CNH Industrial to re-measure Venezuelan currency exchange rate for US Dollars
Based on recent changes to the way Venezuela’s exchange rate mechanism operates, CNH Industrial is changing the bolivar fuerte (“Bs.F.”) rate used to re-measure its Venezuelan Iveco truck and bus business operations financial statements in US dollars. Effective March 31, 2014, CNH Industrial has started to use the exchange rate determined by US dollar auctions conducted under Venezuela’s Complementary System of Foreign Currency Administration (SICAD I). From this date CNH Industrial is using an exchange rate of 10.7 Bs.F. to the US dollar compared with the previously used Official Exchange Rate of 6.3 Bs.F. to the US dollar.
The Company believes that the SICAD I system offers a more representative rate for many of the goods locally produced by its Iveco manufacturing operations and also for future dividend payments as the Official Exchange Rate is increasingly reserved for the purchase of goods deemed ‘essential’ by the Venezuelan Government. As a result of this change, CNH Industrial expects to record a First Quarter 2014 pre-tax re-measurement charge of approximately US $64 million. With the SICAD I exchange rate being determined by periodic auctions, the potential exists for additional losses to be incurred on the re-measurement of the Company’s Bs.F.-denominated assets and liabilities to US Dollars.
Basildon, April 11, 2014