price of our common shares on
the New York Stock Exchange during the thirty-day period
preceding the date of grant. The original $3,729,600 of
compensation cost related to the 2001 award has been deferred
and is being charged to expense over the four-year service
period of the related options. No options were granted in 2003
under the CNH EIP. As of December 31, 2003, there were
2,611,254 common shares available for issuance under the CNH EIP.

The following table reflects option activity
under the CNH EIP for the years ended December 31, 2003,
2002 and 2001:

|                                 |           |        |           |          |   |        |       |          |  |        |           |           |   |   |       |       |  |  |           |           |   |   |       |       | 
|-------------------------------- | --------- | ------ | --------- | -------- | - | ------ | ----- | -------- |  | ------ | --------- | --------- | - | - | ----- | ----- |  |  | --------- | --------- | - | - | ----- | ----- | 
|                                 |           |        |           |          |   |       
|                                 |           | 2003   |           | 2002     |   | 2001  
|                                 |           |        |           |          |   |       
|                                 |           |        |           | Exercise |   |        |       | Exercise |  |        |           | Exercise 
|                                 |           | Shares |           | Price*   |   | Shares |       | Price*   |  | Shares |           | Price*   
|                                 |           |        |           |          |   |        |       |          |  |        |           |          
|Outstanding at beginning of year |           |        | 3,219,995 |          |   | $      | 34.35 |          |  |        | 1,907,182 |           |   | $ | 48.65 |       |  |  | 1,040,387 |           |   | $ | 68.85 |      
|                                 | Granted   |        |           |         |   |        |       |         |  |        |           | 1,424,140 |   |   |       | 16.20 |  |  |           | 1,065,600 |   |   |       | 31.70 | 
|                                 | Forfeited |        |           | (503,153 | ) |        |       | 41.97    |  |        |           | (111,327  | ) |   |       | 46.60 |  |  |           | (198,805  | ) |   |       | 63.75 | 
|                                 |           |        |           |          |   |        |       |          |  |        |           |           |   |   |       |       |  |  |           |           |   |   |       |      
|Outstanding at end of year       |           |        | 2,716,842 |          |   |        | 32.94 |          |  |        | 3,219,995 |           |   |   | 34.35 |       |  |  | 1,907,182 |           |   |   | 48.65 |      
|                                 |           |        |           |          |   |        |       |          |  |        |           |           |   |   |       |       |  |  |           |           |   |   |       |      
|Exercisable at end of year       |           |        | 1,216,093 |          |   |        | 42.43 |          |  |        | 774,780   |           |   |   | 57.10 |       |  |  | 355,585   |           |   |   | 68.85 |      
|                                 |           |        |           |          |   |        |       |          |  |        |           |           |   |   |       |       |  |  |           |           |   |   |       |      



---

|  |                 
|- | ----------------
|* | Weighted-average

79



---



##### 



The following table summarizes outstanding stock
options under the CNH Equity Incentive Plan at December 31,
2003:

|                        |  |                     |           |                     |  |          |     |             |  |          |       |  |  |  |         |  |  |   |       | 
|----------------------- |  | ------------------- | --------- | ------------------- |  | -------- | --- | ----------- |  | -------- | ----- |  |  |  | ------- |  |  | - | ----- | 
|                        |  |                     |           |                    
|                        |  | Options Outstanding |           | Options Exercisable
|                        |  |                     |           |                    
|                        |  | Shares              |           |                     |  | Exercise |     | Shares      |  | Exercise
|Range of Exercise Price |  | Outstanding         |           | Contractual Life*   |  | Price*   |     | Exercisable |  | Price*  
|                        |  |                     |           |                     |  |          |     |             |  |         
|$15.20 - $26.20         |  |                     | 1,275,215 |                     |  |          | 8.6 |             |  | $        | 16.18 |  |  |  | 320,284 |  |  | $ | 16.18 | 
|$26.21 - $40.00         |  |                     | 818,600   |                     |  |          | 7.6 |             |  |          | 31.70 |  |  |  | 410,800 |  |  |   | 31.70 | 
|$40.01 - $77.05         |  |                     | 623,027   |                     |  |          | 6.1 |             |  |          | 68.85 |  |  |  | 485,009 |  |  |   | 68.85 | 



---

|  |                 
|- | ----------------
|* | Weighted-average

Under the CNH EIP, shares may also be granted as
restricted shares. We establish the period of restriction for
each award and hold the shares during the restriction period.
Certain restricted shares vest over time, while certain
performance-based restricted shares vest subject to the
attainment of specified performance criteria. Such
performance-based restricted shares vest no later than seven
years from the award date.

We maintain a management bonus program that links
a portion of the compensation paid to senior executives to our
achievement of financial performance criteria specified by the
Nominating and Compensation Committee of the CNH Board of
Directors. Effective for the 2002 plan year only, a special
incentive plan (the 2002 Special Incentive Program)
was approved which provides a grant of restricted stock to
certain senior executives upon meeting a specified financial
position target. The 2002 Special Incentive Program was
administered under the CNH EIP. Since the specified target was
achieved, we issued 207,215 restricted shares under the program
in 2003, which will vest in March 2004. Additionally, for
individuals electing to not take the restricted stock earned
under the 2002 Special Incentive Program, CNH agreed to issue an
equivalent number of common shares if the individual remained
employed by CNH as of the vesting date for the restricted shares
issued to other participants in the 2002 Special Incentive
Program. No restricted shares were awarded during 2002 and 2001.
At December 31, 2003, restricted common shares outstanding
under the EIP, including the 2002 Special Incentive
Program, totaled 209,783 shares.

Beginning in 2004 awards granted under the EIP
will be subject to the achievement of certain performance
criteria over a 3-year period, as defined by the Nominating and
Compensation Committee of our Board of Directors. Under this
program, earned awards will be satisfied equally with cash and
CNH common shares.



| |                          
| | -------------------------
| | Fiat Stock Option Program

Certain employees of CNH are eligible to
participate in stock option plans of Fiat (Fiat
Plans) whereby participants are granted options to
purchase ordinary shares of Fiat (Fiat Shares). A
summary of options under the Fiat Plans as of December 31,
2003 follows:

|              |  |               |       |                |  |         |       |         |  |           |       |             |  |           |         |             |  |             |        |  |  |  |         |   |  |  |   |  |  |  |         |  |  |  |         | 
|------------- |  | ------------- | ----- | -------------- |  | ------- | ----- | ------- |  | --------- | ----- | ----------- |  | --------- | ------- | ----------- |  | ----------- | ------ |  |  |  | ------- | - |  |  | - |  |  |  | ------- |  |  |  | ------- | 
|              |  |               |       |                |  |        
|              |  |               |       | Exercise Price |  | Options
|              |  | Date of Grant |       |                |  |        
|Year of Grant |  | Share Price   |       | Original       |  | Current |       | Granted |  | Transfers |       | Forfeitures |  | Exercises |         | Outstanding |  | Exercisable
|              |  |               |       |                |  |         |       |         |  |           |       |             |  |           |         |             |  |            
|1999          |  |              | 29.38 |                |  |        | 28.45 |         |  |          | 26.12 |             |  |           | 53,300  |             |  |             | 24,900 |  |  |  | (18,400 | ) |  |  |  |  |  |  | 59,800  |  |  |  | 59,800  | 
|2000          |  |               | 33.00 |                |  |         | 30.63 |         |  |           | 28.12 |             |  |           | 102,500 |             |  |             | 72,000 |  |  |  | (8,000  | ) |  |  |  |  |  |  | 166,500 |  |  |  | 124,875 | 
|2001          |  |               | 26.77 |                |  |         | 27.07 |         |  |           | 24.85 |             |  |           | 50,000  |             |  |             | 30,000 |  |  |  |        |   |  |  |  |  |  |  | 80,000  |  |  |  | 40,000  | 
|2001          |  |               | 18.06 |                |  |         | 18.00 |         |  |           | 16.52 |             |  |           | 249,000 |             |  |             | 83,000 |  |  |  | (41,000 | ) |  |  |  |  |  |  | 291,000 |  |  |  | 145,500 | 
|2002          |  |               | 11.88 |                |  |         | 11.16 |         |  |           | 10.39 |             |  |           | 513,000 |             |  |             | 78,000 |  |  |  | (36,000 | ) |  |  |  |  |  |  | 555,000 |  |  |  | 138,750 | 

The original exercise prices, which were
determined by an average of the price of Fiat Shares on the
Italian Stock Exchange prior to grant, were subsequently
modified by Fiat. The options vest ratably over a four year
period. No options to purchase Fiat Shares were issued to
employees of CNH during 2003. All options under the Fiat Plans
expire eight years after the grant date. The fair value of these
options did not result in a material amount of compensation
expense.

80



---



##### 





| |                    
| | -------------------
| | C. Board Practices.

Responsibility for our management lies with our
Board of Directors, which supervises the policies of CNH and the
general course of corporate affairs. The members of the Board
are appointed at the meetings of shareholders and do not have
fixed terms of office.

We have an Audit Committee, a Nominating and
Compensation Committee, and a Finance Committee of the Board of
Directors.

Pursuant to resolutions adopted by the Board of
Directors, the principal functions of the Audit Committee are to
recommend the selection and review the activities of our
independent public accountants, and to exercise general
oversight with respect to our financial reporting process and
internal accounting controls. The committee currently consists
of Ms. Hudson and Messrs. Provan, Diana and Murphy.
Ms. Hudson serves as chairperson of this committee. All of
the committees members are independent directors, and each
of Ms. Hudson and Mr. Murphy is an audit
committee financial expert for the purposes of the
Sarbanes-Oxley Act of 2002.

Pursuant to resolutions adopted by the Board of
Directors, the principal functions of the Nominating and
Compensation Committee are to aid in attracting qualified
candidates to serve as outside directors and exercise general
oversight of our executive compensation program, including
fixing the compensation of executive and certain other senior
officers of CNH. The committee currently consists of
Messrs. Morchio, Provan, Diana and Hiler. Mr. Morchio
serves as chairperson of this committee.

Pursuant to resolutions adopted by the Board of
Directors, the principal functions of the Finance Committee are
to review and make recommendations on major transactions,
programs or policies, including acquisitions, joint ventures or
divestitures, capital investments, short-term or long-term
financing, including the public offering or private placement of
debt securities, sale, repurchase or split of equity securities,
and financial and hedging policy of CNH. The committee currently
consists of Ms. Hudson and Mr. Hiler. Ms. Hudson
serves as chairperson of this committee.



| |              
| | -------------
| | D. Employees.

At December 31, 2003, 2002, and 2001 we had
approximately 26,800, 28,500 and 28,100 employees,
respectively. There were approximately 19,500 employees in
the agricultural equipment business, 4,700 in the construction
equipment business and 900 in the financial services business,
with the remaining 1,700 shared by all business units. As of
December 31, 2003, as broken down by geographic location,
there were 9,200 employees in North America,
13,000 employees in Europe, 2,400 employees in Latin
America and 2,200 employees in the Rest of World.

Unions represent many of our worldwide production
and maintenance employees. Our collective bargaining agreement
with the UAW, which represents approximately 3,000 of our active
and retiree hourly production and maintenance employees in the
United States, expires May 2, 2004. Labor agreements
covering employees in certain European countries generally
expire annually. We can offer no assurance that future contracts
with the UAW or any of our other union contracts or labor
agreements will be renegotiated upon terms that are acceptable
to us.

Our employees in Europe are also protected by
various worker co-determination and similar laws that afford
employees, through local and central works councils, certain
rights of consultation with respect to matters involving the
business and operations of their employers, including the
downsizing or closure of facilities and the termination of
employment. Over the years, we have experienced various work
slow-downs, stoppages and other labor disruptions.

81



---



##### 





| |                    
| | -------------------
| | E. Share Ownership.

All of our directors and executive officers
beneficially own, or were granted options with respect to, less
than one percent of our issued common shares. Directors
automatic option awards vest after the third anniversary of the
grant date. Elective option awards vest immediately upon grant.
Directors options terminate six months after a Director
leaves the Board of Directors if not exercised. In any event,
Directors options terminate if not exercised by the tenth
anniversary of the grant date.

Options issued to outside directors are issued
from the CNH Directors Plan. Options issued to
employees who are also board members are issued from the
CNH EIP. The following table summarizes outstanding stock
options for Directors as of December 31, 2003:

|                                      |                      |       |            |            |  |         |       |              |  |         |        |            |  |           |        |            |  |             |        |           |  |       |        |        |  |  |        |        |  |  |       |       |  |  |   |   |  |  |        |        |  |  |         |         | 
|------------------------------------- | -------------------- | ----- | ---------- | ---------- |  | ------- | ----- | ------------ |  | ------- | ------ | ---------- |  | --------- | ------ | ---------- |  | ----------- | ------ | --------- |  | ----- | ------ | ------ |  |  | ------ | ------ |  |  | ----- | ----- |  |  | - | - |  |  | ------ | ------ |  |  | ------- | ------- | 
|                                      |                      | Grant |            | Exercise   |  | Alfredo |       | Katherine M. |  | Kenneth |        | James L.C. |  | Edward A. |        | Michael E. |  | Jean-Pierre |        | Paulo     |  |      
|                                      |                      | Date  |            | Price      |  | Diana   |       | Hudson       |  | Lipper  |        | Provan     |  | Hiler     |        | Murphy     |  | Rosso       |        | Monferino |  | Total
|                                      |                      |       |            |            |  |         |       |              |  |         |        |            |  |           |        |            |  |             |        |           |  |      
|Opening Balance as of January 1, 2003 |                      |       |            |            |  |         |       |              |  |         |        |            |  |           |        |            |  |             |        |           |  |       |        |        |  |  |        |        |  |  |       |       |  |  |   |   |  |  |        |        |  |  |         |        
|                                      | (automatic option)   |       |            | 11/20/1999 |  |         | $     | 77.03        |  |         |        | 750        |  |           |        | 750        |  |             |        | 750       |  |       |        | 750    |  |  |        |       |  |  |       |      |  |  |   |  |  |  |        |       |  |  |         | 3,000   | 
|                                      |                      |       | 2/29/2000  |            |  |         | 56.10 |              |  |         | 624    |            |  |           | 624    |            |  |             | 713    |           |  |       | 624    |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 2,585   |        
|                                      |                      |       | 4/18/2000  |            |  |         | 68.85 |              |  |         |       |            |  |           |       |            |  |             |       |           |  |       |       |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  | 45,000 |        |  |  | 45,000  |        
|                                      |                      |       | 6/6/2000   |            |  |         | 60.63 |              |  |         | 577    |            |  |           | 577    |            |  |             | 660    |           |  |       | 577    |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 2,391   |        
|                                      | (automatic option)   |       |            | 6/7/2000   |  |         |       | 60.00        |  |         |        | 1,500      |  |           |        | 1,500      |  |             |        | 1,500     |  |       |        | 1,500  |  |  |        |       |  |  |       |      |  |  |   |  |  |  |        |       |  |  |         | 6,000   | 
|                                      |                      |       | 9/4/2000   |            |  |         | 49.55 |              |  |         | 706    |            |  |           | 706    |            |  |             | 807    |           |  |       | 706    |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 2,925   |        
|                                      |                      |       | 12/3/2000  |            |  |         | 49.08 |              |  |         | 713    |            |  |           | 713    |            |  |             | 815    |           |  |       | 713    |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 2,954   |        
|                                      |                      |       | 3/2/2001   |            |  |         | 38.63 |              |  |         | 906    |            |  |           | 906    |            |  |             | 1,036  |           |  |       | 906    |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 3,754   |        
|                                      |                      |       | 5/2/2001   |            |  |         | 26.90 |              |  |         | 1,301  |            |  |           | 1,301  |            |  |             | 1,487  |           |  |       | 1,301  |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 5,390   |        
|                                      | (automatic option)   |       |            | 5/3/2001   |  |         |       | 27.88        |  |         |        | 1,500      |  |           |        | 1,500      |  |             |        | 1,500     |  |       |        | 1,500  |  |  |        |       |  |  |       |      |  |  |   |  |  |  |        |       |  |  |         | 6,000   | 
|                                      |                      |       | 7/31/2001  |            |  |         | 36.35 |              |  |         | 963    |            |  |           | 963    |            |  |             | 1,101  |           |  |       | 963    |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 3,990   |        
|                                      |                      |       | 10/29/2001 |            |  |         | 26.25 |              |  |         | 1,333  |            |  |           | 1,333  |            |  |             | 1,524  |           |  |       | 1,333  |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 5,523   |        
|                                      |                      |       | 1/27/2002  |            |  |         | 29.48 |              |  |         | 1,188  |            |  |           | 1,188  |            |  |             | 1,357  |           |  |       | 1,188  |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 4.921   |        
|                                      |                      |       | 5/6/2002   |            |  |         | 26.60 |              |  |         | 1,316  |            |  |           | 1,436  |            |  |             | 1,368  |           |  |       | 1,316  |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 5,436   |        
|                                      | (automatic option)   |       |            | 5/7/2002   |  |         |       | 26.43        |  |         |        | 1,500      |  |           |        | 1,500      |  |             |        | 1,500     |  |       |        | 1,500  |  |  |        | 1,500  |  |  |       |      |  |  |   |  |  |  |        |       |  |  |         | 7,500   | 
|                                      |                      |       | 7/22/2002  |            |  |         | 16.18 |              |  |         |       |            |  |           |       |            |  |             |       |           |  |       |       |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  | 34,000 |        |  |  | 34,000  |        
|                                      |                      |       | 8/2/2002   |            |  |         | 15.23 |              |  |         | 2,299  |            |  |           | 2,627  |            |  |             | 2,299  |           |  |       |       |        |  |  | 2,299  |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 9,524   |        
|                                      | (automatic option)   |       |            | 9/3/2002   |  |         |       | 18.53        |  |         |        |           |  |           |        |           |  |             |        |          |  |       |        |       |  |  |        |       |  |  |       | 1,011 |  |  |   |  |  |  |        |       |  |  |         | 1,011   | 
|                                      |                      |       | 11/4/2002  |            |  |         | 15.18 |              |  |         | 2,307  |            |  |           | 2,636  |            |  |             | 2,307  |           |  |       |       |        |  |  | 2,307  |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 9,557   |        
|                                      |                      |       |            |            |  |         |       |              |  |         |        |            |  |           |        |            |  |             |        |           |  |       |        |        |  |  |        |        |  |  |       |       |  |  |   |   |  |  |        |        |  |  |         |        
|Opening Total                         |                      |       |            |            |  |         |       |              |  |         | 19,483 |            |  |           | 20,260 |            |  |             | 20,724 |           |  |       | 14,877 |        |  |  | 6,106  |        |  |  | 1,011 |       |  |  |  |   |  |  | 79,000 |        |  |  | 161,461 |        
|                                      |                      |       |            |            |  |         |       |              |  |         |        |            |  |           |        |            |  |             |        |           |  |       |        |        |  |  |        |        |  |  |       |       |  |  |   |   |  |  |        |        |  |  |         |        
|                                      | Vested/Not Exercised |       |            |            |  |         |       |              |  |         |        | 16,483     |  |           |        | 17,260     |  |             |        | 17,724    |  |       |        | 11,877 |  |  |        | 4,606  |  |  |       |      |  |  |   |  |  |  |        | 45,796 |  |  |         | 113,746 | 
|                                      | Not Vested           |       |            |            |  |         |       |              |  |         |        | 3,000      |  |           |        | 3,000      |  |             |        | 3,000     |  |       |        | 3,000  |  |  |        | 1,500  |  |  |       | 1,011 |  |  |   |  |  |  |        | 33,204 |  |  |         | 47,715  | 
|Options Granted in 2003*              |                      |       | 1/31/2003  |            |  |         | 16.00 |              |  |         | 2,229  |            |  |           | 2,547  |            |  |             | 2,229  |           |  |       |       |        |  |  | 2,229  |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 9,234   |        
|                                      |                      |       | 5/7/2003   |            |  |         | 9.00  |              |  |         | 3,827  |            |  |           | 4,374  |            |  |             | 3,827  |           |  |       |       |        |  |  | 3,827  |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 15,855  |        
|                                      | (automatic option)   |       |            | 5/8/2003   |  |         |       | 9.00         |  |         |        | 6,194      |  |           |        | 6,212      |  |             |        | 6,380     |  |       |        | 6,194  |  |  |        | 4,000  |  |  |       | 4,000 |  |  |   |  |  |  |        |       |  |  |         | 32,980  | 
|                                      |                      |       | 8/4/2003   |            |  |         | 10.00 |              |  |         |       |            |  |           | 1,136  |            |  |             |       |           |  |       |       |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 1,136   |        
|                                      |                      |       | 11/3/2003  |            |  |         | 13.00 |              |  |         |       |            |  |           | 834    |            |  |             |       |           |  |       |       |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  | 834     |        
|                                      |                      |       |            |            |  |         |       |              |  |         |        |            |  |           |        |            |  |             |        |           |  |       |        |        |  |  |        |        |  |  |       |       |  |  |   |   |  |  |        |        |  |  |         |        
|                                      | 2003 Sub-Total       |       |            |            |  |         |       |              |  |         |        | 12,250     |  |           |        | 15,103     |  |             |        | 12,436    |  |       |        | 6,194  |  |  |        | 10,056 |  |  |       | 4,000 |  |  |   |  |  |  |        |       |  |  |         | 60,039  | 
|Options Exercised in 2003             |                      |       |            |            |  |         |       |              |  |         |       |            |  |           |       |            |  |             |       |           |  |       |       |        |  |  |       |        |  |  |      |       |  |  |  |   |  |  |       |        |  |  |        |        
|                                      |                      |       |            |            |  |         |       |              |  |         |        |            |  |           |        |            |  |             |        |           |  |       |        |        |  |  |        |        |  |  |       |       |  |  |   |   |  |  |        |        |  |  |         |        
|Closing Balance as 12/31/03           |                      |       |            |            |  |         |       |              |  |         |        |            |  |           |        |            |  |             |        |           |  |       |        |        |  |  |        |        |  |  |       |       |  |  |   |   |  |  |        |        |  |  |         |        
|Closing Total                         |                      |       |            |            |  |         |       |              |  |         | 31,733 |            |  |           | 35,363 |            |  |             | 33,160 |           |  |       | 21,071 |        |  |  | 16,162 |        |  |  | 5,011 |       |  |  |  |   |  |  | 79,000 |        |  |  | 221,500 |        
|                                      |                      |       |            |            |  |         |       |              |  |         |        |            |  |           |        |            |  |             |        |           |  |       |        |        |  |  |        |        |  |  |       |       |  |  |   |   |  |  |        |        |  |  |         |        
|                                      | Vested/Not Exercised |       |            |            |  |         |       |              |  |         |        | 22,539     |  |           |        | 26,151     |  |             |        | 23,780    |  |       |        | 11,877 |  |  |        | 10,662 |  |  |       |      |  |  |   |  |  |  |        | 45,796 |  |  |         | 140,805 | 
|                                      |                      |       |            |            |  |         |       |              |  |         |        |            |  |           |        |            |  |             |        |           |  |       |        |        |  |  |        |        |  |  |       |       |  |  |   |   |  |  |        |        |  |  |         |        
|                                      | Not Vested           |       |            |            |  |         |       |              |  |         |        | 9,194      |  |           |        | 9,212      |  |             |        | 9,380     |  |       |        | 9,194  |  |  |        | 5,500  |  |  |       | 5,011 |  |  |   |  |  |  |        | 33,204 |  |  |         | 80,695  | 
|                                      |                      |       |            |            |  |         |       |              |  |         |        |            |  |           |        |            |  |             |        |           |  |       |        |        |  |  |        |        |  |  |       |       |  |  |   |   |  |  |        |        |  |  |         |        

82



---



##### 



Effective January 31, 2003, we began
providing matching contributions to our U.S. Defined
Contribution Plan in the form of CNH common shares rather
than in cash. Employees may transfer these contributions out of
the CNH stock fund after a maximum of 90 days. For the
year ended December 31, 2003, approximately
1,463,000 shares were contributed to this plan. Our 5%
fixed contribution to the plan continues to be funded in cash.
Employees may not elect to invest any of their own contributions
in CNH common shares.

We maintain a management bonus program that links
a portion of the compensation paid to senior executives to our
achievement of financial performance criteria specified by the
Nominating and Compensation Committee of our Board of Directors.
Effective for the 2002 plan year only, the 2002 Special
Incentive Program was approved which provided a grant of
restricted stock to certain senior executives upon meeting a
specified financial position target. The 2002 Special Incentive
Program was administered under the CNH EIP and these shares
will vest during March 2004.




Item 7. Major Shareholders and
Related Party Transactions



| |                      
| | ---------------------
| | A.Major Shareholders.

Our outstanding capital stock consists of common
shares, par value
2.25 per
share and Series A Preferred Stock, par value
2.25 per
share. As of March 31, 2004, there were 133,046,263 common
shares and 8,000,000 shares of Series A Preferred
Stock outstanding. At March 31, 2004 we had approximately
736 registered holders of record of our common shares in
the United States, holding approximately 16% of the outstanding
common shares. Since certain of the common shares are held by
brokers or other nominees, the number of direct record holders
in the United States may not be fully indicative of the number
of direct beneficial owners in the United States or of where the
direct beneficial owners of such shares are resident.

The following table sets forth the outstanding
common shares of CNH as of March 31, 2004:

|                   |  |             |             |            |  |  |     |  
|------------------ |  | ----------- | ----------- | ---------- |  |  | --- | -
|                   |  | Number of   |             |           
|                   |  | Outstanding |             | Percentage
|                   |  | Common      |             | Ownership 
|Shareholders       |  | Shares      |             | Interest  
|                   |  |             |             |           
|Fiat Netherlands   |  |             | 111,866,037 |            |  |  | 84  | %
|Other shareholders |  |             | 21,180,226  |            |  |  | 16  |  
|                   |  |             |             |            |  |  |     |  
|Total              |  |             | 133,046,263 |            |  |  | 100 | %
|                   |  |             |             |            |  |  |     |  

All of the Series A Preferred Stock is held
by Fiat and an affiliate. Each of our directors and executive
officers, individually and collectively, own less than 1% of our
common shares.

We are controlled by our largest single
shareholder, Fiat Netherlands, a wholly owned subsidiary of
Fiat. Consequently, Fiat controls all matters submitted to a
vote of our shareholders, including approval of annual
dividends, election and removal of its directors and approval of
extraordinary business combinations. Fiat Netherlands has the
same voting rights as our other shareholders. None of the
Series A Preferred Stock is held by a shareholder in the
United States.



| |                                  
| | ---------------------------------
| | B.Related Party
    Transactions.

On April 7 and 8, 2003, we issued a total of
8 million shares of Series A Preferred Stock to Fiat
and an affiliate of Fiat in exchange for the retirement of
$2 billion in Equipment Operations indebtedness owed to
Fiat Group companies.

The Series A Preferred Stock will not accrue
dividends until January 1, 2005. Subsequently, the
Series A Preferred Stock will pay a dividend at the then
prevailing common dividend yield. However, should we achieve
certain defined financial performance measures, the annual
dividend will be fixed at the prevailing common dividend yield,
plus an additional 150 basis points. Dividends will be
payable annually in arrears, subject to certain provisions that
allow for a deferral for a period not to exceed five consecutive
years. The Series A Preferred Stock has a liquidation
preference of $250 per share and each share is entitled to
one vote on all

83



---



##### 



matters submitted to our shareholders. The
Series A Preferred Stock will convert into 100 million
CNH common shares at a conversion price of $20 per
share automatically if the market price of the common shares,
defined as the average of the closing price per share for
30 consecutive trading days, is greater than $24 at any
time through and including December 31, 2006 or $21 at any
time on or after January 1, 2007, subject to anti-dilution
adjustment. In the event of dissolution or liquidation, whatever
remains of the companys equity after all its debts have
been discharged will first be applied to distribute to the
holders of the Series A Preferred Stock the nominal amount
of their preference shares and thereafter the amount of the
share premium reserve relating to the Series A Preferred
Stock. Any remaining assets will be distributed to the holders
of common shares in proportion to the aggregate nominal amount
of their common shares.


In June 2002, Fiat exchanged $1.3 billion of
our debt for 65 million common shares, equal to
$1.3 billion divided by $20 per share, which was the
price per share at which we sold 10 million shares in our
concurrent public offering.

We continue to rely on Fiat to provide either
guarantees or funding in connection with some of our external
debt financing needs. At December 31, 2003, our outstanding
debt with Fiat and its affiliates was approximately 35% of our
total debt, compared with 50% at December 31, 2002. Fiat
guarantees $1.4 billion of our debt with third parties
or approximately 20% of our outstanding debt. We pay Fiat a
guarantee fee based on the average amount outstanding under
facilities guaranteed by Fiat. In 2003, we paid a guarantee fee
of between 0.03125% per annum and 0.0625% per annum
while in 2002 the guarantee fee ranged between 0.03125% and
0.125% per annum and 2001 guarantee fees were between
0.0625% and 0.125% per annum. Fiat has agreed to maintain
its existing treasury and debt financing arrangements with us
for as long as it maintains control of CNH and in any event
until December 31, 2004. While no extension of this
agreement was formalized as of December 31, 2003 or as of
the date of this report, we believe that it is not the current
intention of Fiat to withdraw its support of us. After that
time, Fiat has committed that it will not terminate our access
to these financing arrangements without affording us an
appropriate time period to develop suitable substitutes. The
terms of any alternative sources of financing may not be as
favorable as those provided or facilitated by Fiat.

Like other companies that are part of
multinational groups, we participate in a group-wide cash
management system with other members of the Fiat Group. Under
this system, which is operated by Fiat in a number of
jurisdictions, the cash balances of Fiat Group members,
including us, are aggregated at the end of each business day to
a central pooling account. Our positive cash balances, if any,
at the end of any given business day may be applied by Fiat to
offset negative balances of other Fiat Group members and vice
versa. Alternatively, in certain other jurisdictions where cash
balances are not aggregated daily, third-party lenders to other
participating Fiat Group members may be entitled to rights to
set off against Fiat Group member funds present in the cash
management pool or may benefit from guarantees of payment by
certain Fiat Group members. As a result, we are exposed to Fiat
Group credit risk to the extent that Fiat is unable to return
any such offset amounts at the beginning of the following
business day, and in the event of a bankruptcy or insolvency of
Fiat (or any other Fiat Group member in the jurisdictions with
set off agreements) we may be unable to secure the return of
such funds to the extent they belong to us, and we may be viewed
as a creditor of such Fiat entity with respect to such funds. We
cannot assure you that in the future the operation of this cash
management system may not adversely impact our ability to
recover our funds to the extent one or more of the
above-described events were to occur.

We purchase some of our engines and other
components from the Fiat Group and companies of the Fiat Group
provide us with administrative services such as accounting and
internal audit, cash management, maintenance of plant and
equipment, research and development, information systems and
training. We sell certain products to subsidiaries and
affiliates of Fiat. In addition, we enter into hedging
arrangements with counterparties that are members of the Fiat
Group. In 2003, 2002 and 2001, we purchased approximately
$584 million, $416 million, and $239 million,
respectively in goods and services, from companies in the Fiat
Group. Our principal purchases of goods from Fiat and its
affiliates include diesel engines from Iveco N.V., robotic
equipment and paint systems from Comau Pico Holdings
Corporation, dump trucks from

84



---



##### 



Astra V.I. S.p.A., and castings from
Teksid. We also purchase tractors from our Mexican joint venture
for resale in the United States.


Fiat provides accounting services to us in Europe
and Brazil through an affiliate that uses shared service centers
to provide such services at competitive costs to various Fiat
companies and third-party customers. Fiat provides internal
audit services at the direction of our internal audit area in
certain locations where it is more cost effective to use
existing Fiat resources. Routine maintenance of our plants and
facilities in Europe is provided by a Fiat affiliate skilled in
such work that also provides similar services to third parties.
We purchase network and hardware support from and we outsource a
portion of our information services to a joint venture that Fiat
has formed with IBM. Fiat also provides training services
through an affiliate that is skilled at providing employee
training. We use a broker that is an affiliate of Fiat to
purchase a portion of our insurance coverage. We purchase
research and development from an Italian joint venture set up by
Fiat and owned by various Fiat subsidiaries. This joint venture
benefits from Italian government incentives granted to promote
work in the less developed areas of Italy.

For material related party transactions, we
generally solicit and evaluate bid proposals prior to entering
into any such transactions, and in such instances, the Audit
Committee generally conducts a review to determine that such
transactions are what the committee believes to be on
arms-length terms.

If the goods or services or financing
arrangements described above were not available from Fiat, we
would have to obtain them from other sources. We can offer no
assurance that such alternative sources would provide goods and
services on terms as favorable as those offered by Fiat.

Fiat has executed, on our behalf, certain foreign
exchange and interest rate-related contracts. As of
December 31, 2003, and 2002, we were parties to derivative
or other financial instruments having an aggregate contract
value of $977 million and $334 million, respectively,
to which affiliates of Fiat were counterparties. Our management
believes that the terms of the foreign exchange and interest
rate-related contracts entered into with Fiat and its affiliates
are at least as favorable to those available from unaffiliated
third parties.

Additionally, certain of our executives
participate in the stock option program of Fiat as described in
Note 19, Option and Incentive Plans, of our
Consolidated Financial Statements.



| |                                        
| | ---------------------------------------
| | C.Interests of Experts and
    Counsel.

Not applicable.




Item 8. Financial
Information



| |                                                               
| | --------------------------------------------------------------
| | A.Consolidated Statements and Other
    Financial Information.

See Item 18. Financial
Statements for a list of the Financial Statements filed
with this document.



| |                       
| | ----------------------
| | B.Significant Changes.

No significant changes have occurred since the
date of the Consolidated Financial Statements.

85



---



##### 






Item 9. The Offer and
Listing



| |                                  
| | ---------------------------------
| | A. Offer and Listing
    Details.

Our common shares are quoted on the New York
Stock Exchange under the symbol CNH. The following
table provides the high and low closing prices of our common
shares as reported on the New York Stock Exchange for each of
the periods indicated (as adjusted to reflect the
1-for-5 reverse stock split we effected on April 1,
2003):



| |                   
| | ------------------
| | Common Share Price

|                             |                |      |       |       |  |   |       |       | 
|---------------------------- | -------------- | ---- | ----- | ----- |  | - | ----- | ----- | 
|                             |                | High |       | Low  
|                             |                |      |       |      
|Most recent six months:      |                |      |       |       |  |   |       |      
|                             | March 2004     |      | $     | 18.88 |  |   | $     | 16.99 | 
|                             | February 2004  |      |       | 18.75 |  |   |       | 16.45 | 
|                             | January 2004   |      |       | 17.72 |  |   |       | 16.37 | 
|                             | December 2003  |      |       | 17.02 |  |   |       | 14.16 | 
|                             | November 2003  |      |       | 13.88 |  |   |       | 12.70 | 
|                             | October 2003   |      |       | 13.81 |  |   |       | 12.47 | 
|Year ended December 31, 2003 |                |      |       |       |  |   |       |      
|                             | First Quarter  |      | $     | 19.00 |  |   | $     | 5.95  | 
|                             | Second Quarter |      |       | 10.05 |  |   |       | 7.25  | 
|                             | Third Quarter  |      |       | 14.42 |  |   |       | 8.34  | 
|                             | Fourth Quarter |      |       | 17.02 |  |   |       | 12.47 | 
|                             | Full Year      |      |       | 19.00 |  |   |       | 5.95  | 
|Year ended December 31, 2002 |                |      |       |       |  |   |       |      
|                             | First Quarter  |      | $     | 32.15 |  |   | $     | 19.50 | 
|                             | Second Quarter |      |       | 29.10 |  |   |       | 19.95 | 
|                             | Third Quarter  |      |       | 20.70 |  |   |       | 14.05 | 
|                             | Fourth Quarter |      |       | 19.50 |  |   |       | 14.00 | 
|                             | Full Year      |      |       | 32.15 |  |   |       | 14.00 | 
|2001                         |                | $    | 48.75 |       |  | $ | 25.50 |      
|2000                         |                | $    | 74.05 |       |  | $ | 37.80 |      
|1999                         |                | $    | 90.00 |       |  | $ | 43.75 |      

On March 31, 2004, the last reported sales
price of our common shares as reported on the New York Stock
Exchange was $18.72 per share. There were approximately 736
registered holders of record of our common shares in the United
States as of that date.



| |                         
| | ------------------------
| | B. Plan of Distribution.

Not applicable.



| |            
| | -----------
| | C. Markets.

The outstanding common shares of CNH are listed
on the New York Stock Exchange under the symbol CNH.



| |                         
| | ------------------------
| | D. Selling Shareholders.

Not applicable.



| |             
| | ------------
| | E. Dilution.

Not applicable.

86



---



##### 





| |                              
| | -----------------------------
| | F. Expenses of the
    Issue.

Not applicable.




Item 10. Additional
Information



| |                  
| | -----------------
| | A. Share Capital.

Not applicable.



| |                                               
| | ----------------------------------------------
| | B. Memorandum and Articles of
    Association.

Set forth below is a summary description of the
material provisions of our Articles of Association, effective
April 1, 2003 (the Articles of Association),
and particular provisions of Dutch law relevant to CNHs
statutory existence. This summary does not restate our Articles
of Association or relevant Dutch law in their entirety.

Registration and Objectives

CNH is registered at Commercial Register kept at
the Chamber of Commerce in Amsterdam under file number 33283760.

As provided in its Articles of Association,
CNHs objectives are to:



| |   |                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | engage in, and/or to participate in and operate
    one or more companies engaged in the design, engineering,
    manufacture, sale or distribution of agricultural and
    construction equipment;              
|
| |  | engage in and/or to participate in and operate
    one or more companies engaged in any business, financial or
    otherwise, which CNH may deem suitable to be carried on in
    conjunction with the foregoing;
|
| |  | render management and advisory services;                                                                                                                                                                         
|
| |  | issue guarantees, provide security, warrant
    performance or in any other way assume liability for or in
    respect of obligations of group companies; and                                                    
|
| |  | do anything which a company may lawfully do under
    the laws of The Netherlands which may be deemed conducive to the
    attainment of the objectives set out in the foregoing paragraphs.                     

Authorized Capital

Our authorized share capital is
1,350,000,000,
consisting of 400,000,000 common shares and 200,000,000
Series A preference shares (the preference
shares) with each having a par value of
2.25 per share.
We will issue common shares only in registered form. We have
appointed JP Morgan Chase Bank as our agent to maintain the
share register relating to the common and preference shares and
to act as transfer agent and registrar for the common and
preference shares.

Dividends

Our shareholders may establish reserves out of
our annual profits at a general meeting of shareholders, subject
to a proposal of our board of directors. The shareholders have
discretion as to the use of that portion of our annual profits
remaining after the establishment of reserves and payment of
dividends on the preference shares for distribution of dividends
on the common shares only. However, no dividends were
distributed to the preference shares in 2003 and no dividends
may be distributed to the preference shares for 2004. The
dividends on the preference shares are not cumulative. Moreover,
the board of directors may defer the payment of dividends on the
preference shares for a period not to exceed five consecutive
annual periods, in which case payment of dividends on common
shares for the relevant financial year will be deferred for the
same period. A resolution to reduce the capital of the
preference shares or apply the share premium reserve

87



---



##### 



attributable to the preference shares to recoup
losses CNH has suffered requires the prior approval of all
holders of the preference shares.


The board of directors may recommend to the
shareholders that they resolve at the annual general meeting
that we pay dividends out of our share premium account or out of
any other reserve available for shareholder distributions under
Dutch law, provided that payment from reserves may only be made
to the shareholders who are entitled to the relevant reserve
upon dissolution of CNH. However, we may not pay dividends if
the payment would reduce shareholders equity to an amount
less than the aggregate share capital plus required statutory
reserves. The board of directors may resolve that we pay interim
dividends, but the payments are also subject to these statutory
restrictions. If a shareholder does not collect any cash
dividend or other distribution within six years after the date
on which it became due and payable, the right to receive the
payment reverts to CNH.

At any general meeting of shareholders, our
shareholders may declare dividends in the form of cash (in U.S.
Dollars), common shares or a combination of both.

Shareholder Meetings and Voting
Rights

Each shareholder has a right to attend general
meetings of shareholders, either in person or by proxy, and to
exercise voting rights in accordance with the provisions of our
Articles of Association. We must hold at least one general
meeting of shareholders each year. This meeting must be convened
at one of four specified locations in The Netherlands within six
months after the end of our fiscal year. Our board of directors
may convene additional general meetings as often as it deems
necessary, or upon the call of holders representing at least 10%
of our outstanding shares or other persons entitled to attend
the general meetings. Dutch law does not restrict the rights of
shareholders who do not reside in The Netherlands to hold or
vote their shares.

We will give notice of each meeting of
shareholders by notice published in at least one national daily
newspaper distributed throughout The Netherlands and in any
other manner that we may be required to follow in order to
comply with applicable stock exchange requirements. In addition,
we will notify registered holders of the shares by letter,
cable, telex or telefax. We will give this notice no later than
the fifteenth day prior to the day of the meeting. As deemed
necessary by the board of directors, the notice will include or
be accompanied by an agenda identifying the business to be
considered at the meeting or will state that the agenda will be
available for shareholders and other persons who are entitled to
attend the general meeting, at our offices or places of business.

Each share of the common shares and the
preference shares, including the Series A Preferred Stock,
is entitled to one vote. Unless otherwise required by our
Articles of Association or Dutch law, shareholders may validly
adopt resolutions at the general meeting by a majority vote.
Except in circumstances specified in the Articles of Association
or provided under Dutch law, there is no quorum requirement for
the valid adoption of resolutions. Pursuant to the Articles of
Association, so long as the Series A Preferred Stock is
issued and outstanding, any resolution to amend the terms and
conditions of the Series A Preferred Stock requires
approval of shareholders representing at least 95% of CNHs
issued and outstanding share capital. Consistent with Dutch law,
the terms and conditions of the common shares may be amended by
an amendment of the Articles of Association pursuant to a vote
by a majority of the capital shares at a meeting of the
shareholders of CNH.

We are exempt from the proxy rules under the U.S.
Securities Exchange Act of 1934, as amended.

Board of Directors; Adoption of Annual
Accounts

The shareholders elect the members of our board
of directors at a general meeting. The shareholders may also
dismiss or suspend any member of the board of directors at any
time by the vote of a majority of the votes cast at a general
meeting.

Our board of directors must prepare our annual
accounts and make them available to the shareholders for
inspection at our offices within five months after the end of
our fiscal year. Under some special circumstances, Dutch law
permits an extension of this period for up to six additional
months by approval of the shareholders

88



---



##### 



at a general meeting. During this period,
including any extension, the board of directors must submit the
annual accounts to the shareholders for adoption at a general
meeting.


Under Dutch law, the board of directors must
consider in the performance of its duties the interests of CNH,
its shareholders and its employees, in all cases with
reasonableness and fairness.

When our shareholders adopt the annual accounts
prepared by the board of directors, they may discharge the
members of the board of directors from potential liability with
respect to the exercise of their duties during the fiscal year
covered by the accounts. This discharge may be given subject to
such reservations as the shareholders deem appropriate and is
subject to a reservation of liability required under Dutch law.
Examples of reservations of liability required by Dutch law
include: (1) liability of members of management boards and
supervisory boards upon the bankruptcy of a company; and
(2) general principles of reasonableness and fairness.
Under Dutch law, a discharge of liability does not extend to
matters not properly disclosed to shareholders. As of the
financial year 2002, the discharge of the board of directors
must be a separate item on the agenda of the general meeting and
the members of the board of directors are no longer
automatically discharged by adoption of the annual accounts.

Liquidation Rights

In the event of our dissolution and liquidation,
the assets remaining after payment of all debts will first be
applied to distribute to the holders of preference shares the
nominal amount of the preference shares and then the amount of
the share premium reserve relating to the preference shares. Any
remaining assets will be distributed to the holders of common
shares in proportion to the aggregate nominal amount of the
common shares and, if only preference shares are issued and
outstanding, to the holders of the preference shares in
proportion to the aggregate nominal amount of preference shares.
No liquidation payments will be made on shares that CNH holds in
treasury.

Issue of Shares; Preference Rights

Our board of directors has the power to issue
common shares and/or preference shares if and to the extent that
a general meeting of shareholders has designated the board to
act as the authorized body for this purpose. A designation of
authority to the board of directors to issue shares remains
effective for the period specified by the general meeting and
may be up to five years from the date of designation. A general
meeting of shareholders may renew this designation for
additional periods of up to five years. Without this
designation, only the general meeting of shareholders has the
power to authorize the issuance of shares. At a general meeting
of shareholders in February 2002, the shareholders authorized
our board of directors to issue shares and/or rights to purchase
shares for five years.

In the event of an issue of shares of any class,
every holder of shares of that class will have a ratable
preference right to subscribe for shares of that class that we
issue for cash unless a general meeting of shareholders, or its
designee, limits or eliminates this right. In addition, the
right of our shareholders in the United States to subscribe for
shares pursuant to this preference right may be limited under
some circumstances to a right to receive approximately the
market value of the right, if any, in cash. Our shareholders
have no ratable preference subscription right with respect to
shares issued for consideration other than cash. If a general
meeting of shareholders delegates its authority to the board of
directors for this purpose, then the board of directors will
have the power to limit or eliminate the preference rights of
shareholders. In the absence of this designation, the general
meeting of shareholders will have the power to limit or
eliminate these rights. Such a proposal requires the approval of
at least two-thirds of the votes cast by shareholders at a
general meeting if less than half of the issued share capital is
represented at the meeting. Designations of authority to the
board of directors may remain in effect for up to five years and
may be renewed for additional periods of up to five years. At
our extraordinary general meeting of shareholders on
February 4, 2002, CNH shareholders authorized our board of
directors to limit or eliminate the preference rights of
shareholders for five years following the date of the meeting.

These provisions apply equally to any issue by us
of rights to subscribe for shares.

89



---



##### 



Under Dutch law, shareholders are not liable for
further capital calls by CNH.

Repurchases of Shares

We may acquire shares, subject to applicable
provisions of Dutch law and of our Articles of Association, to
the extent:



| |   |                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our shareholders equity, less the amount to
    be paid for the shares to be acquired, exceeds the sum of
    (1) our share capital account plus (2) any reserves
    required to be maintained by Dutch law; and                                                                                             
|
| |  | after the acquisition of shares, we and our
    subsidiaries would not hold, or hold as pledges, shares having
    an aggregate par value that exceeds 10% of our issued share
    capital account, as these amounts would be calculated under
    generally accepted accounting principles in The Netherlands.

Our board of directors may repurchase shares only
if our shareholders have authorized the repurchases. Under Dutch
law, an authorization to repurchase shares will remain in effect
for a maximum of 18 months.

Reduction of Share Capital

At a general meeting of shareholders, our
shareholders may vote to reduce the issued share capital by
canceling shares held by us or by reducing the par value of our
shares. In either case, this reduction would be subject to
applicable statutory provisions. Holders of at least two-thirds
of the votes cast must vote in favor of a resolution to reduce
our issued share capital if less than half of the issued share
capital is present at the general meeting in person or by proxy.

Amendment of the Articles of
Association

A majority of the votes cast by holders of our
shares at a general meeting must approve any resolution proposed
by our board of directors to amend the Articles of Association
or to wind up CNH. Any such resolution proposed by one or more
shareholders must likewise be approved by a majority of the
votes cast at a general meeting of shareholders.

Disclosure of Holdings

Under Dutch law regarding the disclosure of
holdings in listed companies, if our shares are admitted to
official quotation or listing on Euronext or on any other stock
exchange in the European Union, registered holders and some
beneficial owners of our shares must promptly notify CNH and the
Securities Board of The Netherlands if their shareholding
reaches, exceeds or thereafter falls below 5%, 10%, 25%, 50% or
66 2/3% of our outstanding shares. For this purpose,
shareholding includes economic interests, voting rights or both.
Failure to comply with this requirement would constitute a
criminal offense and could result in civil sanctions, including
the suspension of voting rights.

Limitations on Right to Hold or Vote
Shares

Our Articles of Association and relevant
provisions of Dutch law do not currently impose any limitations
on the right of holders of shares to hold or vote their shares.



| |                       
| | ----------------------
| | C. Material Contracts.

For a discussion of our related party
transactions, including a description of the Series A
Preferred Stock, see Item 7. Major Shareholders and
Related Party Transactions. B. Related Party Transactions.

On August 1, 2003 and September 12,
2003, Case New Holland issued a total of $1.05 billion of
the 9 1/4% Senior Notes which are fully and unconditionally
guaranteed by CNH and certain of its direct and indirect
subsidiaries. Case New Holland, indirectly through its
subsidiaries, owns substantially all of the US assets of
CNHs Equipment Operations and certain of its non-US
assets. The 9 1/4% Senior Notes were issued under an
indenture dated as of August 1, 2003 as supplemented by a
supplemental indenture dated as of September 6,

90



---



##### 



2003 (collectively, the Indenture) by
and among Case New Holland, the Guarantors and JP Morgan Chase
Bank, as trustee. The 9 1/4% Senior Notes are unsecured
obligations of Case New Holland, ranking senior in right of
payment to all future obligations of Case New Holland that are,
by their terms, expressly subordinated in right of payment to
the 9 1/4% Senior Notes and pari passuin right of
payment with all existing and future unsecured obligations of
Case New Holland that are not so subordinated. The 9 1/4%
Senior Notes mature on August 1, 2011. The 9 1/4%
Senior Notes are redeemable at specified premiums until August
1, 2009 and thereafter when the 9 1/4% Senior Notes may be
redeemed without a premium.


The Indenture contains covenants limiting, among
other things, our ability and the ability of our restricted
subsidiaries to:



| |   |                                                                            
| | - | ---------------------------------------------------------------------------
| |  | Incur additional debt;                                                     
|
| |  | Pay dividends on our capital stock or repurchase
    our capital stock;    
|
| |  | Make certain investments;                                                  
|
| |  | Enter into certain types of transactions with
    affiliates;              
|
| |  | Limit dividends or other payments by our
    restricted subsidiaries to us;
|
| |  | Use assets as security in other transactions;                              
|
| |  | Enter into sale and leaseback transactions; and                            
|
| |  | Sell certain assets or merge with or into other
    companies.             

Some of these covenants will cease to apply if
the 9 1/4% Senior Notes are rated investment grade ratings
by both Standard & Poors Ratings Services and
Moodys Investors Service, Inc.



| |                      
| | ---------------------
| | D. Exchange Controls.

Under existing laws of The Netherlands there are
no exchange controls applicable to the transfer to persons
outside of The Netherlands of dividends or other distributions
with respect to, or of the proceeds from the sale of, shares of
a Dutch company.



| |             
| | ------------
| | E. Taxation.

United States Federal Income
Taxation

The following is a discussion of the material
U.S. federal income tax consequences of the ownership and
disposition of our common shares by a U.S. Holder (as defined
below). The discussion is based on the Internal Revenue Code of
1986, as amended (the Code), its legislative
history, existing and proposed regulations, published rulings of
the Internal Revenue Code (IRS) and court decisions
as currently in effect. Such authorities are subject to change
or repeal, possibly on a retroactive basis.

This discussion does not contain a full
description of all tax considerations that may be relevant to
ownership of our common shares or a decision to purchase such
shares. In particular, the discussion is directed only to U.S.
Holders that will hold our common shares as capital assets and
whose functional currency is the U.S. dollar. Furthermore, the
discussion does not address the U.S. federal income tax
treatment of holders that are subject to special tax rules such
as banks and other financial institutions, security dealers,
dealers in currencies, securities traders who elect to account
for their investment in shares on a mark-to-market basis,
persons that hold shares as a position in a straddle or
conversion transaction, insurance companies, tax-exempt entities
and holders of ten percent or more of the voting shares of CNH.
The discussion also does not consider any state, local or
non-U.S. tax considerations and does not cover any aspect of
U.S. federal tax law other than income taxation.

91



---



##### 



Prospective purchasers and holders of our common
shares are advised to consult their own tax advisors about the
U.S., federal, state, local or other tax consequences to them of
the purchase, beneficial ownership and disposition of our common
shares.

For purposes of this discussion, you are a
U.S. Holder if you are a beneficial owner of our
common shares who is:



| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | an individual citizen or resident of the United
    States for U.S. federal income tax purposes;         
|
| |  | a corporation created or organized under the laws
    of the United States or a state thereof;           
|
| |  | an estate the income of which is subject to U.S.
    federal income taxation regardless of its source; or
|
| |  | a trust subject to primary supervision of a U.S.
    court and the control of one or more U.S. persons.  



| |                      
| | ---------------------
| | Taxation of Dividends

The gross amount of cash dividends paid by us in
respect of our common shares (including amounts withheld in
respect of Dutch taxes) will be included in the gross income of
a U.S. Holder as ordinary income on the day on which the
dividends are actually or constructively received by the U.S.
Holder, and will not be eligible for the dividends-received
deduction generally allowed to U.S. corporations in respect of
dividends received from other U.S. corporations. For this
purpose, a dividend will include any distribution
paid by us with respect to our common shares but only to the
extent such distribution is not in excess of our current and
accumulated earnings and profits, as determined under U.S.
federal income tax principles.

Subject to applicable limitations under the Code
and the Treasury regulations and subject to the discussion
below, any Dutch withholding tax imposed on dividends in respect
of our common shares will be treated as a foreign income tax
eligible for credit against a U.S. Holders U.S. federal
income tax liability (or, at a U.S. Holders election, may
be deducted in computing taxable income). Such dividends will
constitute foreign-source passive income or,
possibly, financial services income, for U.S.
foreign tax credit purposes. Under the Code, foreign tax credits
will not be allowed for withholding taxes imposed in respect of
certain short-term or hedged positions in securities. Further,
the Internal Revenue Service has announced that future
regulations could disallow foreign tax credits (including on a
retroactive basis) in respect of arrangements in which a U.S.
Holders reasonably expected economic profit, after
non-U.S. taxes, is insubstantial compared to the value of the
expected foreign tax credits. No such regulations have been
issued to date. The rules regarding U.S. foreign tax credits are
very complex. U.S. Holders should consult their own tax advisors
concerning the implications of U.S. foreign tax credit rules in
light of their particular circumstances.

We generally will fund dividend distributions on
our common shares with dividends received from our non-Dutch
subsidiaries. Assuming that the necessary conditions and
requirements are met under Dutch law, we may be entitled to a
reduction in the amount in respect of Dutch withholding taxes
payable to the Dutch tax authorities, which reduction would
equal 3% of the amount of Dutch withholding tax withheld by us
in respect of dividends distributed by us to our shareholders.
There is a risk that such a reduction may constitute a partial
subsidy in respect of the Dutch withholding tax payable on our
dividends and, thus, that a U.S. Holder would not be entitled to
a foreign tax credit with respect to the amount of the reduction
so allowed to us.



| |                          
| | -------------------------
| | Taxation of Capital Gains

Upon a sale or other taxable disposition of our
common shares, an U.S. Holder will recognize gain or loss equal
to the difference between the amount realized in the sale or
other taxable disposition and the tax basis of the common
shares. Such gain or loss will be capital gain or loss and will
be a long-term capital gain or loss if the shares were held for
more than one year. Non-corporate U.S. Holders (including
individuals) can qualify for preferential rates of U.S. federal
income taxation in respect of long-term capital gains. The
deduction of capital losses is subject to limitations under the
Code. Gain realized by an U.S. Holder on a sale or other
disposition of our common shares generally will be treated as
U.S.-source income for U.S. foreign tax credit purposes.

92



---



##### 





| |                       
| | ----------------------
| | Backup Withholding Tax

Information reporting requirements will apply to
U.S. Holders other than certain exempt recipients (such as
corporations) with respect to distributions made on our common
shares and proceeds received on disposition of such shares paid
within the United States, and proceeds received on a disposition
of such shares that is effected at a U.S. office of a broker.
Furthermore, a 29% (to be reduced to 28% for 2006 and
thereafter) backup withholding tax may apply to such amounts if
the U.S. Holder fails to provide an accurate taxpayer
identification number or to report interest and dividends
required to be shown on its U.S. federal income tax returns or
otherwise fails to comply with or establish an exemption from
such backup withholding tax. The amount of backup withholding
imposed on a payment to a U.S. Holder may be refunded by the IRS
or allowed as a credit against the U.S. federal income tax of
the U.S. Holder provided that the required information is
properly furnished to the IRS.

Netherlands Taxation

This taxation summary solely addresses the
material Dutch tax consequences of the acquisition and the
ownership and disposition of CNH shares. It is a general summary
that only applies to a Non-Resident holder of shares (as defined
below) and it does not discuss every aspect of taxation that may
be relevant to a particular holder of shares under special
circumstances or who is subject to special treatment under
applicable law. This summary also assumes that CNH is organized,
and its business will be conducted, in the manner outlined in
this report. Changes in the organizational structure or the
manner in which CNH conducts its business may invalidate this
summary.

Unless stated otherwise, this summary is based on
the tax laws of The Netherlands as they are in force and in
effect on the date of this report. These laws could change and a
change could be effective retroactively. This summary will not
be updated to reflect changes in laws and if such change occurs
the information in this summary could become invalid.

Any potential investor should consult his own tax
advisor for more information about the tax consequences of
acquiring, owning and disposing of shares in particular
circumstances.

We have not addressed every potential tax
consequence of an investment in shares under the laws of The
Netherlands.

Netherlands Taxation of Non-Resident Holders
of Shares



| |        
| | -------
| | General

The summary of Netherlands taxes set out in this
section  Netherlands Taxation of Non-Resident
Holders of Shares only applies to a holder of shares who
is a Non-Resident holder of shares.

A holder of shares is a Non-Resident holder of
shares if:



| |   |                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | he is neither resident, nor deemed to be
    resident, in the Netherlands for purposes of Dutch taxation and,
    in the case of an individual, has not elected to be treated as a
    resident of the Netherlands for Dutch income tax purposes;
|
| |  | in the case of an individual, he neither is nor
    has been, nor is deemed to be nor has been deemed to be, an
    employee of CNH nor of any entity related to CNH; and                                                                        
|
| |  | his shares do not form part, and are not deemed
    to form part, of a substantial interest (aanmerkelijk belang)in CNH, unless such interest forms part of the assets of an
    enterprise.                                                     

If a person holds an interest in CNH, such
interest forms part or is deemed to form part of a substantial
interest in CNH if any one or more of the following
circumstances is present:



| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | such person alone or, in case such person is an
    individual, together with his partner has, directly or
    indirectly, the ownership of, shares of CNH representing 5% or
    more of the total issued and

93



---



##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | outstanding capital (or the issued and
    outstanding capital of any class of shares) of CNH, or rights to
    acquire, directly or indirectly, shares, whether or not already
    issued, that represent at any time 5% or more of the total
    issued and outstanding capital (or the issued and outstanding
    capital of any class of shares) of CNH or the ownership of
    profit participating certificates (winstbewijzen)that
    relate to 5% or more of the annual profit of CNH or to 5% or
    more of the liquidation proceeds of CNH;
|
| |  | such persons partner or any of the
    relatives by blood or by marriage in the direct line (including
    foster children) of this person or of his partner has a
    substantial interest in CNH;                                                                                                                                                                                                                                                                                                                                                   
|
| |  | such persons shares, profit participating
    certificates or rights to acquire shares or profit participating
    certificates in CNH have been acquired by such person or are
    deemed to have been acquired by such person under a
    non-recognition provision.                                                                                                                                                                                                                                                                                

For purposes of the above, a person who is only
entitled to the benefits from shares or profit participating
certificates (for instance a holder of a right of usufruct) is
deemed to be a holder of shares or profit participating
certificates, as the case may be, and his entitlement to
benefits is considered a share or a profit participating
certificate, as the case may be.



| |                                  
| | ---------------------------------
| | Taxes on Income and Capital Gains

A Non-Resident holder of shares will not be
subject to any Dutch taxes on income or capital gains in respect
of dividends distributed by CNH (other than the dividend
withholding tax described below) or in respect of any gain
realized on the disposal of shares, unless:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | he derives profits from an enterprise, whether as
    an entrepreneur or pursuant to a co-entitlement to the net worth
    of an enterprise, other than as an entrepreneur or a
    shareholder, which enterprise is either managed in The
    Netherlands or, in whole or in part, carried on through a
    permanent establishment or a permanent representative in The
    Netherlands and his shares are attributable to that enterprise;
    or
|
| |  | he (in the case of an individual) derives
    benefits from shares that are taxable as benefits from
    miscellaneous activities in The Netherlands (resultaat uit
    overige werkzaamheden in Nederland).                                                                                                                                                                                                                                        

The concept dividends distributed by
CNH as used in this section includes, but is not limited
to, the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | distributions in cash or in kind, deemed and
    constructive distributions (including, as a rule, consideration
    for the repurchase of shares by CNH (other than a repurchase as
    a temporary investment) in excess of the average capital
    recognized as paid-in for Dutch dividend withholding tax
    purposes), and repayments of capital not recognized as paid-in
    for Dutch dividend withholding tax purposes;                
|
| |  | liquidation proceeds and proceeds of redemption
    of CNH shares in excess of the average capital recognized as
    paid-in for Dutch dividend withholding tax purposes;                                                                                                                                                                                                                                                                         
|
| |  | the par value of shares issued by CNH to a holder
    of shares or an increase of the par value of shares, as the case
    may be, to the extent that it does not appear that a
    contribution, recognized for Dutch dividend withholding tax
    purposes, has been made or will be made; and                                                                                                                                                  
|
| |  | partial repayment of capital, recognized as
    paid-in for Dutch dividend withholding tax purposes, if and to
    the extent that there are net profits (zuivere winst),
    unless (a) the general meeting of shareholders of CNH has
    resolved in advance to make such repayment and (b) the par
    value of the shares concerned has been reduced by an equal
    amount by way of an amendment to the articles of association of
    CNH.

94



---



##### 



A Non-Resident holder of shares may, inter
alia,derive benefits from CNH shares that are taxable as
benefits from miscellaneous activities in The Netherlands in the
following circumstances if:



| |   |                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | his investment activities go beyond the
    activities of an active portfolio investor, for instance in case
    of the use of insider knowledge (voorkennis)or
    comparable forms of special knowledge; or                                        
|
| |  | he makes CNH shares available or is deemed to
    make CNH shares available, legally or in fact, directly or
    indirectly, to a connected party (verbonden persoon)as
    described in articles 3.91 and 3.92 of the Dutch Income Tax Act
    2001;

if such activities are performed or deemed to be
performed in The Netherlands.



| |                         
| | ------------------------
| | Dividend Withholding Tax

Dividends distributed by CNH to a Non-Resident
holder of shares are subject to a withholding tax imposed by The
Netherlands at a statutory rate of 25%. See
 Taxes on Income and Capital Gains for a
description of the concept dividends distributed by
CNH.

If a double tax treaty is in effect between The
Netherlands and the country of residence of a Non-Resident
holder of shares, such holder may be eligible for a full or
partial relief from the Dutch dividend withholding tax provided
that such relief is duly claimed. A relief from Dutch dividend
withholding tax will for Dutch domestic tax purposes only be
available to the beneficial owner (uiteindelijk
gerechtigde)of dividends distributed by CNH. Certain
specific anti-dividend-stripping rules apply. The Dutch tax
authorities have taken the position that the beneficial
ownership test can also be applied to deny relief from Dutch
dividend withholding tax under double tax treaties and the Tax
Arrangement for The Netherlands.

If a Non-Resident holder of shares is resident in
The Netherlands Antilles or Aruba or in a member state of the EU
or in a country that has concluded a double tax treaty with The
Netherlands, CNH is not required to withhold Dutch dividend
withholding tax from a dividend distributed by CNH to such
holder of shares to the extent that the temporary special
distribution tax, discussed below in the section
 Distribution Tax applies to the
distribution.

Under the convention of December 18, 1992,
between the Kingdom of The Netherlands and the United States of
America for the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with Respect to Taxes on Income (the
U.S./ NL Income Tax Treaty), the Dutch dividend
withholding tax rate on dividends paid by CNH on shares held by
a Non-Resident holder of shares who is resident in the United
States and who is entitled to the benefits of the U.S./ NL
Income Tax Treaty will generally be reduced to 15%. The U.S./ NL
Income Tax Treaty provides for a complete exemption for
dividends received by exempt pension trusts and exempt
organizations, as defined therein. Except in the case of exempt
organizations, the reduced dividend withholding tax rate under
the U.S./ NL Income Tax Treaty may be available at source, upon
payment of a dividend in respect of such shares, provided that
the holder thereof or, if applicable, the paying agent, has
supplied CNH with the appropriate Dutch tax forms in accordance
with the Dutch implementation regulations under the U.S./ NL
Income Tax Treaty. If such forms are not duly and timely
supplied, CNH will be required to withhold the dividend
withholding tax at the Dutch statutory rate of 25%. In such
case, a Non-Resident holder of shares who is resident in the
United States and who is entitled to the benefits of the U.S./
NL Income Tax Treaty may obtain a refund of the difference
between the amount withheld and the amount that The Netherlands
was entitled to levy in accordance with the U.S./ NL Income Tax
Treaty by filing the appropriate forms with the Dutch tax
authorities within the term set therefore.



| |          
| | ---------
| | Reduction

If CNH has received a profit distribution from a
foreign entity, or a repatriation of foreign branch profit, that
is exempt from Dutch corporate income tax and that has been
subject to a foreign withholding tax of at least 5%, CNH may be
entitled to a reduction of the amount of Dutch dividend
withholding tax withheld that must be paid over to the Dutch tax
authorities in respect of dividends distributed by CNH.

95



---



##### 



Non-Resident holders of shares are urged to
consult their tax advisors regarding the general creditability
or deductibility of Dutch dividend withholding tax and, in
particular, the impact on such investors of CNHs potential
ability to receive a reduction as meant in the previous
paragraph.



| |                           
| | --------------------------
| | Gift and Inheritance Taxes

A person who acquires shares as a gift (in form
or in substance), or who acquires or is deemed to acquire shares
on the death of an individual, will not be subject to Dutch gift
tax or to Dutch inheritance tax, as the case may be, unless:



| |   |                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the donor or the deceased is resident or deemed
    to be resident in The Netherlands for purposes of gift or
    inheritance tax (as the case may be);                                                                                                                               
|
| |  | the shares are or were attributable to an
    enterprise or part of an enterprise that the donor or the
    deceased carried on through a permanent establishment or a
    permanent representative in The Netherlands at the time of the
    gift or of the death of the deceased; or
|
| |  | the donor makes a gift of shares, then becomes a
    resident or deemed resident of The Netherlands, and dies as a
    resident or deemed resident of The Netherlands within
    180 days after the date of the gift.                                                                 

If the donor or the deceased is an individual who
holds Dutch nationality, he will be deemed to be resident in The
Netherlands for purposes of Dutch gift and inheritance taxes if
he has been resident in The Netherlands at any time during the
ten years preceding the date of the gift or his death. If the
donor is an individual who does not hold Dutch nationality, or
an entity, he or it will be deemed to be resident in The
Netherlands for purposes of Dutch gift tax if he or it has been
resident in The Netherlands at any time during the twelve months
preceding the date of the gift.

Furthermore, in exceptional circumstances, the
donor or the deceased will be deemed to be resident in The
Netherlands for purposes of Dutch gift and inheritance taxes if
the beneficiary of the gift or all beneficiaries under the
estate jointly, as the case may be, make an election to that
effect.



| |                 
| | ----------------
| | Distribution Tax

CNH is subject to a temporary special
distribution tax at a rate of 20% to the extent that dividends
distributed by CNH during the period from January 1, 2001
up to and including December 31, 2005 are classified as
excessive. For purposes of this distribution tax,
dividends distributed by CNH are considered to be
excessive to the extent that, during a particular
calendar year, the total thereof exceeds the highest of the
following three amounts:



| |   |                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 4% of the market capitalization of CNH at the
    beginning of the relevant calendar year;                                                                                                
|
| |  | twice the amount of the average annual dividends
    (exclusive of extraordinary distributions) distributed in the
    three calendar years immediately preceding January 1, 2001;
    and
|
| |  | CNHs consolidated commercial results for
    the preceding book year, subject to certain adjustments.                                                                                    

See  Netherlands Taxation of
Non-Resident Holders of Shares  Taxes on Income and
Capital Gains for a description of the concept
dividends distributed by CNH.

The special distribution tax will not be due if
and to the extent the aggregate of dividends distributed by CNH
during the period from January 1, 2001 up to and including
December 31, 2005 exceeds the fair market value of the
assets at the end of the book year ending on December 31,
2000, net of liabilities and provisions and reduced by the
paid-in capital. The special distribution tax will be reduced in
proportion to the percentage of the shares that were held, at
the time of the excessive distribution, during an
uninterrupted period of three years, by individuals or entities
(other than investment institutions (beleggingsinstellingen)as defined in the Dutch Corporate Income Tax Act 1969)
holding at least 5% of the nominal paid-in capital, provided
such shareholders are resident in The Netherlands, The
Netherlands Antilles or Aruba, or in a member state of the EU,
or in a country that has concluded a double tax treaty with The
Netherlands. In that connection, shares

96



---



##### 



that were held on September 14, 1999 are
deemed to have been held on that date during an uninterrupted
period of three years. The special distribution tax is not a
withholding tax; it is imposed directly on CNH. Therefore, if it
is reduced because certain shareholders own at least 5% of the
nominal paid-in capital, CNH will receive the benefit of the
reduction and it will inure indirectly not only to the
shareholders whose shareholdings caused the reduction to apply.




| |            
| | -----------
| | Capital Tax

CNH is subject to Netherlands capital tax at a
rate of 0.55% on any contribution received in respect of shares.



| |                       
| | ----------------------
| | Other Taxes and Duties

No Dutch registration tax, transfer tax, stamp
duty or any other similar documentary tax or duty will be
payable in The Netherlands in respect of or in connection with
the subscription, issue, placement, allotment or delivery of CNH
shares.



| |                                 
| | --------------------------------
| | U.S. Withholding Tax on Interest

The Netherlands  U.S. Income Tax
Convention, as amended, exempts from U.S. withholding tax the
payment of interest to us on intercompany loans made to our U.S.
subsidiaries provided that, among other considerations, our
principal class of shares are listed on a recognized stock
exchange in the United States or The Netherlands and are
substantially and regularly traded. In order to meet the
substantially and regularly traded requirement, the annual
trading volume of our principal class of shares during the
previous tax year must be at least 6% of the average number of
our issued and outstanding principal class of shares. The
trading volume of our common shares on the New York Stock
Exchange was over 10% in 2003. If the trading volume of our
common shares were to decline below the 6% threshold, the
interest payments on the intercompany loans would become subject
to withholding tax. Our common shares will comprise our
principal class of shares for this purpose if, on an interest
payment date, among other requirements, the value of our common
shares exceeds 50% of the value of all of our outstanding
shares. Because of potential changes in the relative value of
our classes of shares, no assurance can be given that our common
shares will exceed the requisite 50% value. If interest payments
made to us by our U.S. subsidiaries were to become subject to
U.S. withholding tax, then we would consider implementing
strategies that may reduce or eliminate the withholding tax. We
cannot assure that such strategies would be successful.



| |                                    
| | -----------------------------------
| | F. Dividends and Paying
    Agents.

Not applicable.



| |                         
| | ------------------------
| | G. Statement of Experts.

Not applicable.



| |                         
| | ------------------------
| | H. Documents on Display.

CNH files reports, including annual reports on
Form 20-F, periodic reports on Form 6-K and other
information with the Securities and Exchange Commission (the
SEC) pursuant to the rules and regulations of the
SEC that apply to foreign private issuers. These may be read and
copied at the Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20459. To obtain information on the
operation of the Public Reference Room, the telephone number is
1-800-SEC-0330. Any SEC filings may also be accessed by visiting
the SECs website at www.sec.gov or may be read and copied
at the SEC regional offices located at 233 Broadway, New
York, New York 10279 and at Northwest Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois
60662.

97



---



##### 





| |                               
| | ------------------------------
| | I. Subsidiary
    Information.

Not applicable.




Item 11. Quantitative and
Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in
both foreign currency exchange rates and interest rates. We
monitor our exposure to these risks, and manage the underlying
economic exposures using financial instruments such as forward
contracts, currency options, interest rate swaps, interest rate
caps and forward starting swaps. We do not hold or issue
derivative or other financial instruments for speculative or
trading purposes.



| |                                                          
| | ---------------------------------------------------------
| | Transaction Risk and Foreign Currency Risk
    Management

We have significant international manufacturing
operations. We manufacture products and purchase raw materials
from many locations around the world. Our cost base is
diversified over a number of European, Asia-Pacific, and Latin
American currencies, as well as the U.S. Dollar. Foreign
exchange risk exists to the extent that we have payment
obligations or receipts denominated in or based on currencies
other than the functional currency of the various manufacturing
operations.

The diversified cost base counterbalances some of
the cash flow and earnings impact of non-U.S. Dollar revenues
and minimizes the effect of foreign exchange rate movements on
consolidated earnings. Due to periodic mismatches in cash
inflows and outflows, currencies that may have a possible impact
on earnings are the Euro, British Pound, Canadian Dollar,
Australian Dollar, Brazilian Real and Japanese Yen. The primary
currencies for cash outflows were the British Pound, Japanese
Yen and Euro. The primary currencies for cash inflows were the
Canadian Dollar and Australian Dollar. To manage these
exposures, we identify naturally offsetting positions and then
purchase hedging instruments to protect the remaining net
anticipated exposures. In addition, we hedge the anticipated
repayment of inter-company loans to foreign subsidiaries
denominated in foreign currencies. See Note 17,
Financial Instruments to our Consolidated Financial
Statements for a description of our foreign exchange rate risk
management.

We regularly monitor our currency exchange rate
exposure, execute policy-defined hedging strategies and review
the ongoing effectiveness of such strategies. Our strategy is to
use a mixture of foreign exchange forward contracts and options
contracts depending on our view of market conditions and nature
of the underlying cash flow exposure.

For the purposes of assessing specific risks, we
perform a sensitivity analysis to determine the effects that
market risk exposures may have on the fair value of (a) all
foreign exchange forward and option contracts designated as cash
flow hedges, (b) all foreign exposures for the U.S. dollar
denominated financial assets and liabilities for our Latin
American subsidiaries and (c) other long term foreign
currency denominated receivables and payables. The sensitivity
analysis excludes (a) all other foreign exchange forward
contracts designated as fair value hedges and their related
foreign currency denominated receivables, payables, and debt,
(b) other foreign currency denominated receivables and
payables of short term maturities and (c) anticipated
foreign currency cash flows related to the underlying business
operations and (d) related to certain supplier agreements,
payment obligations or receipts based on currencies other than
the functional currency of our manufacturing operations. The
sensitivity analysis computes the impact on the fair value on
the above exposures due to a hypothetical 10% change in the
foreign currency exchange rates, assuming no change in interest
rates. The net potential loss would be approximately
$37 million and $2 million at December 31, 2003
and 2002, respectively.

Our management believes that the above movements
in foreign exchange rates would have an offsetting impact on the
underlying business transactions that the financial instruments
are used to hedge. The sensitivity model assumes an adverse
shift in all foreign currency exchange spot and forward rates.
As consistently and simultaneously unfavorable movements in all
relevant exchange rates are unlikely, this assumption may
overstate the impact of exchange rate fluctuations on such
financial instruments. The fair market valuation

98



---



##### 



and sensitivity analysis of option contracts are
provided by a third party based on our request to compute the
fair value change of a 10% movement in the foreign exchange rate
in which the contracts are based. We do not have a model to
value such contracts as their use is limited and the value is
not significant to our financial position. There were no option
contracts outstanding at December 31, 2003.




| |                                
| | -------------------------------
| | Effects of Currency Translation

Due to our significant international operations,
we recognize that we may be subject to foreign exchange
translation risk. This risk may arise when translating net
income of our foreign operations into U.S. Dollars.
Depending on movements in foreign exchange rates, this may have
an adverse impact on our Consolidated Financial Statements.
Earnings exposures to the major currencies include the Euro,
British Pound, Canadian Dollar and Australian Dollar. Exposures
to other currencies include the Brazilian Real, Argentine Peso,
Mexican Peso, Danish Krone, Norwegian Krone, Swedish Krona,
Polish Zloty, Indian Rupee, and Chinese Renminbi. In reviewing
historical trends in currency exchange rates, adverse changes of
20% have been experienced in the past and could be experienced
in the future. Certain currencies, such as the Mexican Peso,
Brazilian Real, and Argentine Peso have experienced short-term
movements ranging from 30% to 90% due to the devaluation of its
respective currency.

As the expected future net income from our
operations are dependent on multiple factors and foreign
currency rates in these countries would not be expected to move
in an equal and simultaneous fashion, we have not performed a
sensitivity analysis related to this potential exposure. This
potential exposure has resulted in a loss of $4 million in
2003 and income of $8 million in 2002. We do not hedge the
potential impact of foreign currency translation risk on net
income from our foreign operations in our normal course of
business operations as net income of our operations are not
typically remitted to the United States on an ongoing basis.

We also have investments in Europe, Canada, Latin
America and Asia, which are subject to foreign currency risk.
These currency fluctuations for those countries not under
inflation accounting result in non-cash gains and losses that do
not impact net income, but instead are recorded as
Accumulated other comprehensive income in our
consolidated balance sheet. At December 31, 2003, we
performed a sensitivity analysis on our investment in
significant foreign operations that have foreign currency
exchange risk. We calculated that the fair value impact would be
$216 million and $205 million at December 31,
2003 and 2002, respectively, as a result of a hypothetical 10%
change in foreign currency exchange rates, assuming no change in
interest rates. We do not hedge our net investment in non-U.S.
entities because those investments are viewed as long-term in
nature. We have limited investments in subsidiaries in highly
inflationary economies. The change in fair value of these
investments can have an impact on our Consolidated Statements of
Operations. In particular, the devaluation of the Turkish Lira
in 2001 affected our net income by $20 million due to the
change in net investment of our joint venture operations in
Turkey.



| |                              
| | -----------------------------
| | Interest Rate Risk Management

We are exposed to market risk from changes in
interest rates. We monitor our exposure to this risk and manage
the underlying exposure both through the matching of financial
assets and liabilities and through the use of financial
instruments, including swaps, caps, forward starting swaps, and
forward rate agreements for the net exposure. These instruments
aim to stabilize funding costs by managing the exposure created
by the differing maturities and interest rate structures of our
financial assets and liabilities. We do not hold or issue
derivative or other financial instruments for speculative or
trading purposes.

We use a model to monitor interest rate risk and
to achieve a predetermined level of matching between the
interest rate structure of our financial assets and liabilities.
Fixed-rate financial instruments, including receivables, debt,
ABS certificates and other investments, are segregated from
floating-rate instruments in evaluating the potential impact of
changes in applicable interest rates. The potential change in
fair market value of financial instruments including derivative
instruments held at December 31, 2003 and 2002, resulting
from a hypothetical, instantaneous 10% change in the interest
rate applicable to such financial instruments

99



---



##### 



would be approximately $36 million and
$25 million, respectively, based on the discounted values
of their related cash flows.


The above sensitivity analyses are based on the
assumption of a 10% movement of the interest rates used to
discount each homogeneous category of financial assets and
liabilities. A homogeneous category is defined according to the
currency in which financial assets and liabilities are
denominated and the applicable interest rate index. As a result,
our inherent rate risk sensitivity model may overstate the
impact of interest rate fluctuations for such financial
instruments, as consistently unfavorable movements of all
interest rates are unlikely.

See Note 17, Financial
Instruments to our Consolidated Financial Statements for a
description of the methods and assumptions used to determine the
fair values of financial instruments.



| |                                
| | -------------------------------
| | Commodity Price Risk Management

Commodity prices affect our Equipment
Operations sales and Financial Services
originations. Commodity risk is managed through geographic and
enterprise diversification. It is not possible to determine the
impact of commodity prices on earnings, cash flows or fair
values of the Financial Services portfolio.



| |                                                        
| | -------------------------------------------------------
| | Changes in Market Risk Exposure as Compared to
    2002

Our exposures and strategy for managing our
exposures to interest rate, foreign currency and commodity price
risk have not changed significantly from 2002.




Item 12. Description of Securities
Other than Equity Securities

Not applicable.




PART II




Item 13. Defaults, Dividend
Arrearages and Delinquencies

None.




Item 14. Material Modifications to
the Rights of Security Holders and Use of Proceeds

On March 27, 2003, our shareholders approved
amendments to our Articles of Association at an Extraordinary
Meeting of Shareholders. The amendments increased our authorized
share capital to
1,350,000,000,
consisting of 400,000,000 common shares and 200,000,000
Series A Preferred Stock with a par value of
2.25 per share.

The Series A Preferred Stock will not accrue
dividends until January 1, 2005. Subsequently, the
Series A Preferred Stock will pay a dividend at the then
prevailing common dividend yield. However, should we achieve
certain defined financial performance measures, the annual
dividend will be fixed at the prevailing common dividend yield
plus an additional 150 basis points. Dividends will be payable
annually in arrears, subject to certain provisions that allow
for a deferral for a period not to exceed five consecutive
years. The Series A Preferred Stock has a liquidation
preference of $250 per share and each share is entitled to one
vote on all matters submitted to our shareholders. The
Series A Preferred Stock will convert into 100 million
CNH common shares at a conversion price of $20 per share
automatically if the market price of the common shares, defined
as the average of the closing price per share for 30 consecutive
trading days, is greater than $24 at any time through and
including December 31, 2006 or $21 at any time on or after
January 1, 2007, subject to anti-dilution adjustment. In
the event of dissolution or liquidation, whatever remains of the
companys equity, after all its debts have been discharged,
will first be applied to distribute to the holders of the
Series A Preferred Stock the nominal amount of their
preference shares and thereafter the amount of the share premium
reserve

100



---



##### 



relating to the Series A Preferred Stock.
Any remaining assets will be distributed to the holders of
common shares in proportion to the aggregate nominal amount of
their common shares.





Item 15. Controls and
Procedures

CNHs management, including the Chief
Executive Officer and Chief Financial Officer, have conducted an
evaluation of the effectiveness of CNHs disclosure
controls and procedures as of December 31, 2003 pursuant to
Exchange Act Rule 13a-14. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded
that the disclosure controls and procedures are effective in
ensuring that all material information required to be filed in
this annual report has been made known to them in a timely
fashion. There have been no significant changes in internal
controls or in other factors that could significantly affect
internal controls subsequent to the date the Chief Executive
Officer and the Chief Financial Officer completed their
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.




Item 16A. Audit Committee Financial
Expert

The Board of Directors of CNH has determined that
Katherine M. Hudson and Michael E. Murphy are audit committee
financial experts. Both Ms. Hudson and Mr. Murphy are
independent directors.




Item 16B. Code of Ethics

We have adopted a code of ethics. CNH will
provide a copy of the code of ethics without charge, upon
request to wwinvestorrelations@cnh.com.




Item 16C. Principal Accountant Fees
and Services

Deloitte & Touche LLP, the member firms
of Deloitte Touche Tohmotsu and their respective affiliates
(collectively, the Deloitte Entities) were appointed
to serve as our independent auditors for the year ended
December 31, 2003. The Deloitte Entities billed the
following fees to us for professional services for the years
ended December 31, 2003 and 2002:

|                   |  |      |           |      |  |   |           | 
|------------------ |  | ---- | --------- | ---- |  | - | --------- | 
|                   |  | 2003 |           | 2002
|                   |  |      |           |     
|Audit Fees         |  | $    | 3,943,000 |      |  | $ | 2,863,000 | 
|Audit-Related Fees |  |      | 786,000   |      |  |   | 271,000   | 
|Tax Fees           |  |      | 1,386,000 |      |  |   | 492,000   | 
|All Other Fees     |  |      | 67,000    |      |  |   | 35,000    | 
|                   |  |      |           |      |  |   |           | 
|Total              |  | $    | 6,182,000 |      |  | $ | 3,661,000 | 
|                   |  |      |           |      |  |   |           | 

Audit Fees are the aggregate fees
billed by the Deloitte Entities for the audit of our
consolidated and annual financial statements, reviews of interim
financial statements and attestation services that are provided
in connection with statutory and regulatory filings or
engagements. Audit-Related Fees are fees charged by
the Deloitte Entities for assurance and related services that
are reasonably related to the performance of the audit or review
of our financial statements and are not reported under
Audit Fees. This category comprises fees billed for
the audit of employee benefit plans and pension schemes,
agreed-upon procedure engagements and other attestation services
subject to regulatory requirements, certifications of
accounting-related internal controls, as well as advisory
services associated with our financial reporting. Tax
Fees are fees for professional services rendered by the
Deloitte Entities for tax compliance, tax advice on actual or
contemplated transactions, tax consulting associated with
international transfer prices, and expatriate employee tax
services. Fees disclosed under the category All Other
Fees are mainly related to software support services and
due diligence services.

101



---



##### 



During 2002, CNH appointed Deloitte
& Touche to replace Arthur Andersen LLP as its
independent auditor. Due to the timing of the appointment of
Deloitte & Touche, it was not practical to transfer
audit work in all countries to Deloitte & Touche for
2002. As a result, CNH incurred Audit Fees of approximately
$700,000 in 2002 with firms other than Deloitte
& Touche. In 2003, the transfer of this work to
Deloitte & Touche was substantially completed.

Audit Committees pre-approval policies
and procedures

Our Audit Committee nominates and engages our
independent auditors to audit our financial statements. In 2003
our Audit Committee also adopted a policy requiring management
to obtain the Committees approval before engaging our
independent auditors to provide any other audit or permitted
non-audit services to us or our subsidiaries. Pursuant to this
policy, which is designed to assure that such engagements do not
impair the independence of our auditors, the Audit Committee
pre-approves annually a catalog of specific audit and non-audit
services in the categories Audit Service, Audit-Related Service,
Tax Consulting Services, and Other Services that may be
performed by our auditors.




PART III




Item 17. Financial
Statements

We have responded to Item 18 in lieu of
responding to this item.

102



---



##### 






Item 18. Financial
Statements

INDEX TO FINANCIAL STATEMENTS

CNH GLOBAL N.V. AND SUBSIDIARIES

|                                                                                                                        |  |      |     | 
|----------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                        |  | Page
|                                                                                                                        |  |     
|Independent Auditors Report                                                                                            |  |      | F-2 | 
|Report of Independent Public Accountants                                                                                |  |      | F-4 | 
|Consolidated statements of operations for the
    years ended December 31, 2003, 2002, and 2001                         |  |      | F-5 | 
|Consolidated balance sheets as of
    December 31, 2003 and 2002                                                        |  |      | F-6 | 
|Consolidated statements of cash flows for the
    years ended December 31, 2003, 2002 and 2001                          |  |      | F-7 | 
|Consolidated statements of changes in
    shareholders equity for the years ended December 31,
    2003, 2002 and 2001 |  |      | F-8 | 
|Notes to consolidated financial statements                                                                              |  |      | F-9 | 




Item 19. Exhibits

A list of exhibits included as part of this
annual report on Form 20-F is set forth in the Index to
Exhibits that immediately precedes such exhibits, which is
incorporated herein by reference.

103



---



##### 



INDEX TO FINANCIAL STATEMENTS

CNH GLOBAL N.V. AND SUBSIDIARIES

|                                                                                                                        |  |      |     | 
|----------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                        |  | Page
|                                                                                                                        |  |     
|Independent Auditors Report                                                                                            |  |      | F-2 | 
|Report of Independent Public Accountants                                                                                |  |      | F-4 | 
|Consolidated statements of operations for the
    years ended December 31, 2003, 2002, and 2001                         |  |      | F-5 | 
|Consolidated balance sheets as of
    December 31, 2003 and 2002                                                        |  |      | F-6 | 
|Consolidated statements of cash flows for the
    years ended December 31, 2003, 2002 and 2001                          |  |      | F-7 | 
|Consolidated statements of changes in
    shareholders equity for the years ended December 31,
    2003, 2002 and 2001 |  |      | F-8 | 
|Notes to consolidated financial statements                                                                              |  |      | F-9 | 

F-1



---



##### 



INDEPENDENT AUDITORS REPORT

To the Board of Directors and Shareholders of CNH
Global N.V.:

We have audited the accompanying consolidated
balance sheets of CNH Global N.V. (a Netherlands corporation)
and its subsidiaries (collectively, the Company) as
of December 31, 2003 and 2002, and the related statements
of operations, cash flows, and changes in shareholders
equity for each of the two years in the period ended
December 31, 2003. These consolidated financial statements
and the supplemental financial statements referred to below are
the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated
financial statements and the supplemental financial statements
based on our audits. The financial statements of CNH Global N.V.
for the year ended December 31, 2001, were audited by other
auditors who have ceased operations. Those auditors expressed an
unqualified opinion on those statements in their report dated
February 7, 2002.

We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, such 2003 and 2002 financial
statements present fairly, in all material respects, the
financial position of CNH Global N.V. and subsidiaries as of
December 31, 2003 and 2002, and the results of their
operations and their cash flows for each of the two years in the
period ended December 31, 2003 in conformity with
accounting principles generally accepted in the United States of
America.

As discussed in Note 9 to the consolidated
financial statements, the Company ceased its amortization of
goodwill and other indefinite-lived intangible assets in 2002 in
accordance with Statement of Financial Accounting Standards
(Statement) No. 142, Goodwill and Other Intangible
Assets, which was adopted by the Company as of
January 1, 2002.

As discussed above, the consolidated financial
statements of the Company for the year ended December 31,
2001 were audited by other auditors who have ceased operations.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | As described in Note 9, these consolidated
    financial statements have been revised to include the
    transitional disclosures required by Statement No. 142. Our
    audit procedures with respect to the disclosures in Note 9
    with respect to 2001 included (i) agreeing the previously
    reported net income (loss) to the previously issued financial
    statements and the adjustments to reported net income (loss)
    representing amortization expense (including any related tax
    effects) to the Companys underlying records obtained from
    management, and (ii) testing the mathematical accuracy of
    the reconciliation of adjusted net income (loss) to reported net
    income (loss), and the related income (loss) per share amounts.
|
| |  | The Company changed the presentation of its
    results of operations by segment in 2002, and the amounts in the
    2001 financial statements relating to the results of operations
    by segment have been restated to conform to the 2003 and 2002
    presentation of results of operations by segment. Our procedures
    included (i) agreeing the adjusted amounts of results of
    operations by segment to the Companys underlying records
    obtained from management, and (ii) testing the mathematical
    accuracy of the reconciliations of segment amounts to the
    consolidated financial statements.                                                                                                                                                
|
| |  | As described in Note 18, the 2001
    consolidated financial statements were revised to reflect a
    1-for-5 reverse split of the Companys common shares. Our
    audit procedures with respect to all references to the number of
    common shares and earnings (loss) per share in the consolidated
    financial statements                                                                                                                                                                                                                                                                                                                                                                                                                                          

F-2



---



##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | and notes thereto included testing the
    mathematical accuracy of applying the 1-for-5 reverse split to
    common shares outstanding and the related earnings (loss) per
    share amounts.                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | These consolidated financial statements,
    specifically the supplemental information of Equipment
    Operations, have been reclassified to reflect Interest
    Compensation to Financial Services as a separate line item in
    the statements of operations. This amount had previously been
    included within Interest Expense  Other. Our
    procedures included (i) agreeing the Interest Compensation
    to Financial Services to the Companys underlying records
    obtained from management, and (ii) testing the mathematical
    accuracy of the revised Interest Expense  Other
    amount.

In our opinion, the adjustments described above
to present the transitional disclosures required by Statement
No. 142, restate the reportable segments and the
supplemental information of the Companys Equipment
Operations, and to reflect the 1-for-5 reverse split of the
Companys common shares have been properly applied.
However, we were not engaged to audit, review, or apply any
procedures to the 2001 consolidated financial statements of the
Company other than with respect to such disclosures and,
accordingly, we do not express an opinion or any other form of
assurance on the 2001 consolidated financial statements taken as
a whole.

Our audits were conducted for the purpose of
forming an opinion on the 2003 and 2002 consolidated financial
statements taken as a whole. The supplemental information is
presented for purposes of additional analysis of the
consolidated financial statements rather than to present the
financial position, results of operations, and cash flows of
Equipment Operations and Financial Services. The 2003 and 2002
supplemental information has been subjected to the auditing
procedures applied in the audits of the consolidated financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the 2003 and 2002 consolidated financial
statements taken as a whole. The 2001 supplemental financial
statements were subjected to audit procedures by other auditors
who have ceased operations. Those auditors, whose report dated
February 7, 2002, referred to above, stated that such
schedules were fairly stated in all material respects in
relation to the basic consolidated financial statements taken as
a whole.

/S/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

April 2, 2004


F-3



---



##### 



The following report is a copy of a report
previously issued by Arthur Andersen LLP in connection with the
Companys Annual Report for the year ended
December 31, 2001. This opinion has not been reissued by
Arthur Andersen LLP. In 2002, the Company adopted Statement of
Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets (SFAS No. 142).
As discussed in Note 9 of the Notes to Consolidated
Financial Statements, the Company has presented the transitional
disclosures for 2001 and 2000 required by SFAS No. 142. In
2002, the Company changed the presentation of its results of
operations by segment and the supplemental information of the
Companys Equipment Operations in the 2001 financial
statements to conform to the 2003 and 2002 presentation of
results of operations by segment and the supplemental
information of the Companys Equipment Operations. Prior to
release of the 2002 consolidated financial statements, the
Company effected a 1-for-5 reverse split of the Companys
common shares. As described in Note 18, the 2001
consolidated financial statements have been revised to reflect
the 1-for-5 reverse split of the Companys common shares.

The Arthur Andersen LLP report does not extend to
revised disclosures discussed above. These disclosures are
reported on by Deloitte & Touche LLP as stated in their
report appearing herein.

REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS

To the Board of Directors and Shareholders of CNH
Global N.V.:

We have audited the accompanying consolidated
balance sheets of CNH Global N.V. (a Netherlands Corporation)
and its subsidiaries as of December 31, 2001 and 2000, and
the related statements of operations, cash flows, and changes in
shareholders equity for the years then ended. These
consolidated financial statements and the supplemental financial
statements referred to below are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these consolidated financial statements and the
supplemental financial statements based on our audits. The
financial statements of CNH Global N.V. for the year ended
December 31, 1999, were audited by other auditors whose
report dated February 1, 2000, expressed an unqualified
opinion on those statements.

We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of CNH Global N.V. and
subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally
accepted in the United States.

Our audits were made for the purpose of forming
an opinion on the basic consolidated financial statements taken
as a whole. The supplemental financial statements of Equipment
Operations and Financial Services are presented for the purposes
of additional analysis and are not a required part of the basic
consolidated financial statements. This information has been
subjected to the auditing procedures applied in our audits of
the basic consolidated financial statements and, in our opinion,
is fairly stated in all material respects in relation to the
basic consolidated financial statements taken as a whole.

/S/ ARTHUR ANDERSEN LLP

Milwaukee, Wisconsin

February 7, 2002


F-4



---



##### 



CNH GLOBAL N.V.

CONSOLIDATED STATEMENTS OF
OPERATIONS

For the Years Ended December 31, 2003,
2002, and 2001


(and Supplemental Information)


|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |     | 
|--------------------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------ | ------ | -------------------- |  | ------------------ | ------ | ------------------------ |  | ---- | ------ | ----- | - | ---- | ------ | ------ |  | ---- | ----- | ----- |  | - | ----- | ----- | - | - | --- | --- |  | - | --- | --- |  | - | --- | --- | 
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                         
|                                                                                                          |                                              |                                      |        |                      |  |                    |        | Supplemental Information
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                         
|                                                                                                          |                                              |                                      |        |                      |  |                   
|                                                                                                          |                                              | Consolidated                         |        | Equipment Operations |  | Financial Services
|                                                                                                          |                                              |                                      |        |                      |  |                   
|                                                                                                          |                                              | 2003                                 |        | 2002                 |  | 2001               |        | 2003                     |  | 2002 |        | 2001  |   | 2003 |        | 2002   |  | 2001
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |     
|                                                                                                          |                                              |                                     
|                                                                                                          |                                              | (in millions, except per share data)
|Revenues:                                                                                                 |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|                                                                                                          | Net sales                                    |                                      | $      | 10,069               |  |                    | $      | 9,331                    |  |      | $      | 9,030 |   |      | $      | 10,069 |  |      | $     | 9,331 |  |   | $     | 9,030 |   |   | $   |    |  |   | $   |    |  |   | $   |    | 
|                                                                                                          | Finance and interest income                  |                                      |        | 597                  |  |                    |        | 609                      |  |      |        | 685   |   |      |        | 83     |  |      |       | 100   |  |   |       | 149   |   |   |     | 621 |  |   |     | 641 |  |   |     | 739 | 
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|                                                                                                          |                                              |                                      | 10,666 |                      |  |                    | 9,940  |                          |  |      | 9,715  |       |   |      | 10,152 |        |  |      | 9,431 |       |  |   | 9,179 |       |   |   | 621 |     |  |   | 641 |     |  |   | 739 |    
|Costs and Expenses:                                                                                       |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|                                                                                                          | Cost of goods sold                           |                                      |        | 8,590                |  |                    |        | 7,902                    |  |      |        | 7,586 |   |      |        | 8,590  |  |      |       | 7,902 |  |   |       | 7,586 |   |   |     |    |  |   |     |    |  |   |     |    | 
|                                                                                                          | Selling, general and administrative          |                                      |        | 1,042                |  |                    |        | 1,094                    |  |      |        | 1,224 |   |      |        | 839    |  |      |       | 884   |  |   |       | 915   |   |   |     | 203 |  |   |     | 210 |  |   |     | 314 | 
|                                                                                                          | Research, development and engineering        |                                      |        | 259                  |  |                    |        | 283                      |  |      |        | 306   |   |      |        | 259    |  |      |       | 283   |  |   |       | 306   |   |   |     |    |  |   |     |    |  |   |     |    | 
|                                                                                                          | Restructuring and other merger related costs |                                      |        | 271                  |  |                    |        | 51                       |  |      |        | 104   |   |      |        | 268    |  |      |       | 50    |  |   |       | 97    |   |   |     | 3   |  |   |     | 1   |  |   |     | 7   | 
|                                                                                                          | Interest expense  Fiat affiliates           |                                      |        | 113                  |  |                    |        | 236                      |  |      |        | 358   |   |      |        | 85     |  |      |       | 198   |  |   |       | 308   |   |   |     | 28  |  |   |     | 38  |  |   |     | 50  | 
|                                                                                                          | Interest expense  other                     |                                      |        | 368                  |  |                    |        | 318                      |  |      |        | 368   |   |      |        | 236    |  |      |       | 192   |  |   |       | 178   |   |   |     | 182 |  |   |     | 204 |  |   |     | 289 | 
|                                                                                                          | Interest compensation to Financial Services  |                                      |        |                     |  |                    |        |                         |  |      |        |      |   |      |        | 79     |  |      |       | 76    |  |   |       | 99    |   |   |     |    |  |   |     |    |  |   |     |    | 
|                                                                                                          | Other, net                                   |                                      |        | 241                  |  |                    |        | 182                      |  |      |        | 193   |   |      |        | 149    |  |      |       | 62    |  |   |       | 112   |   |   |     | 71  |  |   |     | 98  |  |   |     | 81  | 
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|                                                                                                          |                                              |                                      | 10,884 |                      |  |                    | 10,066 |                          |  |      | 10,139 |       |   |      | 10,505 |        |  |      | 9,647 |       |  |   | 9,601 |       |   |   | 487 |     |  |   | 551 |     |  |   | 741 |    
|Equity in Income (Loss) of Unconsolidated
    Subsidiaries and Affiliates:                                |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|                                                                                                          | Financial Services                           |                                      |        | 6                    |  |                    |        | 4                        |  |      |        | 6     |   |      |        | 93     |  |      |       | 60    |  |   |       | 4     |   |   |     | 6   |  |   |     | 4   |  |   |     | 6   | 
|                                                                                                          | Equipment Operations                         |                                      |        | 13                   |  |                    |        | 15                       |  |      |        | (14   | ) |      |        | 13     |  |      |       | 15    |  |   |       | (14   | ) |   |     |    |  |   |     |    |  |   |     |    | 
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|Income (loss) before taxes, minority interest and
    cumulative effect of change in accounting principle |                                              |                                      | (199   | )                    |  |                    | (107   | )                        |  |      | (432   | )     |   |      | (247   | )      |  |      | (141  | )     |  |   | (432  | )     |   |   | 140 |     |  |   | 94  |     |  |   | 4   |    
|Income tax provision (benefit)                                                                            |                                              |                                      | (49    | )                    |  |                    | (14    | )                        |  |      | (105   | )     |   |      | (97    | )      |  |      | (48   | )     |  |   | (105  | )     |   |   | 47  |     |  |   | 34  |     |  |   |    |    
|Minority interest                                                                                         |                                              |                                      | 7      |                      |  |                    | 8      |                          |  |      | 5      |       |   |      | 7      |        |  |      | 8     |       |  |   | 5     |       |   |   |    |     |  |   |    |     |  |   |    |    
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|Net income (loss) before cumulative effect of
    change in accounting principle                          |                                              |                                      | (157   | )                    |  |                    | (101   | )                        |  |      | (332   | )     |   |      | (157   | )      |  |      | (101  | )     |  |   | (332  | )     |   |   | 93  |     |  |   | 60  |     |  |   | 4   |    
|Cumulative effect of change in accounting
    principle, net of tax                                       |                                              |                                      |       |                      |  |                    | (325   | )                        |  |      |       |       |   |      |       |        |  |      | (325  | )     |  |   |      |       |   |   |    |     |  |   |    |     |  |   |    |    
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|Net income (loss)                                                                                         |                                              | $                                    | (157   | )                    |  | $                  | (426   | )                        |  | $    | (332   | )     |   | $    | (157   | )      |  | $    | (426  | )     |  | $ | (332  | )     |   | $ | 93  |     |  | $ | 60  |     |  | $ | 4   |    
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|Per share data:                                                                                           |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|Basic earnings (loss) per share before cumulative
    effect of change in accounting principle            |                                              | $                                    | (1.19  | )                    |  | $                  | (1.05  | )                        |  | $    | (6.00  | )     |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|Cumulative effect of change in accounting
    principle, net of tax                                       |                                              |                                      |       |                      |  |                    | (3.35  | )                        |  |      |       |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|Basic earnings (loss) per share                                                                           |                                              | $                                    | (1.19  | )                    |  | $                  | (4.40  | )                        |  | $    | (6.00  | )     |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|Diluted earnings (loss) per share before
    cumulative effect of change in accounting principle          |                                              | $                                    | (1.19  | )                    |  | $                  | (1.05  | )                        |  | $    | (6.00  | )     |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|Cumulative effect of change in accounting
    principle, net of tax                                       |                                              |                                      |       |                      |  |                    | (3.35  | )                        |  |      |       |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|Diluted earnings (loss) per share                                                                         |                                              | $                                    | (1.19  | )                    |  | $                  | (4.40  | )                        |  | $    | (6.00  | )     |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    
|                                                                                                          |                                              |                                      |        |                      |  |                    |        |                          |  |      |        |       |   |      |        |        |  |      |       |       |  |   |       |       |   |   |     |     |  |   |     |     |  |   |     |    

The Consolidated data in this
statement include CNH Global N.V. and its consolidated
subsidiaries and conform to the requirements of SFAS
No. 94. The supplemental Equipment Operations
(with Financial Services on the equity basis) data
in this statement include primarily CNH Global N.V.s
agricultural and construction equipment operations. The
supplemental Financial Services data in this
statement include primarily CNH Global N.V.s financial
services business. Transactions between Equipment
Operations and Financial Services have been
eliminated to arrive at the Consolidated data. The
accompanying notes to consolidated financial statements are an
integral part of these Statements of Operations.

F-5



---



##### 



CNH GLOBAL N.V.

CONSOLIDATED BALANCE SHEETS

As of December 31, 2003 and
2002


(and Supplemental Information)


|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |       |       | 
|---------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | ----- | ---------- | ------ | ------------------------ | ----- | ------ | ------ | ---- | ----- | ------ | ------ |  | ----- | ------ | ------ |  | ----- | ----- | ----- |  | ----- | ----- | ----- | 
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                         
|                                         |                                                                                                                                                                                        |                                  |       |            |        | Supplemental Information
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                         
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |       
|                                         |                                                                                                                                                                                        |                                  |       | Equipment  |        | Financial               
|                                         |                                                                                                                                                                                        | Consolidated                     |       | Operations |        | Services                
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                         
|                                         |                                                                                                                                                                                        | 2003                             |       | 2002       |        | 2003                     |       | 2002   |        | 2003 |       | 2002  
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |       
|                                         |                                                                                                                                                                                        |                                 
|                                         |                                                                                                                                                                                        | (in millions, except share data)
|ASSETS                                   |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|Current Assets:                          |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         | Cash and cash equivalents  Fiat                                                                                                                                                       |                                  | $     | 1,325      |        |                          | $     | 544    |        |      | $     | 1,315  |        |  | $     | 336    |        |  | $     | 10    |       |  | $     | 208   |      
|                                         | Cash and cash equivalents  other                                                                                                                                                      |                                  |       | 619        |        |                          |       | 231    |        |      |       | 486    |        |  |       | 133    |        |  |       | 133   |       |  |       | 98    |      
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         |                                                                                                                                                                                        | Total cash and cash equivalents  |       |            | 1,944  |                          |       |        | 775    |      |       |        | 1,801  |  |       |        | 469    |  |       |       | 143   |  |       |       | 306   | 
|                                         | Accounts and notes receivable                                                                                                                                                          |                                  |       | 3,797      |        |                          |       | 3,612  |        |      |       | 2,077  |        |  |       | 1,791  |        |  |       | 2,074 |       |  |       | 2,147 |      
|                                         | Intersegment notes receivable                                                                                                                                                          |                                  |       |           |        |                          |       |       |        |      |       | 312    |        |  |       | 1,083  |        |  |       |      |       |  |       | 354   |      
|                                         | Inventories                                                                                                                                                                            |                                  |       | 2,478      |        |                          |       | 2,054  |        |      |       | 2,478  |        |  |       | 2,054  |        |  |       |      |       |  |       |      |      
|                                         | Deferred income taxes                                                                                                                                                                  |                                  |       | 498        |        |                          |       | 505    |        |      |       | 406    |        |  |       | 393    |        |  |       | 92    |       |  |       | 112   |      
|                                         | Prepayments and other                                                                                                                                                                  |                                  |       | 80         |        |                          |       | 108    |        |      |       | 76     |        |  |       | 102    |        |  |       | 4     |       |  |       | 6     |      
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         |                                                                                                                                                                                        | Total current assets             |       |            | 8,797  |                          |       |        | 7,054  |      |       |        | 7,150  |  |       |        | 5,892  |  |       |       | 2,313 |  |       |       | 2,925 | 
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|Long-Term Receivables                    |                                                                                                                                                                                        |                                  | 2,199 |            |        |                          | 2,099 |        |        |      | 270   |        |        |  | 230   |        |        |  | 1,929 |       |       |  | 1,869 |      
|Intersegment Long-Term Notes Receivable  |                                                                                                                                                                                        |                                  |      |            |        |                          |      |        |        |      | 700   |        |        |  | 700   |        |        |  |      |       |       |  |      |      
|Property, Plant and Equipment, net       |                                                                                                                                                                                        |                                  | 1,528 |            |        |                          | 1,449 |        |        |      | 1,518 |        |        |  | 1,437 |        |        |  | 10    |       |       |  | 12    |      
|Other Assets:                            |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         | Investments in unconsolidated subsidiaries and
    affiliates                                                                                                                          |                                  |       | 429        |        |                          |       | 375    |        |      |       | 364    |        |  |       | 328    |        |  |       | 65    |       |  |       | 47    |      
|                                         | Investment in Financial Services                                                                                                                                                       |                                  |       |           |        |                          |       |       |        |      |       | 1,241  |        |  |       | 1,019  |        |  |       |      |       |  |       |      |      
|                                         | Equipment on operating leases, net                                                                                                                                                     |                                  |       | 353        |        |                          |       | 544    |        |      |       |       |        |  |       |       |        |  |       | 353   |       |  |       | 544   |      
|                                         | Goodwill                                                                                                                                                                               |                                  |       | 2,554      |        |                          |       | 2,533  |        |      |       | 2,409  |        |  |       | 2,395  |        |  |       | 145   |       |  |       | 138   |      
|                                         | Intangible assets                                                                                                                                                                      |                                  |       | 839        |        |                          |       | 852    |        |      |       | 839    |        |  |       | 850    |        |  |       |      |       |  |       | 2     |      
|                                         | Other                                                                                                                                                                                  |                                  |       | 1,962      |        |                          |       | 1,854  |        |      |       | 1,659  |        |  |       | 1,516  |        |  |       | 303   |       |  |       | 338   |      
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         |                                                                                                                                                                                        | Total other assets               |       |            | 6,137  |                          |       |        | 6,158  |      |       |        | 6,512  |  |       |        | 6,108  |  |       |       | 866   |  |       |       | 1,069 | 
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         |                                                                                                                                                                                        | Total                            |       | $          | 18,661 |                          |       | $      | 16,760 |      |       | $      | 16,150 |  |       | $      | 14,367 |  |       | $     | 5,118 |  |       | $     | 5,875 | 
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|LIABILITIES AND SHAREHOLDERS
    EQUITY |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|Current Liabilities:                     |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         | Current maturities of long-term debt 
    Fiat affiliates                                                                                                                             |                                  | $     | 62         |        |                          | $     | 514    |        |      | $     | 17     |        |  | $     | 514    |        |  | $     | 45    |       |  | $     |      |      
|                                         | Current maturities of long-term debt 
    other                                                                                                                                       |                                  |       | 781        |        |                          |       | 604    |        |      |       | 71     |        |  |       | 310    |        |  |       | 710   |       |  |       | 294   |      
|                                         | Short-term debt  Fiat affiliates                                                                                                                                                      |                                  |       | 698        |        |                          |       | 1,086  |        |      |       | 403    |        |  |       | 817    |        |  |       | 295   |       |  |       | 269   |      
|                                         | Short-term debt  other                                                                                                                                                                |                                  |       | 1,412      |        |                          |       | 1,663  |        |      |       | 1,119  |        |  |       | 1,067  |        |  |       | 293   |       |  |       | 596   |      
|                                         | Intersegment short-term debt                                                                                                                                                           |                                  |       |           |        |                          |       |       |        |      |       |       |        |  |       | 354    |        |  |       | 312   |       |  |       | 1,083 |      
|                                         | Accounts payable                                                                                                                                                                       |                                  |       | 1,635      |        |                          |       | 1,436  |        |      |       | 1,836  |        |  |       | 1,555  |        |  |       | 139   |       |  |       | 183   |      
|                                         | Restructuring liability                                                                                                                                                                |                                  |       | 72         |        |                          |       | 50     |        |      |       | 71     |        |  |       | 50     |        |  |       | 1     |       |  |       |      |      
|                                         | Other accrued liabilities                                                                                                                                                              |                                  |       | 1,795      |        |                          |       | 1,712  |        |      |       | 1,608  |        |  |       | 1,567  |        |  |       | 201   |       |  |       | 169   |      
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         |                                                                                                                                                                                        | Total current liabilities        |       |            | 6,455  |                          |       |        | 7,065  |      |       |        | 5,125  |  |       |        | 6,234  |  |       |       | 1,996 |  |       |       | 2,594 | 
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|Long-Term Debt  Fiat Affiliates         |                                                                                                                                                                                        |                                  | 1,669 |            |        |                          | 2,285 |        |        |      | 1,363 |        |        |  | 1,918 |        |        |  | 306   |       |       |  | 367   |      
|Long-Term Debt  Other                   |                                                                                                                                                                                        |                                  | 2,374 |            |        |                          | 1,712 |        |        |      | 1,742 |        |        |  | 796   |        |        |  | 632   |       |       |  | 916   |      
|Intersegment Long-Term Debt              |                                                                                                                                                                                        |                                  |      |            |        |                          |      |        |        |      |      |        |        |  |      |        |        |  | 700   |       |       |  | 700   |      
|Other Liabilities:                       |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         | Pension, postretirement and postemployment
    benefits                                                                                                                                |                                  |       | 2,040      |        |                          |       | 1,759  |        |      |       | 2,021  |        |  |       | 1,739  |        |  |       | 19    |       |  |       | 20    |      
|                                         | Other                                                                                                                                                                                  |                                  |       | 1,174      |        |                          |       | 1,105  |        |      |       | 951    |        |  |       | 847    |        |  |       | 223   |       |  |       | 258   |      
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         |                                                                                                                                                                                        | Total other liabilities          |       |            | 3,214  |                          |       |        | 2,864  |      |       |        | 2,972  |  |       |        | 2,586  |  |       |       | 242   |  |       |       | 278   | 
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|Commitments and Contingencies (Note 16)  |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|Minority Interest                        |                                                                                                                                                                                        |                                  | 75    |            |        |                          | 73    |        |        |      | 74    |        |        |  | 72    |        |        |  | 1     |       |       |  | 1     |      
|Shareholders Equity:                    |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         | Preference Shares,
    2.25 par
    value; authorized 200,000,000 shares in 2003 and
    60,000,000 shares in 2002; issued 8,000,000 shares in
    2003 and 0 shares in 2002          |                                  |       | 19         |        |                          |       |       |        |      |       | 19     |        |  |       |       |        |  |       |      |       |  |       |      |      
|                                         | Common Shares,
    2.25 par
    value; authorized 400,000,000 shares in 2003 and
    140,000,000 shares in 2002, issued 132,913,714 shares
    in 2003 and 131,238,200 shares in 2002 |                                  |       | 309        |        |                          |       | 305    |        |      |       | 309    |        |  |       | 305    |        |  |       | 135   |       |  |       | 118   |      
|                                         | Paid-in capital                                                                                                                                                                        |                                  |       | 6,310      |        |                          |       | 4,327  |        |      |       | 6,310  |        |  |       | 4,327  |        |  |       | 947   |       |  |       | 910   |      
|                                         | Treasury stock, 116,706 shares in 2003 and
    2002, at cost                                                                                                                           |                                  |       | (7         | )      |                          |       | (7     | )      |      |       | (7     | )      |  |       | (7     | )      |  |       |      |       |  |       |      |      
|                                         | Retained earnings (deficit)                                                                                                                                                            |                                  |       | (1,217     | )      |                          |       | (1,027 | )      |      |       | (1,217 | )      |  |       | (1,027 | )      |  |       | 120   |       |  |       | 49    |      
|                                         | Accumulated other comprehensive income (loss)                                                                                                                                          |                                  |       | (539       | )      |                          |       | (835   | )      |      |       | (539   | )      |  |       | (835   | )      |  |       | 39    |       |  |       | (58   | )    
|                                         | Unearned compensation on restricted shares and
    options                                                                                                                             |                                  |       | (1         | )      |                          |       | (2     | )      |      |       | (1     | )      |  |       | (2     | )      |  |       |      |       |  |       |      |      
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         |                                                                                                                                                                                        | Total shareholders equity       |       |            | 4,874  |                          |       |        | 2,761  |      |       |        | 4,874  |  |       |        | 2,761  |  |       |       | 1,241 |  |       |       | 1,019 | 
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      
|                                         |                                                                                                                                                                                        | Total                            |       | $          | 18,661 |                          |       | $      | 16,760 |      |       | $      | 16,150 |  |       | $      | 14,367 |  |       | $     | 5,118 |  |       | $     | 5,875 | 
|                                         |                                                                                                                                                                                        |                                  |       |            |        |                          |       |        |        |      |       |        |        |  |       |        |        |  |       |       |       |  |       |      

The Consolidated data in this
statement include CNH Global N.V. and its consolidated
subsidiaries and conform to the requirements of
SFAS No. 94. The supplemental Equipment
Operations (with Financial Services on the
equity basis) data in this statement include primarily
CNH Global N.V.s agricultural and construction
equipment operations. The supplemental Financial
Services data in this statement include primarily
CNH Global N.V.s financial services business.
Transactions between Equipment Operations and
Financial Services have been eliminated to arrive at
the Consolidated data. The accompanying notes to
consolidated financial statements are an integral part of these
Balance Sheets.

F-6



---



##### 



CNH GLOBAL N.V.



CONSOLIDATED STATEMENTS OF CASH
FLOWS


For the Years Ended December 31, 2003,
2002 and 2001


(and Supplemental Information)


|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |      |     |      |  
|------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | --------------------------------------------------------------- | -------------------- | --- | ------------------ | ----- | ------------------------ | ---- | ---- | ---- | ------ | ---- | ---- | ----- | ----- | ---- | ---- | ---- | ---- | ---- | ---- | ---- | ----- | --- | ---- | ---- | ---- | --- | ---- | ---- | ---- | --- | --- | ---- | ---- | --- | ---- | -
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                         
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       | Supplemental Information
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                         
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                   
|                                                                         |                                                                                                     | Consolidated                                                       |                                                                 | Equipment Operations |     | Financial Services
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                   
|                                                                         |                                                                                                     | 2003                                                               |                                                                 | 2002                 |     | 2001               |       | 2003                     |      | 2002 |      | 2001   |      | 2003 |       | 2002  |      | 2001
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |     
|                                                                         |                                                                                                     |                                                                   
|                                                                         |                                                                                                     | (in millions)                                                     
|Operating activities:                                                    |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |     
|                                                                         | Net income (loss)                                                                                   |                                                                    | $                                                               | (157                 | )   |                    | $     | (426                     | )    |      | $    | (332   | )    |      | $     | (157  | )    |      | $    | (426 | )    |      | $    | (332  | )   |      | $    | 93   |     |      | $    | 60   |     |     | $    | 4    |    
|                                                                         | Adjustments to reconcile net income (loss) to net
    cash provided (used) by operating activities: |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |      |    
|                                                                         |                                                                                                     | Cumulative effect of change in accounting
    principle            |                                                                 |                      |    |                    |       |                          | 325  |      |      |        |     |      |       |       |     |      |      |      | 325  |      |      |       |    |      |      |      |    |      |      |      |    |     |      |      |    |     
|                                                                         |                                                                                                     | Depreciation and amortization                                      |                                                                 |                      | 346 |                    |       |                          | 346  |      |      |        | 424  |      |       |       | 246  |      |      |      | 228  |      |      |       | 319 |      |      |      | 100 |      |      |      | 118 |     |      |      | 105 |     
|                                                                         |                                                                                                     | Deferred income tax expense (benefit)                              |                                                                 |                      | (72 | )                  |       |                          | (277 | )    |      |        | (174 | )    |       |       | (125 | )    |      |      | (195 | )    |      |       | (91 | )    |      |      | 53  |      |      |      | (82 | )   |      |      | (83 | )   
|                                                                         |                                                                                                     | (Gain) loss on disposal of fixed assets                            |                                                                 |                      | (1  | )                  |       |                          | (15  | )    |      |        | 3    |      |       |       | (1   | )    |      |      | (15  | )    |      |       | 3   |      |      |      |    |      |      |      |    |     |      |      |    |     
|                                                                         |                                                                                                     | Undistributed (earnings) losses of unconsolidated
    subsidiaries |                                                                 |                      | 10  |                    |       |                          | 10   |      |      |        | 17   |      |       |       | (61  | )    |      |      | (42  | )    |      |       | 19  |      |      |      |    |      |      |      | (4  | )   |      |      | (6  | )   
|                                                                         |                                                                                                     | Changes in operating assets and liabilities:                       |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |      |     |     
|                                                                         |                                                                                                     |                                                                    | (Increase) decrease in intersegment activities                  |                      |     |                   |       |                          |      |     |      |        |      |     |       |       |      | 138  |      |      |      | 16   |      |       |     | (200 | )    |      |     | (138 | )    |      |     | (16 | )    |      |     | 200  |  
|                                                                         |                                                                                                     |                                                                    | (Increase) decrease in receivables                              |                      |     | 367                |       |                          |      | 580  |      |        |      | (264 | )     |       |      | (26  | )    |      |      | 101  |      |       |     | (153 | )    |      |     | 393  |      |      |     | 479 |      |      |     | (111 | )
|                                                                         |                                                                                                     |                                                                    | (Increase) decrease in inventories                              |                      |     | (139               | )     |                          |      | 335  |      |        |      | 48   |       |       |      | (139 | )    |      |      | 335  |      |       |     | 48   |      |      |     |     |      |      |     |    |      |      |     |     |  
|                                                                         |                                                                                                     |                                                                    | (Increase) decrease in prepayments and other
    current assets |                      |     | 36                 |       |                          |      | (4   | )    |        |      | 137  |       |       |      | 34   |      |      |      | (1   | )    |       |     | (23  | )    |      |     | 2    |      |      |     | (3  | )    |      |     | 160  |  
|                                                                         |                                                                                                     |                                                                    | (Increase) decrease in other assets                             |                      |     | 4                  |       |                          |      | 368  |      |        |      | (155 | )     |       |      | (17  | )    |      |      | 226  |      |       |     | (239 | )    |      |     | 21   |      |      |     | 142 |      |      |     | 84   |  
|                                                                         |                                                                                                     |                                                                    | Increase (decrease) in payables                                 |                      |     | (4                 | )     |                          |      | 49   |      |        |      | 78   |       |       |      | (5   | )    |      |      | 52   |      |       |     | 111  |      |      |     | 1    |      |      |     | (3  | )    |      |     | (33  | )
|                                                                         |                                                                                                     |                                                                    | Increase (decrease) in other accrued liabilities                |                      |     | (173               | )     |                          |      | (228 | )    |        |      | 5    |       |       |      | (213 | )    |      |      | (235 | )    |       |     | 133  |      |      |     | 40   |      |      |     | 7   |      |      |     | (128 | )
|                                                                         |                                                                                                     |                                                                    | Increase (decrease) in other liabilities                        |                      |     | 204                |       |                          |      | 8    |      |        |      | 217  |       |       |      | 209  |      |      |      | 22   |      |       |     | 127  |      |      |     | (5   | )    |      |     | (14 | )    |      |     | 90   |  
|                                                                         | Other, net                                                                                          |                                                                    |                                                                 | 183                  |     |                    |       | 104                      |      |      |      | (186   | )    |      |       | 183   |      |      |      | 94   |      |      |      | (190  | )   |      |      |     |     |      |      | 9    |     |     |      | 4    |    
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |     
|Net cash (used) provided by operating
    activities                     |                                                                                                     |                                                                    | 604                                                             |                      |     |                    | 1,175 |                          |      |      | (182 | )      |      |      | 66    |       |      |      | 485  |      |      |      | (468 | )     |     |      | 560  |      |     |      | 693  |      |     |     | 286  |     
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |     
|Investing activities:                                                    |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |     
|                                                                         | Acquisitions and investments, net of cash acquired                                                  |                                                                    |                                                                 | (40                  | )   |                    |       | (234                     | )    |      |      | (8     | )    |      |       | (83   | )    |      |      | (296 | )    |      |      | (62   | )   |      |      | (11  | )   |      |      | (11  | )   |     |      | (1   | )  
|                                                                         | Proceeds from sale of businesses and assets                                                         |                                                                    |                                                                 | 212                  |     |                    |       | 182                      |      |      |      | 287    |      |      |       | 54    |      |      |      | 60   |      |      |      | 114   |     |      |      | 158  |     |      |      | 122  |     |     |      | 173  |    
|                                                                         | Expenditures for property, plant and equipment                                                      |                                                                    |                                                                 | (194                 | )   |                    |       | (241                     | )    |      |      | (229   | )    |      |       | (192  | )    |      |      | (237 | )    |      |      | (221  | )   |      |      | (2   | )   |      |      | (4   | )   |     |      | (8   | )  
|                                                                         | Expenditures for equipment on operating leases                                                      |                                                                    |                                                                 | (51                  | )   |                    |       | (166                     | )    |      |      | (322   | )    |      |       |      |      |      |      |     |      |      |      |      |     |      |      | (51  | )   |      |      | (166 | )   |     |      | (322 | )  
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |     
|Net cash (used) provided by investing
    activities                     |                                                                                                     |                                                                    | (73                                                             | )                    |     |                    | (459  | )                        |      |      | (272 | )      |      |      | (221  | )     |      |      | (473 | )    |      |      | (169 | )     |     |      | 94   |      |     |      | (59  | )    |     |     | (158 | )   
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |     
|Financing activities:                                                    |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |     
|                                                                         | Intersegment activity                                                                               |                                                                    |                                                                 |                     |     |                    |       |                         |      |      |      |       |      |      |       | 484   |      |      |      | (116 | )    |      |      | (902  | )   |      |      | (484 | )   |      |      | 116  |     |     |      | 902  |    
|                                                                         | Proceeds from issuance of long-term
    debt  Fiat affiliates                                      |                                                                    |                                                                 | 147                  |     |                    |       |                         |      |      |      | 1,646  |      |      |       | 147   |      |      |      |     |      |      |      | 1,499 |     |      |      |     |     |      |      |     |     |     |      | 147  |    
|                                                                         | Proceeds from issuance of long-term
    debt  other                                                |                                                                    |                                                                 | 1,282                |     |                    |       | 738                      |      |      |      | 824    |      |      |       | 1,053 |      |      |      | 9    |      |      |      | 824   |     |      |      | 229  |     |      |      | 729  |     |     |      |     |    
|                                                                         | Payment of long-term debt  Fiat
    affiliates                                                     |                                                                    |                                                                 | (16                  | )   |                    |       | (544                     | )    |      |      | (129   | )    |      |       |      |      |      |      | (487 | )    |      |      | (13   | )   |      |      | (16  | )   |      |      | (57  | )   |     |      | (116 | )  
|                                                                         | Payment of long-term debt  other                                                                   |                                                                    |                                                                 | (800                 | )   |                    |       | (1,022                   | )    |      |      | (1,197 | )    |      |       | (535  | )    |      |      | (137 | )    |      |      | (529  | )   |      |      | (265 | )   |      |      | (885 | )   |     |      | (668 | )  
|                                                                         | Net increase (decrease) in short-term revolving
    credit facilities                               |                                                                    |                                                                 | (23                  | )   |                    |       | 79                       |      |      |      | (853   | )    |      |       | 306   |      |      |      | 645  |      |      |      | (410  | )   |      |      | (329 | )   |      |      | (566 | )   |     |      | (443 | )  
|                                                                         | Issuance of common shares                                                                           |                                                                    |                                                                 |                     |     |                    |       | 201                      |      |      |      |       |      |      |       |      |      |      |      | 201  |      |      |      |      |     |      |      | 54   |     |      |      | 73   |     |     |      | 55   |    
|                                                                         | Dividends paid                                                                                      |                                                                    |                                                                 | (33                  | )   |                    |       | (28                      | )    |      |      | (28    | )    |      |       | (33   | )    |      |      | (28  | )    |      |      | (28   | )   |      |      | (22  | )   |      |      | (3   | )   |     |      |     |    
|                                                                         | Other, net                                                                                          |                                                                    |                                                                 | (19                  | )   |                    |       |                         |      |      |      |       |      |      |       | (19   | )    |      |      |     |      |      |      |      |     |      |      |     |     |      |      |     |     |     |      |     |    
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |     
|Net cash provided (used) by financing
    activities                     |                                                                                                     |                                                                    | 538                                                             |                      |     |                    | (576  | )                        |      |      | 263  |        |      |      | 1,403 |       |      |      | 87   |      |      |      | 441  |       |     |      | (833 | )    |     |      | (593 | )    |     |     | (123 | )   
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |     
|Effect of foreign exchange rate changes on cash
    and cash equivalents |                                                                                                     |                                                                    | 100                                                             |                      |     |                    | (28   | )                        |      |      | (32  | )      |      |      | 84    |       |      |      | (8   | )    |      |      | (19  | )     |     |      | 16   |      |     |      | (20  | )    |     |     | (13  | )   
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |     
|Increase (decrease) in cash and cash
    equivalents                     |                                                                                                     |                                                                    | 1,169                                                           |                      |     |                    | 112   |                          |      |      | (223 | )      |      |      | 1,332 |       |      |      | 91   |      |      |      | (215 | )     |     |      | (163 | )    |     |      | 21   |      |     |     | (8   | )   
|Cash and cash equivalents, beginning of
    year                         |                                                                                                     |                                                                    | 775                                                             |                      |     |                    | 663   |                          |      |      | 886  |        |      |      | 469   |       |      |      | 378  |      |      |      | 593  |       |     |      | 306  |      |     |      | 285  |      |     |     | 293  |     
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |     
|Cash and cash equivalents, end of
    year                               |                                                                                                     | $                                                                  | 1,944                                                           |                      |     | $                  | 775   |                          |      | $    | 663  |        |      | $    | 1,801 |       |      | $    | 469  |      |      | $    | 378  |       |     | $    | 143  |      |     | $    | 306  |      |     | $   | 285  |     
|                                                                         |                                                                                                     |                                                                    |                                                                 |                      |     |                    |       |                          |      |      |      |        |      |      |       |       |      |      |      |      |      |      |      |       |     |      |      |      |     |      |      |      |     |     |      |     

The Consolidated data in this
statement include CNH Global N.V. and its consolidated
subsidiaries and conform to the requirements of SFAS
No. 94. The supplemental Equipment Operations
(with Financial Services on the equity basis) data
in this statement include primarily CNH Global N.V.s
agricultural and construction equipment operations. The
supplemental Financial Services data in this
statement include primarily CNH Global N.V.s financial
services business. Transactions between Equipment
Operations and Financial Services have been
eliminated to arrive at the Consolidated data. The
accompanying notes to consolidated financial statements are an
integral part of these Statements of Cash Flows.

F-7



---



##### 



CNH GLOBAL N.V.

CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY

For the Years Ended December 31, 2003,
2002 and 2001


|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |      |     |      |  
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ------------------------------------------- | ----- | ---------- | - | ------- | -- | -------- | - | ------------ | ----- | --------- | - | ------------- | -- | ----- | - | ------------- | -- | - | - | - | ------ | ---- | - | - | ---- | ---- | --- | - | ----- | ---- | --- | - | - | ---- | --- | ---- | -
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   | Accumulated   |    |       |   |              
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   | Other         |    |       |   |              
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       | Retained  |   | Comprehensive |    |       |   | Comprehensive
|                                                                      |                                                                                  | Common                                      |       | Preference |   | Paid-in |    | Treasury |   | Unearned     |       | Earnings  |   | Income        |    |       |   | Income       
|                                                                      |                                                                                  | Shares                                      |       | Shares     |   | Capital |    | Stock    |   | Compensation |       | (Deficit) |   | (Loss)        |    | Total |   | (Loss)       
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |              
|                                                                      |                                                                                  |                                            
|                                                                      |                                                                                  | (in millions)                              
|Balance, January 1 2001                                               |                                                                                  | $                                           | 143   |            |   | $       |   |          |   | $            | 2,991 |           |   | $             | (6 | )     |   | $             | (2 | ) |   | $ | (213   | )    |   | $ | (399 | )    |     | $ | 2,514 |      |     |   |   |     
|Comprehensive loss:                                                   |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|                                                                      | Net loss                                                                         |                                             |       |           |   |         |    |         |   |              |       |          |   |               |    |      |   |               |    |  |   |   |        | (332 | ) |   |      |     |     |   |       | (332 | )   |   | $ | (332 | )  
|                                                                      | Translation adjustment                                                           |                                             |       |           |   |         |    |         |   |              |       |          |   |               |    |      |   |               |    |  |   |   |        |     |   |   |      | (110 | )   |   |       | (110 | )   |   |   | (110 | )  
|                                                                      | Pension liability adjustment (net of tax
    $89 million)                        |                                             |       |           |   |         |    |         |   |              |       |          |   |               |    |      |   |               |    |  |   |   |        |     |   |   |      | (117 | )   |   |       | (117 | )   |   |   | (117 | )  
|Derivative financial instruments                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|                                                                      |                                                                                  | Losses deferred (net of tax of $12 million) |       |            |  |         |    |          |  |              |       |           |  |               |    |       |  |               |    |   |  |   |        |      |  |   |      |      | (47 | ) |       |      | (47 | ) |   |      | (47 | )   
|                                                                      |                                                                                  | Losses reclassified to earnings             |       |            |  |         |    |          |  |              |       |           |  |               |    |       |  |               |    |   |  |   |        |      |  |   |      |      | 27  |   |       |      | 27  |   |   |      | 27  |     
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|                                                                      |                                                                                  |                                             | Total |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |      | $   | (579 | )
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|Dividends declared                                                    |                                                                                  |                                             |      |            |   |         |   |          |   |              |      |           |   |               |   |       |   |               |   |   |   |   | (28    | )    |   |   |     |      |     |   | (28   | )    |     |   |   |     
|Recognition of compensation on restricted stock                       |                                                                                  |                                             |      |            |   |         |   |          |   |              |      |           |   |               |   |       |   |               | 2  |   |   |   |       |      |   |   |     |      |     |   | 2     |      |     |   |   |     
|Issuance of restricted shares, net of forfeitures                     |                                                                                  |                                             |      |            |   |         |   |          |   |              |      |           |   |               | (1 | )     |   |               | 1  |   |   |   |       |      |   |   |     |      |     |   |      |      |     |   |   |     
|Issuance of stock options                                             |                                                                                  |                                             |      |            |   |         |   |          |   |              | 4     |           |   |               |   |       |   |               | (4 | ) |   |   |       |      |   |   |     |      |     |   |      |      |     |   |   |     
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|Balance, December 31, 2001                                            |                                                                                  |                                             | 143   |            |   |         |   |          |   |              | 2,995 |           |   |               | (7 | )     |   |               | (3 | ) |   |   | (573   | )    |   |   | (646 | )    |     |   | 1,909 |      |     |   |   |     
|Comprehensive loss:                                                   |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|                                                                      | Net loss                                                                         |                                             |       |           |   |         |    |         |   |              |       |          |   |               |    |      |   |               |    |  |   |   |        | (426 | ) |   |      |     |     |   |       | (426 | )   |   | $ | (426 | )  
|                                                                      | Translation adjustment                                                           |                                             |       |           |   |         |    |         |   |              |       |          |   |               |    |      |   |               |    |  |   |   |        |     |   |   |      | 88   |     |   |       | 88   |     |   |   | 88   |    
|                                                                      | Pension liability adjustment (net of tax of
    $134 million)                    |                                             |       |           |   |         |    |         |   |              |       |          |   |               |    |      |   |               |    |  |   |   |        |     |   |   |      | (278 | )   |   |       | (278 | )   |   |   | (278 | )  
|                                                                      | Derivative financial instruments:                                                |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |      |    
|                                                                      |                                                                                  | Losses deferred (net of tax of $16 million) |       |            |  |         |    |          |  |              |       |           |  |               |    |       |  |               |    |   |  |   |        |      |  |   |      |      | (30 | ) |       |      | (30 | ) |   |      | (30 | )   
|                                                                      |                                                                                  | Losses reclassified to earnings             |       |            |  |         |    |          |  |              |       |           |  |               |    |       |  |               |    |   |  |   |        |      |  |   |      |      | 31  |   |       |      | 31  |   |   |      | 31  |     
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|                                                                      |                                                                                  |                                             | Total |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |      | $   | (615 | )
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|Issuance of common shares                                             |                                                                                  |                                             | 23    |            |   |         |   |          |   |              | 178   |           |   |               |   |       |   |               |   |   |   |   |       |      |   |   |     |      |     |   | 201   |      |     |   |   |     
|Conversion of debt to equity                                          |                                                                                  |                                             | 139   |            |   |         |   |          |   |              | 1,154 |           |   |               |   |       |   |               |   |   |   |   |       |      |   |   |     |      |     |   | 1,293 |      |     |   |   |     
|Dividends declared                                                    |                                                                                  |                                             |      |            |   |         |   |          |   |              |      |           |   |               |   |       |   |               |   |   |   |   | (28    | )    |   |   |     |      |     |   | (28   | )    |     |   |   |     
|Recognition of compensation on restricted stock
    and stock options |                                                                                  |                                             |      |            |   |         |   |          |   |              |      |           |   |               |   |       |   |               | 1  |   |   |   |       |      |   |   |     |      |     |   | 1     |      |     |   |   |     
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|Balance, December 31, 2002                                            |                                                                                  |                                             | 305   |            |   |         |   |          |   |              | 4,327 |           |   |               | (7 | )     |   |               | (2 | ) |   |   | (1,027 | )    |   |   | (835 | )    |     |   | 2,761 |      |     |   |   |     
|Comprehensive income:                                                 |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|                                                                      | Net loss                                                                         |                                             |       |           |   |         |    |         |   |              |       |          |   |               |    |      |   |               |    |  |   |   |        | (157 | ) |   |      |     |     |   |       | (157 | )   |   | $ | (157 | )  
|                                                                      | Translation adjustment                                                           |                                             |       |           |   |         |    |         |   |              |       |          |   |               |    |      |   |               |    |  |   |   |        |     |   |   |      | 263  |     |   |       | 263  |     |   |   | 263  |    
|                                                                      | Pension liability adjustment (net of tax of
    $1 million)                      |                                             |       |           |   |         |    |         |   |              |       |          |   |               |    |      |   |               |    |  |   |   |        |     |   |   |      | (1   | )   |   |       | (1   | )   |   |   | (1   | )  
|                                                                      | Unrealized gain on available for sale securities
    (net of tax of $13 million) |                                             |       |           |   |         |    |         |   |              |       |          |   |               |    |      |   |               |    |  |   |   |        |     |   |   |      | 20   |     |   |       | 20   |     |   |   | 20   |    
|                                                                      | Derivative financial instruments:                                                |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |      |    
|                                                                      |                                                                                  | Losses deferred (net of tax of $7 million)  |       |            |  |         |    |          |  |              |       |           |  |               |    |       |  |               |    |   |  |   |        |      |  |   |      |      | (4  | ) |       |      | (4  | ) |   |      | (4  | )   
|                                                                      |                                                                                  | Losses reclassified to earnings             |       |            |  |         |    |          |  |              |       |           |  |               |    |       |  |               |    |   |  |   |        |      |  |   |      |      | 18  |   |       |      | 18  |   |   |      | 18  |     
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|                                                                      |                                                                                  |                                             | Total |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |      | $   | 139  |  
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|Issuance of common shares                                             |                                                                                  |                                             | 4     |            |   |         |   |          |   |              | 16    |           |   |               |   |       |   |               |   |   |   |   |       |      |   |   |     |      |     |   | 20    |      |     |   |   |     
|Conversion of debt to equity                                          |                                                                                  |                                             |      |            |   |         | 19 |          |   |              | 1,967 |           |   |               |   |       |   |               |   |   |   |   |       |      |   |   |     |      |     |   | 1,986 |      |     |   |   |     
|Dividends declared                                                    |                                                                                  |                                             |      |            |   |         |   |          |   |              |      |           |   |               |   |       |   |               |   |   |   |   | (33    | )    |   |   |     |      |     |   | (33   | )    |     |   |   |     
|Recognition of compensation on restricted stock
    and stock options |                                                                                  |                                             |      |            |   |         |   |          |   |              |      |           |   |               |   |       |   |               | 1  |   |   |   |       |      |   |   |     |      |     |   | 1     |      |     |   |   |     
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     
|Balance, December 31, 2003                                            |                                                                                  | $                                           | 309   |            |   | $       | 19 |          |   | $            | 6,310 |           |   | $             | (7 | )     |   | $             | (1 | ) |   | $ | (1,217 | )    |   | $ | (539 | )    |     | $ | 4,874 |      |     |   |   |     
|                                                                      |                                                                                  |                                             |       |            |   |         |    |          |   |              |       |           |   |               |    |       |   |               |    |   |   |   |        |      |   |   |      |      |     |   |       |      |     |   |   |     

The accompanying notes to consolidated financial
statements are an integral part of these

Statements of Changes in Shareholders
Equity.


F-8



---



##### 



CNH GLOBAL N.V.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Note 1: Nature of
Operations

CNH Global N.V. (CNH), formerly New
Holland N.V. (New Holland), is incorporated in The
Netherlands under Dutch law. CNHs Equipment Operations
manufacture, market and distribute a full line of agricultural
and construction equipment on a worldwide basis. CNHs
Financial Services operations offers a broad array of financial
services products, including retail financing for the purchase
or lease of new and used CNH and other manufacturers
products and other retail financing programs. To facilitate the
sale of its products, CNH offers wholesale financing to dealers.

CNH is controlled by Fiat Netherlands Holding
N.V. (Fiat Netherlands), a wholly owned subsidiary
of Fiat S.p.A. (Fiat), a company organized under the
laws of Italy, which owned approximately 84% of the outstanding
common shares of CNH at December 31, 2003. Additionally,
Fiat and an affiliate of Fiat own a total of 8 million
shares of Series A Preference Shares (Series A
Preferred Stock). In total, Fiat voting power approximates
85% of our outstanding capital stock. If the Series A
Preferred Stock were converted to common stock as of
December 31, 2003, Fiats ownership of our common
stock would rise to approximately 91%.

On April 1, 2003, CNH effected a 1-for-5
reverse stock split of its common shares. All references in the
accompanying consolidated financial statements and notes thereto
to earnings per share and the number of common shares have been
retroactively restated for all periods presented to reflect this
reverse stock split.

Note 2: Summary of Significant
Accounting Policies



| |                                                          
| | ---------------------------------------------------------
| | Principles of Consolidation and Basis of
    Presentation

CNH has prepared the accompanying consolidated
financial statements in accordance with accounting principles
generally accepted in the United States or U.S. GAAP. CNH
has prepared its consolidated financial statements in
U.S. Dollars and, unless otherwise indicated, all financial
data set forth in these financial statements is expressed in
U.S. Dollars. The financial statements include the accounts
of CNHs majority-owned 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. In addition, CNHs principal
competitors present supplemental data on a similar basis.
Therefore, users of CNHs financial statements can use the
supplemental data to make meaningful comparisons of CNH and its
principal competitors. The financial statements reflect the
consolidated results of CNH and also include, on a separate and
supplemental basis, the consolidation of CNHs equipment
operations and financial services operations as follows:

Equipment
Operations The
financial information captioned Equipment Operations
reflects the consolidation of all majority-owned subsidiaries
except for CNHs Financial Services business. CNHs
Financial Services business has been included using the equity
method of accounting whereby the net income and net assets of
CNHs financial services business are reflected,
respectively, in Equity in Income (Loss) of Unconsolidated
Subsidiaries and Affiliates  Financial Services
in the accompanying statements of operations, and in
Investment in Financial Services in the accompanying
balance sheets.

Financial
Services The
financial information captioned Financial Services
reflects the consolidation of CNHs financial services
business.

All significant intercompany transactions,
including activity within and between Equipment
Operations and Financial Services, have been
eliminated in deriving the consolidated financial statements and
data. Intersegment notes receivable, intersegment long-term
notes receivable, intersegment short-term debt and

F-9



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

intersegment long-term debt represent
intersegment financing between Equipment Operations and
Financial Services. During June 2002, a non-cash dividend of
$250 million was declared by Financial Services. In
exchange, Financial Services assumed an equal amount of debt
from Equipment Operations.

Investments in unconsolidated subsidiaries and
affiliates that are at least 20% owned, or where CNH exercises
significant influence, are accounted for using the equity
method. Under this method, the investment is initially recorded
at cost and is increased or decreased by CNHs
proportionate share of the entitys respective profits or
losses, and decreased by amortization of any related goodwill
before 2002. Dividends received from these entities reduce the
carrying value of the investments.

Investments wherein CNH owns less than 20% and
where CNH does not exercise significant influence are stated at
lower of cost or net realizable value.

The Company sells receivables, using consolidated
special purpose entities, to limited purpose business trusts,
and other privately structured facilities, which then issue
asset-backed securities to private or public investors. 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.
For additional information on the Companys receivable
securitization programs, see Note 4 Accounts and
Notes Receivables.



| |                                                                
| | ---------------------------------------------------------------
| | Use of Estimates in the Preparation of
    Financial Statements

The preparation of financial statements in
conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.



| |                    
| | -------------------
| | Revenue Recognition

Equipment Operations record sales of equipment
and replacement parts when title and all risks of ownership have
transferred to the independent dealer or other customer. In the
United States and the majority of international locations, title
to equipment and replacement parts transfers to the dealer upon
shipment. In various international locations, certain equipment
and replacement parts are shipped to dealers on a consignment
basis under which title and risk of ownership are not
transferred to the dealer. Under these circumstances, sales are
not recorded until a retail customer has purchased the goods.
Dealers may not return equipment or replacement parts while the
applicable dealer contract remains in place. In the
U.S. and Canada, if a dealer contract is terminated for any
reason, CNH is obligated to repurchase new equipment from the
dealer. CNH has credit limits and other safeguards in place to
monitor the financial stability of its dealers. In cases where
dealers are unable to pay for equipment or parts, CNH attempts
to have these goods returned or negotiate a settlement of the
outstanding receivables. CNH may provide certain sales
incentives to dealers to stimulate sales to retail customers.
The expense of such incentives is recorded as a deduction in
arriving at net sales at the time the sale is recognized by CNH.

For all sales, no significant uncertainty exists
surrounding the purchasers obligation to pay for the
equipment and replacement parts and CNH records appropriate
provisions for doubtful receivables as necessary. Receivables
are due upon the earlier of payment terms discussed below or
sale to the retail customer. Fixed payment schedules exist for
all sales to dealers but payment terms vary by geographic market
and product line. In connection with these payment terms, CNH
offers wholesale financing to many of its dealers including
interest-free financing for specified periods of time which also
vary by geographic market and

F-10



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

product line. Interest is charged to dealers
after the completion of the interest free period. In 2003 and
2002, interest free periods averaged 4.1 months and
3.5 months, respectively, on approximately 71% and 64%,
respectively, of sales for the agricultural equipment business.
In 2003 and 2002, interest free periods averaged 3.4 months and
3.6 months, respectively, on approximately 64% and 71%,
respectively, of sales for the construction equipment business.
Sales to dealers that do not qualify for an interest free period
are subject to payment terms of 30 days or less.

Financial Services records earned finance charges
(interest income) on retail and other notes receivables and
finance leases using the effective interest method.



| |                                             
| | --------------------------------------------
| | Modification Programs and Warranty
    Costs

The costs of major programs to modify products in
the customers possession are accrued when these costs can
be identified and quantified. Normal warranty costs are recorded
at the time of sale.



| |            
| | -----------
| | Advertising

CNH expenses advertising costs as incurred.
Advertising expense totaled $54 million, $67 million
and $78 million for the years ended December 31, 2003,
2002, and 2001 respectively.



| |                         
| | ------------------------
| | Research and Development

Research and development costs are expensed as
incurred.



| |                             
| | ----------------------------
| | Foreign Currency Translation

CNHs non-U.S. subsidiaries and
affiliates maintain their books and accounting records using
local currency as the functional currency, except for those
operating in hyperinflationary economies. Assets and liabilities
of non-U.S. subsidiaries are translated into
U.S. Dollars at period-end exchange rates, and net exchange
gains or losses resulting from such translation are included in
Accumulated other comprehensive income (loss) in the
accompanying Balance Sheets. Income and expense accounts of
non-U.S. subsidiaries are translated at the average
exchange rates for the period, and gains and losses from foreign
currency transactions are included in net income (loss) in the
period during which they arise. The U.S. Dollar is used as
the functional currency for subsidiaries and affiliates
operating in highly inflationary economies for which both
translation adjustments and gains and losses on foreign currency
transactions are included in the determination of net income
(loss) in the period during which they arise. Net foreign
exchange gains and losses are reflected in Other,
net in the accompanying Statements of Operations.

The Turkish Lira was significantly devalued
against the U.S. Dollar during the first quarter of 2001.
As a result CNH recorded a net exchange loss of approximately
$20 million related to its investments in New Holland
Trakmak Tracktor Ve Ziraat Makineleri A.S. and Turk Traktor Ve
Ziraat Makineleri A.S.



| |                          
| | -------------------------
| | Cash and Cash Equivalents

Cash equivalents are comprised of all highly
liquid investments with an original maturity of three months or
less. Cash equivalents also include amounts deposited with
affiliates, principally Fiat and its affiliates, which are
repayable to CNH upon one days notice. The carrying value
of cash equivalents approximates fair value because of the short
maturity of these investments. For additional information on
cash and cash equivalents deposited with Fiat, See Note 23
Related Party Information.

F-11



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                     
| | ------------------------------------
| | Receivables and Receivable
    Sales

Receivables are recorded at face value, net of
allowances for doubtful accounts and deferred fees and costs.

CNH sells retail and wholesale receivables in
securitizations and retains interest-only strips, subordinated
tranches of notes, servicing rights, and cash reserve accounts,
all of which are retained interests in the securitized
receivables. Gain or loss on sale of the receivables depends in
part on the carrying amount of the financial assets allocated
between the assets sold and the retained interests based on
their relative fair value at the date of transfer. The Company
estimates fair value based on the present value of future
expected cash flows estimated using managements best
estimates of the key assumptions  credit losses,
prepayment speeds, and discount rates commensurate with the
risks involved.



| |            
| | -----------
| | Inventories

Inventories are stated at the lower of cost or
net realizable value. Cost is determined by the first-in,
first-out (FIFO) method. The cost of finished goods and work in
progress includes the cost of raw materials, other direct costs
and production overheads. Net realizable value is the estimate
of the selling price in the ordinary course of business, less
the cost of completion and selling. Provision is made for
obsolete and slow-moving inventories.



| |                              
| | -----------------------------
| | Property, Plant and Equipment

Property, plant and equipment are stated at cost,
less accumulated depreciation. Expenditures for improvements
that increase asset values and extend useful lives are
capitalized. Expenditures for maintenance and repairs are
expensed as incurred. Depreciation is provided on a
straight-line basis over the estimated useful lives of the
respective assets as follows:

|                           |  |       |               | 
|-------------------------- |  | ----- | ------------- | 
|Category                   |  | Lives
|                           |  |      
|Buildings and improvements |  |       | 10  40 years | 
|Plant and machinery        |  |       | 5  16 years  | 
|Other equipment            |  |       | 3  10 years  | 

CNH capitalizes interest costs as part of the
cost of constructing certain facilities and equipment. CNH
capitalizes interest costs only during the period of time
required to complete and prepare the facility or equipment for
its intended use. The amount of interest capitalized in 2003,
2002 and 2001 is not significant in relation to the consolidated
financial results.

CNH evaluates the recoverability of the carrying
amount of long lived assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be fully recoverable. CNH assesses the recoverability of
assets to be held and used by comparing the carrying amount of
an asset to future undiscounted net cash flows expected to be
generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured as the
amount by which the carrying amount of the assets exceed the
fair value of the assets, based on a discounted cash flow
analysis.



| |                                        
| | ---------------------------------------
| | Software Developed for Internal
    Use

CNH defines internal-use software as software
acquired or internally developed or modified solely to meet the
internal needs of CNH. Internal and external costs incurred
during the preliminary project stage are expensed as incurred.
Capitalization of such costs begins upon completion of the
preliminary project stage, assessment of technological
feasibility and upon managements authorization and
commitment to fund the software project. Capitalization ceases
at the point at which the computer software project is
substantially

F-12



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

complete and the software is ready for its
intended use. Internal and external costs for data conversion,
training and maintenance are expensed as incurred, and overhead
costs are not capitalized. The capitalized costs of software
acquired or developed for internal use are amortized on a
straight-line basis over the useful life of the software,
generally not exceeding 5 years.



| |                              
| | -----------------------------
| | Equipment on Operating Leases

Financial Services purchases from Dealers,
equipment that is leased to retail customers under operating
leases. Income from operating leases is recognized over the term
of the lease. Financial Services investment in operating
leases is based on the purchase price paid for the equipment.
The investment is depreciated on a straight-line basis over the
term of the lease to the estimated residual value at lease
termination, which is calculated at the inception of the lease
date. Realization of the residual values is dependent on
Financial Services future ability to market the equipment
under the then prevailing market conditions. CNH continually
evaluates whether events and circumstances have occurred which
affect the estimated residual values of equipment on operating
leases. Although realization is not assured, management believes
that the estimated residual values are realizable. Expenditures
for maintenance and repairs are the responsibility of the lessee.



| |                         
| | ------------------------
| | Goodwill and Intangibles

SFAS No. 142, Goodwill and Other
Intangible Assets (SFAS No. 142)
addresses financial accounting and reporting for intangible
assets and goodwill. In January 2002, CNH adopted SFAS
No. 142, which requires companies to stop amortizing
goodwill and certain intangible assets with indefinite useful
lives. Instead, SFAS No. 142 requires that goodwill and
intangible assets deemed to have an indefinite useful life be
reviewed for impairment upon the adoption of SFAS No. 142
on January 1, 2002 and at least annually thereafter. The
Company will perform its annual impairment review during the
fourth quarter of each year, commencing in the fourth quarter of
2002. Impairment testing for goodwill is done at a reporting
unit level. CNH has identified three reporting units under the
criteria set forth by SFAS No. 142: Agricultural Equipment,
Construction Equipment and Financial Services. To determine fair
value, CNH has relied on two valuation models: guideline company
method and discounted cash flow.

Goodwill represents the excess of the purchase
price paid plus the liabilities assumed over the fair value of
the tangible and identifiable intangible assets purchased.
Before January 1, 2002, goodwill was amortized on a
straight-line basis over 10 to 30 years. Goodwill relating
to acquisitions of unconsolidated subsidiaries and affiliates is
included in Investments in unconsolidated subsidiaries and
affiliates in the accompanying Balance Sheets, and the
related amortization is charged to Equity in Income (Loss)
of Unconsolidated Subsidiaries and Affiliates in the
accompanying Statements of Operations. During 2001, CNH
continued to evaluate the recoverability of goodwill in
compliance with SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of. Prior to January 1, 2002, CNH
continually evaluated whether events and circumstances had
occurred that indicated the remaining estimated useful life of
goodwill may warrant revision or that the remaining balance of
goodwill may not have been recoverable. When factors indicated
that goodwill should be evaluated for possible impairment, CNH
used an estimate of the undiscounted cash flows over the
remaining life of the goodwill in measuring whether the goodwill
was recoverable.

Negative goodwill represents the excess of the
fair value of the tangible and identifiable intangible assets
purchased, with the fair value of non-current assets having been
reduced to zero, over the purchase price paid plus liabilities
assumed. Before January 1, 2002, negative goodwill was
being amortized on a straight-line basis over approximately
3 years. For the year ended December 31, 2001,
negative goodwill of approximately $33 million was
amortized. As of December 31, 2001, negative goodwill was
fully amortized.

F-13



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Intangibles consist primarily of acquired dealer
networks, trademarks, product drawings and patents.
Non-indefinite lived intangible assets are being amortized on a
straight-line basis over 5 to 30 years.

Reference is made to Note 3,
Acquisitions and Divestitures of Businesses and
Investments, and Note 9, Goodwill and
Intangible Assets for further information regarding
goodwill and intangibles.



| |             
| | ------------
| | Income Taxes

CNH follows an asset and liability approach for
financial accounting and reporting for income taxes. CNH
recognizes a current tax liability or asset for the estimated
taxes payable or refundable on tax returns for the current year.
A deferred tax liability or asset is recognized for the
estimated future tax effects attributable to temporary
differences and carryforwards. The measurement of current and
deferred tax liabilities and assets is based on provisions of
the enacted tax law; the effects of future changes in tax laws
or rates are not anticipated. Deferred tax assets are reduced,
if necessary, by the amount of any tax benefits for which, based
on available evidence, it is more likely than not that they will
not to be realized.



| |                    
| | -------------------
| | Retirement Programs

CNH operates numerous defined benefit and defined
contribution pension plans, the assets of which are held in
separate trustee-administered funds. The pension plans are
generally funded by payments from employees and CNH. The cost of
providing defined benefit pension and other postretirement
benefits is based upon actuarial valuations and is charged to
income during the period of the employees service. The
liability for termination indemnities is accrued in accordance
with labor legislation in each country where such benefits are
required. CNH contributions to defined contribution plans are
charged to income during the period of the employees
service.



| |            
| | -----------
| | Derivatives

CNH records derivative financial instruments in
the Consolidated Balances Sheets as either an asset or a
liability measured at fair value. The fair value of CNHs
foreign exchange derivatives is based on quoted market exchange
rates, adjusted for the respective interest rate differentials
(premiums or discounts). The fair value of CNHs interest
rate derivatives is based on discounting expected cash flows,
using market interest rates, over the remaining term of the
instrument. Changes in the fair value of derivative financial
instruments are recognized currently in earnings unless specific
hedge accounting criteria are met. For derivative financial
instruments designated to hedge exposure to changes in the fair
value of a recognized asset or liability, the gain or loss is
recognized in earnings in the period of change together with the
offsetting loss or gain on the related hedged item. For
derivative financial instruments designated to hedge exposure to
variable cash flows of a forecasted transaction, the effective
portion of the derivative financial instruments gain or
loss is initially reported as a component of accumulated other
comprehensive income and is subsequently reclassified into
earnings when the forecasted transaction affects earnings. The
ineffective portion of the gain or loss is reported in earnings
immediately.

Reference is made to Note 17,
Financial Instruments, for further information
regarding CNHs use of derivative financial instruments



| |                                   
| | ----------------------------------
| | Stock-Based Compensation
    Plans

The Company has stock-based employee compensation
plans which are described more fully in Note 19,
Option and Incentive Plans. Prior to 2003, the
Company accounted for those plans under the recognition and
measurement principles of Accounting Principles Board
(APB) Opinion No. 25, Accounting for
Stock Issued to Employees (APB No. 25),
and related interpretations. In December 2002, the FASB

F-14



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

issued SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure
(an amendment of FASB Statement No. 123) (SFAS
No. 148). SFAS No. 148 amends SFAS No. 123,
Accounting for Stock-Based Compensation (SFAS
No. 123), to provide alternative methods of
transition for a voluntary change to the fair value based method
of accounting for stock-based employee compensation.

Additionally, compensation expense is reflected
in net income (loss for stock options granted prior to 2003 with
an exercise price less than the quoted market price of CNH
common shares on the date of grant.

The following table illustrates the effect on net
loss and loss per share if the Company had applied the fair
value recognition provisions of FASB Statement No. 123,
Accounting for Stock-Based Compensation (SFAS
No. 123) to stock-based employee compensation for the
years ended December 31, 2003, 2002 and 2001.

|                                                                                                                  |                                 |      |      |       |   |      |      |       |   |   |      |       |  
|----------------------------------------------------------------------------------------------------------------- | ------------------------------- | ---- | ---- | ----- | - | ---- | ---- | ----- | - | - | ---- | ----- | -
|                                                                                                                  |                                 | 2003 |      | 2002  |   | 2001
|                                                                                                                  |                                 |      |      |       |   |     
|Net loss, as reported                                                                                             |                                 | $    | (157 | )     |   | $    | (426 | )     |   | $ | (332 | )    
|Add: Stock-based employee compensation expense
    included in reported net loss, net of tax                      |                                 |      | 1    |       |   |      | 1    |       |   |   | 2    |      
|Deduct: Total stock-based employee compensation
    expense determined under fair value based methods, net of tax |                                 |      | (5   | )     |   |      | (4   | )     |   |   | (6   | )    
|                                                                                                                  |                                 |      |      |       |   |      |      |       |   |   |      |      
|Pro forma net loss                                                                                                |                                 | $    | (161 | )     |   | $    | (429 | )     |   | $ | (336 | )    
|                                                                                                                  |                                 |      |      |       |   |      |      |       |   |   |      |      
|Earnings (loss) per share:                                                                                        |                                 |      |      |       |   |      |      |       |   |   |      |      
|                                                                                                                  | Basic and Diluted  as reported |      | $    | (1.19 | ) |      | $    | (4.40 | ) |   | $    | (6.00 | )
|                                                                                                                  |                                 |      |      |       |   |      |      |       |   |   |      |      
|                                                                                                                  | Basic and Diluted  pro forma   |      | $    | (1.22 | ) |      | $    | (4.45 | ) |   | $    | (6.05 | )
|                                                                                                                  |                                 |      |      |       |   |      |      |       |   |   |      |      



| |                  
| | -----------------
| | Reclassifications

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



| |                              
| | -----------------------------
| | New Accounting Pronouncements

In December 2003, the FASB issued FASB
Interpretation No. 46, (Revised December 2003),
Consolidation of Variable Interest Entities, an
interpretation of ARB No. 51 (Interpretation
No. 46R) This standard replaces FASB Interpretation
No. 46, Consolidation of Variable Interest
Entities (FIN 46) that was issued in
January 2003. Interpretation No. 46R modifies or clarifies
various provisions of FIN 46. Interpretation No. 46R
addresses the consolidation by business enterprises of variable
interest entities (VIEs), as defined by
Interpretation No. 46R. Interpretation No. 46R exempts
certain entities from its requirements and provides for special
effective dates for entities that have fully or partially
applied FIN 46 prior to issuance of Interpretation
No. 46R. Otherwise, application of Interpretation
No. 46R is required in financial statements of public
entities that have interest in structures commonly referred to
as special purpose entities for periods ending after
December 15, 2003. Application by public entities, other
than small business issuers, for all other types of VIEs is
required in financial statements for periods ending after
March 15, 2004. The Company will adopt the provisions of
Interpretation No. 46R during the quarter ended
March 31, 2004.

As disclosed in Note 4, Accounts and
Notes Receivables, our Financial Services operation uses
certain special purpose entities (SPE) in the
securitization and sale of its receivables. These SPEs meet the
criteria of qualified special purpose entities
(QSPE) as defined by FASB Statement No. 140,
Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities, which are exempt from

F-15



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

consolidation as SPEs under Interpretation
No. 46R. The Company is currently evaluating its other
VIEs, but does not believe the adoption of the remaining
provisions of Interpretation No. 46R will have a material
effect on the Companys financial condition or results of
operations.

In April 2003, the FASB issued
SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities
(SFAS No. 149). SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded
in other contracts and for hedging activities under FASB
Statement No. 133 Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 149
was implemented for contracts entered into or modified after
June 30, 2003 and the disclosure requirements are reflected
in the accompanying Consolidated Financial Statements.

In May 2003, the FASB issued
SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and
Equity (SFAS No. 150).
SFAS No. 150 establishes standards for how an issuer
classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that
an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances) when
many of those instruments were previously classified as equity.
Adoption of SFAS No. 150 in 2003 did not have a
material impact on our Consolidated Financial Statements.

In December 2003, the FASB issued
SFAS No. 132 (Revised 2003),
Employers Disclosures about Pensions and Other
Postretirement Benefits
(SFAS No. 132) which retains the
disclosures originally required by SFAS No. 132, in
addition to new disclosures relating to types of plan assets,
investment strategy, measurement dates, plan obligations, cash
flows and components of net periodic benefit cost recognized in
interim periods of defined benefit pension plans and other
defined benefit postretirement plans. The provisions of
SFAS No. 132 are effective for domestic plans in
financial statements issued for years ending after
December 15, 2003 and for interim periods beginning after
December 15, 2003 at which time the additional disclosures
will be included. Full implementation is required for financial
statements issued for years ending after December 15, 2004.
CNH, a Netherlands based entity, has provided the required
disclosure information for its U.S. and U.K. plans in advance of
the required implementation date. CNH has no plans in the
Netherlands. The U.S. and U.K. plans make up the majority of our
defined benefit obligation.

In December 2003, the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (the Act)
became law. In January 2004, the FASB issued FASB Staff
Position (FSP) No. FAS 106-1,
Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of
2003 (FSP No. 106-1). FSP No. 106-1
allows a plan sponsor to elect to defer recognition of the
effects of the Act in accounting for its plan and in providing
related disclosures, until authoritative guidance on the
accounting for the federal subsidy is issued, or until certain
other events, as defined, occur. CNH has elected to defer
recognition of the Act in accordance with the provisions of FSP
No. 106-1.

Note 3: Acquisitions and Divestitures of
Businesses and Investments



| |                             
| | ----------------------------
| | Acquisitions and Investments



| |        
| | -------
| | Kobelco

In January 2002, CNH entered into a global
alliance with Kobelco Construction Machinery Co. Ltd.
(Kobelco Japan) and Kobe Steel, Ltd. For the
development, production and sale of crawler excavators,
including mini-excavators, on a worldwide basis. During the
first quarter of 2002, CNH acquired a 65% interest in Kobelco
America, Inc. (Kobelco America) for approximately
$101 million net of cash acquired and assumption of debt.
The Kobelco America transaction is accounted for as a purchase
and accordingly, the accompanying consolidated financial
statements include the results of operations of Kobelco America
from

F-16



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

January 2002. In addition, in
January 2002, CNH acquired a 10% interest in Kobelco Japan
and certain other intangibles for $78 million. In July
2002, CNH increased its interest in Kobelco Japan from 10% to
20% for approximately $42 million. Goodwill associated with
these transactions totaled $38 million. The CNH and Kobelco
Japan alliance allows CNH to increase its interest in Kobelco
Japan from 20% to 35% by the third quarter of 2004. The Kobelco
Japan investment is accounted for using the equity method.

In July 2002, the European regional alliance
between CNH and Hitachi Construction Machinery Company, Ltd.
(Hitachi) was terminated. CNH acquired
Hitachis interest in Fiat-Hitachi Excavator for
approximately $42 million. Concurrent with acquiring
Hitachis interest, CNH, Kobelco Japan and Sumitomo
Corporation formed Fiat-Kobelco Machinery S.p.A. (Italy)
(Fiat-Kobelco). Fiat-Kobelco generally consists of
the former Fiat-Hitachi Excavator and Kobelco Construction
Machinery Europe (Kobelco Europe) businesses. After
giving consideration to Kobelco Japan purchasing shares in
Fiat-Kobelco from CNH for approximately $10 million,
Fiat-Kobelco is owned by the venture partners as follows: CNH
75%, Kobelco Japan 20% and Sumitomo Corporation 5%. The CNH and
Kobelco Japan alliance allows Kobelco Japan to increase its
interest in Fiat-Kobelco from 20% to 35% by the third quarter of
2004.

Additionally, in connection with entering into
this global alliance with Kobelco Japan, CNH received proceeds
of approximately $24 million from the sale of CNHs
construction equipment operations in Australia and China to
Kobelco Japan.



| |         
| | --------
| | Shanghai

In January 2002, Shanghai New Holland
Agricultural Machinery Corp., Ltd. (Shanghai)
commenced operations. Shanghai was formed as a joint venture
between Shanghai Tractor and Internal Combustion Engine
Corporation (STEC), a wholly owned subsidiary of
Shanghai Automotive Industry Corporation and CNH. Shanghai
manufactures, distributes and exports agricultural tractors
under 100 horsepower. Shanghai is owned by the venture partners
as follows: CNH 60% and STEC 40%. CNHs original investment
in Shanghai was approximately $14 million.



| |                       
| | ----------------------
| | CNH Capital Europe SAS

During the second quarter of 2002, CNH and BNP
Paribas Lease Group (BPLG) formed CNH Capital Europe
SAS (CNH Capital Europe), a retail financing
partnership. CNH Capital Europe, which will hold the retail
financing portfolio, will cover all brands and commercial
activities of CNH in Europe. Under the partnership, BPLG owns
50.1% of the shares of CNH Capital Europe, and CNH owns the
remaining 49.9% of the shares. CNH accounts for its interest in
CNH Capital Europe using the equity method. BPLG provides
funding and administrative services for CNH Capital Europe,
while CNHs own European financial services businesses will
be responsible for the marketing and origination of financial
products.

In connection with the creation of the joint
venture, CNH sold approximately $100 million of retail
receivables directly to BPLG during the third quarter of 2002.
Additionally, CNH sold approximately $200 million of retail
receivables to CNH Capital Europe during the fourth quarter of
2002. The receivables sold were previously funded by CNHs
financial services subsidiaries in Italy and the United Kingdom,
respectively.



| |             
| | ------------
| | Divestitures

During December 2003, CNH sold its Kobelco Crane
business, acquired as a part of the 2002 Kobelco acquisitions
above, back to entities controlled by Kobelco, Japan.

F-17



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

During April 2001, CNH sold its Carr Hill Works,
Doncaster, England, components facility to Graziano Trasmissioni
S.p.A.

In January 2001, CNH sold its tractor
manufacturing plant in Doncaster, England, to Landini S.p.A.
(Landini).

Note 4: Accounts and Notes
Receivables



| |                    
| | -------------------
| | On Book Receivables

Wholesale notes and accounts arise primarily from
the sale of goods to dealers and distributors and to a lesser
extent, the financing of dealer operations. Under the standard
terms of the wholesale receivable agreements, these receivables
typically have interest-free periods of up to twelve months and
stated original maturities of up to twenty-four months, with
repayment accelerated upon the sale of the underlying equipment
by the dealer. After the expiration of any interest-free period,
interest is charged to dealers on outstanding balances until CNH
receives payment. The interest-free periods are determined based
on the type of equipment sold and the time of year of the sale.
Interest rates are set based on market factors and based on the
prime rate or LIBOR. CNH evaluates and assesses dealers on an
ongoing basis as to their credit worthiness.

CNH provides and administers financing for retail
purchases of new and used equipment sold through its dealer
network. CNH purchases retail installment sales, loan and
finance lease contracts from its dealers. The terms of retail
and other notes and finance leases generally range from two to
six years, and interest rates on retail and other notes and
finance leases vary depending on prevailing market interest
rates and certain incentive programs offered by CNH.

A summary of receivables as of December 31,
2003 and 2002 is as follows:

|                                          |                                  |               |        |       |  |   |        |       | 
|----------------------------------------- | -------------------------------- | ------------- | ------ | ----- |  | - | ------ | ----- | 
|                                          |                                  | 2003          |        | 2002 
|                                          |                                  |               |        |      
|                                          |                                  |              
|                                          |                                  | (in millions)
|Wholesale notes and accounts              |                                  | $             | 2,574  |       |  | $ | 2,541  |      
|Retail and other notes and finance leases |                                  |               | 2,938  |       |  |   | 2,827  |      
|Other notes                               |                                  |               | 674    |       |  |   | 572    |      
|                                          |                                  |               |        |       |  |   |        |      
|                                          | Gross receivables                |               |        | 6,186 |  |   |        | 5,940 | 
|Less:                                     |                                  |               |        |       |  |   |        |      
|Allowance for credit losses               |                                  |               | (190   | )     |  |   | (229   | )    
|Current portion                           |                                  |               | (3,797 | )     |  |   | (3,612 | )    
|                                          |                                  |               |        |       |  |   |        |      
|                                          | Total long-term receivables, net |               | $      | 2,199 |  |   | $      | 2,099 | 
|                                          |                                  |               |        |       |  |   |        |      

Maturities of long-term receivables as of
December 31, 2003 are as follows:

|                    |                                  |               |     |       | 
|------------------- | -------------------------------- | ------------- | --- | ----- | 
|                    |                                  | Amount       
|                    |                                  |              
|                    |                                  | (in millions)
|2005                |                                  | $             | 773 |      
|2006                |                                  |               | 563 |      
|2007                |                                  |               | 342 |      
|2008                |                                  |               | 315 |      
|2009 and thereafter |                                  |               | 206 |      
|                    |                                  |               |     |      
|                    | Total long-term receivables, net |               | $   | 2,199 | 
|                    |                                  |               |     |      

F-18



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

It has been CNHs experience that
substantial portions of retail receivables are repaid or sold
before their contractual maturity dates. As a result, the above
table should not be regarded as a forecast of future cash
collections.

Wholesale, retail and finance lease receivables
have significant concentrations of credit risk in the
agricultural and construction business sectors, the majority of
which are in North America. CNH typically retains, as
collateral, a security interest in the equipment associated with
wholesale and retail notes receivable.



| |                         
| | ------------------------
| | Off-Book Securitizations



| |                                          
| | -----------------------------------------
| | Wholesale Receivables
    Securitizations

CNH sells eligible receivables on a revolving
basis to privately and publicly structured securitization
facilities. The receivables are initially sold to wholly owned
bankruptcy-remote special purpose entities (SPE),
where required by bankruptcy laws, which are consolidated by
CNH, but legally isolate the receivables from the creditors of
CNH. In turn, these subsidiaries establish separate trusts to
which the receivables are transferred in exchange for proceeds
from debt issued by the trusts. Each trust qualifies as a
Qualifying Special Purpose Entity (QSPE) under SFAS
No. 140 Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities
(SFAS 140), and accordingly is not consolidated
by CNH. These transactions are utilized as an alternative to the
issuance of debt and allow CNH to realize a lower cost of funds
due to the asset-backed nature of the receivables and the credit
enhancements offered to investors.

The facilities consist of a 364-day,
C$325 million facility that is renewable annually (June
2004) upon agreement of the parties and a new facility
established for the U.S. wholesale receivables portfolio. During
2003, CNH established a new wholly owned bankruptcy-remote SPE,
which in turn established a new master trust facility to replace
the privately structured facilities that existed at
December 31, 2002. The new master trust facility consists
of $522 million term senior and subordinated asset-backed notes
with a two year maturity, $522 million term senior and
subordinated asset-backed notes with a three year maturity and a
364-day, $500 million conduit facility that is renewable
annually (September 2004) at the sole discretion of the
purchasers.

At December 31, 2003, $1,297 million
and C$325 million were outstanding under these facilities,
consisting of $1,572 million and C$441 million of
wholesale receivables sold less CNHs retained undivided
interest of $275 million and C$116 million. At
December 31, 2002, $958 million was outstanding under
the former U.S. facilities, consisting of $1,153 million of
wholesale receivables sold less CNHs retained undivided
interest of $195 million. For the Canadian facility at
December 31, 2002, C$325 million was outstanding,
consisting of C$382 million of wholesale receivables sold
less CNHs retained undivided interest of
C$57 million. The retained undivided interests provide
recourse to investors in the event of default and are recorded
at cost, which approximates fair value due to the short-term
nature of the receivables, in Accounts and notes
receivable in the accompanying consolidated balance sheets.

The cash flows between CNH and the facilities for
the years ended December 31, 2003 and 2002 included:

|                                                         |  |               |       |      |  |   |       | 
|-------------------------------------------------------- |  | ------------- | ----- | ---- |  | - | ----- | 
|                                                         |  | 2003          |       | 2002
|                                                         |  |               |       |     
|                                                         |  |              
|                                                         |  | (in millions)
|Proceeds from new securitizations                        |  | $             | 1,518 |      |  | $ | 372   | 
|Repurchase of receivables                                |  |               | 1,066 |      |  |   | 394   | 
|Proceeds from collections reinvested in the
    facility |  |               | 4,774 |      |  |   | 3,567 | 

F-19



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

In addition to the securitizations described
above, certain foreign subsidiaries of CNH securitized or
discounted receivables without recourse. As of December 31,
2003 and 2002, $174 million and $171 million,
respectively, of wholesale receivables were outstanding. CNH
records a discount each time receivables are sold to the
counterparties in the facilities. This discount, which reflects
the difference between interest income earned on the receivables
sold and interest expense paid to the investors in the
facilities, along with related transaction expenses, is computed
at the then prevailing market rates as stated in the sale
agreement.

At December 31, 2003 and 2002, certain
subsidiaries of CNH sold, with recourse, wholesale receivables
totaling $1,073 million and $1,116 million,
respectively. The receivables sold are recorded in
Wholesale notes and accounts and the proceeds
received are recorded in Short-term debt 
other in the accompanying consolidated balance sheets as
the transactions do not meet the criteria for derecognition in a
transfer of financial assets.



| |                                   
| | ----------------------------------
| | Retail Receivables Securitizations

CNH funds a significant portion of its retail
receivable originations by means of retail receivable
securitizations. Within CNHs asset securitization program,
qualifying retail finance receivables are sold to limited
purpose, bankruptcy-remote consolidated subsidiaries of CNH,
where required by bankruptcy laws. In turn, these subsidiaries
establish separate trusts to which the receivables are
transferred in exchange for proceeds from asset-backed
securities issued 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 QSPE under SFAS
No. 140. The QSPEs have a limited life and generally
terminate upon final distribution of amounts owed to investors
or upon exercise of a cleanup call option by CNH. No recourse
provisions exist that allow holders of the QSPEs
asset-backed securities to put those securities back to CNH. CNH
does not guarantee any securities issued by the QSPEs.

CNH securitized retail notes with a net principal
value of $3.0 billion, $2.6 billion and
$2.1 billion in 2003, 2002 and 2001, respectively. CNH
recognized gains on the sales of these receivables of
$101 million, $68 million and $87 million in
2003, 2002 and 2001, respectively.

In conjunction with these sales, CNH retains
certain interests in the sold receivables including subordinated
tranches of asset-backed securities (ABS
certificates) issued, interest-only strips, cash reserve
accounts held in escrow (Spread), and rights to
service the sold receivables. The ABS certificates are initially
recorded at their allocated fair value as a component of
Other assets in the accompanying consolidated
balance sheets. All other retained interests are also initially
recorded at their allocated fair value as components of
Accounts and notes receivable and Long-term
receivables in the accompanying consolidated balance
sheets. ABS certificates are classified as held to maturity
securities, as the ABS certificates could not be prepaid in any
way that would not assure recovery and management has the intent
and ability to hold them to maturity. Interest-only strips are
classified as available for sale debt securities, as they could
be prepaid or settled in such a way that recovery is not
assured. The other retained interests are carried at the lower
of amortized cost or market. The investors and the
securitization trusts have no recourse beyond CNHs
retained interest assets for failure of debtors to pay when due.
CNHs retained interests are subordinate to investors
interests, and are subject to credit, prepayment and interest
rate risks on the transferred financial assets.

Spread accounts are created through the reduction
of proceeds received by CNH from sales to provide security to
investors in the event that cash collections from the
receivables are not sufficient to remit principal and interest
payments on the securities. In 2003 and 2002, the creation of
new spread accounts reduced proceeds from the sales of retail
receivables by $68 million and $71 million,
respectively. Total spread account balances were
$215 million and $216 million at December 31,
2003 and 2002, respectively.

F-20



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The components of CNHs retained interests
as of December 31, 2003 and 2002 are as follows:

|              |                                                 |                                                              |   |      |     |  |   |     |     | 
|------------- | ----------------------------------------------- | ------------------------------------------------------------ | - | ---- | --- |  | - | --- | --- | 
|              |                                                 | 2003                                                         |   | 2002
|              |                                                 |                                                              |   |     
|              |                                                 |                                                             
|              |                                                 | (in millions)                                               
|Receivables:  |                                                 |                                                              |   |      |     |  |   |    
|              | Interest only strip                             |                                                              | $ | 92   |     |  | $ | 39  |    
|              | Spread and other                                |                                                              |   | 268  |     |  |   | 242 |    
|              |                                                 |                                                              |   |      |     |  |   |    
|              |                                                 | Total amount included in Accounts and notes
    receivable |   |      | 360 |  |   |     | 281 | 
|Other assets: |                                                 |                                                              |   |      |     |  |   |    
|              | ABS certificates included in Other
    assets |                                                              |   | 231  |     |  |   | 213 |    
|              |                                                 |                                                              |   |      |     |  |   |    
|              |                                                 | Total retained interests                                     |   | $    | 591 |  |   | $   | 494 | 
|              |                                                 |                                                              |   |      |     |  |   |    

CNH is required to remit the cash collected on
the serviced portfolio to the trusts within two business days.
At December 31, 2003 and 2002, $7 million and
$28 million, respectively, of unremitted cash payable
within this two business day window was included in
Accounts payable in the accompanying consolidated
balance sheets.

Key economic assumptions utilized in measuring
the initial fair value of retained interests for securitizations
completed during 2003 and 2002 were as follows:

|                             |  |       |               |          |  |      |               |      |  |  |       |   |  |  |       |  
|---------------------------- |  | ----- | ------------- | -------- |  | ---- | ------------- | ---- |  |  | ----- | - |  |  | ----- | -
|                             |  |       |               |          |  |     
|                             |  |       |               | Weighted
|                             |  | Range |               | Average 
|                             |  |       |               |         
|                             |  | 2003  |               | 2002     |  | 2003 |               | 2002
|                             |  |       |               |          |  |      |               |     
|Constant prepayment rate     |  |       | 17.00  20.00 | %        |  |      | 11.72  20.00 | %    |  |  | 17.48 | % |  |  | 16.69 | %
|Annual credit loss rate      |  |       | 0.26   1.58  | %        |  |      | 0.51   0.70  | %    |  |  | 0.52  | % |  |  | 0.63  | %
|Discount rate                |  |       | 4.37   6.97  | %        |  |      | 4.62   7.45  | %    |  |  | 5.16  | % |  |  | 4.97  | %
|Remaining maturity in months |  |       | 17  22       |          |  |      | 20  28       |      |  |  | 21    |   |  |  | 26    |  

CNH monitors the fair value of its retained
interests outstanding each period by discounting expected future
cash flows based on similar assumptions. The fair value is
compared to the carrying value of the retained interests and any
excess of carrying value over fair value results in an
impairment of the retained interests with a corresponding offset
to earnings. Based on this analysis, CNH reduced the value of
its interest-only strips by $12 million, $24 million
and $76 million in 2003, 2002 and 2001, respectively.



| |                     
| | --------------------
| | Impact on Fair Value

The significant assumptions used in estimating
the fair values of retained interests from sold receivables,
which remain outstanding, and the sensitivity of the current
fair value to immediate 10% and 20% adverse changes at
December 31, 2003 and 2002 are as follows (in millions
unless stated otherwise):

|                             |  |              |       |        |  |        |     |              |  |        |      |        |  |  |       |   |  |   |     |  |  |   |     | 
|---------------------------- |  | ------------ | ----- | ------ |  | ------ | --- | ------------ |  | ------ | ---- | ------ |  |  | ----- | - |  | - | --- |  |  | - | --- | 
|                             |  |              |       |       
|                             |  | 2003         |       | 2002  
|                             |  |              |       |       
|                             |  | December 31, |       | 10%    |  | 20%    |     | December 31, |  | 10%    |      | 20%   
|                             |  | Assumption   |       | Change |  | Change |     | Assumption   |  | Change |      | Change
|                             |  |              |       |        |  |        |     |              |  |        |      |       
|Weighted Average:            |  |              |       |        |  |        |     |              |  |        |      |        |  |  |       |   |  |   |     |  |  |   |     | 
|Constant prepayment rate     |  |              | 19.31 | %      |  | $      | 1.0 |              |  | $      | 2.0  |        |  |  | 18.44 | % |  | $ | 1.5 |  |  | $ | 2.2 | 
|Annual credit loss rate      |  |              | 0.68  | %      |  | $      | 6.9 |              |  | $      | 12.7 |        |  |  | 1.04  | % |  | $ | 4.4 |  |  | $ | 8.0 | 
|Discount rate                |  |              | 5.62  | %      |  | $      | 2.0 |              |  | $      | 4.0  |        |  |  | 5.11  | % |  | $ | 0.7 |  |  | $ | 1.2 | 
|Remaining maturity in months |  |              | 16    |        |  |        |     |              |  |        |      |        |  |  | 15    |   |  |   |     |  |  |   |     | 

F-21



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The changes shown above are hypothetical. They
are computed based on variations of individual assumptions
without considering the interrelationship between these
assumptions. As a change in one assumption may affect the other
assumptions, the magnitude of the impact on fair value of actual
changes may be greater or less than those illustrated above.
Weighted-average remaining maturity represents the
weighted-average number of months that the current collateral
balance is expected to remain outstanding.

Actual and expected credit losses are summarized
as follows:

|                        |  |                            |      |      |  |      |      |      |  |  |      |   |  |  |      |  
|----------------------- |  | -------------------------- | ---- | ---- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                        |  |                           
|                        |  | Receivables Securitized in
|                        |  |                           
|                        |  | 2000                       |      | 2001 |  | 2002 |      | 2003
|                        |  |                            |      |      |  |      |      |     
|As of December 31, 2003 |  |                            | 1.09 | %    |  |      | 0.74 | %    |  |  | 0.66 | % |  |  | 0.65 | %
|As of December 31, 2002 |  |                            | 1.38 | %    |  |      | 0.78 | %    |  |  | 1.04 | % |  |  |      |  
|As of December 31, 2001 |  |                            | 2.03 | %    |  |      | 1.21 | %    |  |  |      |   |  |  |      |  

Credit losses are calculated by summing the
actual and projected future credit losses and dividing them by
the original balance of each pool of assets securitized.

CNHs cash flows related to securitization
activities for the years ended December 31, 2003 and 2002
are as follows:

|                                          |  |               |       |      |  |   |       | 
|----------------------------------------- |  | ------------- | ----- | ---- |  | - | ----- | 
|                                          |  | 2003          |       | 2002
|                                          |  |               |       |     
|                                          |  |              
|                                          |  | (in millions)
|Proceeds from new retail securitizations  |  | $             | 2,857 |      |  | $ | 2,598 | 
|Servicing fees received                   |  |               | 51    |      |  |   | 37    | 
|Cash received on other retained interests |  |               | 70    |      |  |   | 56    | 
|Cash paid upon cleanup call               |  |               | 213   |      |  |   | 162   | 



| |                                           
| | ------------------------------------------
| | Managed Portfolio  Financial
    Services

Historical loss and delinquency amounts for
Financial Services Managed Portfolio for 2003 and 2002 are
as follows:

|                                              |  |                |        |                |  |                |     |  |  |   |     | 
|--------------------------------------------- |  | -------------- | ------ | -------------- |  | -------------- | --- |  |  | - | --- | 
|                                              |  | Principal      |        | Principal More |  |               
|                                              |  | Amount of      |        | Than 30 Days   |  | Net Credit    
|                                              |  | Receivables At |        | Delinquent At  |  | Losses for the
|                                              |  | December 31,   |        | December 31,   |  | Year Ending   
|                                              |  |                |        |                |  |               
|                                              |  |               
|                                              |  | (in millions) 
|2003                                          |  |                |        |                |  |                |     |  |  |   |     | 
|                                              |  |                |        |                |  |                |     |  |  |   |     | 
|Type of receivable:                           |  |                |        |                |  |                |     |  |  |   |     | 
|Wholesale notes and accounts                  |  | $              | 3,334  |                |  | $              | 95  |  |  | $ | 8   | 
|Retail and other notes and finance leases     |  |                | 9,095  |                |  |                | 315 |  |  |   | 141 | 
|                                              |  |                |        |                |  |                |     |  |  |   |     | 
|Total managed                                 |  | $              | 12,429 |                |  | $              | 410 |  |  | $ | 149 | 
|                                              |  |                |        |                |  |                |     |  |  |   |     | 
|Comprised of:                                 |  |                |        |                |  |                |     |  |  |   |     | 
|Receivables held in portfolio                 |  | $              | 3,796  |                |  |                |     |  |  |   |     | 
|Receivables serviced for Equipment Operations |  |                | 1,179  |                |  |                |     |  |  |   |     | 
|Receivables serviced for Joint Ventures       |  |                | 1,401  |                |  |                |     |  |  |   |     | 
|Securitized                                   |  |                | 6,053  |                |  |                |     |  |  |   |     | 
|                                              |  |                |        |                |  |                |     |  |  |   |     | 
|Total managed                                 |  | $              | 12,429 |                |  |                |     |  |  |   |     | 
|                                              |  |                |        |                |  |                |     |  |  |   |     | 

F-22



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                              |  |                |        |                |  |                |     |  |  |   |     | 
|--------------------------------------------- |  | -------------- | ------ | -------------- |  | -------------- | --- |  |  | - | --- | 
|                                              |  | Principal      |        | Principal More |  |               
|                                              |  | Amount of      |        | Than 30 Days   |  | Net Credit    
|                                              |  | Receivables At |        | Delinquent At  |  | Losses for the
|                                              |  | December 31,   |        | December 31,   |  | Year Ending   
|                                              |  |                |        |                |  |               
|                                              |  |               
|                                              |  | (in millions) 
|2002                                          |  |                |        |                |  |                |     |  |  |   |     | 
|                                              |  |                |        |                |  |                |     |  |  |   |     | 
|Type of receivable:                           |  |                |        |                |  |                |     |  |  |   |     | 
|Wholesale notes and accounts                  |  | $              | 2,794  |                |  | $              | 112 |  |  | $ | 10  | 
|Retail and other notes and finance leases     |  |                | 8,476  |                |  |                | 469 |  |  |   | 132 | 
|                                              |  |                |        |                |  |                |     |  |  |   |     | 
|Total managed                                 |  | $              | 11,270 |                |  | $              | 581 |  |  | $ | 142 | 
|                                              |  |                |        |                |  |                |     |  |  |   |     | 
|Comprised of:                                 |  |                |        |                |  |                |     |  |  |   |     | 
|Receivables held in portfolio                 |  | $              | 4,088  |                |  |                |     |  |  |   |     | 
|Receivables serviced for Equipment Operations |  |                | 855    |                |  |                |     |  |  |   |     | 
|Receivables serviced for Joint Ventures       |  |                | 993    |                |  |                |     |  |  |   |     | 
|Securitized                                   |  |                | 5,334  |                |  |                |     |  |  |   |     | 
|                                              |  |                |        |                |  |                |     |  |  |   |     | 
|Total managed                                 |  | $              | 11,270 |                |  |                |     |  |  |   |     | 
|                                              |  |                |        |                |  |                |     |  |  |   |     | 

Note 5: Inventories

Inventories as of December 31, 2003 and 2002
consist of the following:

|                |                   |               |       |       |  |   |       |       | 
|--------------- | ----------------- | ------------- | ----- | ----- |  | - | ----- | ----- | 
|                |                   | 2003          |       | 2002 
|                |                   |               |       |      
|                |                   |              
|                |                   | (in millions)
|Raw materials   |                   | $             | 416   |       |  | $ | 295   |      
|Work-in-process |                   |               | 243   |       |  |   | 267   |      
|Finished goods  |                   |               | 1,819 |       |  |   | 1,492 |      
|                |                   |               |       |       |  |   |       |      
|                | Total inventories |               | $     | 2,478 |  |   | $     | 2,054 | 
|                |                   |               |       |       |  |   |       |      

Note 6: Property, Plant and
Equipment

A summary of property, plant and equipment as of
December 31, 2003 and 2002 is as follows:

|                                 |                                   |               |        |       |  |   |        |       | 
|-------------------------------- | --------------------------------- | ------------- | ------ | ----- |  | - | ------ | ----- | 
|                                 |                                   | 2003          |        | 2002 
|                                 |                                   |               |        |      
|                                 |                                   |              
|                                 |                                   | (in millions)
|Land, buildings and improvements |                                   | $             | 802    |       |  | $ | 606    |      
|Plant and machinery              |                                   |               | 1,977  |       |  |   | 1,875  |      
|Other equipment                  |                                   |               | 458    |       |  |   | 282    |      
|Construction in progress         |                                   |               | 89     |       |  |   | 169    |      
|                                 |                                   |               |        |       |  |   |        |      
|                                 |                                   |               | 3,326  |       |  |   | 2,932  |      
|Accumulated depreciation         |                                   |               | (1,798 | )     |  |   | (1,483 | )    
|                                 |                                   |               |        |       |  |   |        |      
|                                 | Net property, plant and equipment |               | $      | 1,528 |  |   | $      | 1,449 | 
|                                 |                                   |               |        |       |  |   |        |      

Depreciation expense totaled $213 million,
$202 million and $207 million for the years ended
December 31, 2003, 2002 and 2001, respectively.

F-23



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 7: Investments in Unconsolidated
Subsidiaries and Affiliates

A summary of investments in unconsolidated
subsidiaries and affiliates as of December 31, 2003 and
2002 is as follows:

|                     |       |               |     |      |  |   |     |     | 
|-------------------- | ----- | ------------- | --- | ---- |  | - | --- | --- | 
|Method of Accounting |       | 2003          |     | 2002
|                     |       |               |     |     
|                     |       |              
|                     |       | (in millions)
|Equity method        |       | $             | 422 |      |  | $ | 370 |    
|Cost method          |       |               | 7   |      |  |   | 5   |    
|                     |       |               |     |      |  |   |     |    
|                     | Total |               | $   | 429  |  |   | $   | 375 | 
|                     |       |               |     |      |  |   |     |    

During 2002, investments in unconsolidated
subsidiaries and affiliates increased as a result of CNHs
investment in Kobelco Japan and CNH Capital Europe. At
December 31, 2003, investments accounted for using the
equity method primarily include interests CNH has in various
ventures in the United States, Europe, Turkey, Mexico, Japan,
India, and Pakistan.

Note 8: Equipment on Operating
Leases

A summary of Financial Services equipment
on operating leases as of December 31, 2003 and 2002 is as
follows:

|                                  |  |               |      |      |  |   |      |  
|--------------------------------- |  | ------------- | ---- | ---- |  | - | ---- | -
|                                  |  | 2003          |      | 2002
|                                  |  |               |      |     
|                                  |  |              
|                                  |  | (in millions)
|Equipment on operating leases     |  | $             | 525  |      |  | $ | 716  |  
|Accumulated depreciation          |  |               | (172 | )    |  |   | (172 | )
|                                  |  |               |      |      |  |   |      |  
|Net equipment on operating leases |  | $             | 353  |      |  | $ | 544  |  
|                                  |  |               |      |      |  |   |      |  

Depreciation expense totaled $96 million,
$114 million and $92 million for the years ended
December 31, 2003, 2002 and 2001, respectively.

Lease payments owed to CNH for equipment under
non-cancelable operating leases as of December 31, 2003,
are as follows:

|      |  |               |     | 
|----- |  | ------------- | --- | 
|      |  | Amount       
|      |  |              
|      |  | (in millions)
|2004  |  | $             | 122 | 
|2005  |  |               | 46  | 
|2006  |  |               | 23  | 
|2007  |  |               | 6   | 
|2008  |  |               | 1   | 
|      |  |               |     | 
|Total |  | $             | 198 | 
|      |  |               |     | 

Note 9: Goodwill and
Intangibles

SFAS No. 142 required companies to stop
amortizing goodwill and certain intangible assets with an
indefinite useful life. Instead, SFAS No. 142 requires that
goodwill and intangible assets deemed to have an indefinite
useful life be reviewed for impairment. CNH has identified three
reporting units under the criteria set forth by SFAS
No. 142: Agricultural Equipment, Construction Equipment and
Financial Services. To determine fair value, CNH has relied on
two valuation models: guideline company method and discounted
cash flow. Upon adoption of SFAS No. 142 and effective in
the first quarter of 2002, CNH recorded a

F-24



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

one-time, non-cash charge of approximately
$325 million. Such charge is reflected as a cumulative
effect of change in accounting principle, net of tax, in the
accompanying consolidated statements of operations. The charge
consists of $319 million to reduce the carrying value of
goodwill attributable to the Construction Equipment reporting
unit recorded in connection with New Hollands acquisition
of Case LLC, formerly Case Corporation (Case) in
1999 and approximately $6 million related to an equity
method joint venture. The impairment is primarily a result of
the decline in the construction equipment market experienced by
CNH and its competitors from the acquisition date through the
adoption date of SFAS No. 142.

The Company performs its annual impairment review
during the fourth quarter of each year. No additional impairment
charge was required upon the Companys completion of its
annual goodwill impairment review in the fourth quarter of 2003
or 2002.

Had the provisions of SFAS No. 142 related
to amortization of goodwill been applied since January 1,
2001, the Companys net loss and earnings (loss) per share
for the years ended December 31, 2003, 2002 and 2001,would
have been as follows:

|                                                             |      |                                                                               |       |      |   |      |       |   |   |   |       |   |    | 
|------------------------------------------------------------ | ---- | ----------------------------------------------------------------------------- | ----- | ---- | - | ---- | ----- | - | - | - | ----- | - | -- | 
|                                                             |      | 2003                                                                          |       | 2002 |   | 2001
|                                                             |      |                                                                               |       |      |   |     
|                                                             |      |                                                                              
|                                                             |      | (in millions,                                                                
|                                                             |      | except per share data)                                                       
|Net loss, as reported                                        |      | $                                                                             | (157  | )    |   | $    | (426  | ) |   | $ | (332  | )
|                                                             | Add: |                                                                               |       |      |   |      |       |   |   |   |       |   |   
|                                                             |      | Goodwill amortization, net of tax                                             |       |      |  |      |       |   |  |   |       |   | 84 | 
|                                                             |      | Intangible assets with an indefinite useful life
    amortization, net of tax |       |      |  |      |       |   |  |   |       |   | 6  | 
|                                                             |      |                                                                               |       |      |   |      |       |   |   |   |       |  
|Adjusted net loss                                            |      | $                                                                             | (157  | )    |   | $    | (426  | ) |   | $ | (242  | )
|                                                             |      |                                                                               |       |      |   |      |       |   |   |   |       |  
|Basic and diluted weighted average shares
    outstanding    |      |                                                                               | 132   |      |   |      | 97    |   |   |   | 55    |  
|                                                             |      |                                                                               |       |      |   |      |       |   |   |   |       |  
|Basic and diluted earnings (loss) per share,
    as reported |      | $                                                                             | (1.19 | )    |   | $    | (4.40 | ) |   | $ | (6.00 | )
|Effect of SFAS No. 142.                                      |      |                                                                               |      |      |   |      |      |   |   |   | 1.65  |  
|                                                             |      |                                                                               |       |      |   |      |       |   |   |   |       |  
|Adjusted basic and diluted earnings
    (loss) per share     |      | $                                                                             | (1.19 | )    |   | $    | (4.40 | ) |   | $ | (4.35 | )
|                                                             |      |                                                                               |       |      |   |      |       |   |   |   |       |  

Amortization of goodwill and intangible assets
with indefinite useful lives continues to be reflected in
historical financial statements presented for 2001.

F-25



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Changes in the carrying amount of goodwill, by
segment, for the years ended December 31, 2003, and 2002
are as follows:

|                                                     |  |               |       |              |  |           |      |       |  |   |     |  |  |   |       |  
|---------------------------------------------------- |  | ------------- | ----- | ------------ |  | --------- | ---- | ----- |  | - | --- |  |  | - | ----- | -
|                                                     |  | Agricultural  |       | Construction |  | Financial |      |      
|                                                     |  | Equipment     |       | Equipment    |  | Services  |      | Total
|                                                     |  |               |       |              |  |           |      |      
|                                                     |  |              
|                                                     |  | (in millions)
|Balance at January 1, 2002                           |  | $             | 1,737 |              |  | $         | 935  |       |  | $ | 138 |  |  | $ | 2,810 |  
|Impairment adjustment  adoption of
    SFAS No. 142 |  |               |      |              |  |           | (319 | )     |  |   |    |  |  |   | (319  | )
|Acquisitions                                         |  |               |      |              |  |           | 38   |       |  |   |    |  |  |   | 38    |  
|Impact of foreign exchange                           |  |               | 27    |              |  |           | (23  | )     |  |   |    |  |  |   | 4     |  
|                                                     |  |               |       |              |  |           |      |       |  |   |     |  |  |   |       |  
|Balance at December 31, 2002                         |  |               | 1,764 |              |  |           | 631  |       |  |   | 138 |  |  |   | 2,533 |  
|Divestitures                                         |  |               |      |              |  |           | (3   | )     |  |   |    |  |  |   | (3    | )
|Impact of foreign exchange                           |  |               | 11    |              |  |           | 6    |       |  |   | 7   |  |  |   | 24    |  
|                                                     |  |               |       |              |  |           |      |       |  |   |     |  |  |   |       |  
|Balance at December 31, 2003                         |  | $             | 1,775 |              |  | $         | 634  |       |  | $ | 145 |  |  | $ | 2,554 |  
|                                                     |  |               |       |              |  |           |      |       |  |   |     |  |  |   |       |  

As of December 31, 2003 and 2002, the
Companys intangible assets and related accumulated
amortization consisted of the following:

|                                                              |                      |           |  |               |  |              |       |     |  |       |     |              |  |     |     |     |  |   |     |     |  |   |     |    |  |   |     |     | 
|------------------------------------------------------------- | -------------------- | --------- |  | ------------- |  | ------------ | ----- | --- |  | ----- | --- | ------------ |  | --- | --- | --- |  | - | --- | --- |  | - | --- | -- |  | - | --- | --- | 
|                                                              |                      |           |  |               |  |             
|                                                              |                      |           |  | 2003          |  | 2002        
|                                                              |                      |           |  |               |  |             
|                                                              |                      | Weighted  |  |               |  | Accumulated  |       |     |  |       |     | Accumulated  |  |    
|                                                              |                      | Avg. Life |  | Gross         |  | Amortization |       | Net |  | Gross |     | Amortization |  | Net
|                                                              |                      |           |  |               |  |              |       |     |  |       |     |              |  |    
|                                                              |                      |           |  |              
|                                                              |                      |           |  | (in millions)
|Intangible assets subject to Amortization:                    |                      |           |  |               |  |              |       |     |  |       |     |              |  |     |     |     |  |   |     |     |  |   |     |    |  |   |     |    
|                                                              | Engineering Drawings |           |  | 20            |  |              | $     | 335 |  |       | $   | 69           |  |     | $   | 266 |  |   | $   | 335 |  |   | $   | 51 |  |   | $   | 284 | 
|                                                              | Dealer Networks      |           |  | 25            |  |              |       | 216 |  |       |     | 35           |  |     |     | 181 |  |   |     | 216 |  |   |     | 26 |  |   |     | 190 | 
|                                                              | Other                |           |  | 10  30       |  |              |       | 188 |  |       |     | 69           |  |     |     | 119 |  |   |     | 158 |  |   |     | 53 |  |   |     | 105 | 
|                                                              |                      |           |  |               |  |              |       |     |  |       |     |              |  |     |     |     |  |   |     |     |  |   |     |    |  |   |     |    
|                                                              |                      |           |  |               |  |              | 739   |     |  |       | 173 |              |  |     | 566 |     |  |   | 709 |     |  |   | 130 |    |  |   | 579 |    
|                                                              |                      |           |  |               |  |              |       |     |  |       |     |              |  |     |     |     |  |   |     |     |  |   |     |    |  |   |     |    
|Intangible assets not subject to amortization:
    Trademarks |                      |           |  |               |  |              | 273   |     |  |       |    |              |  |     | 273 |     |  |   | 273 |     |  |   |    |    |  |   | 273 |    
|                                                              |                      |           |  |               |  |              |       |     |  |       |     |              |  |     |     |     |  |   |     |     |  |   |     |    |  |   |     |    
|                                                              |                      |           |  |               |  | $            | 1,012 |     |  | $     | 173 |              |  | $   | 839 |     |  | $ | 982 |     |  | $ | 130 |    |  | $ | 852 |    
|                                                              |                      |           |  |               |  |              |       |     |  |       |     |              |  |     |     |     |  |   |     |     |  |   |     |    |  |   |     |    

CNH recorded amortization expense of
$37 million, $30 million and $122 million during
2003, 2002 and 2001, respectively. Based on the current amount
of intangible assets subject to amortization, the estimated
amortization expense for each of the succeeding 5 years is
approximately $35 million. As acquisitions and dispositions
occur in the future and as purchase price allocations are
finalized, these amounts may vary.

For tax purposes, goodwill amortization for each
of the three years ended December 31, 2003 was not
deductible.

Note 10: Short-Term Debt

CNH has various lines of credit and liquidity
facilities that include borrowings under both committed credit
facilities and uncommitted lines of credit and similar
agreements.

CNH has historically obtained, and may continue
to obtain, a significant portion of its external financing from
Fiat or under facilities guaranteed by Fiat, on terms that CNH
believes are at least as favorable as those

F-26



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

available from unaffiliated third parties. The
debt owed by CNH to Fiat is unsecured. In 2003, CNH paid a
guarantee fee of between 0.03125% per annum and 0.0625% per
annum on the average amount outstanding under facilities
guaranteed by Fiat. Fiat has agreed to maintain its existing
treasury and debt financing arrangements with CNH for as long as
it maintains control of CNH and, in any event, until
December 31, 2004. After that time, Fiat has committed that
it will not terminate CNHs access to these financing
arrangements without affording CNH an appropriate time period to
develop suitable substitutes.

As of December 31, 2003, CNH had
approximately $4.5 billion of its $7.9 billion total
lines of credit available, including the asset backed liquidity
facilities described below. Borrowings under these lines
totaling $1.3 billion were classified as long term debt,
while $2.1 billion were classified as short term debt.

The following table summarizes our credit
facilities at December 31, 2003:

|                                                                                   |                         |               |         |        |  |            |       |           |  |       |     |           |  |           |       |       |  |   |       |       |  |   |       |       |  |  |      |  | 
|---------------------------------------------------------------------------------- | ----------------------- | ------------- | ------- | ------ |  | ---------- | ----- | --------- |  | ----- | --- | --------- |  | --------- | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- |  |  | ---- |  | 
|                                                                                   |                         |               |         |        |  |            |       |           |  |      
|                                                                                   |                         |               |         |        |  | Drawn      |       |           |  |      
|                                                                                   |                         |               |         |        |  |            |       |           |  |      
|                                                                                   |                         |               |         |        |  | Equipment  |       | Financial |  |       |     |           |  |          
|                                                                                   |                         | Maturity      |         | Amount |  | Operations |       | Services  |  | Total |     | Available |  | Guarantor
|                                                                                   |                         |               |         |        |  |            |       |           |  |       |     |           |  |          
|                                                                                   |                         |               |         |       
|                                                                                   |                         | (in millions) |         |       
|Committed Lines:                                                                   |                         |               |         |        |  |            |       |           |  |       |     |           |  |           |       |       |  |   |       |       |  |   |       |       |  |  |      | 
|Revolving syndicated backup credit facility                                        |                         |               | 2005    |        |  | $          | 1,800 |           |  | $     |    |           |  | $         |      |       |  | $ |      |       |  | $ | 1,800 |       |  |  | Fiat | 
|Backup credit facilities with third parties
    shared with some Fiat subsidiaries |                         |               | 20045  |        |  |            | 275   |           |  |       |    |           |  |           |      |       |  |   |      |       |  |   | 275   |       |  |  | Fiat | 
|Other backup facilities with third parties                                         |                         |               | 20046  |        |  |            | 150   |           |  |       |    |           |  |           |      |       |  |   |      |       |  |   | 150   |       |  |  | Fiat | 
|Other committed lines guaranteed by Fiat                                           |                         |               | various |        |  |            | 55    |           |  |       | 55  |           |  |           |      |       |  |   | 55    |       |  |   |      |       |  |  | Fiat | 
|Revolving credit facility (Fin. Serv., USA)                                        |                         |               | 2004    |        |  |            | 500   |           |  |       |    |           |  |           | 500   |       |  |   | 500   |       |  |   |      |       |  |  | Fiat | 
|Other committed lines (Fin. Serv., Brazil)                                         |                         |               | various |        |  |            | 866   |           |  |       |    |           |  |           | 719   |       |  |   | 719   |       |  |   | 147   |       |  |  | Fiat | 
|Revolving credit facility with Fiat affiliate                                      |                         |               | 2004    |        |  |            | 1,000 |           |  |       | 403 |           |  |           | 294   |       |  |   | 697   |       |  |   | 303   |       |  |  | Fiat | 
|Other committed lines                                                              |                         |               | various |        |  |            | 230   |           |  |       | 155 |           |  |           | 53    |       |  |   | 208   |       |  |   | 22    |       |  |  |      | 
|                                                                                   |                         |               |         |        |  |            |       |           |  |       |     |           |  |           |       |       |  |   |       |       |  |   |       |       |  |  |      | 
|                                                                                   | Total committed lines   |               |         |        |  |            |       | 4,876     |  |       |     | 613       |  |           |       | 1,566 |  |   |       | 2,179 |  |   |       | 2,697 |  |  |      |  | 
|Uncommitted Lines                                                                  |                         |               |         |        |  |            | 1,112 |           |  |       | 871 |           |  |           | 131   |       |  |   | 1,002 |       |  |   | 110   |       |  |  |      | 
|Asset-backed Programs                                                              |                         |               | 2004    |        |  |            | 1,931 |           |  |       | 147 |           |  |           | 83    |       |  |   | 230   |       |  |   | 1,701 |       |  |  |      | 
|                                                                                   |                         |               |         |        |  |            |       |           |  |       |     |           |  |           |       |       |  |   |       |       |  |   |       |       |  |  |      | 
|                                                                                   | Total credit facilities |               |         |        |  |            | $     | 7,919     |  |       | $   | 1,631     |  |           | $     | 1,780 |  |   | $     | 3,411 |  |   | $     | 4,508 |  |  |      |  | 
|                                                                                   |                         |               |         |        |  |            |       |           |  |       |     |           |  |           |       |       |  |   |       |       |  |   |       |       |  |  |      | 
|Total Credit facilities with Fiat affiliates or
    guaranteed by Fiat affiliates  |                         |               |         |        |  | $          | 4,646 |           |  | $     | 458 |           |  | $         | 1,513 |       |  | $ | 1,971 |       |  | $ | 2,675 |       |  |  |      | 
|                                                                                   |                         |               |         |        |  |            |       |           |  |       |     |           |  |           |       |       |  |   |       |       |  |   |       |       |  |  |      | 

F-27



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

A summary of short-term debt, as of
December 31, 2003 and 2002 is as follows:

|                                  |                                                  |                                                  |       |       |       |   |        |       |       | 
|--------------------------------- | ------------------------------------------------ | ------------------------------------------------ | ----- | ----- | ----- | - | ------ | ----- | ----- | 
|                                  |                                                  | 2003                                             |       | 2002 
|                                  |                                                  |                                                  |       |      
|                                  |                                                  |                                                 
|                                  |                                                  | (in millions)                                   
|Equipment Operations:             |                                                  |                                                  |       |       |       |   |        |      
|                                  | Credit agreements*                               |                                                  | $     | 1,119 |       |   | $      | 1,067 |      
|                                  | Short-term debt with Fiat affiliates             |                                                  |       | 403   |       |   |        | 817   |      
|                                  | Short-term debt payable to Financial Services    |                                                  |       |      |       |   |        | 354   |      
|                                  |                                                  |                                                  |       |       |       |   |        |      
|                                  |                                                  | Total short-term debt  Equipment
    Operations |       |       | 1,522 |   |        |       | 2,238 | 
|                                  |                                                  |                                                  |       |       |       |   |        |      
|Financial Services:               |                                                  |                                                  |       |       |       |   |        |      
|                                  | Credit agreements*                               |                                                  |       | 210   |       |   |        | 429   |      
|                                  | Asset-backed commercial paper liquidity facility |                                                  |       | 83    |       |   |        | 167   |      
|                                  | Short-term debt with Fiat affiliates             |                                                  |       | 295   |       |   |        | 269   |      
|                                  | Short-term debt payable to Equipment Operations  |                                                  |       | 312   |       |   |        | 1,083 |      
|                                  |                                                  |                                                  |       |       |       |   |        |      
|                                  |                                                  | Total short-term debt  Financial
    Services   |       |       | 900   |   |        |       | 1,948 | 
|Less intersegment short-term debt |                                                  |                                                  | (312  | )     |       |   | (1,437 | )    
|                                  |                                                  |                                                  |       |       |       |   |        |      
|Total short-term debt             |                                                  | $                                                | 2,110 |       |       | $ | 2,749  |      
|                                  |                                                  |                                                  |       |       |       |   |        |      






|  |                                                                                                                                                                                                           
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | The credit agreements for both Equipment
    Operations and Financial Services include borrowings under both
    committed credit facilities and uncommitted lines of credit and
    similar arrangements.

The weighted-average interest rates on
consolidated short-term debt at December 31, 2003 and 2002
were 4.72% and 4.55%, respectively. The average rate is
calculated using the actual rates at December 31, 2003 and
2002 weighted by the amount of the outstanding borrowings of
each debt instrument.

Borrowings under non-affiliated third party
revolving credit facilities bear interest at: (1) EURIBOR,
plus an applicable margin; (2) LIBOR, plus an applicable
margin; (3) bankers bills of acceptance rates, plus
an applicable margin; or (4) other relevant domestic
benchmark rates plus an applicable margin.

The applicable margin on third party debt depends
upon:



| |   |                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the initial maturity of the facility/credit line;                                                                                                                                                                                                             
|
| |  | the rating of short-term/long-term unsecured debt
    at the time the facility/credit line was negotiated; in cases
    where Fiat provides a guarantee, the margin reflects Fiats
    credit standing at the time the facility/credit line was
    arranged;
|
| |  | the extent of over-collateralization, in the case
    of receivables warehouse facilities; and                                                                                                                                                                
|
| |  | the level of availability of credit lines for CNH
    in different jurisdictions.                                                                                                                                                                             

The applicable margin for related party debt is
based on Fiat intercompany borrowing and lending rates applied
to all of its affiliates. These rates are determined by Fiat
based on its cost of funding for debt of different maturities.
As Fiats creditworthiness has in the past been
consistently and significantly better than that of CNH, the cost
of the related party debt has been lower than the corresponding
rates that CNH could have been required to pay to unaffiliated
third parties providing similar financing arrangements. Even
though Fiats and CNHs ratings are currently equal,
we believe that rates applied by Fiat to our related party debt
are at least as advantageous as alternative sources of funds we
may obtain from third parties; in those case where we achieve
negotiated margins more favorable than those applied by Fiat, we
maximize use of such more

F-28



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

advantageous facilities before returning to Fiat
funding. The range of margins applied by Fiat to our related
party debt outstanding as of December 31, 2003 was between
0.65% and 1.50%.

Borrowings against asset-backed commercial paper
liquidity facilities bear interest at prevailing asset backed
commercial paper rates. Borrowings may be obtained in U.S.
Dollars and certain other foreign currencies. Certain of
CNHs revolving credit facilities contain contingent
requirements in respect of the maintenance of financial
conditions and impose some restrictions in respect of new liens
on assets and changes in ownership of certain subsidiaries. At
December 31, 2003, CNH was in compliance with all debt
covenants. The non-affiliated third party committed credit
facilities generally provide for facility fees on the total
commitment, whether used or unused, and provide for annual
agency fees to the administrative agents for the facilities.

During 2003, approximately $95 million of
Equipment Operations short-term debt with Fiat was
refinanced with long-term debt with Fiat in a non-cash
transaction. Interest expense approximates interest paid for all
periods presented.

F-29



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 11: Long-Term Debt

A summary of long-term debt as of
December 31, 2003 and 2002 is as follows:

|                                                                                                         |                                                                                             |                                               |       |       |       |  |       |      |       | 
|-------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | --------------------------------------------- | ----- | ----- | ----- |  | ----- | ---- | ----- | 
|                                                                                                         |                                                                                             | 2003                                          |       | 2002 
|                                                                                                         |                                                                                             |                                               |       |      
|                                                                                                         |                                                                                             |                                              
|                                                                                                         |                                                                                             | (in millions)                                
|Equipment Operations:                                                                                    |                                                                                             |                                               |       |       |       |  |       |     
|Public Notes:                                                                                            |                                                                                             |                                               |       |       |       |  |       |     
|                                                                                                         | Payable in 2003, interest rate of 6.25%                                                     |                                               | $     |      |       |  | $     | 279  |      
|                                                                                                         | Payable in 2005, interest rate of 7.25%                                                     |                                               |       | 244   |       |  |       | 244  |      
|                                                                                                         | Payable in 2011, average interest rate of 9.22%                                             |                                               |       | 1,052 |       |  |       |     |      
|                                                                                                         | Payable in 2016, interest rate of 7.25%                                                     |                                               |       | 254   |       |  |       | 254  |      
|Third Party Loan:                                                                                        |                                                                                             |                                               |       |       |       |  |       |     
|                                                                                                         | Payable in 2007, interest rate of 1.61% (floating
    rate)                                 |                                               |       | 188   |       |  |       | 205  |      
|Notes with Fiat affiliates:                                                                              |                                                                                             |                                               |       |       |       |  |       |     
|                                                                                                         | Payable in 2003, interest rate of 3.95%                                                     |                                               |       |      |       |  |       | 199  |      
|                                                                                                         | Payable in 2003, interest rate of 4.69%                                                     |                                               |       |      |       |  |       | 200  |      
|                                                                                                         | Payable in 2003, interest rate of 4.69%                                                     |                                               |       |      |       |  |       | 100  |      
|                                                                                                         | Payable in 2004, interest rate of 7.92%                                                     |                                               |       |      |       |  |       | 100  |      
|                                                                                                         | Payable in 2005, interest rate of 3.50%                                                     |                                               |       | 300   |       |  |       | 600  |      
|                                                                                                         | Payable in 2006, interest rate of 2.38% (floating
    rate)                                 |                                               |       | 700   |       |  |       | 450  |      
|                                                                                                         | Payable in 2006, interest rate of 3.35% (floating
    rate)                                 |                                               |       | 101   |       |  |       | 550  |      
|                                                                                                         | Other affiliated notes, weighted average interest
    rate of 7.51% and 5.44%, respectively |                                               |       | 262   |       |  |       | 233  |      
|Other debt                                                                                               |                                                                                             |                                               | 92    |       |       |  | 124   |     
|                                                                                                         |                                                                                             |                                               |       |       |       |  |       |     
|                                                                                                         |                                                                                             |                                               | 3,193 |       |       |  | 3,538 |     
|                                                                                                         | Less-current maturities                                                                     |                                               |       | (88   | )     |  |       | (824 | )    
|                                                                                                         |                                                                                             |                                               |       |       |       |  |       |     
|                                                                                                         |                                                                                             | Total long-term debt  Equipment Operations   |       |       | 3,105 |  |       |      | 2,714 | 
|                                                                                                         |                                                                                             |                                               |       |       |       |  |       |     
|Financial Services:                                                                                      |                                                                                             |                                               |       |       |       |  |       |     
|Public Notes:                                                                                            |                                                                                             |                                               |       |       |       |  |       |     
|                                                                                                         | Payable in 2003, interest rate of 6.13%                                                     |                                               |       |      |       |  |       | 191  |      
|                                                                                                         | Payable in 2007, interest rate of 6.75%                                                     |                                               |       | 127   |       |  |       | 127  |      
|Long-term debt with Fiat affiliates,
    weighted-average interest rate of 4.11% and 3.75%, respectively |                                                                                             |                                               | 306   |       |       |  | 367   |     
|Intersegment debt with Equipment Operations,
    interest rate of 2.44% and 2.72%, respectively          |                                                                                             |                                               | 700   |       |       |  | 700   |     
|Other debt                                                                                               |                                                                                             |                                               | 1,260 |       |       |  | 892   |     
|                                                                                                         |                                                                                             |                                               |       |       |       |  |       |     
|                                                                                                         |                                                                                             |                                               | 2,393 |       |       |  | 2,277 |     
|                                                                                                         | Less  current maturities                                                                   |                                               |       | (755  | )     |  |       | (294 | )    
|                                                                                                         |                                                                                             |                                               |       |       |       |  |       |     
|                                                                                                         |                                                                                             | Total long-term debt  Financial
    Services |       |       | 1,638 |  |       |      | 1,983 | 
|                                                                                                         | Less long-term debt payable to Equipment
    Operations                                     |                                               |       | (700  | )     |  |       | (700 | )    
|                                                                                                         |                                                                                             |                                               |       |       |       |  |       |     
|                                                                                                         |                                                                                             | Total long-term debt                          |       | $     | 4,043 |  |       | $    | 3,997 | 
|                                                                                                         |                                                                                             |                                               |       |       |       |  |       |     

F-30



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

A summary of the minimum annual repayments of
long-term debt, less current maturities of long-term debt, as of
December 31, 2003, is as follows:

|                    |       |               |       |       | 
|------------------- | ----- | ------------- | ----- | ----- | 
|                    |       | Amount       
|                    |       |              
|                    |       | (in millions)
|2005                |       | $             | 1,169 |      
|2006                |       |               | 1,150 |      
|2007                |       |               | 300   |      
|2008                |       |               | 85    |      
|2009 and thereafter |       |               | 1,339 |      
|                    |       |               |       |      
|                    | Total |               | $     | 4,043 | 
|                    |       |               |       |      

On August 1, 2003 and September 12,
2003, a total of $1.05 billion of Case New Holland, Inc.
9 1/4% Senior Notes due 2011(the 9 1/4% Senior
Notes) were issued. The 9 1/4% Senior Notes are fully
and unconditionally guaranteed by CNH and certain of its direct
and indirect subsidiaries and contain certain covenants that
restrict our ability to, among other things, incur additional
debt; pay dividends on our capital stock or repurchase our
capital stock; make certain investments; enter into certain
types of transactions with affiliates; restrict dividend or
other payments by our restricted subsidiaries; use assets as
security in other transactions; enter into sale and leaseback
transactions; and sell certain assets or merge with, or into,
other companies. In addition, certain of the related agreements
governing our subsidiaries indebtedness contain covenants
limiting their incurrence of secured debt or structurally senior
debt.

In 2003, CNH renewed approximately
$95 million of short-term debt with Fiat through the
issuance of long-term debt with Fiat in a non-cash transaction.
Interest expense approximates interest paid for all periods
presented.

Note 12: Income Taxes

The sources of income (loss) before taxes
and minority interest for the years ended December 31,
2003, 2002 and 2001 are as follows:

|                                        |  |               |      |      |  |      |      |   |  |   |      |  
|--------------------------------------- |  | ------------- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                                        |  | 2003          |      | 2002 |  | 2001
|                                        |  |               |      |      |  |     
|                                        |  |              
|                                        |  | (in millions)
|The Netherlands source                  |  | $             | (80  | )    |  | $    | (43  | ) |  | $ | 10   |  
|Foreign sources                         |  |               | (119 | )    |  |      | (389 | ) |  |   | (442 | )
|                                        |  |               |      |      |  |      |      |   |  |   |      |  
|Loss before taxes and minority interest |  | $             | (199 | )    |  | $    | (432 | ) |  | $ | (432 | )
|                                        |  |               |      |      |  |      |      |   |  |   |      |  

The provision (benefit) for income taxes for
the years ended December 31, 2003, 2002 and 2001 consisted
of the following:

|                      |                   |               |     |      |   |      |     |     |   |   |      |      |  
|--------------------- | ----------------- | ------------- | --- | ---- | - | ---- | --- | --- | - | - | ---- | ---- | -
|                      |                   | 2003          |     | 2002 |   | 2001
|                      |                   |               |     |      |   |     
|                      |                   |              
|                      |                   | (in millions)
|Current income taxes  |                   | $             | 23  |      |   | $    | 13  |     |   | $ | 69   |     
|Deferred income taxes |                   |               | (72 | )    |   |      | (27 | )   |   |   | (174 | )   
|                      |                   |               |     |      |   |      |     |     |   |   |      |     
|                      | Total tax benefit |               | $   | (49  | ) |      | $   | (14 | ) |   | $    | (105 | )
|                      |                   |               |     |      |   |      |     |     |   |   |      |     

F-31



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

A reconciliation of CNHs statutory and
effective income tax provision (benefit) before cumulative
effect of change in accounting principle for the years ended
December 31, 2003, 2002 and 2001 is as follows:

|                                                         |                   |               |     |      |   |      |     |     |   |   |      |      |  
|-------------------------------------------------------- | ----------------- | ------------- | --- | ---- | - | ---- | --- | --- | - | - | ---- | ---- | -
|                                                         |                   | 2003          |     | 2002 |   | 2001
|                                                         |                   |               |     |      |   |     
|                                                         |                   |              
|                                                         |                   | (in millions)
|Tax benefit at the Netherlands statutory rate of
    35% |                   | $             | (70 | )    |   | $    | (37 | )   |   | $ | (151 | )   
|Foreign income taxed at different rates                  |                   |               | 5   |      |   |      | 13  |     |   |   | (29  | )   
|Effect of tax loss carryforwards                         |                   |               | (10 | )    |   |      | (8  | )   |   |   | (16  | )   
|Change in valuation allowance                            |                   |               | 13  |      |   |      | 45  |     |   |   | 54   |     
|Nondeductible goodwill and intangibles                   |                   |               |    |      |   |      | 4   |     |   |   | 29   |     
|Dividend withholding taxes and credits                   |                   |               | 2   |      |   |      | (19 | )   |   |   | 2    |     
|Other                                                    |                   |               | 11  |      |   |      | (12 | )   |   |   | 6    |     
|                                                         |                   |               |     |      |   |      |     |     |   |   |      |     
|                                                         | Total tax benefit |               | $   | (49  | ) |      | $   | (14 | ) |   | $    | (105 | )
|                                                         |                   |               |     |      |   |      |     |     |   |   |      |     

The components of the net deferred tax asset as
of December 31, 2003 and 2002 are as follows:

|                          |                                            |                                |                         |        |       |     |   |       |       |     | 
|------------------------- | ------------------------------------------ | ------------------------------ | ----------------------- | ------ | ----- | --- | - | ----- | ----- | --- | 
|                          |                                            | 2003                           |                         | 2002  
|                          |                                            |                                |                         |       
|                          |                                            |                               
|                          |                                            | (in millions)                 
|Deferred tax assets:      |                                            |                                |                         |        |       |     |   |      
|                          | Marketing and selling incentives           |                                | $                       | 127    |       |     | $ | 118   |      
|                          | Bad debt reserves                          |                                |                         | 40     |       |     |   | 79    |      
|                          | Postretirement and postemployment benefits |                                |                         | 301    |       |     |   | 426   |      
|                          | Inventories                                |                                |                         | 32     |       |     |   | 37    |      
|                          | Warranty reserves                          |                                |                         | 79     |       |     |   | 74    |      
|                          | Restructuring reserves                     |                                |                         | 55     |       |     |   | 79    |      
|                          | Other reserves                             |                                |                         | 748    |       |     |   | 675   |      
|                          | Tax loss carryforwards                     |                                |                         | 1,585  |       |     |   | 1,294 |      
|                          | Less: Valuation allowance                  |                                |                         | (1,167 | )     |     |   | (982  | )    
|                          |                                            |                                |                         |        |       |     |   |      
|                          |                                            | Total deferred tax assets      |                         |        | 1,800 |     |   |       | 1,800 |    
|                          |                                            |                                |                         |        |       |     |   |      
|Deferred tax liabilities: |                                            |                                |                         |        |       |     |   |      
|                          | Fixed assets basis difference/depreciation |                                |                         | 190    |       |     |   | 177   |      
|                          | Intangibles                                |                                |                         | 274    |       |     |   | 281   |      
|                          | Inventories                                |                                |                         | 35     |       |     |   | 45    |      
|                          | Other                                      |                                |                         | 396    |       |     |   | 416   |      
|                          |                                            |                                |                         |        |       |     |   |      
|                          |                                            | Total deferred tax liabilities |                         |        | 895   |     |   |       | 919   |    
|                          |                                            |                                |                         |        |       |     |   |      
|                          |                                            |                                | Net deferred tax assets |        | $     | 905 |   |       | $     | 881 | 
|                          |                                            |                                |                         |        |       |     |   |      

F-32



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The net deferred tax assets are reflected in the
accompanying balance sheets as of December 31, 2003 and
2002 as follows:

|                                 |                        |               |       |      |  |   |       |     | 
|-------------------------------- | ---------------------- | ------------- | ----- | ---- |  | - | ----- | --- | 
|                                 |                        | 2003          |       | 2002
|                                 |                        |               |       |     
|                                 |                        |              
|                                 |                        | (in millions)
|Current deferred tax asset       |                        | $             | 498   |      |  | $ | 505   |    
|Long-term deferred tax asset     |                        |               | 1,449 |      |  |   | 1,362 |    
|Current deferred tax liability   |                        |               | (171  | )    |  |   | (223  | )  
|Long-term deferred tax liability |                        |               | (871  | )    |  |   | (763  | )  
|                                 |                        |               |       |      |  |   |       |    
|                                 | Net deferred tax asset |               | $     | 905  |  |   | $     | 881 | 
|                                 |                        |               |       |      |  |   |       |    

CNH has net operating tax loss carryforwards in a
number of foreign tax jurisdictions within its global
operations. The years in which they expire are as follows:
$2 million in 2004; $4 million in 2005;
$6 million in 2006; $3 million in 2007;
$3 million in 2008; and $903 million with expiration
dates from 2009 through 2023. CNH also has net operating tax
loss carryforwards of $664 million with indefinite lives.

In 2003, 2002 and 2001, CNH recorded deferred tax
assets without valuation allowances for U.S. Federal tax loss
carryforwards in the amount of $97 million,
$116 million and $209 million, respectively. The
realization of the deferred tax assets recorded as a result of
the U.S. Federal tax loss carryforward is considered to be more
likely than not. This determination was based upon the
evaluation of the recent losses after considering the impact of
non-recurring items, the impact of the cyclical nature of the
business on past and future profitability, expectations of
sufficient future U.S. taxable income prior to the years in
which the carryforwards expire as well as the impact of profit
improvement initiatives on the future earnings of U.S.
operations. These expectations of future profitability were
based on assumptions regarding the Companys market share,
profitability of new model introductions and benefits from
capital and operating restructuring actions. CNH cannot assure
that it will generate the necessary profitability to realize all
or part of the U.S. deferred tax assets and that in the future
these assets will not require the recording of additional
valuation allowances. A determination that it is more likely
than not that some or all of the deferred tax assets currently
recorded will not be realized could adversely impact CNHs
results of operations and financial position as the required
additional valuation allowance would be an additional charge
recorded to tax expense in the period that such determination
was made.

During 2003, 2002 and 2001, CNH generated income
in certain International and U.S. State jurisdictions that
supported reductions in the valuation allowance and recognized
losses in certain international and U.S. state jurisdictions
that supported increases in the valuation allowance. CNH has
recorded deferred tax assets without valuation allowances in tax
jurisdictions where CNH has generated income, as CNH believes it
is more likely than not that such assets will be realizable in
the future. CNH has recorded valuation allowances in certain tax
jurisdictions where it does not expect to generate sufficient
income to fully realize the deferred tax asset. As of
December 31, 2003, CNH has $132 million of U.S. state
tax loss carryforwards and $988 million of non-U.S. Federal
tax loss carryforwards for which CNH has established valuation
allowances of $29 million and $710 million,
respectively.

With respect to the valuation allowances recorded
against the deferred tax assets of Case and its subsidiaries as
of the acquisition date, any reduction in these valuation
allowances will, in the future, be treated as a reduction of the
goodwill recorded in conjunction with the acquisition and will
not impact future periods tax expense. As of
December 31, 2003, the valuation allowance that is
potentially subject to being allocated to goodwill as part of
the Case acquisition totaled $535 million.

At December 31, 2003, the undistributed
earnings of foreign subsidiaries totaled approximately
$2.2 billion. In most cases, such earnings will continue to
be reinvested. Provision has generally not been made for

F-33



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

additional taxes on the undistributed earnings of
foreign subsidiaries. These earnings could become subject to
additional tax if they are remitted as dividends or if CNH were
to dispose of its investment in the subsidiaries. It has not
been practical to estimate the amount of additional taxes that
might be payable on the foreign earnings, and CNH believes that
additional tax credits and tax planning strategies would largely
eliminate any tax on such earnings.

CNH received (paid) cash of
$83 million, $83 million and ($63) million for
taxes during 2003, 2002 and 2001 respectively.

Note 13: Restructuring

Effective January 1, 2003, CNH has adopted
SFAS No. 146. Under SFAS No. 146, CNH recognizes costs
related to restructuring when a liability is incurred. Prior to
January 1, 2003, CNH recorded restructuring liabilities at
the time management approved and committed CNH to a
restructuring plan that identified all significant actions to be
taken and the expected completion date of the plan was within a
reasonable period of time. The restructuring liability included
those restructuring costs that (1) could be reasonably
estimated, (2) were not associated with or did not benefit
activities that would be continued, and (3) were not
associated with or were not incurred to generate revenues after
the plans commitment date. Restructuring costs were
incurred as a direct result of the plan and (1) were
incremental to other costs incurred by CNH in the conduct of its
activities prior to the commitment date, or (2) existed
prior to the commitment date under a contractual obligation that
will either continue after the exit plan is completed with no
economic benefit to the enterprise or reflect a penalty to
cancel a contractual obligation.



| |                            
| | ---------------------------
| | CNH Merger Integration Plan

As part of its original merger integration, CNH
evaluated the divestiture or closure of certain manufacturing
locations and parts depots. Through the consolidation of all
functional areas, including the impact of divestiture actions
required by the European and U.S. regulatory agencies in
connection with the merger, CNH significantly reduced its
worldwide workforce. The CNH Merger Integration Plan takes into
consideration duplicate capacity and other synergies including
purchasing and supply chain management, and selling, general and
administrative functions. These restructuring actions will be
recorded and implemented through at least 2004.

The CNH Merger Integration Plan is comprised of
two separate programs, the Case Purchase Accounting
Restructuring Program and the CNH Merger Integration Program.
The Case Purchase Accounting Restructuring Program encompasses
all actions of the CNH Merger Integration Plan related to Case
which qualified for purchase accounting treatment at the time of
the merger. The CNH Merger Integration Program encompasses all
other actions of the CNH Merger Integration Plan. CNH expects to
fund the remaining cash requirements of the CNH Merger
Integration Plan with cash flows from operations and additional
borrowings under CNHs credit facilities.



| |                               
| | ------------------------------
| | CNH Merger Integration Program

During 2003, 2002 and 2001, $274 million,
$61 million and $122 million, respectively, was
recorded under the CNH Merger Integration Program. These costs
primarily relate to severance and other employee-related costs,
writedown of assets, loss on the sale of assets and businesses,
costs related to closing, selling, downsizing existing
facilities and other merger related costs. During 2001, 2002 and
2003, CNH reversed $18 million, $10 million and
$3 million, respectively, of the CNH Merger Integration
Program accrual principally as a result of determining that
costs to exit certain facilities were lower than anticipated.

F-34



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

As of December 31, 2003, CNH had terminated
3,800 employees under the CNH Merger Integration Program and has
approximately 200 employees who have yet to be terminated under
the program. These reductions were achieved by eliminating
administrative and back office functions and related personnel
and manufacturing personnel in facilities that were either
closed or downsized. These costs include severance and
contractual benefits in accordance with collective bargaining
agreements, other agreements and CNH policy, outplacement
services, medical and supplemental vacation and retirement
payments.

Costs related to closing, selling, and downsizing
existing facilities were due to required divestitures, excess
capacity and duplicate facilities and primarily relate to the
following actions under the CNH Merger Integration Plan:



| |   |                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Closing of CNHs East Moline, United States
    combine manufacturing plant and moving production to the Grand
    Island, United States plant.                                                                                                             
|
| |  | Rationalization of the crawler excavator product
    line produced at the Crepy, France facility;                                                                                                                                                           
|
| |  | Transfer production of the loader/backhoe product
    line produced at the Crepy, France facility to the Imola, Italy
    facility;                                                                                                                         
|
| |  | Outsourcing of various components produced at the
    Burlington, Iowa facility; and                                                                                                                                                                        
|
| |  | Other actions which take into consideration
    duplicate capacity and other synergies including purchasing and
    supply chain management, research and development and selling,
    general and administrative functions related to CNHs
    operations.

As management approves and commits to a
restructuring action, CNH determines the assets that will be
disposed of in the restructuring actions and records an
impairment loss equal to the lower of their carrying amount or
fair market value less the cost to sell. The fair market value
of the assets is determined as the amount at which the asset
could be bought or sold in a current transaction between willing
parties. Impairment charges of $38 million,
$13 million and $15 million were included in costs
provided for closing, selling, downsizing, exiting facilities
and asset impairments in 2003, 2002 and 2001, respectively.

Other merger related costs relate to incremental
costs incurred by CNH in conjunction with merger integration
activities at CNH. These costs are classified as
Restructuring and other merger related costs in the
accompanying statements of operations. These expenses consist
primarily of consulting expenses, systems integration expenses
and employee relocation expenses. Other merger related costs
were recorded from the time of the merger through September 2001.

F-35



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table sets forth activity for the
CNH Merger Integration Program for the years ended
December 31, 2001, 2002 and 2003:

|                             |  |               |      |                  |  |               |     |        |  |       |     |   |  |   |     |   |  |   |      |  
|---------------------------- |  | ------------- | ---- | ---------------- |  | ------------- | --- | ------ |  | ----- | --- | - |  | - | --- | - |  | - | ---- | -
|                             |  | Severance and |      | Facility Related |  |               |     |        |  |      
|                             |  | Other         |      | Costs and        |  |               |     |        |  |      
|                             |  | Employee      |      | Asset            |  | Other         |     | Other  |  |      
|                             |  | Costs         |      | Impairments      |  | Restructuring |     | Merger |  | Total
|                             |  |               |      |                  |  |               |     |        |  |      
|                             |  |              
|                             |  | (in millions)
|Balance at January 1, 2001   |  | $             | 12   |                  |  | $             | 51  |        |  | $     | 6   |   |  | $ |    |   |  | $ | 69   |  
|Additions                    |  |               | 74   |                  |  |               | 18  |        |  |       | 15  |   |  |   | 15  |   |  |   | 122  |  
|Reserves utilized            |  |               | (40  | )                |  |               | (52 | )      |  |       | (2  | ) |  |   | (15 | ) |  |   | (109 | )
|Changes in estimates         |  |               |     |                  |  |               | (15 | )      |  |       | (3  | ) |  |   |    |   |  |   | (18  | )
|                             |  |               |      |                  |  |               |     |        |  |       |     |   |  |   |     |   |  |   |      |  
|Balance at December 31, 2001 |  |               | 46   |                  |  |               | 2   |        |  |       | 16  |   |  |   |    |   |  |   | 64   |  
|Additions                    |  |               | 34   |                  |  |               | 17  |        |  |       | 10  |   |  |   |    |   |  |   | 61   |  
|Reserves utilized            |  |               | (49  | )                |  |               | (5  | )      |  |       | (16 | ) |  |   |    |   |  |   | (70  | )
|Changes in estimates         |  |               | (3   | )                |  |               | (7  | )      |  |       |    |   |  |   |    |   |  |   | (10  | )
|                             |  |               |      |                  |  |               |     |        |  |       |     |   |  |   |     |   |  |   |      |  
|Balance at December 31, 2002 |  |               | 28   |                  |  |               | 7   |        |  |       | 10  |   |  |   |    |   |  |   | 45   |  
|Additions                    |  |               | 220  |                  |  |               | 44  |        |  |       | 10  |   |  |   |    |   |  |   | 274  |  
|Reserves utilized            |  |               | (204 | )                |  |               | (32 | )      |  |       | (10 | ) |  |   |    |   |  |   | (246 | )
|Changes in estimates         |  |               | (3   | )                |  |               |    |        |  |       |    |   |  |   |    |   |  |   | (3   | )
|                             |  |               |      |                  |  |               |     |        |  |       |     |   |  |   |     |   |  |   |      |  
|Balance at December 31, 2003 |  | $             | 41   |                  |  | $             | 19  |        |  | $     | 10  |   |  | $ |    |   |  | $ | 70   |  
|                             |  |               |      |                  |  |               |     |        |  |       |     |   |  |   |     |   |  |   |      |  

The specific restructuring measures and
associated estimated costs were based on managements best
business judgment under prevailing circumstances. Management
believes that the CNH Merger Integration Program reserve balance
at December 31, 2003, is adequate to carry out the
restructuring activities as outlined above, and CNH anticipates
that the majority of all actions currently accrued for will be
completed by December 31, 2004. Costs relating to the
majority of these actions will be expended through the second
quarter of 2004. As prescribed under U.S. GAAP, if future
events warrant changes to the reserve, such adjustments will be
reflected in the applicable statements of operations as
Restructuring.



| |                                                   
| | --------------------------------------------------
| | Case Purchase Accounting Restructuring
    Program

During 1999, CNH recorded $90 million under
the Case Purchase Accounting Restructuring Program as a part of
the preliminary allocation of the Case purchase price. During
2000, in connection with the finalization of the Case purchase
price allocation, an additional $264 million was recorded
for the Case Purchase Accounting Restructuring Program. These
costs primarily relate to closing, selling, and downsizing
existing facilities and severance and other employee-related
costs. During 2001, CNH reversed $31 million of the Case
Purchase Accounting Restructuring Program accrual to goodwill as
more employees left CNH voluntarily than originally anticipated
and as costs to exit certain facilities were determined to be
lower than anticipated.

F-36



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table sets forth the CNH activities
for the years ended December 31, 2001 and 2002 under the
Case Purchase Accounting Restructuring Program:

|                             |  |               |     |                  |  |       |     |       |  |   |    |   |  |   |      |  
|---------------------------- |  | ------------- | --- | ---------------- |  | ----- | --- | ----- |  | - | -- | - |  | - | ---- | -
|                             |  | Severance and |     |                  |  |       |     |      
|                             |  | other         |     |                  |  |       |     |      
|                             |  | employee      |     | Facility related |  | Other |     |      
|                             |  | costs         |     | costs            |  | costs |     | Total
|                             |  |               |     |                  |  |       |     |      
|                             |  |              
|                             |  | (in millions)
|Balance at January 1, 2001   |  | $             | 68  |                  |  | $     | 113 |       |  | $ | 1  |   |  | $ | 182  |  
|Reserves utilized            |  |               | (50 | )                |  |       | (91 | )     |  |   |   |   |  |   | (141 | )
|Changes in estimates         |  |               | (12 | )                |  |       | (19 | )     |  |   |   |   |  |   | (31  | )
|                             |  |               |     |                  |  |       |     |       |  |   |    |   |  |   |      |  
|Balance at December 31, 2001 |  |               | 6   |                  |  |       | 3   |       |  |   | 1  |   |  |   | 10   |  
|Reserves utilized            |  |               | (6  | )                |  |       | (3  | )     |  |   | (1 | ) |  |   | (10  | )
|                             |  |               |     |                  |  |       |     |       |  |   |    |   |  |   |      |  
|Balance at December 31, 2002 |  | $             |    |                  |  | $     |    |       |  | $ |   |   |  | $ |     |  
|                             |  |               |     |                  |  |       |     |       |  |   |    |   |  |   |      |  

The specific restructuring measures and
associated estimated costs were based on managements best
business judgment under prevailing circumstances. All actions
recorded in the Case Purchase Accounting Restructuring Program
have been completed and there are no unresolved activities. Any
additional restructuring actions relating to Case locations or
employees are recorded as restructuring costs under the CNH
Merger Integration Program.



| |                                                       
| | ------------------------------------------------------
| | Kobelco Purchase Accounting Restructuring
    Programs

During 2002, CNH recorded $5 million under
the Kobelco Purchase Accounting Restructuring Programs as a part
of the preliminary allocation of the Kobelco America and Kobelco
Europe purchase price. These amounts primarily relate to costs
related to closing, selling, and downsizing existing facilities
and severance and other employee-related costs. During 2003,
$3 million of these reserves were utilized. As of
December 31, 2003, reserves under this program were
approximately $2 million.

Note 14: Employee Benefit Plans and
Postretirement Benefits



| |                                                     
| | ----------------------------------------------------
| | Defined Benefit and Postretirement Benefit
    Plans

CNH has various defined benefit plans that cover
certain employees. Benefits are generally based on years of
service and, for most salaried employees, on final average
compensation. Benefits for salaried employees were frozen for
pay and service as of December 31, 2000. Salaried employees
receive a 3% increase for every year of employment after
December 31, 2000 for a maximum of three years.

CNHs funding policies are to contribute to
the plans amounts necessary to, at a minimum, satisfy the
funding requirements as prescribed by the laws and regulations
of each country. Plan assets consist principally of listed
equity and fixed income securities.

CNH has postretirement health and life insurance
plans that cover the majority of its U.S. and Canadian
employees. For New Holland U.S. salaried and hourly
employees, and for Case U.S. non-represented hourly and Case
U.S. and Canadian salaried employees, the plans cover employees
retiring on or after attaining age 55 who have had at least
10 years of service with the Company. For Case U.S. and
Canadian hourly employees represented by a labor union, the
plans generally cover employees who retire pursuant to their
respective hourly plans and collective bargaining agreements.
These benefits may be subject to deductibles, copayment
provisions and other limitations, and CNH has reserved the right
to change these benefits, subject to the provisions of any
collective bargaining agreement. CNH U.S. and Canadian employees
hired after January 1, 2001 and January 1, 2002,
respectively, are not eligible for postretirement health and
life insurance

F-37



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

benefits under the CNH plans. Beginning in 2005,
a defined dollar benefit will apply to salaried retiree medical
coverage. Once the defined dollar benefit is reached,
contributions paid by the retirees will increase by an amount
equal to any premium cost increases above that amount.

In connection with CNHs acquisition of
Orenstein & Koppel Aktiengesellschaft
(O&K) in December 1998, CNH recorded an unfunded
pension obligation of approximately $140 million related to
pension rights of non-active employees of O&K who are
retired or whose employment has been terminated and who have
vested rights. In connection with the acquisition of O&K,
CNH entered into an agreement with the seller of O&K whereby
the seller, in return for a payment of $140 million , has
agreed to reimburse O&K for all future pension payments,
including death benefits and medical support liabilities and any
funding obligations under the collective bargaining agreement
related to the non-active employees of O&K. An irrevocable,
revolving bank guarantee was obtained to back the sellers
guarantee of the future pension payment reimbursement. The
actuarial present value related to this benefit obligation that
is recorded on the balance sheet and reflected in the
rollforward below was $171 million and $145 million at
December 31, 2003 and 2002, respectively. CNH has an equal,
corresponding other asset on its balance sheet to reflect the
payment made by CNH to the seller in conjunction with the
acquisition.

Former parent companies of New Holland and Case
retained certain accumulated pension benefit obligations and
related assets and certain accumulated postretirement health and
life insurance benefit obligations. Accordingly, as these remain
the obligations of the former parent companies, the financial
statements of CNH do not reflect any related assets or
liabilities.

The following assumptions were utilized in
determining the funded status of CNHs defined benefit
pension plans for the years ended December 31, 2003, 2002
and 2001:

|                                                               |  |       |       |          |  |       |       |          |  |       |       |          |  |  |       |  |  |  |       |  |  |  |       | 
|-------------------------------------------------------------- |  | ----- | ----- | -------- |  | ----- | ----- | -------- |  | ----- | ----- | -------- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                                               |  |       |       |          |  |      
|                                                               |  | 2003  |       | 2002     |  | 2001 
|                                                               |  |       |       |          |  |      
|                                                               |  | U.S.  |       | Non-U.S. |  | U.S.  |       | Non-U.S. |  | U.S.  |       | Non-U.S.
|                                                               |  | Plans |       | Plans    |  | Plans |       | Plans    |  | Plans |       | Plans   
|                                                               |  |       |       |          |  |       |       |          |  |       |       |         
|Weighted-average discount rates for obligations                |  |       | 6.25% |          |  |       | 5.31% |          |  |       | 6.75% |          |  |  | 5.58% |  |  |  | 7.25% |  |  |  | 5.91% | 
|Weighted-average discount rates for expense                    |  |       | 6.75% |          |  |       | 5.58% |          |  |       | 7.25% |          |  |  | 5.91% |  |  |  | 7.50% |  |  |  | 5.92% | 
|Rate of increase in future compensation                        |  |       | N/A   |          |  |       | 3.43% |          |  |       | N/A   |          |  |  | 3.42% |  |  |  | N/A   |  |  |  | 3.81% | 
|Weighted-average, long-term rates of return on
    plan assets |  |       | 8.75% |          |  |       | 7.33% |          |  |       | 9.00% |          |  |  | 7.33% |  |  |  | 9.00% |  |  |  | 7.31% | 

The expected long-term rate of return on plan
assets reflects managements expectations of long-term
average rates of earnings on funds invested to provide for
benefits included in the projected benefit obligations. The
return is based on the outlook for inflation, fixed income
returns and equity returns, while also considering the
plans historical returns, their asset allocation and
investment strategy, as well as the views of investment managers
and other large pension plan sponsors. Although not a guarantee
of future results, the average annual return of key indices,
allocated in a fashion similar to our U.S. plan assets,
reflect a return of 10.25% over the last ten years and
12.06% over the past 20 years. The expected long-term rate
of return, which will be used beginning in 2004, will be 8.75%
for the U.S. plans and between 6.00% and 7.50% for non-U.S.
plans.

F-38



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following assumptions were utilized in
determining the accumulated postretirement benefit obligation of
CNHs postretirement health and life insurance plans for
the years ended December 31, 2003, 2002 and 2001:

|                                                                   |  |       |        |          |  |       |       |          |  |       |        |          |  |  |       |  |  |  |       |  |  |  |       | 
|------------------------------------------------------------------ |  | ----- | ------ | -------- |  | ----- | ----- | -------- |  | ----- | ------ | -------- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                                                   |  |       |        |          |  |      
|                                                                   |  | 2003  |        | 2002     |  | 2001 
|                                                                   |  |       |        |          |  |      
|                                                                   |  | U.S.  |        | Canadian |  | U.S.  |       | Canadian |  | U.S.  |        | Canadian
|                                                                   |  | Plans |        | Plan     |  | Plans |       | Plan     |  | Plans |        | Plan    
|                                                                   |  |       |        |          |  |       |       |          |  |       |        |         
|Weighted-average discount rates for obligations                    |  |       | 6.25%  |          |  |       | 6.00% |          |  |       | 6.75%  |          |  |  | 6.75% |  |  |  | 7.25% |  |  |  | 6.50% | 
|Weighted-average discount rates for expense                        |  |       | 6.75%  |          |  |       | 6.75% |          |  |       | 7.25%  |          |  |  | 6.50% |  |  |  | 7.50% |  |  |  | 6.50% | 
|Rate of increase in future compensation                            |  |       | 4.00%  |          |  |       | 3.50% |          |  |       | 4.00%  |          |  |  | 3.50% |  |  |  | 4.00% |  |  |  | 3.50% | 
|Weighted-average, assumed healthcare cost trend
    rate           |  |       | 10.00% |          |  |       | 9.00% |          |  |       | 10.00% |          |  |  | 9.00% |  |  |  | 8.00% |  |  |  | 8.50% | 
|Weighted-average, assumed ultimate healthcare
    cost trend rate  |  |       | 5.00%  |          |  |       | 5.00% |          |  |       | 5.00%  |          |  |  | 5.00% |  |  |  | 5.50% |  |  |  | 5.00% | 
|Year anticipated attaining ultimate healthcare
    cost trend rate |  |       | 2008   |          |  |       | 2011  |          |  |       | 2007   |          |  |  | 2010  |  |  |  | 2006  |  |  |  | 2008  | 

CNH uses a measurement date of December 31
for its qualified and non-qualified pension plans and
postretirement benefit plans.

Plans in the U.S. and U.K. reflect the majority
of CNHs pension and postretirement benefit plan
obligations. The fair value of the CNH U.S. qualified pension
plan assets as of December 31, 2003 and 2002 was
approximately $600 million and $483 million,
respectively. The expected long-term rate of return on the plan
assets was 8.75% in 2003 and 9.00% in 2002. The fair value of
the CNH U.K. qualified pension plan assets as of
December 31, 2003 and 2002 was approximately
$654 million and $531 million, respectively.

The asset allocation for the CNH U.S. and U.K.
qualified pension plans and the target allocation for 2004 are
as follows:

|                |                   |            |  |               |  |            |  |               |  |      |  |      |  |  |  |     |  |  |  |     |  |  |  |     | 
|--------------- | ----------------- | ---------- |  | ------------- |  | ---------- |  | ------------- |  | ---- |  | ---- |  |  |  | --- |  |  |  | --- |  |  |  | --- | 
|                |                   |            |  |              
|                |                   | U.S. Plans |  | U.K. Plans   
|                |                   |            |  |              
|                |                   |            |  |               |  |            |  |              
|                |                   |            |  | Percentage of |  |            |  | Percentage of
|                |                   |            |  | Plan Assets   |  |            |  | Plan Assets  
|                |                   | Target     |  | as of         |  | Target     |  | as of        
|                |                   | Allocation |  | December 31,  |  | Allocation |  | December 31, 
|                |                   | 2004       |  | 2003          |  | 2002       |  | 2004          |  | 2003 |  | 2002
|                |                   |            |  |               |  |            |  |               |  |      |  |     
|Asset category: |                   |            |  |               |  |            |  |               |  |      |  |      |  |  |  |     |  |  |  |     |  |  |  |    
|                | Equity securities |            |  | 53%           |  |            |  | 54%           |  |      |  | 53%  |  |  |  | 70% |  |  |  | 68% |  |  |  | 54% | 
|                | Debt securities   |            |  | 47%           |  |            |  | 45%           |  |      |  | 47%  |  |  |  | 30% |  |  |  | 32% |  |  |  | 46% | 
|                | Cash              |            |  | 0%            |  |            |  | 1%            |  |      |  | 0%   |  |  |  | 0%  |  |  |  | 0%  |  |  |  | 0%  | 

The investment strategy followed by CNH varies by
country depending on the circumstances of the underlying plan.
Typically less mature plan benefit obligations are funded by
using more equity securities as they are expected to achieve
long-term growth while exceeding inflation. More mature plan
benefit obligations are funded using more fixed income
securities as they are expected to produce current income with
limited volatility. Risk management practices include the use of
multiple asset classes and investment managers within each asset
class for diversification purposes. Specific guidelines for each
asset class and investment manager are implemented and monitored.

F-39



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

CNH currently estimates that discretionary
contributions to its U.S. defined benefit pension plan
trust will be approximately $155 million in 2004. Estimated
contributions to the CNH postretirement benefit plan in the
U.S. total approximately $65 million for 2004.

On December 8, 2003, the Act was signed into
law. The Act introduced a prescription drug benefit program
under Medicare as well as a federal subsidy to sponsors of
retiree health care benefit plans. Certain accounting issues
raised by the Act, such as how to account for the federal
subsidy, are not explicitly addressed by FASB Statement
No. 106 Employers Accounting for Postretirement
Benefits Other Than Pensions The FASB issued
FSP No. 106-1, which allows sponsors to elect to defer
recognition of the effects of the Act.

In accordance with FSP No. 106-1, CNH
has elected to defer recognition of the effects of the Act.
Accordingly, the financial statements do not reflect the effects
of the Act.

F-40



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following summarizes data from CNHs
defined benefit pension plans and postretirement health and life
insurance plans for the years ended December 31, 2003 and
2002:

|                                                                                              |  |                  |        |                |  |       |       |      |  |   |        |   |  |   |        |  
|--------------------------------------------------------------------------------------------- |  | ---------------- | ------ | -------------- |  | ----- | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                              |  |                  |        |                |  |      
|                                                                                              |  |                  |        |                |  | Other
|                                                                                              |  |                  |        | Postretirement
|                                                                                              |  | Pension Benefits |        | Benefits      
|                                                                                              |  |                  |        |               
|                                                                                              |  | 2003             |        | 2002           |  | 2003  |       | 2002
|                                                                                              |  |                  |        |                |  |       |       |     
|                                                                                              |  |                 
|                                                                                              |  | (in millions)   
|Change in benefit obligations:                                                                |  |                  |        |                |  |       |       |      |  |   |        |   |  |   |        |  
|Actuarial present value of benefit obligation at
    beginning of measurement period          |  | $                | 2,027  |                |  | $     | 1,759 |      |  | $ | 1,019  |   |  | $ | 863    |  
|Service cost                                                                                  |  |                  | 27     |                |  |       | 25    |      |  |   | 17     |   |  |   | 15     |  
|Interest cost                                                                                 |  |                  | 123    |                |  |       | 115   |      |  |   | 71     |   |  |   | 58     |  
|Plan participants contributions                                                              |  |                  | 5      |                |  |       | 5     |      |  |   | 5      |   |  |   | 4      |  
|Actuarial loss                                                                                |  |                  | 131    |                |  |       | 172   |      |  |   | 366    |   |  |   | 134    |  
|Currency fluctuations                                                                         |  |                  | 185    |                |  |       | 140   |      |  |   | 7      |   |  |   |       |  
|Gross benefits paid                                                                           |  |                  | (125   | )              |  |       | (105  | )    |  |   | (63    | ) |  |   | (48    | )
|Plan amendments                                                                               |  |                  |       |                |  |       | (80   | )    |  |   | (21    | ) |  |   |       |  
|Acquisitions/ divestitures                                                                    |  |                  | (5     | )              |  |       | (6    | )    |  |   |       |   |  |   |       |  
|Curtailment loss                                                                              |  |                  | 58     |                |  |       | 2     |      |  |   | 93     |   |  |   |       |  
|Adjustments to reflect re-measurement of benefit
    obligation                               |  |                  |       |                |  |       |      |      |  |   |       |   |  |   | (7     | )
|                                                                                              |  |                  |        |                |  |       |       |      |  |   |        |   |  |   |        |  
|Actuarial present value of benefit obligation at
    end of measurement period                |  |                  | 2,426  |                |  |       | 2,027 |      |  |   | 1,494  |   |  |   | 1,019  |  
|                                                                                              |  |                  |        |                |  |       |       |      |  |   |        |   |  |   |        |  
|Change in plan assets:                                                                        |  |                  |        |                |  |       |       |      |  |   |        |   |  |   |        |  
|Plan assets at fair value at beginning of
    measurement period                              |  |                  | 1,130  |                |  |       | 1,301 |      |  |   |       |   |  |   |       |  
|Actual return on plan assets                                                                  |  |                  | 182    |                |  |       | (153  | )    |  |   |       |   |  |   |       |  
|Currency fluctuations                                                                         |  |                  | 92     |                |  |       | 62    |      |  |   |       |   |  |   |       |  
|Employer contributions                                                                        |  |                  | 114    |                |  |       | 28    |      |  |   | 58     |   |  |   | 44     |  
|Plan participants contributions                                                              |  |                  | 5      |                |  |       | 5     |      |  |   | 5      |   |  |   | 4      |  
|Gross benefits paid                                                                           |  |                  | (125   | )              |  |       | (105  | )    |  |   | (63    | ) |  |   | (48    | )
|Acquisitions/ divestitures                                                                    |  |                  | (5     | )              |  |       | (8    | )    |  |   |       |   |  |   |       |  
|                                                                                              |  |                  |        |                |  |       |       |      |  |   |        |   |  |   |        |  
|Plan assets at fair value at end of measurement
    period                                    |  |                  | 1,393  |                |  |       | 1,130 |      |  |   |       |   |  |   |       |  
|                                                                                              |  |                  |        |                |  |       |       |      |  |   |        |   |  |   |        |  
|Funded status:                                                                                |  |                  | (1,033 | )              |  |       | (897  | )    |  |   | (1,494 | ) |  |   | (1,019 | )
|Unrecognized prior service cost                                                               |  |                  | 17     |                |  |       | 20    |      |  |   | (46    | ) |  |   | (42    | )
|Unrecognized net loss resulting from plan
    experience and changes in actuarial assumptions |  |                  | 718    |                |  |       | 689   |      |  |   | 709    |   |  |   | 375    |  
|Remaining unrecognized net asset at initial
    application                                   |  |                  |       |                |  |       |      |      |  |   | 37     |   |  |   | 46     |  
|                                                                                              |  |                  |        |                |  |       |       |      |  |   |        |   |  |   |        |  
|Net amount recognized at end of year                                                          |  | $                | (298   | )              |  | $     | (188  | )    |  | $ | (794   | ) |  | $ | (640   | )
|                                                                                              |  |                  |        |                |  |       |       |      |  |   |        |   |  |   |        |  

F-41



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                                         |  |                  |        |                |  |       |      |      |  |   |      |   |  |   |      |  
|-------------------------------------------------------- |  | ---------------- | ------ | -------------- |  | ----- | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                                         |  |                  |        |                |  |      
|                                                         |  |                  |        |                |  | Other
|                                                         |  |                  |        | Postretirement
|                                                         |  | Pension Benefits |        | Benefits      
|                                                         |  |                  |        |               
|                                                         |  | 2003             |        | 2002           |  | 2003  |      | 2002
|                                                         |  |                  |        |                |  |       |      |     
|                                                         |  |                 
|                                                         |  | (in millions)   
|Amounts recognized in the balance sheets
    consist of: |  |                  |        |                |  |       |      |      |  |   |      |   |  |   |      |  
|Prepaid benefit cost                                     |  | $                | 79     |                |  | $     | 121  |      |  | $ |     |   |  | $ |     |  
|Accrued benefit liability                                |  |                  | (1,006 | )              |  |       | (949 | )    |  |   | (794 | ) |  |   | (640 | )
|Intangible asset                                         |  |                  | 17     |                |  |       | 20   |      |  |   |     |   |  |   |     |  
|Deferred tax assets                                      |  |                  | 222    |                |  |       | 223  |      |  |   |     |   |  |   |     |  
|Accumulated other comprehensive income                   |  |                  | 398    |                |  |       | 397  |      |  |   |     |   |  |   |     |  
|                                                         |  |                  |        |                |  |       |      |      |  |   |      |   |  |   |      |  
|Net amount recognized at end of year                     |  | $                | (290   | )              |  | $     | (188 | )    |  | $ | (794 | ) |  | $ | (640 | )
|                                                         |  |                  |        |                |  |       |      |      |  |   |      |   |  |   |      |  

The following summarizes the statement of
operations impact of CNHs defined benefit pension plans
and postretirement health and life insurance plans for the years
ended December 31, 2003, 2002 and 2001:

|                                             |                    |                  |     |                |     |      |      |       |    |      |      |      |    |   |     |     |     |   |    |     |    |   |    |     |    | 
|-------------------------------------------- | ------------------ | ---------------- | --- | -------------- | --- | ---- | ---- | ----- | -- | ---- | ---- | ---- | -- | - | --- | --- | --- | - | -- | --- | -- | - | -- | --- | -- | 
|                                             |                    |                  |     |                |     |      |      |      
|                                             |                    |                  |     |                |     |      |      | Other
|                                             |                    |                  |     | Postretirement
|                                             |                    | Pension Benefits |     | Benefits      
|                                             |                    |                  |     |               
|                                             |                    | 2003             |     | 2002           |     | 2001 |      | 2003  |    | 2002 |      | 2001
|                                             |                    |                  |     |                |     |      |      |       |    |      |      |     
|                                             |                    |                 
|                                             |                    | (in millions)   
|Components of net periodic benefit
    cost: |                    |                  |     |                |     |      |      |       |    |      |      |      |    |   |     |     |     |   |    |     |    |   |    |    
|Service cost                                 |                    | $                | 27  |                |     | $    | 25   |       |    | $    | 29   |      |    | $ | 17  |     |     | $ | 15 |     |    | $ | 12 |    
|Interest cost                                |                    |                  | 123 |                |     |      | 115  |       |    |      | 114  |      |    |   | 71  |     |     |   | 58 |     |    |   | 50 |    
|Expected return on assets                    |                    |                  | (95 | )              |     |      | (110 | )     |    |      | (119 | )    |    |   |    |     |     |   |   |     |    |   |   |    
|Amortization of:                             |                    |                  |     |                |     |      |      |       |    |      |      |      |    |   |     |     |     |   |    |     |    |   |    |    
|                                             | Transition asset   |                  |     |               |     |      |      |      |    |      |      |     |    |   |     | 9   |     |   |    | 9   |    |   |    | 9   |   
|                                             | Prior service cost |                  |     | 3              |     |      |      | 4     |    |      |      | 3    |    |   |     | (17 | )   |   |    | (14 | )  |   |    | (13 | ) 
|                                             | Actuarial loss     |                  |     | 49             |     |      |      | 22    |    |      |      | 3    |    |   |     | 35  |     |   |    | 16  |    |   |    | 6   |   
|                                             |                    |                  |     |                |     |      |      |       |    |      |      |      |    |   |     |     |     |   |    |     |    |   |    |    
|Net periodic benefit cost                    |                    |                  | 107 |                |     |      | 56   |       |    |      | 30   |      |    |   | 115 |     |     |   | 84 |     |    |   | 64 |    
|Curtailment loss                             |                    |                  | 58  |                |     |      | 2    |       |    |      | 1    |      |    |   | 93  |     |     |   |   |     |    |   |   |    
|                                             |                    |                  |     |                |     |      |      |       |    |      |      |      |    |   |     |     |     |   |    |     |    |   |    |    
|                                             |                    | Total expense    |     | $              | 165 |      |      | $     | 58 |      |      | $    | 31 |   |     | $   | 208 |   |    | $   | 84 |   |    | $   | 64 | 
|                                             |                    |                  |     |                |     |      |      |       |    |      |      |      |    |   |     |     |     |   |    |     |    |   |    |    

The aggregate projected benefit obligation,
aggregate accumulated benefit obligation and aggregate fair
value of plan assets for pension plans with benefit obligations
in excess of plan assets were $2.4 billion,
$2.3 billion and $1.4 billion, respectfully as of
December 31, 2003 and $2.0 billion, $1.9 billion
and $1.1 billion, respectively, as of December 31,
2002.

Due to the poor performance of equity markets in
2000, 2001 and 2002, the value of the CNH pension fund assets,
which principally relate to plans in the United States and
United Kingdom, declined. SFAS No. 87,
Employers Accounting for Pensions requires
recognition of an additional minimum liability if the market
value of plan assets is less than the accumulated benefit
obligation at the end of the plan year. At December 31,
2003, this resulted in a decrease in accumulated other
comprehensive income, a component of Shareholders Equity,
of approximately $398 million, net of tax of
$222 million. These amounts are essentially unchanged from
December 31, 2002.

We have experienced a continuing high level of
other post-retirement employee benefit costs, principally
related to health care, during 2003. Consequently, we will
maintain the 2003 initial annual estimated rate of increase in
the per capita cost of healthcare at 10% for 2004 despite
earlier expectations that this rate would decrease. The initial
annual estimated rate of increase in per capita cost of
healthcare will decrease by 1%

F-42



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

in each subsequent year until reaching 5% in
2008. Increasing the assumed healthcare cost trend rate by one
percentage point would increase the total accumulated
postretirement benefit obligation at December 31, 2003, by
approximately $142 million, and would increase the
aggregate of the service cost and interest cost components of
the net 2003 postretirement benefit cost by approximately
$22 million. Decreasing the assumed healthcare cost trend
rate by one percentage point would decrease the total
accumulated postretirement benefit obligation at
December 31, 2003, by approximately $120 million, and
would decrease the aggregate of the service cost and interest
cost components of the net 2003 postretirement benefit cost by
approximately $19 million.



| |               
| | --------------
| | Other Programs

In Belgium, early retirement liabilities were
accrued in connection with the restructuring of CNHs
Belgian facilities initiated in 1991. Such liabilities were
approximately $14 million and $13 million at
December 31, 2003 and 2002, respectively. Programs in other
countries are provided through payroll tax and other social
contributions in accordance with local statutory requirements.

As required by Italian labor legislation, an
accrual for an employee severance indemnity has been provided
for a portion of CNHs Italian employees annual
salaries, indexed for inflation. At December 31, 2003 and
2002, the indemnity accruals were $97 million and
$87 million, respectively.

Additionally, certain executives participate in a
special plan approved by the Board of Directors of Fiat and CNH
(the Individual Top Hat Scheme), which provides a
lump sum to be paid in installments if an executive leaves, in
certain circumstances, Fiat and/or its subsidiaries before the
age of 65. Contributions to the Individual Top Hat Scheme
totaled $745,000, $446,000 and $1,717,000 in 2003, 2002 and
2001, respectively.



| |                           
| | --------------------------
| | Defined Contribution Plans

Effective January 1, 2001, both the Case and
New Holland entities provide an identical defined contribution
plan for their U.S. salaried employees (the CNH
Salaried Plan). The CNH Salaried Plan allows employee
elective deferrals on a pretax basis of up to 25% of pay with
CNH matching such deferrals at a rate of 70 cents for each
dollar deferred on the first 10% of participant contributions.
In addition to matching contributions, CNH provides a fixed
contribution of five percent of eligible salary per year. During
2003, 2002 and 2001, CNH contributed $14 million,
$14 million and $15 million, respectively, in matching
contributions. During 2003, 2002 and 2001, CNH contributed
$12 million, $13 million and $8 million,
respectively, in fixed contributions. Subject to CNHs
operating results, CNH may make additional profit sharing
matching contributions to the defined contribution plan. CNH
made no profit sharing contributions in 2003, 2002 or 2001.

Effective January 1, 2001, both the Case and
New Holland entities provide an identical defined contribution
plan for their U.S. non-represented hourly employees (the
CNH Hourly Plan). These plans allow employee
elective deferrals on a pretax basis of up to 25% (15% prior to
January 1, 2002) of base compensation with CNH matching
such deferrals at a rate of 50% on the first 10% of a
participants contribution. During 2003, 2002 and 2001, CNH
contributed $3 million, $3 million and
$5 million, respectively, in matching contributions.

Effective July 1, 2003, the Company updated
the CNH Hourly Plan specific to U.S. non-represented hourly
employees hired on or after July 1, 2003, to include a
fixed contribution of 5% of eligible pay, in lieu of
participating in the Companys defined benefit pension plan.

CNH also maintains a plan for represented hourly
employees covered by collective bargaining agreements, which
provides for employee elective deferrals of up to 25% of
eligible pay. UAW represented

F-43



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

participants hired after the 1998 collective
bargaining agreement are eligible for a 25% match on the first
6% of participant contributions. All other represented employees
and UAW represented participants hired before the 1998
collective bargaining agreement are not eligible for this match.

Note 15: Other Accrued
Liabilities

A summary of other accrued liabilities as of
December 31, 2003 and 2002 is as follows:

|                                          |                                 |               |     |       |  |   |     |       | 
|----------------------------------------- | ------------------------------- | ------------- | --- | ----- |  | - | --- | ----- | 
|                                          |                                 | 2003          |     | 2002 
|                                          |                                 |               |     |      
|                                          |                                 |              
|                                          |                                 | (in millions)
|Marketing and sales incentive programs    |                                 | $             | 371 |       |  | $ | 333 |      
|Current deferred tax liability            |                                 |               | 171 |       |  |   | 223 |      
|Warranty provisions                       |                                 |               | 183 |       |  |   | 169 |      
|Accrued payroll                           |                                 |               | 130 |       |  |   | 140 |      
|Value-added taxes and other taxes payable |                                 |               | 167 |       |  |   | 107 |      
|Other accrued expenses                    |                                 |               | 773 |       |  |   | 740 |      
|                                          |                                 |               |     |       |  |   |     |      
|                                          | Total other accrued liabilities |               | $   | 1,795 |  |   | $   | 1,712 | 
|                                          |                                 |               |     |       |  |   |     |      

Note 16: Commitments and
Contingencies



| |              
| | -------------
| | Environmental

CNH is involved in environmental remediation
activities concerning potential liabilities under
U.S. federal, U.S. state and
non-U.S. environmental laws. These activities involve
non-owned Waste Sites and properties currently or formerly owned
by CNH where it is believed there has been a release of
hazardous substances. These properties comprise a number of
sites currently or formerly operated by CNH or its predecessors.
Expenditures for ongoing compliance with environmental
regulations that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an
existing condition caused by past operations and which do not
contribute to current or future revenue generation are expensed.
Liabilities are recorded when environmental assessments indicate
that remedial efforts are probable and the costs can be
reasonably estimated. Estimates of the liability are provided in
ranges to reflect uncertainties due to a variety of factors that
include lack of direct knowledge of historic industrial and
waste handling activities that may have resulted in releases of
hazardous substances, inherent limitations of subsurface soil
and groundwater investigatory techniques, future changes in the
laws, including their interpretation and implementation by
governmental authorities, changes in remedial technologies,
level of responsibility to be assumed by other potentially
responsible parties, and future land use. Probable liabilities
may also be the subject of both asserted and unasserted claims,
including those by government authorities that may be dormant or
pursued over extremely long time periods. Moreover, because
liability under CERCLA and similar laws can be strict, joint and
several, CNH could be required to pay amounts in excess of its
pro-rata share of remediation costs at the Waste Sites.
Settlements and government-approved and completed remediation
projects can, in certain circumstances, be reopened based on
newly discovered conditions and be subject to further remedial
activities or settlement payments.

Based upon information currently available,
management estimates potential environmental liabilities
including remediation, decommissioning, restoration, monitoring,
and other closure costs associated with current or formerly
owned or operated facilities, the Waste Sites, and other claims
to be in the range of $42 million to $101 million. As
of December 31, 2003, environmental reserves of
approximately $62 million had been established to address
these specific estimated potential liabilities. Such reserves
are undiscounted. After considering these reserves, management
is of the opinion that the outcome of these matters will not
have a material adverse effect on CNHs financial position
or results of operations.

F-44



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                  
| | -----------------
| | Product Liability

Product liability claims against CNH arise from
time to time in the ordinary course of business. There is an
inherent uncertainty as to the eventual resolution of unsettled
claims. However, in the opinion of management, any losses with
respect to these existing claims will not have a material
adverse effect on CNHs financial position or results of
operations.



| |                 
| | ----------------
| | Other Litigation

In December 2002, six named individuals filed a
purported class action lawsuit in the Federal District Court for
the Eastern District of Michigan against El Paso Tennessee
Pipeline Co. (formerly Tenneco, Inc.) (El Paso) and
Case. (Yolton, et. al v. El Paso Tennessee Pipeline Co., and
Case Corporation a/k/a/ Case Power Equipment Corporation, Docket
number 02-74276). The lawsuit alleged breach of contract and
violations of various provisions of the Employee Retirement
Income Security Act arising due to alleged changes in health
insurance benefits provided to employees of the Tenneco, Inc.
agriculture and construction equipment business who retired
before selected assets of that business were transferred to Case
in June 1994. The changes resulted from an agreement between an
El Paso subsidiary and the UAW to cap (prior to the transfer of
the agricultural and construction equipment business to Case)
the amount of retiree health insurance costs (the
Cap). The UAW retirees were to bear the costs above
the Cap. El Paso administers the health insurance programs for
the purported plaintiff class, and Case and El Paso are parties
to a 1994 agreement under which El Paso has agreed to indemnify
Case for the costs of the health insurance program. The lawsuit
arose after El Paso notified the retirees that the retirees will
be required to pay a portion of the cost of those benefits
because the Cap had been reached. The plaintiffs also filed a
motion for preliminary injunction, asking the court to prevent
El Paso and/or Case from requesting the retirees to pay a
portion of the health benefits. On December 31, 2003, the
court entered a preliminary injunction order requiring El Paso
to pay the full costs of health insurance benefits for the
purported plaintiff class. El Paso filed a motion for
reconsideration. On March 9, 2004, the court entered an
order granting plaintiffs motion for preliminary
injunction. Pursuant to the March 9, 2004 order, the court
vacated its December 31, 2003 order and ordered Case to pay
the full costs of health insurance benefits for the purported
plaintiff class from March 2004. However, El Paso has not
disputed its responsibility to pay amounts up to the Cap. Case
has filed a motion with the court seeking to have the
preliminary injunction stayed and the order reconsidered because
we believe El Paso is primarily responsible for the costs of the
health insurance benefits including amounts over the Cap and, in
any event, Case should not be responsible for amounts up to the
Cap. Case also has filed a motion for summary judgment that El
Paso indemnify Case pursuant to the terms of the 1994 agreement.
Until the court rules on Cases motion to reconsider our
summary judgment motion, Case is obligated to pay the amounts
above the Cap. While CNH is unable to predict the outcome of
this proceeding, CNH believes that Case has good legal and
factual defenses and CNH will continue to vigorously defend
against this lawsuit.

F-45



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |            
| | -----------
| | Commitments

Minimum rental commitments at December 31,
2003, under non-cancelable operating leases with lease terms in
excess of one year are as follows:

|           |                                  |               |    |     | 
|---------- | -------------------------------- | ------------- | -- | --- | 
|           |                                  | Amount       
|           |                                  |              
|           |                                  | (in millions)
|           |                                  |              
|2004       |                                  | $             | 43 |    
|2005       |                                  |               | 28 |    
|2006       |                                  |               | 22 |    
|2007       |                                  |               | 18 |    
|2008       |                                  |               | 16 |    
|Thereafter |                                  |               | 72 |    
|           |                                  |               |    |    
|           | Total minimum rental commitments |               | $  | 199 | 
|           |                                  |               |    |    

Total rental expense for all operating leases was
$33 million, $40 million and $44 million for the
years ended December 31, 2003, 2002 and 2001, respectively.

In the normal course of business, CNH and its
subsidiaries issue guarantees in the form of bonds guaranteeing
the payment of value added taxes, performance bonds, custom
bonds, bid bonds and bonds related to litigation. As of
December 31, 2003, total commitments of this type total
approximately $201 million.



| |           
| | ----------
| | Guarantees

As described in Note 2 Summary of
Significant Accounting Policies, CNH pays for normal
warranty costs and the costs of major programs to modify
products in the customers possession within certain
pre-established time periods. A summary of recorded activity for
the years ended December 31, 2003 and 2002 for this
commitment is as follows:

|                                  |  |               |      |      |  |   |      |  
|--------------------------------- |  | ------------- | ---- | ---- |  | - | ---- | -
|                                  |  | 2003          |      | 2002
|                                  |  |               |      |     
|                                  |  |              
|                                  |  | (in millions)
|Balance, beginning of year        |  | $             | 169  |      |  | $ | 189  |  
|Current year provision            |  |               | 247  |      |  |   | 216  |  
|Claims paid and other adjustments |  |               | (233 | )    |  |   | (236 | )
|                                  |  |               |      |      |  |   |      |  
|Balance, end of year              |  | $             | 183  |      |  | $ | 169  |  
|                                  |  |               |      |      |  |   |      |  

Note 17: Financial
Instruments



| |                                               
| | ----------------------------------------------
| | Fair Market Value of Financial
    Instruments

The fair market value of a financial instrument
is the price at which one party would assume the rights and/or
duties of another party. The estimated fair market values of
financial instruments that do not approximate their carrying
values in the financial statements as of December 31, 2003
and 2002 are as follows:

|                                   |  |               |       |       |  |          |       |       |  |   |       |  |  |   |       | 
|---------------------------------- |  | ------------- | ----- | ----- |  | -------- | ----- | ----- |  | - | ----- |  |  | - | ----- | 
|                                   |  |               |       |      
|                                   |  | 2003          |       | 2002 
|                                   |  |               |       |      
|                                   |  | Carrying      |       | Fair  |  | Carrying |       | Fair 
|                                   |  | Amount        |       | Value |  | Amount   |       | Value
|                                   |  |               |       |       |  |          |       |      
|                                   |  |              
|                                   |  | (in millions)
|Accounts and notes receivable, net |  | $             | 5,996 |       |  | $        | 6,055 |       |  | $ | 5,711 |  |  | $ | 5,790 | 
|Long-term debt                     |  | $             | 4,043 |       |  | $        | 4,190 |       |  | $ | 3,997 |  |  | $ | 3,949 | 

F-46



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                       
| | --------------------------------------
| | Accounts and notes receivable,
    net

The fair value of accounts and notes receivable
was based on discounting the estimated future payments at
prevailing market rates. The fair value, which approximates
carrying value, of the interest only strip component of
CNHs accounts and notes receivables was based on loss,
prepayment and interest rate assumptions approximating those
currently experienced by CNH. The carrying amount of
floating-rate accounts and notes receivable was assumed to
approximate their fair value.



| |               
| | --------------
| | Long Term debt

The fair value of fixed-rate, public long-term
debt was based on both quoted prices and the market value of
debt with similar maturities and interest rates; the fair value
of other fixed-rate borrowings were based on discounting using
the treasury yield curve; the carrying amount of floating-rate
long-term debt was assumed to approximate their fair value.



| |                     
| | --------------------
| | Derivative contracts

As derivatives are recorded at fair market value
on the balance sheet, the carrying amounts and fair market
values are equivalent for CNHs foreign exchange forward
contracts, currency options, interest rate swaps and interest
rate caps.



| |            
| | -----------
| | Derivatives

CNH utilizes derivative instruments to mitigate
its exposure to interest rate and foreign currency exposures.
Derivatives used as hedges are effective at reducing the risk
associated with the exposure being hedged and are designated as
a hedge at the inception of the derivative contract. CNH does
not hold or issue such instruments for trading purposes. The
credit and market risk for interest rate hedges are reduced
through diversification among counterparties with high credit
ratings. These counterparties include certain Fiat subsidiaries.
The total notional amount of foreign exchange hedges and
interest rate derivative hedges with certain Fiat subsidiaries
as counterparties was approximately $977 million as of
December 31, 2003.



| |                           
| | --------------------------
| | Foreign Exchange Contracts

CNH has entered into foreign exchange forward
contracts, swaps, and options in order to manage and preserve
the economic value of cash flows in non-functional currencies.
CNH conducts its business on a multinational basis in a wide
variety of foreign currencies and hedges foreign currency
exposures arising from various receivables, liabilities and
expected inventory purchases. Derivative instruments that are
utilized to hedge the foreign currency risk associated with
anticipated inventory purchases in foreign currencies are
designated as cash flow hedges. Gains and losses on these
instruments, to the extent that they have been effective, are
deferred in other comprehensive income and recognized in
earnings when the related inventory is sold. Ineffectiveness
related to these hedge relationships is recognized currently in
the Statements of Operations as Other, Net and was
not significant. The maturity of these instruments does not
exceed 12 months and the net of tax losses deferred in
other comprehensive income to be recognized in earnings over the
12 months ending December 31, 2004 are
$5.6 million. The effective portion of changes in the fair
value of the derivatives are recorded in other comprehensive
income and are recognized in the Statements of Operations when
the hedge item affects earnings.

CNH has also designated certain forwards and
swaps as fair value hedges of certain short-term receivables and
liabilities denominated in foreign currencies. The effective
portion of the fair value gains or losses on these instruments
are reflected in earnings and are offset by fair value
adjustments in the underlying foreign currency exposures.
Ineffectiveness related to these hedge relationships was not
material.

F-47



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Options and forwards not designated as hedging
instruments are also used to hedge the impact of variability in
exchange rates on foreign operational cash flow exposures. The
changes in the fair values of these instruments are recognized
directly in earnings, and are expected to generally offset the
foreign exchange gains or losses on the exposures being managed,
although the gain or loss on the exposure being hedged may be
recorded in a different period than the gains or losses on the
derivative instruments.



| |                          
| | -------------------------
| | Interest Rate Derivatives

CNH has entered into interest rate swaps
agreements in order to manage interest rate exposures arising in
the normal course of business for Financial Services. Interest
rate swaps that have been designated in cash flow hedging
relationships are being used by CNH to mitigate the risk of
rising interest rates related to the anticipated issuance of
short-term LIBOR based debt in future periods. Gains and losses
on these instruments, to the extent that the hedge relationship
has been effective, are deferred in other comprehensive income
and recognized in interest expense over the period in which CNH
recognizes interest expense on the related debt. Ineffectiveness
recognized related to these hedge relationships was not
significant and is recorded in other, net in the
accompanying statements of operations. The maximum length of
time over which CNH is hedging its interest rate exposure
through the use of derivative instruments designated in cash
flow hedge relationships is 72 months, and CNH expects
approximately $8 million, net of tax losses deferred in
other comprehensive income to be recognized in earnings over the
12 months ending December 31, 2004.

Interest rate swaps that have been designated in
fair value hedge relationships have been used by CNH to mitigate
the risk of deductions in the fair value of existing fixed rate
long term bonds and medium-term notes due to decreases in LIBOR
based interest rates. This strategy is used mainly for the
interest rate exposures for Equipment Operations. Gains and
losses on these instruments are reflected in interest expense in
the period in which they occur and an offsetting gain or loss is
also reflected in interest expense based on changes in the fair
value of the debt instrument being hedged due to changes in
LIBOR based interest rates. There was no ineffectiveness as a
result of fair value hedge relationships in 2003 or 2002.

CNH enters into forward starting interest rate
swaps and forward rate agreements as hedges of the proceeds
received upon the sale of receivables in ABS transactions as
described in Note 4, Accounts and Notes
Receivable. These instruments protect the Company from
rising interest rates, which impact the rates paid on the
securities issued to investors in connection with these
transactions. The changes in the fair value of these instruments
are highly correlated to changes in the fair value of the
anticipated cash flows from the proceeds to be received. Gains
and losses are deferred in other comprehensive income and
recognized in Finance and interest income in the
accompanying statements of operations at the time of the ABS
issuance. Ineffectiveness of these hedge relationships was not
significant in 2003 or 2002.

CNH also utilizes both back-to-back interest rate
swaps and back-to-back interest rate caps that are not
designated in hedge relationships. Unrealized and realized gains
and losses resulting from fair value changes in these
instruments are recognized directly in earnings. These
instruments are used to mitigate interest rate risk related to
the Companys asset-backed commercial paper facilities and
various limited purpose business trusts associated with the
Companys retail note asset-backed securitization programs
in North America. These facilities and trusts require CNH to
enter into interest rate swaps and caps. To ensure that these
transactions do not result in the Company being exposed to this
risk, CNH enters into an offsetting interest rate swap or cap
with substantially similar terms. Net gains and losses on these
instruments were insignificant for 2003 and 2002.

Note 18: Shareholders
Equity

On March 27, 2003, CNHs shareholders
approved, at an Extraordinary General Meeting, adoption of
certain amendments to the Articles of Association of CNH,
including an increase in CNHs authorized share

F-48



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

capital to
1,350 million,
divided into 400 million common shares and 200 million
Series A preference shares with a per share par value of
2.25. In a
separate action, the shareholders have authorized the board of
directors to resolve on any future issuance of authorized shares
for a period ending February 2007.

On April 1, 2003, CNH effected a 1-for-5
reverse stock split of its common shares. All references in the
accompanying consolidated financial statements and notes thereto
to earnings per share and the number of shares have been
retroactively restated to reflect this reverse stock split.

On April 7 and 8, 2003, CNH Global
issued a total of 8 million shares of Series A
Preferred Stock to Fiat and an affiliate of Fiat in exchange for
the retirement of $2 billion in Equipment Operations
indebtedness owed to Fiat Group companies.

The Series A Preferred Stock will not accrue
dividends until January 1, 2005. Subsequently, the
Series A Preferred Stock will pay a dividend at the then
prevailing common dividend yield. However, should CNH achieve
certain defined financial performance measures, the annual
dividend will be fixed at the prevailing common dividend yield,
plus an additional 150 basis points. Dividends will be
payable annually in arrears, subject to certain provisions that
allow for a deferral for a period not to exceed five consecutive
years. The Series A Preferred Stock has a liquidation
preference of $250 per share and each share is entitled to
one vote on all matters submitted to CNHs shareholders.
The Series A Preferred Stock will convert into
100 million CNH common shares at a conversion price of
$20 per share automatically if the market price of the
common shares, defined as the average of the closing price per
share for 30 consecutive trading days, is greater than $24 at
any time through and including December 31, 2006 or $21 at
any time on or after January 1, 2007, subject to
anti-dilution adjustment. In the event of dissolution or
liquidation whatever remains of the companys equity, after
all its debts have been discharged, will first be applied to
distribute to the holders of the Series A Preferred Stock,
the nominal amount of their preference shares and thereafter the
amount of the share premium reserve relating to the
Series A Preferred Stock. Any remaining assets will be
distributed to the holders of common shares in proportion to the
aggregate nominal amount of their common shares.

Effective January 31, 2003, the Company
began providing matching contributions to the CNH Salaried Plan
and the CNH Hourly Plan in the form of CNH common shares rather
than cash. This change affects all CNH U.S. employees
eligible to contribute to this plan who receive a
company-provided match on a portion of their elective deferrals.

In June 2002, CNH completed a public offering of
10 million shares of common stock. In July 2002, the
underwriters exercised their over-allotment option for 700,000
additional shares. The offering was priced at $20.00 per
share. Net proceeds after offering costs were approximately
$201 million. Concurrent with this offering, Fiat,
CNHs majority shareholder, exchanged $1.3 billion of
CNH debt for 65 million common shares, equal to
$1.3 billion divided by the public offering price of $20.00.

As of December 31, 2003, CNH has 132,913,714
common shares issued, of which 132,797,008 shares were
outstanding while 116,706 shares were held by CNH as
treasury shares. As of this same date, CNH has 8 million
shares of Series A Preferred Stock issued and outstanding.

F-49



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

During the years ended December 31, 2003,
2002 and 2001, changes in CNH common shares, and CNH
Series A Preference Shares issued were as follows:

|                                         |                                                              |                |         |                   |  |      |         |        |  |      |        |      |  |  |       |   |  |  |   |   |  |  |   |   | 
|---------------------------------------- | ------------------------------------------------------------ | -------------- | ------- | ----------------- |  | ---- | ------- | ------ |  | ---- | ------ | ---- |  |  | ----- | - |  |  | - | - |  |  | - | - | 
|                                         |                                                              |                |         |                   |  |      |         |       
|                                         |                                                              |                |         | Series A         
|                                         |                                                              | Common Shares  |         | Preference Shares
|                                         |                                                              |                |         |                  
|                                         |                                                              | 2003           |         | 2002              |  | 2001 |         | 2003   |  | 2002 |        | 2001
|                                         |                                                              |                |         |                   |  |      |         |        |  |      |        |     
|                                         |                                                              |               
|                                         |                                                              | (in thousands)
|Issued as of beginning of year           |                                                              |                | 131,238 |                   |  |      | 55,537  |        |  |      | 55,537 |      |  |  |      |   |  |  |  |   |  |  |  |  
|Issuances of CNH Common Shares:          |                                                              |                |        |                   |  |      |        |        |  |      |       |      |  |  |      |   |  |  |  |   |  |  |  |  
|                                         | Contributions to CNH benefit plans                           |                |         | 1,463             |  |      |         |       |  |      |        |     |  |  |       |  |  |  |   |  |  |  |   |  | 
|                                         | Restricted shares issued under the equity
    incentive plan |                |         | 207               |  |      |         |       |  |      |        |     |  |  |       |  |  |  |   |  |  |  |   |  | 
|                                         | Public offering                                              |                |         |                  |  |      |         | 10,700 |  |      |        |     |  |  |       |  |  |  |   |  |  |  |   |  | 
|                                         | Fiat conversion of debt to equity                            |                |         |                  |  |      |         | 65,000 |  |      |        |     |  |  |       |  |  |  |   |  |  |  |   |  | 
|                                         | Stock-based compensation for directors                       |                |         | 6                 |  |      |         | 1      |  |      |        |     |  |  |       |  |  |  |   |  |  |  |   |  | 
|Issuance of CNH Series A Preferred Stock |                                                              |                |        |                   |  |      |        |        |  |      |       |      |  |  | 8,000 |   |  |  |  |   |  |  |  |  
|                                         |                                                              |                |         |                   |  |      |         |        |  |      |        |      |  |  |       |   |  |  |   |   |  |  |   |  
|Issued as of end of year                 |                                                              |                | 132,914 |                   |  |      | 131,238 |        |  |      | 55,537 |      |  |  | 8,000 |   |  |  |  |   |  |  |  |  
|                                         |                                                              |                |         |                   |  |      |         |        |  |      |        |      |  |  |       |   |  |  |   |   |  |  |   |  

During 2003, dividends of $0.25 per common
share, totaling $33 million, were declared and paid.
Dividends of $0.50 per common share, totaling
$28 million, were declared and paid during 2002, prior to
the June and July equity transactions noted above. During 2001,
dividends of $0.50 per common share, totaling
$28 million, were declared and paid.

Note 19: Option and Incentive
Plans



| |                    
| | -------------------
| | CNH Directors Plan

The CNH Global N.V. Outside Directors
Compensation Plan (CNH Directors Plan) as
amended provides for (1) the payment of an annual retainer
fee of $40,000 and committee chair fee of $5,000 (collectively,
the Annual Fees) to independent outside members of
the Board in the form of common shares of CNH; (2) an
annual grant of 20,000 options to purchase common shares of
CNH that vest on the third anniversary of the grant date
(Annual Automatic Stock Option); (3) an
opportunity to receive up to 50% of their Annual Fees in cash;
(4) an opportunity to convert all or a portion of their
Annual Fees into stock options; and (5) on May 8,
2003, each outside director received a one time grant of an
amount of options equal to 20% of the annual Automatic Stock
Options and 15% of the elective stock options each outside
director was granted prior to May 6, 2002. The exercise
prices of all options granted under the CNH Directors Plan
are equal to or greater than the fair market value of CNH common
shares on the respective grant dates. Each of our outside
directors is paid a fee of $1,250 plus expenses for each Board
of Director and committee meeting attended. The CNH
Directors Plan was established in 1999 and subsequently
amended in 2001 and 2003. In 2001 and 2002, independent outside
directors received an Annual Fee of $35,000 and Annual Automatic
Stock Options for 4,000 common shares. At December 31,
2003, there were 200,000 common shares reserved for issuance
under this plan. As of December 31, 2003, there were
49,964 common shares remaining available for issuance under
the CNH Directors Plan.

F-50



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table reflects option activity
under the CNH Directors Plan for the years ended
December 31, 2003, 2002 and 2001:

|                                 |           |        |         |          |  |        |       |          |  |        |        |          |   |   |       |       |  |  |        |        |   |   |       |       | 
|-------------------------------- | --------- | ------ | ------- | -------- |  | ------ | ----- | -------- |  | ------ | ------ | -------- | - | - | ----- | ----- |  |  | ------ | ------ | - | - | ----- | ----- | 
|                                 |           |        |         |          |  |       
|                                 |           | 2003   |         | 2002     |  | 2001  
|                                 |           |        |         |          |  |       
|                                 |           |        |         | Exercise |  |        |       | Exercise |  |        |        | Exercise
|                                 |           | Shares |         | Price*   |  | Shares |       | Price*   |  | Shares |        | Price*  
|                                 |           |        |         |          |  |        |       |          |  |        |        |         
|Outstanding at beginning of year |           |        | 82,464  |          |  | $      | 33.10 |          |  |        | 48,314 |          |   | $ | 42.00 |       |  |  | 24,151 |        |   | $ | 59.25 |      
|                                 | Granted   |        |         | 60,036   |  |        |       | 10.28    |  |        |        | 39,322   |   |   |       | 21.35 |  |  |        | 28,456 |   |   |       | 30.20 | 
|                                 | Forfeited |        |         |         |  |        |       |         |  |        |        | (5,172   | ) |   |       | 29.35 |  |  |        | (4,293 | ) |   |       | 60.45 | 
|                                 |           |        |         |          |  |        |       |          |  |        |        |          |   |   |       |       |  |  |        |        |   |   |       |      
|Outstanding at end of year       |           |        | 142,500 |          |  |        | 22.76 |          |  |        | 82,464 |          |   |   | 33.10 |       |  |  | 48,314 |        |   |   | 42.00 |      
|                                 |           |        |         |          |  |        |       |          |  |        |        |          |   |   |       |       |  |  |        |        |   |   |       |      
|Exercisable at end of year       |           |        | 95,009  |          |  |        | 25.68 |          |  |        | 61,954 |          |   |   | 31.80 |       |  |  | 31,814 |        |   |   | 31.80 |      
|                                 |           |        |         |          |  |        |       |          |  |        |        |          |   |   |       |       |  |  |        |        |   |   |       |      




|  |                 
|- | ----------------
|* | Weighted-average

The following table summarizes outstanding stock
options under the CNH Directors Plan at December 31,
2003:

|                        |  |                     |        |                     |  |          |     |             |  |          |       |  |  |  |        |  |  |   |       | 
|----------------------- |  | ------------------- | ------ | ------------------- |  | -------- | --- | ----------- |  | -------- | ----- |  |  |  | ------ |  |  | - | ----- | 
|                        |  |                     |        |                    
|                        |  | Options Outstanding |        | Options Exercisable
|                        |  |                     |        |                    
|                        |  | Shares              |        | Contractual         |  | Exercise |     | Shares      |  | Exercise
|Range of Exercise Price |  | Outstanding         |        | Life*               |  | Price*   |     | Exercisable |  | Price*  
|                        |  |                     |        |                     |  |          |     |             |  |         
|$ 9.15 - $26.20         |  |                     | 97,984 |                     |  |          | 9.0 |             |  | $        | 13.52 |  |  |  | 55,460 |  |  | $ | 13.47 | 
|$26.21 - $40.00         |  |                     | 24,657 |                     |  |          | 7.4 |             |  |          | 30.31 |  |  |  | 19,690 |  |  |   | 30.39 | 
|$40.01 - $56.00         |  |                     | 5,882  |                     |  |          | 6.8 |             |  |          | 49.31 |  |  |  | 5,882  |  |  |   | 49.31 | 
|$56.01 - $77.05         |  |                     | 13,977 |                     |  |          | 6.3 |             |  |          | 63.04 |  |  |  | 13,977 |  |  |   | 63.04 | 



| |                          
| | -------------------------
| | CNH Equity Incentive Plan

As amended, the CNH Equity Incentive Plan (the
CNH EIP) provides for grants of various types of
awards to officers and employees of CNH and its subsidiaries.
There are 5,600,000 common shares reserved for issuance under
this plan. Certain options vest ratably over four years from the
award date, while certain performance-based options vest subject
to the attainment of specified performance criteria but no later
than seven years from the award date. All options expire after
ten years. Except as noted below, the exercise prices of all
options granted under the CNH EIP are equal to or greater than
the fair market value of CNH common shares on the respective
grant dates. During 2001, CNH granted stock options with an
exercise price less than the quoted market price of CNH stock at
the date of grant. The 2001 exercise price was based upon the
average official price on the New York Stock Exchange
during the thirty-day period preceding the date of grant. The
$3,729,600 of compensation cost related to the 2001 award has
been deferred and is being charged to expense over the four-year
service period of the related options. As of December 31,
2003, there were 2,611,254 common shares available for issuance
under the CNH EIP.

F-51



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table reflects option activity
under the CNH EIP for the years ended December 31, 2003,
2002 and 2001:

|                                 |           |        |           |          |   |        |       |          |  |        |           |           |   |   |       |       |  |  |           |           |   |   |       |       | 
|-------------------------------- | --------- | ------ | --------- | -------- | - | ------ | ----- | -------- |  | ------ | --------- | --------- | - | - | ----- | ----- |  |  | --------- | --------- | - | - | ----- | ----- | 
|                                 |           |        |           |          |   |       
|                                 |           | 2003   |           | 2002     |   | 2001  
|                                 |           |        |           |          |   |       
|                                 |           |        |           | Exercise |   |        |       | Exercise |  |        |           | Exercise 
|                                 |           | Shares |           | Price*   |   | Shares |       | Price*   |  | Shares |           | Price*   
|                                 |           |        |           |          |   |        |       |          |  |        |           |          
|Outstanding at beginning of year |           |        | 3,219,995 |          |   | $      | 34.35 |          |  |        | 1,907,182 |           |   | $ | 48.65 |       |  |  | 1,040,387 |           |   | $ | 68.85 |      
|                                 | Granted   |        |           |         |   |        |       |         |  |        |           | 1,424,140 |   |   |       | 16.20 |  |  |           | 1,065,600 |   |   |       | 31.70 | 
|                                 | Forfeited |        |           | (503,153 | ) |        |       | 41.97    |  |        |           | (111,327  | ) |   |       | 46.60 |  |  |           | (198,805  | ) |   |       | 63.75 | 
|                                 |           |        |           |          |   |        |       |          |  |        |           |           |   |   |       |       |  |  |           |           |   |   |       |      
|Outstanding at end of year       |           |        | 2,716,842 |          |   |        | 32.94 |          |  |        | 3,219,995 |           |   |   | 34.35 |       |  |  | 1,907,182 |           |   |   | 48.65 |      
|                                 |           |        |           |          |   |        |       |          |  |        |           |           |   |   |       |       |  |  |           |           |   |   |       |      
|Exercisable at end of year       |           |        | 1,216,093 |          |   |        | 42.43 |          |  |        | 774,780   |           |   |   | 57.10 |       |  |  | 355,585   |           |   |   | 68.85 |      
|                                 |           |        |           |          |   |        |       |          |  |        |           |           |   |   |       |       |  |  |           |           |   |   |       |      




|  |                 
|- | ----------------
|* | Weighted-average

The following table summarizes outstanding stock
options under the CNH Equity Incentive Plan at December 31,
2003:

|                        |  |                     |           |                     |  |          |     |             |  |          |       |  |  |  |         |  |  |   |       | 
|----------------------- |  | ------------------- | --------- | ------------------- |  | -------- | --- | ----------- |  | -------- | ----- |  |  |  | ------- |  |  | - | ----- | 
|                        |  |                     |           |                    
|                        |  | Options Outstanding |           | Options Exercisable
|                        |  |                     |           |                    
|                        |  | Shares              |           | Contractual         |  | Exercise |     | Shares      |  | Exercise
|Range of Exercise Price |  | Outstanding         |           | Life*               |  | Price*   |     | Exercisable |  | Price*  
|                        |  |                     |           |                     |  |          |     |             |  |         
|$15.20 - $26.20         |  |                     | 1,275,215 |                     |  |          | 8.6 |             |  | $        | 16.18 |  |  |  | 320,284 |  |  | $ | 16.18 | 
|$26.21 - $40.00         |  |                     | 818,600   |                     |  |          | 7.6 |             |  |          | 31.70 |  |  |  | 410,800 |  |  |   | 31.70 | 
|$40.01 - $77.05         |  |                     | 623,027   |                     |  |          | 6.1 |             |  |          | 68.85 |  |  |  | 485,009 |  |  |   | 68.85 | 




|  |                 
|- | ----------------
|* | Weighted-average

Under the CNH EIP, shares may also be granted as
restricted shares. CNH establishes the period of restriction for
each award and holds the stock during the restriction period.
Certain restricted shares vest over time, while certain
performance-based restricted shares vest subject to the
attainment of specified performance criteria. Such
performance-based restricted shares vest no later than seven
years from the award date.

CNH maintains a management bonus program that
links a portion of the compensation paid to senior executives to
our achievement of financial performance criteria specified by
the Nominating and Compensation Committee of the CNH Board of
Directors. Effective for the 2002 plan year only, a special
incentive plan (the 2002 Special Incentive Program)
was approved which provides a grant of restricted stock to
certain senior executives upon meeting a specified financial
position target. The 2002 Special Incentive Program is
administered under the CNH EIP. Since the specified target was
achieved we issued 207,215 restricted shares under the program
in 2003, which will vest in March 2004. Additionally, for
individuals electing not to take the restricted stock earned
under the 2002 Special Incentive Program, CNH agreed to issue an
equivalent number of common shares if the individual remained
employed by CNH as of the vesting date for the restricted shares
issued to other participants in the 2002 Special Incentive
Program. No restricted shares were awarded during 2002 and 2001.
At December 31, 2003, restricted common shares outstanding
under the EIP, including the 2002 Special Incentive Program,
totaled 209,783 shares.

Beginning in 2004 awards granted under the EIP
will be subject to the achievement of certain performance
criteria over a 3-year period, as defined by the Nominating and
Compensation Committee of our Board of Directors. Under this
program, earned awards will be satisfied equally with cash and
CNH common shares.

F-52



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                          
| | -------------------------
| | Fiat Stock Option Program

Certain employees of CNH are eligible to
participate in stock option plans of Fiat (Fiat
Plans) whereby participants are granted options to
purchase ordinary shares of Fiat (Fiat Shares). A
summary of options under the Fiat Plans as of December 31,
2003 follows:

|              |  |               |       |                |  |         |       |         |  |           |       |             |  |           |         |             |  |             |        |  |  |  |         |   |  |  |   |  |  |  |         |  |  |  |         | 
|------------- |  | ------------- | ----- | -------------- |  | ------- | ----- | ------- |  | --------- | ----- | ----------- |  | --------- | ------- | ----------- |  | ----------- | ------ |  |  |  | ------- | - |  |  | - |  |  |  | ------- |  |  |  | ------- | 
|              |  |               |       |                |  |        
|              |  |               |       | Exercise Price |  | Options
|              |  | Date of Grant |       |                |  |        
|Date of Grant |  | Share Price   |       | Original       |  | Current |       | Granted |  | Transfers |       | Forfeitures |  | Exercises |         | Outstanding |  | Exercisable
|              |  |               |       |                |  |         |       |         |  |           |       |             |  |           |         |             |  |            
|3/30/1999     |  |              | 29.38 |                |  |        | 28.45 |         |  |          | 26.12 |             |  |           | 53,300  |             |  |             | 24,900 |  |  |  | (18,400 | ) |  |  |  |  |  |  | 59,800  |  |  |  | 59,800  | 
|2/18/2000     |  |               | 33.00 |                |  |         | 30.63 |         |  |           | 28.12 |             |  |           | 102,500 |             |  |             | 72,000 |  |  |  | (8,000  | ) |  |  |  |  |  |  | 166,500 |  |  |  | 124,875 | 
|2/27/2001     |  |               | 26.77 |                |  |         | 27.07 |         |  |           | 24.85 |             |  |           | 50,000  |             |  |             | 30,000 |  |  |  |        |   |  |  |  |  |  |  | 80,000  |  |  |  | 40,000  | 
|10/31/2001    |  |               | 18.06 |                |  |         | 18.00 |         |  |           | 16.52 |             |  |           | 249,000 |             |  |             | 83,000 |  |  |  | (41,000 | ) |  |  |  |  |  |  | 291,000 |  |  |  | 145,500 | 
|9/12/2002     |  |               | 11.88 |                |  |         | 11.16 |         |  |           | 10.39 |             |  |           | 513,000 |             |  |             | 78,000 |  |  |  | (36,000 | ) |  |  |  |  |  |  | 555,000 |  |  |  | 138,750 | 

The original exercise prices, which were
determined by an average of the price of Fiat Shares on the
Italian Stock Exchange prior to grant, were subsequently
modified by Fiat. The options vest ratably over a four year
period. No options to purchase Fiat Shares were issued to
employees of CNH during 2003. All options under the Fiat Plans
expire eight years after the grant date. The fair value of these
options did not result in a material amount of compensation
expense.



| |                            
| | ---------------------------
| | SFAS No. 123
    Disclosure

For 2003, CNH adopted the Prospective Method of
accounting for stock options under SFAS No. 148. The
Prospective Method requires the recognition of expense for
options granted, modified or settled since January 1, 2003.
CNH has retained the intrinsic value method of accounting for
stock-based compensation in accordance with APB No. 25 for
options issued prior to January 1, 2003. The Black-Scholes
pricing model was used to calculate the fair value
of stock options. Based on this model, the weighted-average fair
values of stock options awarded for the years ended
December 31, 2003, 2002 and 2001 were as follows:

|                    |  |      |      |      |  |      |      |  |  |   |       | 
|------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ----- | 
|                    |  | 2003 |      | 2002 |  | 2001
|                    |  |      |      |      |  |     
|CNH Directors Plan |  | $    | 5.87 |      |  | $    | 8.95 |  |  | $ | 12.40 | 
|CNH EIP             |  |      | N/A  |      |  | $    | 6.65 |  |  | $ | 14.70 | 

The weighted-average assumptions used under the
Black-Scholes pricing model were as follows:

|                        |  |            |      |      |  |            |     |     |  |            |      |     |  |  |      |   |  |  |      |   |  |  |      |  
|----------------------- |  | ---------- | ---- | ---- |  | ---------- | --- | --- |  | ---------- | ---- | --- |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|                        |  |            |      |      |  |           
|                        |  | 2003       |      | 2002 |  | 2001      
|                        |  |            |      |      |  |           
|                        |  | Directors |      |      |  | Directors |     |     |  | Directors |      |    
|                        |  | Plan       |      | EIP  |  | Plan       |     | EIP |  | Plan       |      | EIP
|                        |  |            |      |      |  |            |     |     |  |            |      |    
|Risk-free interest rate |  |            | 2.7  | %    |  |            | N/A |     |  |            | 3.9  | %   |  |  | 3.8  | % |  |  | 4.3  | % |  |  | 4.1  | %
|Dividend yield          |  |            | 2.1  | %    |  |            | N/A |     |  |            | 2.4  | %   |  |  | 2.4  | % |  |  | 1.5  | % |  |  | 1.5  | %
|Stock price volatility  |  |            | 79.8 | %    |  |            | N/A |     |  |            | 51.0 | %   |  |  | 51.0 | % |  |  | 47.0 | % |  |  | 47.0 | %
|Option life (years)     |  |            | 5.0  |      |  |            | N/A |     |  |            | 5.0  |     |  |  | 5.5  |   |  |  | 5.0  |   |  |  | 4.5  |  

Pro forma net income (loss) and earnings (loss)
per share assuming the fair value of accounting for stock-based
compensation as prescribed under SFAS No. 123 is
provided in Note 2, Summary of Significant Accounting
Policies.

F-53



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 20: Earnings (Loss) per
Share

The following reconciles the numerators and
denominators of the basic and diluted earnings per share
computations for the years ended December 31, 2003, 2002
and 2001:

|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|------------------------------------------------------------------------------------------------ |  | ----------------------------- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                                                                                 |  | 2003                          |       | 2002 |  | 2001
|                                                                                                 |  |                               |       |      |  |     
|                                                                                                 |  |                              
|                                                                                                 |  | (in million, except per share
|                                                                                                 |  | data)                        
|Basic                                                                                            |  |                               |       |      |  |      |       |   |  |   |       |  
|Net profit (loss)                                                                                |  | $                             | (157  | )    |  | $    | (426  | ) |  | $ | (332  | )
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Weighted-average shares outstanding                                                              |  |                               | 132   |      |  |      | 97    |   |  |   | 55    |  
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Basic earnings (loss) per share before cumulative
    effect of change in accounting principle   |  | $                             | (1.19 | )    |  | $    | (1.05 | ) |  | $ | (6.00 | )
|Cumulative effect of change in accounting
    principle                                          |  |                               |      |      |  |      | (3.35 | ) |  |   |      |  
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Basic earnings (loss) per share                                                                  |  | $                             | (1.19 | )    |  | $    | (4.40 | ) |  | $ | (6.00 | )
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Diluted                                                                                          |  |                               |       |      |  |      |       |   |  |   |       |  
|Net profit (loss)                                                                                |  | $                             | (157  | )    |  | $    | (426  | ) |  | $ | (332  | )
|Effect of dilutive securities (when dilutive)                                                    |  |                               |      |      |  |      |      |   |  |   |      |  
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Net profit (loss) after adjustment for dilutive
    conversions                                  |  | $                             | (157  | )    |  | $    | (426  | ) |  | $ | (332  | )
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Weighted-average shares outstanding 
    Basic                                                  |  |                               | 132   |      |  |      | 97    |   |  |   | 55    |  
|Effect of dilutive securities (when dilutive)                                                    |  |                               |      |      |  |      |      |   |  |   |      |  
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Weighted-average shares outstanding 
    Diluted                                                |  |                               | 132   |      |  |      | 97    |   |  |   | 55    |  
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Diluted earnings (loss) per share before
    cumulative effect of change in accounting principle |  | $                             | (1.19 | )    |  | $    | (1.05 | ) |  | $ | (6.00 | )
|Cumulative effect of change in accounting
    principle                                          |  |                               |      |      |  |      | (3.35 | ) |  |   |      |  
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  
|Diluted earnings (loss) per share                                                                |  | $                             | (1.19 | )    |  | $    | (4.40 | ) |  | $ | (6.00 | )
|                                                                                                 |  |                               |       |      |  |      |       |   |  |   |       |  

Stock options to purchase approximately
2.9 million, 3.3 million and 2.0 million shares
during 2003, 2002 and 2001, respectively, were outstanding but
not included in the calculation of diluted loss per share as the
impact of these options would have been anti-dilutive.

Note 21: Accumulated Other
Comprehensive Income (Loss)

The components of accumulated other comprehensive
income (loss) as of December 31, 2003 and 2002 are as
follows:

|                                                                                                         |       |               |      |      |   |   |      |      |  
|-------------------------------------------------------------------------------------------------------- | ----- | ------------- | ---- | ---- | - | - | ---- | ---- | -
|                                                                                                         |       | 2003          |      | 2002
|                                                                                                         |       |               |      |     
|                                                                                                         |       |              
|                                                                                                         |       | (in millions)
|Cumulative translation adjustment                                                                        |       | $             | (156 | )    |   | $ | (419 | )   
|Minimum pension liability adjustment, net of
    taxes ($222 and $223 and, respectively)                 |       |               | (398 | )    |   |   | (397 | )   
|Deferred gains (losses) on derivative financial
    instruments, net of taxes ($7 and $16, respectively) |       |               | (5   | )    |   |   | (19  | )   
|Unrealized gain on available for sale securities,
    net of taxes ($13 and $0, respectively)            |       |               | 20   |      |   |   |     |     
|                                                                                                         |       |               |      |      |   |   |      |     
|                                                                                                         | Total |               | $    | (539 | ) |   | $    | (835 | )
|                                                                                                         |       |               |      |      |   |   |      |     

F-54



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 22: Segment and Geographical
Information



| |                    
| | -------------------
| | Segment Information

CNH has three reportable segments: Agricultural
Equipment, Construction Equipment and Financial Services.
Certain reclassifications have been made to conform the 2001
historical segment and geographical information to the current
CNH management reporting format.



| |                       
| | ----------------------
| | Agricultural Equipment

The agricultural equipment segment manufactures
and distributes a full line of farm machinery and implements,
including two-wheel and four-wheel drive tractors, combines,
cotton pickers, grape and sugar cane harvesters, hay and forage
equipment, planting and seeding equipment, soil preparation and
cultivation implements and material handling equipment.



| |                       
| | ----------------------
| | Construction Equipment

The construction equipment segment manufactures
and distributes a full line of construction equipment and has
leading positions in excavators, crawler dozers, graders, wheel
loaders, loader/ backhoes, skid steer loaders and trenchers.



| |                   
| | ------------------
| | Financial Services

The financial services segment is engaged in
broad-based financial services for the global marketplace
through various wholly owned subsidiaries and joint ventures in
North America, Latin America, Europe, Australia and Asia
Pacific. CNH provides and administers retail financing to
end-use customers for the purchase or lease of new and used CNH
and other agricultural and construction equipment sold by CNH
dealers and distributors. CNH also facilitates the sale of
insurance products and other financing programs to retail
customers. In addition, CNH provides wholesale financing to CNH
dealers and rental equipment operators, as well as financing
options to dealers to finance working capital, real estate and
other fixed assets and maintenance equipment in connection with
their operations.

The accounting policies of the segments are
described in Note 2, Summary of Significant
Accounting Policies. CNH evaluates segment performance
based on operating earnings. CNH defines operating earnings as
the income (loss) of Equipment Operations before interest
expense, taxes and restructuring and other merger related costs,
including the income of Financial Services on an equity basis.
Transfers between segments are accounted for at market value.
Additionally, Fiat evaluates CNHs performance based on
results of operations computed using accounting principles
followed by Fiat. Results of operations computed using
accounting principles followed by Fiat excludes, among other
things, minority interest, provision (benefit) for income taxes,
restructuring charges, net financial expense and equity in
(income) loss of unconsolidated subsidiaries and affiliates.

CNHs reportable segments are strategic
business units that offer different products and services. Each
segment is managed separately.

A reconciliation of net income (loss) under
U.S. GAAP to results of operations under accounting
principles followed by Fiat as well as CNHs results of
operations by segment and depreciation and

F-55



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

amortization in accordance with accounting
principles followed by Fiat for the years ended
December 31, 2003, 2002 and 2001 are set forth in the
following table:

|                                                         |                                                                                                     |                                                                           |   |      |      |      |   |      |      |   |   |      |      |  
|-------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | - | ---- | ---- | ---- | - | ---- | ---- | - | - | ---- | ---- | -
|                                                         |                                                                                                     | 2003                                                                      |   | 2002 |      | 2001
|                                                         |                                                                                                     |                                                                           |   |      |      |     
|                                                         |                                                                                                     |                                                                          
|                                                         |                                                                                                     | (in millions)                                                            
|Reconciliation of net income (loss) per
    U.S. GAAP to |                                                                                                     |                                                                           |   |      |      |      |   |      |      |   |   |     
|                                                         | results of operations reported to
    Fiat:                                                         |                                                                           |   |      |      |      |   |      |      |   |   |      |     
|                                                         | Net loss per US GAAP                                                                                |                                                                           | $ | (157 | )    |      | $ | (426 | )    |   | $ | (332 | )   
|                                                         | Adjustments to convert from US GAAP to accounting
    principles followed by Fiat:                  |                                                                           |   |      |      |      |   |      |      |   |   |      |     
|                                                         |                                                                                                     | Cumulative effect of change in accounting
    principle, net of tax       |   |      |     |      |   |      | 325  |   |   |      |     |  
|                                                         |                                                                                                     | Amortization of goodwill and other intangibles                            |   |      | (166 | )    |   |      | (158 | ) |   |      | (45  | )
|                                                         |                                                                                                     | Restructuring charge                                                      |   |      | 111  |      |   |      | 34   |   |   |      | 34   |  
|                                                         |                                                                                                     | Other                                                                     |   |      | (12  | )    |   |      | 17   |   |   |      | 78   |  
|                                                         |                                                                                                     |                                                                           |   |      |      |      |   |      |      |   |   |     
|                                                         | Net loss per accounting principles followed by
    Fiat                                             |                                                                           |   | (224 | )    |      |   | (208 | )    |   |   | (265 | )   
|                                                         | Reconciliation of net loss per accounting
    principles followed by Fiat to results of operations: |                                                                           |   |      |      |      |   |      |      |   |   |      |     
|                                                         |                                                                                                     | Minority interest                                                         |   |      | 7    |      |   |      | 8    |   |   |      | 5    |  
|                                                         |                                                                                                     | Income tax provision (benefit)                                            |   |      | (25  | )    |   |      | (35  | ) |   |      | (105 | )
|                                                         |                                                                                                     | Restructuring charge                                                      |   |      | 160  |      |   |      | 17   |   |   |      | 70   |  
|                                                         |                                                                                                     | Net financial expense                                                     |   |      | 354  |      |   |      | 390  |   |   |      | 474  |  
|                                                         |                                                                                                     | Equity in (income) loss of unconsolidated
    subsidiaries and affiliates |   |      | (13  | )    |   |      | (16  | ) |   |      | 9    |  
|                                                         |                                                                                                     | Other non-operating income                                                |   |      |     |      |   |      | (2   | ) |   |      |     |  
|                                                         |                                                                                                     |                                                                           |   |      |      |      |   |      |      |   |   |     
|                                                         | Results of operations as defined by Fiat                                                            |                                                                           | $ | 259  |      |      | $ | 154  |      |   | $ | 188  |     
|                                                         |                                                                                                     |                                                                           |   |      |      |      |   |      |      |   |   |     
|Results of operations by segment:                        |                                                                                                     |                                                                           |   |      |      |      |   |      |      |   |   |     
|                                                         | Agricultural equipment                                                                              |                                                                           | $ | 181  |      |      | $ | 201  |      |   | $ | 105  |     
|                                                         | Construction equipment                                                                              |                                                                           |   | (78  | )    |      |   | (159 | )    |   |   | 13   |     
|                                                         | Financial services                                                                                  |                                                                           |   | 163  |      |      |   | 122  |      |   |   | 93   |     
|                                                         | Eliminations                                                                                        |                                                                           |   | (7   | )    |      |   | (10  | )    |   |   | (23  | )   
|                                                         |                                                                                                     |                                                                           |   |      |      |      |   |      |      |   |   |     
|                                                         |                                                                                                     | Results of operations                                                     |   | $    | 259  |      |   | $    | 154  |   |   | $    | 188  |  
|                                                         |                                                                                                     |                                                                           |   |      |      |      |   |      |      |   |   |     
|Depreciation and amortization:                           |                                                                                                     |                                                                           |   |      |      |      |   |      |      |   |   |     
|                                                         | Agricultural equipment                                                                              |                                                                           | $ | 279  |      |      | $ | 261  |      |   | $ | 238  |     
|                                                         | Construction equipment                                                                              |                                                                           |   | 121  |      |      |   | 124  |      |   |   | 126  |     
|                                                         | Financial services                                                                                  |                                                                           |   | 108  |      |      |   | 126  |      |   |   | 105  |     
|                                                         |                                                                                                     |                                                                           |   |      |      |      |   |      |      |   |   |     
|                                                         |                                                                                                     | Total                                                                     |   | $    | 508  |      |   | $    | 511  |   |   | $    | 469  |  
|                                                         |                                                                                                     |                                                                           |   |      |      |      |   |      |      |   |   |     

F-56



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

A summary of additional reportable segment
information, compiled under U.S. GAAP, for the years ended
December 31, 2003, 2002 and 2001 is as follows:

|                                                                                    |                                 |                        |       |                 |       |        |        |       |       |        |       |       |       |        |       | 
|----------------------------------------------------------------------------------- | ------------------------------- | ---------------------- | ----- | --------------- | ----- | ------ | ------ | ----- | ----- | ------ | ----- | ----- | ----- | ------ | ----- | 
|                                                                                    |                                 | 2003                   |       | 2002            |       | 2001  
|                                                                                    |                                 |                        |       |                 |       |       
|                                                                                    |                                 |                       
|                                                                                    |                                 | (in millions)         
|Revenues:                                                                           |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|                                                                                    | Net sales:                      |                        |       |                 |       |        |        |       |       |        |       |       |      
|                                                                                    |                                 | Agricultural equipment |       | $               | 7,125 |        |        | $     | 6,405 |        |       | $     | 6,073 |       
|                                                                                    |                                 | Construction equipment |       |                 | 2,944 |        |        |       | 2,926 |        |       |       | 2,957 |       
|                                                                                    |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|                                                                                    |                                 |                        |       | Total net sales |       |        | 10,069 |       |       |        | 9,331 |       |       |        | 9,030 | 
|                                                                                    | External financial services     |                        |       | 597             |       |        |        | 609   |       |        |       | 685   |      
|                                                                                    | Intersegment financial services |                        |       | 24              |       |        |        | 32    |       |        |       | 54    |      
|                                                                                    | Eliminations                    |                        |       | (24             | )     |        |        | (32   | )     |        |       | (54   | )    
|                                                                                    |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|                                                                                    |                                 |                        | Total |                 | $     | 10,666 |        |       | $     | 9,940  |       |       | $     | 9,715  |      
|                                                                                    |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|Investments in unconsolidated subsidiaries and
    affiliates (at the end of year): |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|                                                                                    | Agricultural equipment          |                        | $     | 186             |       |        | $      | 184   |       |        | $     | 169   |      
|                                                                                    | Construction equipment          |                        |       | 178             |       |        |        | 144   |       |        |       | 66    |      
|                                                                                    | Financial services              |                        |       | 65              |       |        |        | 47    |       |        |       | 31    |      
|                                                                                    |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|                                                                                    |                                 |                        | Total |                 | $     | 429    |        |       | $     | 375    |       |       | $     | 266    |      
|                                                                                    |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|Depreciation and amortization:                                                      |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|                                                                                    | Agricultural equipment          |                        | $     | 176             |       |        | $      | 161   |       |        | $     | 232   |      
|                                                                                    | Construction equipment          |                        |       | 70              |       |        |        | 67    |       |        |       | 87    |      
|                                                                                    | Financial services              |                        |       | 100             |       |        |        | 118   |       |        |       | 105   |      
|                                                                                    |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|                                                                                    |                                 |                        | Total |                 | $     | 346    |        |       | $     | 346    |       |       | $     | 424    |      
|                                                                                    |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|Segment assets (at the end of year):                                                |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|                                                                                    | Agricultural equipment          |                        | $     | 7,735           |       |        | $      | 6,380 |       |        | $     | 6,410 |      
|                                                                                    | Construction equipment          |                        |       | 3,750           |       |        |        | 3,430 |       |        |       | 2,893 |      
|                                                                                    | Financial services              |                        |       | 5,118           |       |        |        | 5,875 |       |        |       | 6,352 |      
|                                                                                    | Eliminations and other          |                        |       | 2,058           |       |        |        | 1,075 |       |        |       | 1,557 |      
|                                                                                    |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|                                                                                    |                                 |                        | Total |                 | $     | 18,661 |        |       | $     | 16,760 |       |       | $     | 17,212 |      
|                                                                                    |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|Expenditures for additions to long-lived
    assets*:                               |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|                                                                                    | Agricultural equipment          |                        | $     | 152             |       |        | $      | 198   |       |        | $     | 160   |      
|                                                                                    | Construction equipment          |                        |       | 40              |       |        |        | 39    |       |        |       | 61    |      
|                                                                                    | Financial services              |                        |       | 53              |       |        |        | 170   |       |        |       | 330   |      
|                                                                                    |                                 |                        |       |                 |       |        |        |       |       |        |       |      
|                                                                                    |                                 |                        | Total |                 | $     | 245    |        |       | $     | 407    |       |       | $     | 551    |      
|                                                                                    |                                 |                        |       |                 |       |        |        |       |       |        |       |      



---

|  |                                                                              
|- | -----------------------------------------------------------------------------
|* | Includes equipment on operating leases and
    property, plant and equipment.

F-57



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                         
| | ------------------------
| | Geographical Information

The following highlights the results of
CNHs operations by geographic area, by origin:

|                                                       |  |               |       |        |  |         |     |       |  |         |       |       |  |       |       |  |  |   |     |  |  |   |       |  |  |   |        | 
|------------------------------------------------------ |  | ------------- | ----- | ------ |  | ------- | --- | ----- |  | ------- | ----- | ----- |  | ----- | ----- |  |  | - | --- |  |  | - | ----- |  |  | - | ------ | 
|                                                       |  | United        |       |        |  | United  |     |       |  |         |       |       |  |      
|                                                       |  | States        |       | Canada |  | Kingdom |     | Italy |  | Belgium |       | Other |  | Total
|                                                       |  |               |       |        |  |         |     |       |  |         |       |       |  |      
|                                                       |  |              
|                                                       |  | (in millions)
|At December 31, 2003, and for the year then
    ended: |  |               |       |        |  |         |     |       |  |         |       |       |  |       |       |  |  |   |     |  |  |   |       |  |  |   |        | 
|Total Revenues                                         |  | $             | 4,036 |        |  | $       | 701 |       |  | $       | 1,594 |       |  | $     | 2,116 |  |  | $ | 942 |  |  | $ | 1,277 |  |  | $ | 10,666 | 
|                                                       |  |               |       |        |  |         |     |       |  |         |       |       |  |       |       |  |  |   |     |  |  |   |       |  |  |   |        | 
|Long-Lived assets*                                     |  | $             | 880   |        |  | $       | 94  |       |  | $       | 139   |       |  | $     | 268   |  |  | $ | 151 |  |  | $ | 349   |  |  | $ | 1,881  | 
|                                                       |  |               |       |        |  |         |     |       |  |         |       |       |  |       |       |  |  |   |     |  |  |   |       |  |  |   |        | 
|At December 31, 2002, and for the year then
    ended: |  |               |       |        |  |         |     |       |  |         |       |       |  |       |       |  |  |   |     |  |  |   |       |  |  |   |        | 
|Total revenues                                         |  | $             | 4,073 |        |  | $       | 659 |       |  | $       | 1,343 |       |  | $     | 1,717 |  |  | $ | 772 |  |  | $ | 1,376 |  |  | $ | 9,940  | 
|                                                       |  |               |       |        |  |         |     |       |  |         |       |       |  |       |       |  |  |   |     |  |  |   |       |  |  |   |        | 
|Long-lived assets*                                     |  | $             | 1,091 |        |  | $       | 93  |       |  | $       | 116   |       |  | $     | 224   |  |  | $ | 126 |  |  | $ | 343   |  |  | $ | 1,993  | 
|                                                       |  |               |       |        |  |         |     |       |  |         |       |       |  |       |       |  |  |   |     |  |  |   |       |  |  |   |        | 
|At December 31, 2001, and for the year then
    ended: |  |               |       |        |  |         |     |       |  |         |       |       |  |       |       |  |  |   |     |  |  |   |       |  |  |   |        | 
|Total revenues                                         |  | $             | 4,156 |        |  | $       | 606 |       |  | $       | 1,276 |       |  | $     | 1,636 |  |  | $ | 665 |  |  | $ | 1,376 |  |  | $ | 9,715  | 
|                                                       |  |               |       |        |  |         |     |       |  |         |       |       |  |       |       |  |  |   |     |  |  |   |       |  |  |   |        | 
|Long-lived assets*                                     |  | $             | 1,166 |        |  | $       | 103 |       |  | $       | 88    |       |  | $     | 190   |  |  | $ | 89  |  |  | $ | 330   |  |  | $ | 1,966  | 
|                                                       |  |               |       |        |  |         |     |       |  |         |       |       |  |       |       |  |  |   |     |  |  |   |       |  |  |   |        | 



---

|  |                                                                              
|- | -----------------------------------------------------------------------------
|* | Includes equipment on operating leases and
    property, plant and equipment.

CNH is organized under the laws of the Kingdom of
The Netherlands. Geographical information for CNH pertaining to
The Netherlands is not significant or not applicable.

Note 23: Related Party
Information

On April 7 and 8, 2003, CNH issued a
total of 8 million shares of Series A Preferred Stock
to Fiat and an affiliate of Fiat in exchange for the retirement
of $2 billion in Equipment Operations indebtedness owed to
Fiat Group companies.

In June 2002, Fiat, CNHs majority
shareholder, exchanged $1.3 billion of CNH debt for
65 million common shares, equal to $1.3 billion
divided by $20.00 per share, which was the price per share
at which CNH sold 10 million shares in its concurrent
public offering.

CNH continues to rely on Fiat to provide either
guarantees or funding in connection with some of our external
debt financing needs. At December 31, 2003, outstanding
debt with Fiat and its affiliates was approximately 35% of CNH
total debt, compared with 50% at December 31, 2002. Fiat
guarantees $1.4 billion of CNH debt with third parties or
approximately 20% of CNHs outstanding debt. CNH pays Fiat
a guarantee fee based on the average amount outstanding under
facilities guaranteed by Fiat. In 2003, CNH paid a guarantee fee
of between 0.03125% per annum and 0.0625% per annum
while in 2002 the guarantee fee ranged between 0.03125% and
0.125% per annum and 2001 guarantee fees were between
0.0625% and 0.125% per annum. Fiat has agreed to maintain
its existing treasury and debt financing arrangements with us
for as long as it maintains control of CNH and, in any event, at
least until December 31, 2004. After that time, Fiat has
committed that it will not terminate our access to these
financing arrangements without affording us an appropriate time
period to develop suitable substitutes. The terms of any
alternative sources of financing may not be as favorable as
those provided or facilitated by Fiat. See Note 10,
Short-Term Debt and Note 11, Long-Term
Debt for further information regarding financing with Fiat.

F-58



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

CNH participates in a cash management system with
other members of the Fiat Group. Under this system, which is
operated by Fiat in a number of jurisdictions, the cash balances
of Fiat Group members, including CNH, are aggregated at the end
of each business day to a central pooling account. Our positive
cash balances, if any, at the end of any given business day may
be applied by Fiat to offset negative balances of other Fiat
Group members and vice versa. Alternatively, in certain other
jurisdictions where cash balances are not aggregated daily,
third-party lenders to other participating Fiat Group members
may be entitled to rights to set off against Fiat Group member
funds present in the cash management pool or may benefit from
guarantees of payment by certain Fiat Group members. As a
result, we are exposed to Fiat Group credit risk to the extent
that Fiat is unable to return any such offset amounts at the
beginning of the following business day, and in the event of a
bankruptcy or insolvency of Fiat (or any other Fiat Group member
in the jurisdictions with set off agreements) we may be unable
to secure the return of such funds to the extent they belong to
us, and we may be viewed as a creditor of such Fiat entity with
respect to such funds.

CNH purchases some of its engines and other
components from the Fiat Group, and companies of the Fiat Group
provide CNH administrative services such as accounting and
internal audit, cash management, maintenance of plant and
equipment, research and development, information systems and
training. CNH sells certain products to subsidiaries and
affiliates of Fiat. In addition, we enter into hedging
arrangements with counterparties that are members of the Fiat
Group.

CNHs principal purchases of goods from Fiat
and its affiliates include diesel engines from Iveco N.V.,
robotic equipment and paint systems from Comau Pico Holdings
Corporation, dump trucks from Astra V.I. S.p.A., and castings
from Teksid. CNH also purchases tractors from its Mexican joint
venture for resale in the United States.

Fiat has executed, on behalf of CNH, certain
foreign exchange and interest rate-related contracts. As of
December 31, 2003, CNH and its subsidiaries were parties to
derivative or other financial instruments having an aggregate
contract value of $977 million as of December 31, 2003
and $334 million as of December 31, 2002, to which
affiliates of Fiat were counterparties.

Fiat provides accounting services to CNH in
Europe and Brazil through an affiliate that uses shared service
centers to provide such services at competitive costs to various
Fiat companies and third party customers. Fiat provides internal
audit services at the direction of CNHs internal audit
department in certain locations where it is more cost effective
to use existing Fiat resources. Routine maintenance of our
plants and facilities in Europe is provided by a Fiat affiliate
skilled in such work that also provides similar services to
third parties. CNH purchases network and hardware support from
and outsources a portion of its information services to a joint
venture that Fiat has formed with IBM. Fiat also provides
training services through an affiliate that is skilled at
providing employee training. CNH uses a broker that is an
affiliate of Fiat to purchase a portion of its insurance
coverage. CNH purchases research and development from an Italian
joint venture set up by Fiat and owned by various Fiat
subsidiaries. This joint venture benefits from Italian
government incentives granted to promote work in the less
developed areas of Italy.

Additionally, CNH participates in the stock
option program of Fiat as described in Note 19,
Option and Incentive Plans.

F-59



---



##### 



CNH GLOBAL N.V.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table summarizes CNHs sales,
purchases, and finance income with Fiat and affiliates of Fiat,
CNH dealer development companies and joint ventures that are not
already separately reflected in the Consolidated Statements of
Operations for the years ended December 31, 2003, 2002 and
2001:

|                                                                      |                           |               |     |      |  |      |     |     |  |   |     |     | 
|--------------------------------------------------------------------- | ------------------------- | ------------- | --- | ---- |  | ---- | --- | --- |  | - | --- | --- | 
|                                                                      |                           | 2003          |     | 2002 |  | 2001
|                                                                      |                           |               |     |      |  |     
|                                                                      |                           |              
|                                                                      |                           | (in millions)
|Sales of equipment                                                    |                           | $             | 6   |      |  | $    | 7   |     |  | $ | 13  |    
|Sales to affiliated companies and joint ventures                      |                           |               | 179 |      |  |      | 183 |     |  |   | 199 |    
|                                                                      |                           |               |     |      |  |      |     |     |  |   |     |    
|                                                                      | Total sales to affiliates |               | $   | 185  |  |      | $   | 190 |  |   | $   | 212 | 
|                                                                      |                           |               |     |      |  |      |     |     |  |   |     |    
|Purchase of materials, production parts,
    merchandise and Services |                           | $             | 584 |      |  | $    | 416 |     |  | $ | 239 |    
|                                                                      |                           |               |     |      |  |      |     |     |  |   |     |    
|Finance and interest income                                           |                           | $             | 25  |      |  | $    | 40  |     |  | $ | 31  |    
|                                                                      |                           |               |     |      |  |      |     |     |  |   |     |    
|Interest expense                                                      |                           | $             | 113 |      |  | $    | 236 |     |  | $ | 358 |    
|                                                                      |                           |               |     |      |  |      |     |     |  |   |     |    

CNH management believes that the terms of sales
and purchases provided to CNH by Fiat and its affiliates are at
least as favorable as those available from unaffiliated third
parties. For material related party transactions, we generally
solicit and evaluate bid proposals prior to entering into any
such transactions, and in such instances, the Audit Committee
generally conducts a review to determine that such transactions
are what the committee believes to be on arms-length terms.

Note 24: Subsequent Events

The Board of Directors of CNH recommended a
dividend of $0.25 per common share on March 19, 2004.
The dividend will be payable on May 25, 2004 to
shareholders of record at the close of business on May 18,
2004. Declaration of the dividend is subject to approval of the
shareholders at the Annual General Meeting, which will be held
on April 26, 2004.

F-60



---



##### 



SIGNATURE

The registrant hereby certifies that it meets all
of the requirements for filing on Form 20-F and has duly
caused and authorized the undersigned to sign this annual report
on its behalf.



| |                        
| | -----------------------
| | CNH GLOBAL N.V.        
| | (Registrant)           
|
| | /s/ Michel Lecomte     
| |                        
| | Michel Lecomte         
| | Chief Financial Officer

Dated: April 6, 2004



---



##### 



INDEX TO EXHIBITS

|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- | -- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    | Description
|        |    |            
|        | 1  | .1          |  | Articles of Association of CNH Global N.V. (filed
    as Exhibit 1 to Form 6-K on April 4, 2003 and
    incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 1  | .2          |  | Regulations of the Board of Directors of CNH
    Global N.V. dated December 8, 1999.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 1  | .3          |  | Resolution of the Board of Directors of CNH
    Global N.V. dated March 31, 2003 (filed as Exhibit 2
    to Form 6-K on April 4, 2003 and incorporated herein
    by reference).                                                                                                                                                                                                                                                                                                                                                                                     
|        | 2  | .1          |  | Registration Rights Agreement entered into among
    CNH Global N.V., Fiat S.p.A. and Sicind S.p.A. dated
    April 8, 2003.**                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 4  | .1          |  | Outside Directors Compensation Plan of CNH
    Global N.V. as amended and restated May 8, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 4  | .2          |  | Equity Incentive Plan of CNH Global N.V. as
    amended and restated on July 23, 2001 (filed as
    Exhibit 10.1 to the Registration Statement on Form F-3
    of CNH Global N.V. (File No. 333-84954) and incorporated
    herein by reference).                                                                                                                                                                                                                                                                                                                    
|        | 8  | .1          |  | List of subsidiaries of registrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .2.1        |  | Amended and Restated Transfer and Administration
    Agreement dated December 15, 2000 between CNH Capital
    Receivables Inc. as Transferor, Case Credit Corporation, in its
    individual capacity and as Servicer, Certain APA Banks named
    therein, Certain Funding Agents named therein and The Chase
    Manhattan Bank as Administrative Agent (filed as
    Exhibit 10(e)(1) to the Annual Report on Form 10-K of
    Case Credit Corporation (File No. 33-80775-01) for the year
    ended December 31, 2000 and incorporated herein by
    reference).
|        | 10 | .2.2        |  | First Amendment, dated as of January 15,
    2002, to the Amended and Restated Transfer and Administration
    Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .2.3        |  | Second Amendment, dated as of January 14,
    2003, to the Amended and Restated Transfer and Administration
    Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 10 | .2.4        |  | Third Amendment, dated as of January 13,
    2004, to the Amended and Restated Transfer and Administration
    Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .5.1        |  | Indenture, dated as of August 1, 2003, by
    and among Case New Holland, Inc., as issuer, the Guarantors
    named therein and JP Morgan Chase, as trustee.                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 10 | .5.2        |  | First Supplemental Indenture, dated as of
    September 16, 2003, by and among Case New
    Holland, Inc., as issuer, the Guarantors named therein and
    JP Morgan Chase, as trustee.                                                                                                                                                                                                                                                                                                                                                                              
|
|        |    |             |  | There have not been filed as exhibits to
    this Form 20-F certain long-term debt instruments, none of
   which relates to indebtedness that exceeds 10% of the consolidated
assets of CNH Global N.V. CNH Global N.V. agrees to furnish the
Securities and Exchange Commission, upon its request, a copy of any
instrument defining the rights of holders of long-term debt of CNH
Global N.V. and its consolidated subsidiaries.                                                                                                                                  
|        | 12 | .1          |  | Certification Pursuant to the Securities Exchange
    Act Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 12 | .2          |  | Certification Pursuant to the Securities Exchange
    Act Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                         



---

|   |                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*  | Previously filed as an exhibit to the annual
    report on Form 20-F of the registrant for the year ended
    December 31, 1999 and incorporated herein by reference.
|  
|** | Previously filed as an exhibit to the annual
    report on Form 20-F of the registrant for the year ended
    December 31, 2002 and incorporated herein by reference.