CNH Industrial N.V. 10-K

Item 9A. Controls and Procedures Disclosure Controls and Procedures As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer concluded that, due to the unremediated material weakness in our internal control over financial reporting as described below, our disclosure controls and procedures were not effective as of December 31, 2023. Management’s Annual Report on Internal Control over Financial Reporting We are responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even 38 those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. U.S. Securities and Exchange Commission guidance allows companies to exclude acquisitions from management's report on internal control over financial reporting for the first year after the acquisition when it is not possible to conduct an assessment. In March 2023, the Company acquired the remaining 89.5% of the capital stock of Augmenta Holding SAS ("Augmenta") it did not own and it acquired a controlling interest in Bennamann Ltd ("Bennamann"). In October 2023, the Company also acquired 100% of the capital stock of Hemisphere GNSS ("Hemisphere") (see Note 2). Due to the timing of the Augmenta, Bennamann and Hemisphere acquisitions, management has excluded Augmenta, Bennamann and Hemisphere from the annual assessment of the effectiveness of internal control over financial reporting as of December 31, 2023. Augmenta, Bennamann and Hemisphere represent less than 2% of the consolidated total net assets (excluding acquired intangible assets and goodwill in purchase accounting) and less than 1% of the consolidated Net revenues. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) in Internal Control—Integrated Framework . Based on our assessment, and the material weakness noted below, we believe that, as of December 31, 2023 our internal control over financial reporting was not effective. Deloitte & Touche LLP, the independent registered public accounting firm that audited our 2023 consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting. The report appears on page 40 . Material Weakness In connection with the preparation of our quarterly report on Form 10-Q for the three months ended September 30, 2023 we identified a material weakness in our internal control over financial reporting, which persisted as of December 31, 2023. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness relates to the design and implementation of information technology (IT) general controls in the areas of user access limits and segregation of duties related to multiple enterprise resource planning (ERP) applications. These control deficiencies have not resulted in an error or misstatements to our financial statements or the need to revise any previously published financial results. However, these deficiencies if not timely remediated, could impact maintaining effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatements to one or more assertions, and IT controls and underlying data that support the effectiveness of IT system-generated data and reports). The control deficiencies could have resulted in a misstatement of one or more account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected, and accordingly, we determined that these control deficiencies constitute a material weakness. Management’s Plan to Remediate the Material Weakness Subsequent to the identification of the material weakness, management under the oversight of the Audit Committee has been implementing measures and taking steps to address the underlying causes of the material weakness, including enhancing our IT general controls framework that addresses risks associated with user access and security, application change management and IT operations. We are implementing enhanced compensating controls and providing focused training for control owners to help sustain effective control operations and comprehensive remediation efforts relating to segregation of duties to strengthen user access controls and security. While we believe these efforts have improved our internal controls and address the underlying cause of the material weakness, the material weakness will not be remediated until our remediation plan has been fully implemented and tested and we have concluded that following the improvements to our internal controls, our control environment is operating effectively for a sufficient period of time. In particular, the enhanced compensating controls and training will require time to test and assess. We cannot be certain that the steps we are taking will be sufficient to remediate the control deficiencies that led to the material weakness in our internal control over financial reporting or prevent future material weaknesses or control deficiencies from occurring. In addition, we cannot be certain that we have identified all material weaknesses in our internal control over financial reporting, or that in the future we will not have additional material weaknesses in our internal control over financial reporting. Changes in Internal Control over Financial Reporting As described above, the Company is taking steps to remediate the material weakness noted above. Other than in connection with these remediation steps, there have been no changes in our internal control over financial reporting during the three months ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 39 Limitations on Effectiveness of Disclosure Controls and Procedures and Internal Control over Financial Reporting Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to the costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. 40 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of CNH Industrial N.V. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of CNH Industrial N.V. and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, because of the effect of the material weakness identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 29, 2024, expressed an unqualified opinion on those financial statements. As described in Management's Annual Report on Internal Control over Financial Reporting, management excluded from its assessment, the internal control over financial reporting at Bennamann LTD (“Bennamann”), Augmenta Holding SAS (“Augmenta”) and Hemisphere GNSS (“Hemisphere”), which were acquired on March 15, 2023, March 13, 2023 and October 12, 2023, respectively, and whose financial statements represent less than 2% of total assets of the consolidated financial statement amounts (excluding acquired intangible assets and goodwill valued in purchase accounting) for the year ended December 31, 2023. Accordingly, our audit did not include the internal controls over financial reporting at Bennamann, Augmenta, or Hemisphere. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Material Weakness A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management's assessment: material weakness related to the design and implementation of information technology general controls in the areas of user access limits and segregation of duties related to multiple enterprise resource planning (ERP) applications. 41 This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2023, of the Company, and this report does not affect our report on such financial statements. /s/ Deloitte & Touche LLP Chicago, Illinois February 29, 2024 42 Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. None. 43 PART III Item 10. Directors, Executive Officers, and Corporate Governance The information required by this item regarding our executive officers appears as Item 1 of this Report under the caption "Information about our Executive Officers". The remaining information required by this item will be contained in the Company's Notice of Meeting and Proxy Statement for its 2024 Annual General Meeting, prepared in accordance with applicable requirements and/or in the Company's Form 10-K/A, which, if required, will be filed no later than 120 days after December 31, 2023. We have adopted a Code of Conduct that applies to our executive officers, including our principal executive officer, principal financial officer and principal accounting officer. This Code of Conduct and our corporate governance policies are posted on our website at https://www.cnh.com/en-US/Our-Company/Governance. We intend to satisfy disclosure requirements regarding amendments to or waivers from our Code of Conduct by posting such information on this website. The charters of the Audit Committee, the Environmental, Social and Governance Committee and Human Capital and Compensation Committee are available on our website as well. This information is also available in print free of charge to any person who requests it. Item 11. Executive Compensation The information required by this item will be contained in the Company’s Notice of Meeting and Proxy Statement for its 2024 Annual General Meeting, prepared in accordance with applicable requirements and/or in the Company's Form 10-K/A, which, if required, will be filed no later than 120 days after December 31, 2023. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item will be contained in the Company’s Notice of Meeting and Proxy Statement for its 2024 Annual General Meeting, prepared in accordance with applicable requirements and/or in the Company's Form 10-K/A, which, if required, will be filed no later than 120 days after December 31, 2023. Item 13. Certain Relationships and Related Transactions and Director Independence The information required by this item will be contained in the Company’s Notice of Meeting and Proxy Statement for its 2024 Annual General Meeting, prepared in accordance with applicable requirements and/or in the Company's Form 10-K/A, which, if required, will be filed no later than 120 days after December 31, 2023. Item 14. Principal Accountant Fees and Services The information required by this item will be contained in the Company’s Notice of Meeting and Proxy Statement for its 2024 Annual General Meeting, prepared in accordance with applicable requirements and/or in the Company's Form 10-K/A, which, if required, will be filed no later than 120 days after December 31, 2023. 44 PART IV Item 15. Exhibits and Financial Statement Schedules (a) 1. Financial Statements - CNH Industrial N.V. and Subsidiaries The following are contained in this Annual Report on Form 10-K: Report of Independent Registered Public Accounting Firm - (PCAOB ID 34 ) 73 Report of Independent Registered Public Accounting Firm - (PCAOB ID 42 ) 75 Consolidated S tatements of O perations for the Y ears E nded December 31, 2023, 2022 and 2021 76 Consolidated S tatements of C omprehensive I ncome for the Y ears E nded December 31, 2023, 2022 and 2021 77 Consolidated B alance S heets as of December 31, 2023 and 2022 78 Consolidated S tatements of C ash F lows for the Y ears E nded December 31, 2023, 2022 and 2021 80 Consolidated S tatements of C hanges in E quity for the Y ears E nded December 31, 2023, 2022 and 2021 81 Notes to the C onsolidated F inancial S tatements 82 The Report of Independent Registered Public Accounting Firm, the Consolidated Financial Statements, and the Notes to the Financial Statements listed above are filed as part of this Report and are set forth beginning on page 73 immediately following the signature pages of this Report. (a) 2. Financial Statement Schedules Schedules are omitted because they are not applicable, the information required to be contained in them is disclosed elsewhere on our Consolidated Financial Statements, or the amounts involved are not sufficient to require submission. (a) 3. Exhibits 45 Exhibit Description 3.1 Articles of Association of CNH Industrial N.V., dated September 29, 2013 (Previously filed as Exhibit 1.1 to the Annual Report on Form 20-F of the registrant for the year ended December 31, 2014 (File No. 001-36085) and incorporated herein by reference). 3.2 Regulations of the Board of Directors of CNH Industrial N.V. dated September 9, 2013 (Previously filed as Exhibit 1.2 to the Annual Report on Form 20-F of the registrant for the year ended December 31, 2014 (File No. 001-36085) and incorporated herein by reference). 4.1 Indenture, dated as of August 18, 2016, by and between CNH Industrial N.V., as issuer, and U.S. Bank National Association, as trustee, relating to the CNH Industrial N.V. debt securities. (Previously filed as Exhibit 4.1 to the report on Form 6-K of the registrant (File No. 001-36085) and incorporated herein by reference). 4.2 Officers’ Certificate, dated as of August 18, 2016 (including Form of 4.50% Note due 2023 included therein). (Previously filed as Exhibit 4.2 to Form 6‑K of the registrant on August 18, 2016 (File No. 001-36085) and incorporated herein by reference). 4.3 Officers’ Certificate, dated as of November 14, 2017 (including Form of 3.850% Note due 2027 included therein). (Previously filed as Exhibit 4.1 to Form 6‑K of the registrant on November 14, 2017 (File No. 001-36085) and incorporated herein by reference). 4.4 Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Exchange Act (Previously filed as Exhibit 2.4 to the Annual Report on Form 20-F of the registrant for the year ended December 31, 2021 (File Number 001-36085) and incorporated herein by reference). 10.1* CNH Industrial N.V. Directors’ Compensation Plan (Previously filed as Exhibit 4.5 to the Registration Statement on Form S-8 of the registrant on October 1, 2013 (File No. 333-191477) incorporated herein by reference). 10.2* Case New Holland Industrial Inc. 2005 Deferred Compensation Plan, restated effective January 1, 2012 (Previously filed as Exhibit 4.9 to the Annual Report on Form 20-F of the registrant for the year ended December 31, 2014 (File No. 001-36085) and incorporated herein by reference). 10.3* CNH Industrial N.V. Equity Incentive Plan (Previously filed as Exhibit 4.2 to the Registration Statement on Form S-8 of the registrant on June 3, 2020 (File No. 333-238912) incorporated herein by reference). 10.4* Form of Performance Share Agreement (2021-2023) (Previously filed as Exhibit 10.4 to the Annual Report on Form 10-K for the registrant for the year ended December 31, 2022 and incorporated herein by reference). 10.5* Form of Restricted Stock Units Agreement (2021-2023) (Previously filed as Exhibit 10.5 to the Annual Report on Form 10-K for the registrant for the year ended December 31, 2022 and incorporated herein by reference). 10.6* Form of Performance Share Agreement (2022-2024) (Previously filed as Exhibit 10.6 to the Annual Report on Form 10-K for the registrant for the year ended December 31, 2022 and incorporated herein by reference). 10.7* Form of Restricted Stock Units Agreement (2022-2024) (Previously filed as Exhibit 10.7 to the Annual Report on Form 10-K for the registrant for the year ended December 31, 2022 and incorporated herein by reference). 10.8* Employment and Severance Agreement with Derek Neilson (Previously filed as Exhibit 10.9 to the Annual Report on Form 10-K for the registrant for the year ended December 31, 2022 and incorporated herein by reference). 10.9* Employment and Severance Agreement with Scott W. Wine (Previously filed as Exhibit 10.10 the Annual Report on Form 10-K of the registrant for the year ended December 31, 2022 and incorporated herein by reference). 10.10 Agreement and Plan of Merger among Raven Industries, Inc., CNH Industrial N.V. and CNH Industrial South Dakota, Inc. (Previously filed as Exhibit 99.2 to Form 6-K of the registrant on June 21, 2021 and incorporated herein by reference). 10.11 Credit Agreement dated as of March 18, 2019 (Previously filed as Exhibit 10.12 to the Annual Report on Form 10-K of the registrant and incorporated herein by reference). 10.12 Amendment to the Credit Agreement dated March 18, 2019 (Previously filed as Exhibit 10.13 to the Annual Report on Form 10-K of the registrant for the year ended December 31, 2022 and incorporated herein by reference). 10.13* Form of Restricted Stock Units Agreement (2023-2025) 10.14* Form of Performance Share Agreement (2023-2025) 21.0 Subsidiaries and affiliates of the registrant 23.1 Consent of Ernst & Young LLP. 23.2 Consent of Deloitte & Touche LLP. 31.1 Certification of Chief Executive Officer of CNH Industrial N . V . , as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer of CNH Industrial N . V . , as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer of CNH Industrial N . V . and Chief Financial Officer of CNH Industrial N . V . , as required pursuant Section 906 of the Sarbanes-Oxley Act of 2002. 97.1 Compensation Recovery Policy of CNH Industrial N.V. 46 Exhibit Description 101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CLA Inline XBRL Taxonomy Extension Calculation Linkbase Document 101DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover page Interactive Data File is formatted in Inline XBRL and is contained in Exhibits 101 There have not been filed as exhibits to this Form 10-K certain long-term debt instruments, none of which relates to indebtedness that exceeds 10% of the consolidated assets of CNH Industrial N.V. CNH Industrial 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 Industrial N.V. and its consolidated subsidiaries. * Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 15(b) of this Report. Item 16. Form 10-K Summary None. 47 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CNH INDUSTRIAL N.V. (Registrant) By: /s/ SCOTT W. WINE Scott W. Wine Chief Executive Officer Date: February 29, 2024 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Each person signing below also appoints Scott W. Wine, Oddone Incisa, and Roberto Russo, and each of them singly, his or her lawful attorney-in-fact with full power to execute and file any and all amendments to this report together with exhibits thereto and generally to do all such things as such attorney-in-fact may deem appropriate to enable CNH Industrial N.V. to comply with the provisions of the Securities Exchange Act of 1934 and all requirements of the Securities and Exchange Commission. Date Signature Title February 29, 2024 /s/ SCOTT W. WINE Chief Executive Officer Scott W. Wine February 29, 2024 /s/ ODDONE INCISA Chief Financial Officer Oddone Incisa (Principal Financial Officer and Principal Accounting Officer) February 29, 2024 /s/ SUZANNE HEYWOOD Executive Director and Chair of the Board Suzanne Heywood February 29, 2024 /s/ ELIZABETH BASTONI Director Elizabeth Bastoni February 29, 2024 /s/ HOWARD W. BUFFETT Director Howard W. Buffett February 29, 2024 /s/ RICHARD J. KRAMER Director Richard J. Kramer February 29, 2024 /s/ KAREN LINEHAN Director Karen Linehan February 29, 2024 /s/ ALESSANDRO NASI Director Alessandro Nasi February 29, 2024 /s/ VAGN SORENSEN Director Vagn Sørensen February 29, 2024 /s/ ÅSA TAMSONS Director Åsa Tamsons 48 Management's Discussion and Analysis The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to promote understanding of the Company's financial condition and results of operations. The MD&A is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and the accompanying Notes to the Consolidated Financial Statements. This discussion includes forward-looking statements, which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those expressed or implied by the forward-looking statements. This MD&A should be read in conjunction with our discussion of cautionary statements and significant risks to the Company’s business under “Item 1A. Risk Factors” of this Annual Report on Form 10-K. Overview CNH is a leading equipment and services company engaged in the design, production, marketing, sale, and financing of agricultural and construction equipment. Until December 31, 2021, CNH Industrial N.V. owned and controlled the Commercial and Specialty Vehicles business, the Powertrain business, and the related Financial Services business (together the “Iveco Group Business” or the “On-Highway Business”), as well as the Agriculture business, the Construction business, and the related Financial Services business (collectively, the “Off-Highway Business”). Effective January 1, 2022, the Iveco Group Business was separated from CNH Industrial N.V. by way of a demerger under Dutch law (the "Demerger") to Iveco Group N.V. (the "Iveco Group") and the Iveco Group became a public listed company independent from CNH, with its common shares trading on Euronext Milan. The On-Highway Business' financial results for the periods prior to the Demerger have been reflected in our Consolidated Statement of Operations, retrospectively, as discontinued operations. Additionally, the related assets and liabilities associated with the On-Highway Business in the prior year consolidated balance sheet are classified as discontinued operations within Assets Held for Distribution and Liabilities Held for Distribution on the Consolidated Balance Sheet. We generate revenues and cash flows principally from the sale of equipment to dealers and distributors. Financial Services provides a range of financial products focused on financing the sale and lease of equipment to our dealers and their customers. Revenues of Industrial Activities are presented net of discounts, allowances, settlement discounts and rebates, as well as costs for sales incentive programs, determined on the basis of historical costs, country by country, and charged against profit for the period in which the corresponding sales are recognized. Our sales incentive programs may include the granting by Financial Services of retail financing at discounts to market interest rates. The corresponding cost to Industrial Activities is recognized at the time of the initial sale and the revenues of Financial Services are recognized on a pro rata basis in order to match the cost of funding. Principal Factors Affecting Results Our operating performance is highly correlated to sales volumes, which are influenced by several different factors that vary across our segments. For Agriculture, the key factors influencing sales are the level of net farm income, which is influenced by commodity prices, and, to a lesser extent, general economic conditions, interest rates and the availability of financing and related subsidy programs. Variations by region and product are also attributable to differences in typical climate and farming calendars, as well as extraordinary weather conditions. For Construction, segmentation varies by regional market: in developed markets, demand is oriented toward more sophisticated machines that increase operator productivity, while in developing markets, demand is oriented toward more utilitarian models with greater perceived durability. Sales levels for heavy construction equipment are particularly dependent on the expected level of major infrastructure construction and repair projects, which is a function of expected economic growth and government spending. For light construction equipment, the principal factor influencing demand is the level of residential and commercial construction, remodeling and renovation, which is influenced in turn by interest rates and availability of financing, as well as, in the residential sector, levels of disposable income and, in the commercial sector, the broader economic cycle. Demand for services and service-related products, including parts, is a function of the nature and extent of the use of the related agricultural and construction equipment. The after-sales market is historically less volatile than the wholegoods market and, therefore, helps reduce the impact on operating results of fluctuations in new sales. Our cost base principally comprises the cost of raw materials and personnel costs. Raw material costs are closely linked to commodity markets and largely outside of our control, although we are making a targeted effort to increase procurement and production efficiencies. Historically, we have been able to pass on to our customers most of the increase in the cost of raw materials through increases in product pricing. Nevertheless, even when we are able to do so, there is 49 usually a time lag between an increase in materials cost and a realized increase in product prices and, accordingly, our results are typically adversely affected at least in the short-term until price increases are accepted in the market. Personnel costs change over time and are impacted by the terms of collective bargaining agreements, inflation and average number of employees. A significant proportion of our employees are based in countries where labor laws impose significant protection of employers’ rights and, accordingly, we have limited ability to downsize our personnel in response to a decrease in production during periods of market downturn. Our results are also affected by changes in foreign exchange rates from period to period, mainly due to the difference in geographic distribution between our manufacturing activities and our commercial activities, resulting in cash flows from exports denominated in currencies that differ from those associated with production costs. In addition, our Consolidated Financial Statements are expressed in U.S. dollars and are therefore subject to movements in exchange rates upon translation of the financial statements of subsidiaries whose functional currency is not the U.S. dollar. Finally, our results may be materially affected, directly or indirectly, by governmental policies, including monetary and fiscal policies and policies on international trade and investment. Global Business Conditions In combination with the economic recovery factors and repercussions from geopolitical events, the global economy continues to experience volatile disruptions including to the commodity, labor and transportation markets. These disruptions have contributed to an inflationary environment which has affected, and may continue to affect, the price and availability of certain products and services necessary for the Company's operations. For example, the Company experienced supply chain disruptions and inflationary pressures in 2022 and, while these trends improved in 2023, the Company continues to experience some disruptions. The reduction in supply chain disruptions contributed to improved efficiencies in our manufacturing operations, but purchasing costs remain elevated. In addition, the Company continues to monitor global economic conditions and the impact of macroeconomic pressures, including repercussions from rising interest rates, fluctuating currency exchange rates, inflation and recession fears, on the Company’s business, customers and suppliers. For a discussion of the Company’s risks and uncertainties, see Part 1, Item 1A: Risk Factors. Non-GAAP Financial Measures CNH monitors its operations through the use of several non-GAAP financial measures. CNH’s management believes that these non-GAAP financial measures provide useful and relevant information regarding its operating results and enhance the readers’ ability to assess CNH’s financial performance and financial position. Management uses these non-GAAP measures to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions as they provide additional transparency with respect to our core operations. These non-GAAP financial measures have no standardized meaning under U.S. GAAP and are unlikely to be comparable to other similarly titled measures used by other companies and are not intended to be substitutes for measures of financial performance and financial position as prepared in accordance with U.S. GAAP. As of December 31, 2023, CNH’s non-GAAP financial measures are defined as follows: Adjusted EBIT of Industrial Activities Adjusted EBIT of Industrial Activities is defined as net income (loss) before: income taxes, Financial Services’ results, Industrial Activities’ interest expenses, net, foreign exchange gains/losses, finance and non-service component of pension and other post-employment benefit costs, restructuring expenses, and certain non-recurring items. Such non-recurring items are specifically disclosed items that management considers rare or discrete events that are infrequent in nature and not reflective of ongoing operational activities. Net (Cash) Debt and Net (Cash) Debt of Industrial Activities Net Cash (Debt) is defined as total debt less: intersegment notes receivable, cash and cash equivalents, restricted cash, other current financial assets (primarily current securities, short-term deposits and investments towards high-credit rating counterparties) and derivative hedging debt. CNH provides the reconciliation of Net Cash (Debt) to Total (Debt), which is the most directly comparable measure included in the consolidated balance sheets. Due to different sources of cash flows used for the repayment of the debt between Industrial Activities and Financial Services (by cash from operations for Industrial Activities and by collection of financing receivables for Financial Services), management separately evaluates the cash flow performance of Industrial Activities using Net Cash (Debt) of Industrial Activities. 50 Revenues on a Constant Currency Basis CNH discusses the fluctuations in revenues on a constant currency basis by applying the prior year average exchange rates to current year’s revenues expressed in local currency in order to eliminate the impact of foreign exchange rate fluctuations. Free Cash Flow of Industrial Activities Free Cash Flow of Industrial Activities (or Industrial Free Cash Flow) refers to Industrial Activities, only, and is computed as consolidated cash flow from operating activities less: cash flow from operating activities of Financial Services; investments of Industrial Activities in assets sold under operating leases, property, plant and equipment and intangible assets; change in derivatives hedging debt of Industrial Activities; as well as other changes and intersegment eliminations. Operating Results 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 our consolidated operations and financial results. For further information, see “Supplemental Information” within this section, where we present supplemental consolidating data split by Industrial Activities and Financial Services. Transactions between Industrial Activities and Financial Services have been eliminated to arrive at the consolidated data. 2023 Compared to 2022 Consolidated Results of Operations (in millions of dollars) 2023 2022 Revenues Net sales $ 22,080 $ 21,541 Finance, interest and other income 2,607 2,010 Total Revenues 24,687 23,551 Costs and Expenses Cost of goods sold 16,838 16,797 Selling, general and administrative expenses 1,863 1,752 Research and development expenses 1,041 866 Restructuring expenses 67 31 Interest expense 1,345 734 Other, net 830 689 Total Costs and Expenses 21,984 20,869 Income (loss) of Consolidated Group before Income Taxes 2,703 2,682 Income tax expense (594) (747) Equity in income of unconsolidated subsidiaries and affiliates 274 104 Net income (loss) 2,383 2,039 Net income attributable to noncontrolling interests 12 10 Net income (loss) attributable to CNH Industrial N.V. $ 2,371 $ 2,029 Revenues We recorded revenues of $24,687 million in 2023, an increase of 4.8% (up 4.7% on a constant currency basis) compared to 2022. This increase is primarily due to favorable price realization. Cost of Goods Sold Cost of goods sold were $16,838 million in 2023 compared to $16,797 million in 2022, an increase of 0.2% year over year. As a percentage of net sales of Industrial Activities, cost of goods sold was 76.3% in 2023 (78.0% in 2022), as a result of favorable price realization, partially offset by higher manufacturing and purchasing costs. For year ended December 31, 2022 this item includes $41 million of asset write-downs due to the suspension of operations in Russia. 51 Selling, General and Administrative Expenses Selling, General and Administrative Expenses ("SG&A") expenses were $1,863 million in 2023 (7.5% of revenues) compared to $1,752 million in 2022 (7.4% of revenues). The year over year increase is primarily due to increased labor costs. For year ended December 31, 2022, SG&A includes $17 million of asset write-downs due to the suspension of operations in Russia. Research and Development In 2023, R&D expenses were $1,041 million compared to $866 million in 2022. The expense in both years was primarily attributable to continued investment in new products, technologies and digital solutions. Restructuring Expenses The Company incurred restructuring costs of $67 million and $31 million for the years ended December 31, 2023 and 2022, respectively. Interest Expense Interest expense increased to $1,345 million in 2023 from $734 million in 2022 primarily due to higher average interest rates on greater external borrowings, supporting working capital requirements and an increase to the financial services portfolio. The interest expense attributable to Industrial Activities, net of interest income and eliminations, was $76 million in 2023 compared to $119 million in 2022. Other, net Other, net expenses were $830 million in 2023 and included a pre-tax gain of $24 million ($18 million after-tax) as a result of the amortization over 4 years of the $101 million positive impact from the 2021 U.S. healthcare plan modification and a gain of $13 million in relation to the fair value remeasurement of previously held investments in Augmenta and Bennamann, offset by a loss of $23 million on the sale of CNH Industrial Russia. Other, net expenses were $689 million in 2022 and included a pre-tax gain of $90 million ($68 million after-tax) as a result of the Benefit Modification Amortization over approximately 4.5 years of the $527 million positive impact from the 2018 U.S. healthcare plan modification, a pre-tax gain of $24 million ($18 million after-tax) as a result of the amortization over 4 years of the $101 million positive impact from the 2021 U.S. healthcare plan modification, a pre-tax gain of $65 million ($70 million after-tax) on the sale of a facility in Canada, $22 million ($54 million after-tax) of loss on the sale of Raven Engineered Films and Aerostar Divisions, net of income from those businesses held for sale during the period, separation costs in connection with the spin-off of the On-Highway business of $25 million ($24 million after-tax), and foreign exchange losses of $59 million. Income Taxes (in millions of dollars, except percentages) 2023 2022 Income (loss) of Consolidated Group before Income Taxes $ 2,703 $ 2,682 Income tax expense $ 594 $ 747 Effective tax rate 22.0 % 27.9 % In 2023, income taxes were an expense of $594 million, compared to a tax expense of $747 million in 2022. The effective tax rates for 2023 and 2022 were 22.0% and 27.9%, respectively. The 2023 effective tax rate was reduced by the recognition of $99 million of previously unrecognized deferred tax assets in the United Kingdom, lower profitability in high-tax jurisdictions as a percent of total profit, higher credits and incentives, and the tax benefits related to the sale of CNH Industrial Russia; offset by increases in the tax rate due to the tax impact from the Argentina highly inflationary economy and discrete tax expense associated with prior periods. In 2022, income taxes were an expense of $747 million with an effective tax rate of 27.9%. The Company's 2022 tax rate was increased by greater profitability in high-tax jurisdictions as a percent of total profit, tax expenses associated with the disposition of Raven’s Engineered Films and Aerostar Divisions, additional reserves for uncertain tax positions and the tax impacts associated with Argentina’s highly inflationary economy. These impacts were partially offset by the recognition of $55 million of previously unrecognized deferred tax assets in Italy. The Organization for Economic Cooperation and Development (the OECD) has proposed a global minimum tax of 15% of reported profits ("Pillar Two") that has been agreed upon in principle by over 140 countries. During 2023, many countries took steps to incorporate Pillar Two model rule concepts into their domestic laws. The Company continues to monitor developments in the Pillar Two legislation and is working to evaluate the impacts of this legislation on its longer-term financial position. 52 Equity in Income of Unconsolidated Subsidiaries and Affiliates Equity in income of unconsolidated subsidiaries and affiliates was $274 million in 2023 compared to $104 million in 2022 primarily from our joint venture. The 2023 equity income includes a foreign exchange impact of $84 million. Industrial Activities and Business Segments The following tables include Revenues and Adjusted EBIT of Industrial Activities by segment. We have also included a discussion of our results by Industrial Activities and each of our segments. (in millions of dollars, except percentages) 2023 2022 % Change % Change excl. FX Revenues: Agriculture $ 18,148 $ 17,969 1.0 % 0.9 % Construction 3,932 3,572 10.1 % 9.8 % Total Net sales of Industrial Activities 22,080 21,541 2.5 % 2.4 % Financial Services 2,573 1,996 28.9 % 28.6 % Eliminations and other 34 14 Total Revenues $ 24,687 $ 23,551 4.8 % 4.7 % (in millions of dollars, except percentages) 2023 2022 $ Change 2023 Adj EBIT Margin 2022 Adj EBIT Margin Adjusted EBIT by Segment: (1) Agriculture $ 2,732 $ 2,456 $ 276 15.1 % 13.7 % Construction 238 124 114 6.1 % 3.5 % Eliminations and other (240) (147) (93) Adjusted EBIT of Industrial Activities $ 2,730 $ 2,433 $ 297 12.4 % 11.3 % (1) A reconciliation from the most closely related U.S. GAAP measure to this non-GAAP measure is included on page 55 . Net sales of Industrial Activities were $22,080 million in 2023, up 2.5% compared to the prior year (up 2.4% on a constant currency basis) primarily due to favorable price realization. Adjusted EBIT of Industrial Activities was $2,730 million in 2023 ($2,433 million in 2022), with an Adjusted EBIT margin of 12.4%. The increase in adjusted EBIT was primarily attributable to gross margin improvement in our Agriculture and Construction segments, partially offset by increased SG&A expenditures and R&D investments. Business Segment Performance Agriculture Net Sales The following table includes Agriculture net sales by geographic region in 2023 compared to 2022: Agriculture Sales – by geographic region: (in millions of dollars) 2023 2022 % Change North America $ 7,157 $ 6,769 5.7 % Europe, Middle East and Africa 5,878 5,776 1.8 % South America 3,178 3,738 (15.0) % Asia Pacific 1,935 1,686 14.8 % Total $ 18,148 $ 17,969 1.0 % Net sales for Agriculture were $18,148 million in 2023, a 1.0% increase (up 0.9% on a constant currency basis) compared to 2022. The increase was driven by favorable price realization, partially offset by dealer destocking actions due to lower industry demand. In North America, industry volume was up 20% year over year in 2023 for tractors over 140 hp and was down 9% for tractors under 140 hp; combines were up 2%. In Europe, Middle East and Africa (EMEA), tractor and combine demand was flat and up 8%, 53 respectively, of which Europe tractor and combine demand was down 3% and 3%, respectively. South America tractor demand was down 8% and combine demand was down 18%. Asia Pacific tractor demand was down 5% and combine demand was down 37%. Adjusted EBIT Adjusted EBIT was $2,732 million in 2023, compared to $2,456 million in 2022. The $276 million increase was mostly driven by gross margin improvement, partially offset by increased production costs, SG&A expenses and R&D investments. Adjusted EBIT margin was 15.1%. Construction Net Sales The following table includes Construction net sales by geographic region in 2023 compared to 2022: Construction Sales – by geographic region: (in millions of dollars) 2023 2022 % Change North America $ 2,253 $ 1,721 30.9 % Europe, Middle East and Africa 851 907 (6.2) % South America 559 665 (15.9) % Asia Pacific 269 279 (3.6) % Total $ 3,932 $ 3,572 10.1 % Net sales for Construction were $3,932 million in 2023, a 10.1% increase (up 9.8% on a constant currency basis) compared to 2022, driven by favorable price realization and positive volume/mix mainly in North America; partially offset by lower net revenue from South America, and ceased activities in China and Russia. Global industry volume for construction equipment decreased in both Heavy and Light sub-segments year over year in 2023, down 14% and 1%, respectively. Aggregated demand increased 2% in EMEA, increased 3% in North America, decreased 24% in South America and decreased 17% for Asia Pacific, particularly in China. Adjusted EBIT Adjusted EBIT was $238 million in 2023 (up $114 million compared to 2022). The improvement was due to favorable volume and mix and favorable price realization, partially offset by higher raw materials and manufacturing costs and increased R&D investments. Adjusted EBIT margin was 6.1%. Financial Services Performance Finance, Interest and Other Income Financial Services reported revenues of $2,573 million in 2023, up 28.9% compared to 2022 (up 28.6% on a constant currency basis) primarily driven by favorable volumes and higher base rates across all regions, partially offset by lower used equipment sales due to decreased operating lease maturities. Net Income For the year ended December 31, 2023, net income was $371 million, a $33 million increase compared to 2022, driven by favorable volumes in all regions, partially offset by margin compression in all regions, higher risk costs, increased labor costs and higher taxes, primarily due to increased profitability. In 2023, retail originations (including unconsolidated joint ventures) were $11.5 billion, up $1.5 billion compared to 2022 (up $1.5 billion on a constant currency basis). The managed portfolio (including unconsolidated joint ventures) was $28.9 billion as of December 31, 2023 (of which retail was 64% and wholesale 36%), up $5.1 billion compared to December 31, 2022 (up $4.4 billion on a constant currency basis). At December 31, 2023, the receivable balance greater than 30 days past-due as a percentage of receivables was 1.4% (1.3% as of December 31, 2022). 54 2022 Compared to 2021 Please refer to the “Management’s Discussion and Analysis” section of our 2022 Form 10-K . Reconciliation of Adjusted EBIT to Net Income (Loss) The following table includes the reconciliation of Adjusted EBIT for Industrial Activities to net income, the most comparable U.S. GAAP financial measure. Years Ended December 31, (in millions of dollars) 2023 2022 2021 Agriculture $ 2,732 $ 2,456 $ 1,810 Construction 238 124 90 Unallocated items, eliminations and other (1) (240) (147) (137) Total Adjusted EBIT of Industrial Activities 2,730 2,433 1,763 Financial Services Net Income 371 338 349 Financial Services Income Taxes 136 125 107 Interest expense of Industrial Activities, net of interest income and eliminations (76) (119) (118) Foreign exchange gains (losses), net of Industrial Activities (105) (59) (1) Finance and non-service component of Pension and other post-employment benefit cost of Industrial Activities (2) (4) 124 143 Restructuring expense of Industrial Activities (65) (31) (35) Other discrete items of Industrial Activities (3) (10) (25) (178) Income (loss) before taxes 2,977 2,786 2,030 Income tax benefit (expense) (594) (747) (229) Net (loss) from discontinued operations — — (41) Net income (loss) $ 2,383 $ 2,039 $ 1,760 (1) Unallocated items, eliminations and other primarily includes certain corporate costs and other operating expenses and incomes not allocated to segments’ results. (2) In the years ended December 31, 2023, 2022 and 2021, this item includes a pre-tax gain of $24 million, $24 million and $5 million, respectively as a result of the amortization over 4 years of the $101 million positive impact from the 2021 modifications of a healthcare plan in the U.S. In the years ended December 31, 2022 and 2021 this item includes the pre-tax gain of $90 million and $119 million, respectively as a result of the amortization over approximately 4.5 years of the $527 million positive impact from 2018 modification of a healthcare plan in the U.S. (3) In the year ended December 31, 2023, this item includes a loss of $23 million on the sale of the CNH Industrial Russia and CNH Capital Russia businesses, partially offset by a gain of $13 million for the fair value remeasurement of Augmenta and Bennamann. In the year ended December 31, 2022, this item included $43 million of asset write-downs, $25 million of separation costs incurred in a connection with our spin-off of the Iveco Group Business and $22 million of costs related to the activity of the Raven segments held for sale, including the loss on the sale of the Engineered Films and Aerostar divisions, partially offset by a $65 million dollar gain on the sale of our Canada parts depot. In the year ended December 31, 2021, this item included $133 million separation costs in connection with the spin-off of the Iveco Group Business and a charge of $57 million for transaction costs related to the acquisition of Raven Industries, Inc., partially offset by a gain of $12 million for a fair value adjustment of Monarch Tractor investments. 55 Supplemental Information The operations, 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. This supplemental information does not purport to represent the operations of each group as if each group were to operate on a standalone basis. This supplemental data is as follows: Industrial Activities—The financial information captioned “Industrial Activities” reflects the consolidation of all majority-owned subsidiaries except for Financial Services business. Financial Services—The financial information captioned “Financial Services” reflects the consolidation or combination of Financial Services business. Statement of Operations Year Ended December 31, 2023 Year Ended December 31, 2022 (in millions of dollars) Industrial Activities (1) Financial Services Eliminations Consolidated Industrial Activities (1) Financial Services Eliminations Consolidated Revenues Net sales $ 22,080 $ — $ — $ 22,080 $ 21,541 $ — $ — $ 21,541 Finance, interest and other income 206 2,573 (172) (2) 2,607 95 1,996 (81) (2) 2,010 Total Revenues 22,286 2,573 (172) 24,687 21,636 1,996 (81) 23,551 Costs and Expenses Cost of goods sold 16,838 — — 16,838 16,797 — — 16,797 Selling, general & administrative expenses 1,645 218 — 1,863 1,549 203 — 1,752 Research and development expenses 1,041 — — 1,041 866 — — 866 Restructuring expenses 65 2 — 67 31 — — 31 Interest expense 282 1,235 (172) (3) 1,345 214 601 (81) (3) 734 Other, net 201 629 — 830 (55) 744 — 689 Total Costs and Expenses 20,072 2,084 (172) 21,984 19,402 1,548 (81) 20,869 Income (loss) of Consolidated Group before Income Taxes 2,214 489 — 2,703 2,234 448 — 2,682 Income tax expense (458) (136) — (594) (622) (125) — (747) Equity income (loss) of unconsolidated subsidiaries and affiliates 256 18 — 274 89 15 — 104 Net income (loss) $ 2,012 $ 371 $ — $ 2,383 $ 1,701 $ 338 $ — $ 2,039 (1) Industrial Activities represents the enterprise without Financial Services. Industrial Activities includes the Company's Agriculture, Construction, and other corporate assets, liabilities, revenues and expenses not reflected within Financial Services. (2) Eliminations of Financial Services' interest income earned from Industrial Activities. (3) Eliminations of Industrial Activities' interest expense to Financial Services. 56 Balance Sheets Year Ended December 31, 2023 Year Ended December 31, 2022 (in millions of dollars) Industrial Activities (1) Financial Services Eliminations Consolidated Industrial Activities (1) Financial Services Eliminations Consolidated Assets Cash and cash equivalents $ 3,532 $ 790 $ — $ 4,322 $ 3,802 $ 574 $ — $ 4,376 Restricted cash 96 627 — 723 158 595 — 753 Trade receivables, net 136 9 (12) (2) 133 175 3 (6) (2) 172 Financing receivables, net 393 24,539 (683) (3) 24,249 898 19,313 (951) (3) 19,260 Financial receivables from Iveco Group N.V. 302 78 — 380 234 64 — 298 Inventories, net 5,522 23 — 5,545 4,798 13 — 4,811 Property, plant and equipment, net 1,912 1 — 1,913 1,532 — — 1,532 Investments in unconsolidated subsidiaries and affiliates 440 123 — 563 272 113 — 385 Equipment under operating leases 39 1,378 — 1,417 29 1,473 — 1,502 Goodwill 3,473 141 — 3,614 3,182 140 — 3,322 Other intangible assets, net 1,266 26 — 1,292 1,105 24 — 1,129 Deferred tax assets 933 181 (135) (4) 979 440 107 (114) (4) 433 Derivative assets 48 104 (16) (5) 136 82 128 (21) (5) 189 Other assets 1,149 119 (183) (2) 1,085 1,172 126 (79) (2) 1,219 Total Assets $ 19,241 $ 28,139 $ (1,029) $ 46,351 $ 17,879 $ 22,673 $ (1,171) $ 39,381 Liabilities and Equity Debt $ 4,433 $ 23,721 $ (828) $ 27,326 $ 4,972 $ 18,941 $ (951) (3) $ 22,962 Financial payables from Iveco Group N.V. 6 140 — 146 5 151 — 156 Trade payables 3,424 198 (11) (2) 3,611 3,492 216 (6) (2) 3,702 Deferred tax liabilities 35 135 (135) (4) 35 4 195 (114) (4) 85 Pension, postretirement and other postemployment benefits 471 5 — 476 444 5 — 449 Derivative liability 116 116 (16) (5) 216 132 93 (21) (5) 204 Other liabilities 5,311 1,035 (39) (2) 6,307 4,139 787 (79) (2) 4,847 Total Liabilities 13,796 25,350 (1,029) 38,117 13,188 20,388 (1,171) 32,405 Redeemable noncontrolling interest 54 — — 54 49 — — 49 Equity 5,391 2,789 — 8,180 4,642 2,285 — 6,927 Total Liabilities and Equity $ 19,241 $ 28,139 $ (1,029) $ 46,351 $ 17,879 $ 22,673 $ (1,171) $ 39,381 (1) Industrial Activities represents the enterprise without Financial Services. Industrial Activities includes the Company's Agriculture, and Construction segments, and other corporate assets, liabilities, revenues and expenses not reflected within Financial Services. (2) Eliminations of primarily receivables/payables between Industrial Activities and Financial Services. (3) Eliminations of financing receivables/payables between Industrial Activities and Financial Services. (4) Reclassification of deferred tax assets/liabilities in the same jurisdiction and reclassification needed for appropriate consolidated presentation. (5) Elimination of derivative assets/liabilities between Industrial Activities and Financial Services. 57 Cash Flow Statements Year Ended December 31, 2023 Year Ended December 31, 2022 (in millions of dollars) Industrial Activities (1) Financial Services Eliminations Consolidated Industrial Activities (1) Financial Services Eliminations Consolidated Cash Flows from Operating Activities Net income (loss) $ 2,012 $ 371 $ — $ 2,383 $ 1,701 $ 338 $ — $ 2,039 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization expense excluding assets under operating leases 373 4 — 377 325 2 — 327 Depreciation and amortization expense of assets under operating leases 8 179 — 187 6 202 — 208 (Gain) loss from disposal of assets 10 — — 10 (42) — — (42) Undistributed income (loss) of unconsolidated subsidiaries (145) (18) (48) (2) (211) 134 (15) (188) (2) (69) Other non-cash items 92 81 — 173 124 72 — 196 Changes in operating assets and liabilities: Provisions 908 3 — 911 190 (1) — 189 Deferred income taxes (439) (96) — (535) 38 (88) — (50) Trade and financing receivables related to sales, net 51 (2,325) 6 (3) (2,268) 103 (2,551) 1 (3) (2,447) Inventories, net (695) 436 — (259) (690) 539 — (151) Trade payables (132) (19) (6) (3) (157) 111 9 5 (3) 125 Other assets and liabilities 94 202 — 296 5 233 (6) (3) 232 Net cash provided by operating activities 2,137 (1,182) (48) 907 2,005 (1,260) (188) 557 Cash Flows from Investing Activities Additions to retail receivables — (8,069) — (8,069) — (5,971) — (5,971) Collections of retail receivables — 5,824 — 5,824 — 4,360 — 4,360 Proceeds from sale of assets, excluding assets under operating leases 16 — — 16 97 — — 97 Expenditures for property, plant and equipment and intangible assets, excluding assets under operating leases (637) (7) — (644) (456) (5) — (461) Expenditures for assets under operating leases (30) (521) — (551) (21) (517) — (538) Other 191 (677) 211 (275) (1,273) 739 38 (496) Net cash used in investing activities (460) (3,450) 211 (3,699) (1,653) (1,394) 38 (3,009) Cash Flows from Financing Activities Proceeds from long-term debt — 9,941 — 9,941 — 11,183 — 11,183 Payments of long-term debt (1,002) (7,222) — (8,224) (95) (9,128) — (9,223) Net increase (decrease) in other financial liabilities 92 1,979 — 2,071 (20) 600 — 580 Dividends paid (538) (48) 48 (2) (538) (423) (188) 188 (2) (423) Purchase of treasury stock and other (652) 211 (211) (652) (153) 38 (38) (153) Net cash provided (used) by financing activities (2,100) 4,861 (163) 2,598 (691) 2,505 150 1,964 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 91 19 — 110 (215) (13) — (228) Net increase (decrease) in cash, cash equivalents and restricted cash (332) 248 — (84) (554) (162) — (716) Cash, cash equivalents and restricted cash, beginning of year 3,960 1,169 — 5,129 4,514 1,331 — 5,845 Cash, cash equivalents and restricted cash, end of year $ 3,628 $ 1,417 $ — $ 5,045 $ 3,960 $ 1,169 $ — $ 5,129 (1) Industrial Activities represents the enterprise without Financial Services. Industrial Activities includes the Company's Agriculture, Construction, and other corporate assets, liabilities, revenues and expenses not reflected within Financial Services. (2) This item includes the elimination of dividends from Financial Services to Industrial Activities, which are included in Industrial Activities net cash provided by operating activities. (3) This item includes the elimination of certain minor activities between Industrial Activities and Financial Services. Liquidity and Capital Resources Our operations are capital intensive and subject to seasonal variations in financing requirements for dealer receivables and dealer and company inventories. Whenever necessary, funds from operating activities are supplemented from external sources. CNH, focusing on cash preservation and leveraging its good access to funding, continues to maintain solid financial strength and liquidity. Capital Resources The cash flows, funding requirements and liquidity of CNH are managed on a standard and centralized basis. This centralized system is designed to optimize the efficiency and effectiveness of our management of capital resources. 58 Our subsidiaries participate in a company-wide cash management system, which we operate in a number of jurisdictions. Under this system, the cash balances of our subsidiaries are aggregated at the end of each business day to central pooling accounts. The centralized treasury management offers financial and systems expertise in managing these accounts, as well as providing related services and consulting to our business segments. Our policy is to keep a high degree of flexibility with our funding and investment options in order to maintain our desired level of liquidity to achieve our rating targets while improving the Company’s capital structure over time. In managing our liquidity requirements, we are pursuing a financing strategy that aims at extending over time our Industrial Activities debt profile by issuing long-term bonds and retiring short-term debt through opportunistic transactions, deleveraging our Industrial Activities balance sheet by reducing gross debt, and diversifying funding sources. A summary of our strategy is set forth below: • Industrial Activities sells certain of its receivables to Financial Services and relies on internal cash flows including managing working capital to fund its near-term financing requirements. We will also supplement our short-term financing by drawing on existing or new facilities with banks. • To the extent funding needs of Industrial Activities are determined to be of a longer-term nature, we will access public debt markets as well as private investors and banks, as appropriate, to refinance borrowings and replenish our liquidity. • Financial Services’ funding strategy is to maintain sufficient liquidity and flexible access to a wide variety of financial instruments. While we expect securitizations and sale of receivables (factoring) to continue to represent a material portion of our capital structure and intersegment borrowings to remain a marginal source of funding, we will continue to diversify our funding sources and expand our investor base within Financial Services to support our investment grade credit ratings. These diversified funding sources include secured and unsecured facilities, a repurchase agreement, commercial paper and unsecured notes. On a global level, we will continue to evaluate alternatives to ensure that Financial Services has access to capital on favorable terms to support its business, including agreements with global or regional partners, new funding arrangements or a combination of the foregoing. Our access to external sources of financing, as well as the cost of financing, is dependent on various factors, including our credit ratings. On January 4, 2022, Fitch Ratings raised its Long-Term Issuer Default Rating ("IDR") on CNH Industrial N.V. to ‘BBB+’ from ‘BBB-’. Fitch also upgraded CNH Industrial Finance Europe S.A.’s senior unsecured rating to ‘BBB+’ from ‘BBB-’. The Outlook is stable. On January 7, 2022, Fitch upgraded the Long-Term IDR and senior long-term debt ratings of CNH Industrial Capital LLC and CNH Industrial Capital Canada Ltd. to 'BBB+' from 'BBB-'. The outlook is stable. Fitch has also upgraded CNH Industrial Capital LLC's short-term IDR and commercial paper ratings to 'F2' from 'F3'. On February 25, 2022, Moody's upgraded the senior unsecured ratings of CNH Industrial N.V. and its supported subsidiaries including CNH Industrial Capital LLC, CNH Industrial Finance Europe S.A., CNH Industrial Capital Australia Pty. Ltd. and CNH Industrial Capital Canada Ltd. to Baa2 from Baa3. At the same time, Moody's withdrew CNH Industrial Finance Europe S.A. short term rating of (P)P-3. The rating outlook is stable. On November 30, 2023, Standard & Poor's ("S&P") Global Ratings raised its long-term issuer credit ratings on CNH Industrial N.V. and its subsidiary, CNH Industrial Capital LLC, to 'BBB+' from 'BBB'. S&P Global Ratings also affirmed the 'A-2' short-term issuer credit rating. Additionally, S&P Global Ratings raised the issue-level ratings on CNH Industrial N.V. and its industrial subsidiaries' debt, as well as the issue-level ratings on CNH Industrial Capital LLC's senior unsecured debt, to 'BBB+' from 'BBB'. The outlook is stable. Current ratings for the Company are as follows: CNH Industrial N.V. (1) CNH Industrial Capital LLC Long-Term Short-Term Outlook Senior Long-Term Short-Term Outlook S&P Global Ratings BBB+ A-2 Stable BBB+ A-2 Stable Fitch Ratings BBB+ - Stable BBB+ F2 Stable Moody’s Investors Service Baa2 - Stable Baa2 - Stable (1) Includes treasury subsidiary, CNH Industrial Finance Europe S.A. The Company’s debt is investment grade, which the Company believes will allow it to access funding at better rates. A credit rating is not a recommendation to buy, sell or hold securities. Ratings may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating. A deterioration in our ratings could impair our ability to obtain debt financing and would increase the cost of such financing. Ratings are influenced by a number of 59 factors, including, among others: financial leverage on an absolute basis or relative to peers, the composition of the balance sheet and/or capital structure, material changes in earnings trends and volatility, ability to dividend monies from subsidiaries and our competitive position. Material deterioration in any one, or a combination, of these factors could result in a downgrade of our ratings, thus increasing the cost, and limiting the availability, of financing. Consolidated Debt As of December 31, 2023 and 2022, our consolidated Debt was as detailed in the table below: Consolidated Industrial Activities Financial Services (in millions of dollars) 2023 2022 2023 2022 2023 2022 Total Debt $ 27,472 $ 23,118 $ 4,439 $ 4,977 $ 23,861 $ 19,092 We believe that Net Cash/(Debt), a non-GAAP financial measure as defined in the section “Non-GAAP Financial Measures”, of section "General" above, is a useful analytical metric for measuring our effective borrowing requirements. We provide a separate analysis of Net Cash/(Debt) of Industrial Activities and Net (Cash)/Debt of Financial Services to reflect the different cash flow management practices in the two activities. Industrial Activities reflects the consolidation of all majority-owned subsidiaries, including those performing centralized treasury activities, except for Financial Services subsidiaries. Financial Services reflects the consolidation of the Financial Services’ businesses. The calculation of Net Cash/(Debt) has of December 31, 2023 and 2022 and the reconciliation of Total Debt, the U.S. GAAP financial measure that we believe to be most directly comparable, to Net Debt/Cash, are shown below: Consolidated Industrial Activities Financial Services (in millions of dollars) 2023 2022 2023 2022 2023 2022 Third party (debt) $ (27,326) $ (22,962) $ (4,132) $ (4,909) $ (23,194) $ (18,053) Intersegment notes payable — — (301) (63) (527) (888) Financial payables to Iveco Group N.V. (146) (156) (6) (5) (140) (151) Total Debt (1) (27,472) (23,118) (4,439) (4,977) (23,861) (19,092) Less: Cash and cash equivalents 4,322 4,376 3,532 3,802 790 574 Restricted cash 723 753 96 158 627 595 Intersegment notes receivables — — 527 888 301 63 Financial receivables from Iveco Group N.V. 380 298 302 234 78 64 Other current financial assets (2) — 300 — 300 — — Derivatives hedging debt (41) (43) (34) (43) (7) — Net Cash/(Debt) (3) $ (22,088) $ (17,434) $ (16) $ 362 $ (22,072) $ (17,796) (1) Total (Debt) of Industrial Activities includes Intersegment notes payable to Financial Services of $301 million and $63 million at December 31, 2023 and 2022, respectively. Total (Debt) of Financial Services includes Intersegment notes payable to Industrial Activities of $527 million and $888 million at December 31, 2023 and 2022, respectively. (2) This item includes short-term deposits and investments toward high-credit rating counterparties. (3) The net intersegment receivable/(payable) balance owed by Financial Services relating to Industrial Activities was $(226) million and $(825) million as of December 31, 2023 and 2022, respectively. Excluding exchange rate differences effect of $536 million, Net Debt at December 31, 2023 increased by $4,118 million compared to December 31, 2022, mainly reflecting the increase in portfolio receivables of Financial Services of $4,485 million, and the cash out of $1,190 million related to yearly dividend and share buyback program, partially offset by a Free Cash Flow generation from Industrial Activities of $1,216 million. Cash Flow Analysis For the year ended December 31, 2023, Cash and cash equivalents and Restricted cash combined were $5,045 million, a decrease of $84 million from December 31, 2022, primarily due to receivables portfolio absorption, dividends paid, investments in fixed assets, and acquisition of businesses and other equity investments, partially offset by operating activities cash generation and an increase in external borrowings to support working capital requirements. 60 At December 31, 2023, Cash and cash equivalents and Restricted cash were $4,322 million ($4,376 million at December 31, 2022) and $723 million ($753 million at December 31, 2022), respectively. Undrawn medium-term unsecured committed facilities were $5,945 million ($5,061 million at December 31, 2022) and other current financial assets were $— million ($300 million at December 31, 2022). At December 31, 2023, the aggregate of Cash and cash equivalents, Restricted cash, undrawn committed facilities and other current financial assets, which we consider to constitute our principal liquid assets (or "available liquidity"), totaled $11,224 million ($10,632 million at December 31, 2022). At December 31, 2023, this amount also included $234 million net financial receivables from Iveco Group ($142 million net financial receivables at December 31, 2022) consisting of net financial receivables mainly towards Financial Services of Iveco Group. The following table summarizes the changes to cash flows from operating, investing, and financing activities for each of the years ended December 31, 2023, 2022 and 2021. (in millions of dollars) 2023 2022 2021 Cash flow provided (used) by: Operating activities $ 907 $ 557 $ 4,082 Investing activities (3,699) (3,009) (5,001) Financing activities 2,598 1,964 (1,445) Translation exchange differences 110 (228) (403) Net increase (decrease) in cash and cash equivalents $ (84) $ (716) $ (2,767) Net Cash from Operating Activities Cash provided by operating activities in 2023 totaled $907 million and comprised the following elements: • $2,383 million net income; • plus $564 million in non-cash charges for depreciation and amortization ($377 million excluding equipment on operating leases) • plus change in provisions of $911 million • plus $173 million in Other non-cash items primarily due to share based payments and write downs of assets under operating leases • less deferred tax income of $535 million • less $2,388 million change in working capital. In 2022, cash provided by operating activities of continuing operations during the year was $557 million primarily as a result of $2,039 million in net income, $535 million in non-cash charges for depreciation, and $196 million in Other non-cash items partially offset by an increase of working capital of $2,241 million. In 2021, cash provided by operating activities of continuing operations during the year was $3,198 million primarily as a result of an increase of $935 million related to working capital improvements, $537 million in non-cash charges for depreciation, and $126 million in Other non-cash items. Net Cash from Investing Activities In 2023, cash used in investing activities was $3,699 million. Expenditures included net additions to retail receivables ($2,245 million), expenditures for assets under operating leases ($551 million), and expenditures for property, plant and equipment and intangible assets, excluding assets under operating lease ($644 million). In 2022, cash used in investing activities was $3,009 million. Expenditures included assets under operating leases ($538 million), expenditures for Property, Plant, and Equipment and intangible assets ($461 million), and net additions to retail receivables ($1,611 million). In 2021, cash used in investing activities of continuing operations totaled $4,570 million. Expenditures included assets under operating leases ($556 million), expenditures for Property, Plant, and Equipment and intangible assets ($365 million), net additions to retail receivables ($990 million), the cash out of $2,246 million for the acquisition of the 100% interest in Raven Industries, Inc., and $86 million to acquire 90% interest in Sampierana. 61 The following table summarizes our investments in tangible assets by segment and investments in intangible assets for each of the years ended December 31, 2023, 2022 and 2021: (in millions of dollars) 2023 2022 2021 Agriculture $ 396 $ 282 $ 209 Construction 79 48 36 Total Industrial Activities in tangible assets 475 330 245 Industrial Activities investments in intangible assets 162 126 115 Total Industrial Activities capital expenditures 637 456 360 Financial Services investments in intangible assets 7 5 5 Total Capital expenditures $ 644 $ 461 $ 365 We incurred these capital expenditures principally related to initiatives to introduce new products, enhance manufacturing efficiency and increase capacity, and for maintenance and engineering. Capital expenditures were higher than 2022 due to higher investments in new product introductions and technology. Net Cash from Financing Activities In 2023, cash provided by financing activities totaled $2,598 million, primarily due to an increase in external borrowings to support working capital requirements and an increase to the Financial Services portfolio, partially offset by dividends paid and the shares buyback program. In 2022, cash provided by financing activities totaled $1,964 million, primarily due to increase in debt, mainly due to increase in receivables portfolio of Financial Services, dividends paid and shares buyback program. In 2021, cash used by financing activities of continuing operations totaled $1,399 million, primarily due to changes in debt and financial liabilities and the reinstatement of dividends paid after suspension in 2020. Reconciliation of Free Cash Flow The non-GAAP financial measures (Net Cash/(Debt) and Free Cash Flow of Industrial Activities), as defined in the section “Non-GAAP Financial Measures" above, used in this section, should neither be considered as a substitute for, nor superior to, measures of financial performance prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The reconciliation of Free Cash Flow of Industrial Activities to Net cash provided (used) by Operating Activities, the U.S. GAAP financial measure that we believe to be most directly comparable, for the years ended December 31, 2023 and 2022, is shown below: (in millions of dollars) 2023 2022 Cash provided (used) by Operating Activities $ 907 $ 557 Less: Cash flow from Operating Activities of Financial Services, net of Eliminations 1,230 1,448 Change in derivatives hedging debt of Industrial Activities 9 19 Investments in operating lease assets of Industrial Activities (30) (21) Investments in property plant and equipment, and intangible assets of Industrial Activities (637) (456) Other changes (1) (263) 49 Free Cash Flow of Industrial Activities $ 1,216 $ 1,596 (1) This item primarily includes change in financial receivables and capital increases in intersegment investments. For the year ended December 31, 2023, the generation of Free Cash Flow of Industrial Activities was $1,216 million primarily due to the strong adjusted EBIT results of the segments, partially offset by working capital absorption, capital expenditures, cash interest and taxes. Industrial Activities Capital Markets At December 31, 2023, we had an aggregate amount of $9.2 billion in bonds outstanding, of which $4.0 billion was issued by Industrial Activities. 62 The capital markets debt of Industrial Activities mainly related to notes issued under the Euro Medium Term Note Programme (and the notes issued under its predecessor, the Global Medium Term Notes Programme), and senior unsecured debt securities issued by CNH Industrial N.V. described below. Euro Medium Term Note ("EMTN") Programme . We have a medium-term note programme allowing for the placement of debt securities up to a total authorized amount of €10 billion ($11 billion). At December 31, 2023, €3,200 million ($3,537 million) was outstanding under the programme, all such debt having been issued by CNH Industrial Finance Europe S.A. and guaranteed by CNH Industrial N.V. CNH Industrial N.V. Senior Notes . In the United States, CNH Industrial N.V has issued notes from time to time. In 2016, CNH Industrial N.V. issued $600 million of notes at an interest rate of 4.50% due August 2023 (the “2023 Notes”) at an issue price of 100 percent of their principal amount, and, in 2017, CNH Industrial N.V. issued $500 million of notes at an interest rate of 3.850% due November 2027 (the “2027 Notes”) at an issue price of 99.384% of their principal amount. The 2023 Notes and the 2027 Notes are collectively referred to as the “CNH Industrial N.V. Senior Notes” On August 15, 2023, the Company paid off the 2023 Notes in cash on the scheduled due date by utilizing available liquid resources. The notes issued under the EMTN (and its predecessor the Global Medium Term Notes Programme) as well as the CNH Industrial N.V. Senior Notes impose covenants and other obligations on CNH Industrial N.V. as issuer and, in certain cases, as guarantor and CNH Industrial Finance Europe S.A. as issuer, including: (i) a negative pledge provision which requires that, if any security interest over assets of the issuer or the guarantor is granted in connection with debt that is, or is capable of being, listed or any guarantee is granted in connection with such debt, such security or guarantee must be equally and ratably extended to the outstanding notes; (ii) a status (or pari passu ) covenant, under which the notes rank and will rank pari passu with all other present and future outstanding unsubordinated and unsecured obligations of the issuer and/or the guarantor (subject to mandatorily preferred obligations under applicable laws); (iii) an events of default provision setting out certain customary events (such as cross defaults, insolvency related events, etc.) the occurrence of which entitles the holders of the outstanding notes to accelerate the repayment of the notes; (iv) change of control provisions which, when combined with a rating downgrade of CNH Industrial N.V., grant the note holders the right to require immediate repayment of the notes; and (v) other clauses that are generally applicable to securities of a similar type. A breach of these obligations may require the early repayment of the notes. At December 31, 2023, CNH was in compliance with the covenants of the notes issued under the EMTN (and its predecessor the Global Medium Term Notes Programme) and the CNH Industrial N.V. Senior Notes. CNH Industrial intends to repay the issued bonds in cash at the due date by utilizing available liquid resources. In addition, CNH Industrial may from time to time repurchase or enforce the available call options of issued bonds. Such repurchases, if made, depend upon market conditions, the financial situation of CNH Industrial and other factors which could affect such decisions. Bank Debt At December 31, 2023, Industrial Activities available committed unsecured facilities expiring after twelve months amounted to $5.4 billion ($4.5 billion at December 31, 2022). Euro 4 billion Revolving Credit Facility. In March 2019, the Company signed a five-year committed revolving credit facility for €4 billion ($4.5 billion at March 31, 2019 exchange rate) due to mature in 2024 with two extension options of 1-year each, exercisable on the first and second anniversary of the signing date. CNH exercised the first of the two extension options as of February 28, 2020 and the second extension option as of February 26, 2021. The facility is now due to mature in March 2026 for €3,950.5 million; €49.5 million within the facility will mature in March 2025. The credit facility replaced a five-year €1.75 billion credit facility scheduled to mature in 2021 and includes: • customary covenants (including a negative pledge, a status (or pari passu ) covenant and restrictions on the incurrence of indebtedness by certain subsidiaries); • customary events of default (some of which are subject to minimum thresholds and customary mitigants), including cross-default provisions, failure to pay amounts due or to comply with certain provisions under the loan agreement and the occurrence of certain bankruptcy-related events; and: • mandatory prepayment obligations upon a change in control of CNH or the borrower; • a financial covenant (Net debt/EBITDA ratio relating to Industrial Activities) (this covenant is not applicable given the current ratings levels). CNH Industrial N.V. has guaranteed any borrowings under the revolving credit facility with cross-guarantees from each of the borrowers ( i.e. , CNH Industrial Finance S.p.A., CNH Industrial Finance Europe S.A. and CNH Industrial Finance North America Inc.). At December 31, 2023, CNH was in compliance with the covenants of the Revolving Credit Facility. CNH entered into an 18-month committed unsecured credit facility on December 19, 2023, was undrawn at December 31, 2023 and was fully drawn on January 12, 2024. 63 Financial Services Total debt of Financial Services was $23.9 billion at December 31, 2023, compared to $19.1 billion at December 31, 2022. Asset-Backed Financing At December 31, 2023, Financial Services’ committed asset-backed facilities expiring after twelve months amounted to $3.7 billion ($2.9 billion at December 31, 2022), of which $3.7 billion was utilized at December 31, 2023 ($2.1 billion at December 31, 2022). We sell certain of our financial receivables to third parties in order to improve liquidity, to take advantage of market opportunities and, in certain circumstances, to reduce credit and concentration risk in accordance with our risk management objectives. The sale of financial receivables is executed primarily through ABS transactions and involves retail notes and wholesale receivables originated to our Financial Services subsidiaries from end-use customers and dealers, respectively. At December 31, 2023, our receivables from financing activities included receivables sold and financed through both ABS and factoring transactions of $14.1 billion ($12.6 billion at December 31, 2022), which do not meet derecognition requirements and therefore are recorded on our consolidated statement of financial position. These receivables are recognized as such in our financial statements even though they have been legally sold; a corresponding financial liability is recorded in the consolidated statement of financial position as debt (see "Note 4: Receivables"). Repurchase Agreement In September 2023, CNH Industrial Capital LLC entered into a Global Master Repurchase Agreement which expires in September 2024. At December 31, 2023, the Company had CAD 299.9 million ($226.3 million) outstanding under the repurchase agreement, with an obligation to repurchase the underlying receivables in 30 days. The repurchase agreement is treated as a financing arrangement for accounting purposes. Capital Markets In April 2022, Banco CNH Industrial Capital S.A. issued BRL 600 million of notes in two tranches: BRL 177 million at CDI + 0.90%, due in 2024 and BRL 423 million at CDI +1.10%, due in 2025. In May 2022, Banco CNH Industrial Capital S.A. issued BRL 350 million of notes at CDI +1.10%, due in 2025, through a private placement. In May 2022, CNH Industrial Capital LLC issued USD 500 million of 3.95% notes due in 2025 at an issue price of 99.469% of their principal amount. In September 2022, Banco CNH Industrial Capital S.A. issued BRL 700 million of notes in three tranches: BRL 268 million at CDI + 0.90%, due in 2024; BRL 193 million at CDI +1.05%, due in 2025; and BRL 239 million at CDI +1.30%, due in 2026. In October 2022, CNH Industrial Capital LLC issued USD 400 million of 5.45% notes due in 2025 at an issue price of 99.349% of their principal amount. In October 2022, CNH Industrial Capital Argentina issued USD 23 million of 0% notes due in 2025. This was a voluntary exchange offer for the outstanding USD-linked Series 1 notes issued in 2020 due August 2023. In November 2022, Banco CNH Industrial Capital S.A. issued BRL 22 million of notes at CDI + 1.05%, due in 2025, through a private placement. In December 2022, Banco CNH Industrial Capital S.A. issued BRL 190 million of notes at CDI + 0.85%, due in 2024, through a private placement. In April 2023, CNH Industrial Capital LLC issued USD 600 million of 4.550% notes due 2028, with an issue price of 98.857% of their principal amount. In May 2023, CNH Industrial Capital Argentina issued USD 36.4 million of 0% notes due in 2025 at an issue price of 124% of their principal amount. In May 2023, Banco CNH Industrial Capital S.A. issued BRL 500 million of notes in two tranches: BRL 400 million at CDI + 1.40%, due in 2025 and BRL 100 million at CDI +1.60%, due in 2026. In July 2023, CNH Industrial Capital Australia Pty. Limited issued AUD 175 million of 5.800% notes due in 2026 at an issue price of 99.715% of their principal amount. 64 In August 2023, CNH Industrial Capital Canada Ltd. issued CAD 400 million of 5.500% notes due in 2026, with an issue price of 99.883% of their principal amount. In September 2023, CNH Industrial Capital LLC issued USD 500 million of 5.500% notes due in 2029 at an issue price of 99.399% of their principal amount. In October 2023, Banco CNH Industrial Capital S.A. issued BRL 600 million of notes in three tranches: BRL 312.1 million at CDI + 0.90%, due in 2025, BRL 172.4 million at CDI + 1.00%, due in 2026 and BRL 115.5 million at CDI +1.30%, due in 2027. Bank Debt At December 31, 2023, Financial Services' available committed, unsecured facilities expiring after twelve months amounted to $0.5 billion ($0.6 billion at December 31, 2022). Commercial Paper Programs CNH Industrial Capital LLC outstanding commercial paper totaled $351 million as of December 31, 2023 ($299 million outstanding at December 31, 2022). Banco CNH Industrial S.A. outstanding commercial paper totaled $488 million as of December 31, 2023 ($209 million outstanding at December 31, 2022). Support Agreement in the Interest of CNH Industrial Capital LLC CNH Industrial Capital LLC benefits from a support agreement issued by CNH Industrial N.V., pursuant to which CNH Industrial N.V. agrees to, among other things, (a) make cash capital contributions to CNH Industrial Capital LLC, to the extent necessary to cause its ratio of net earnings available for fixed charges to fixed charges to be not less than 1.05:1.0 for each fiscal quarter (with such ratio determined, on a consolidated basis and in accordance with U.S. GAAP, for such fiscal quarter and the immediately preceding three fiscal quarters taken as a whole), (b) generally maintain an ownership of at least 51% of the voting equity interests in CNH Industrial Capital LLC and (c) cause CNH Industrial Capital LLC to have, as of the end of any fiscal quarter, a consolidated tangible net worth of at least $50 million. The support agreement is not intended to be, and is not, a guarantee by CNH Industrial N.V. of the indebtedness or other obligations of CNH Industrial Capital LLC. The obligations of CNH Industrial N.V. to CNH Industrial Capital LLC pursuant to this support agreement are to the company only and do not run to, and are not enforceable directly by, any creditor of CNH Industrial Capital LLC, including holders of the CNH Industrial Capital LLC’s notes or the trustee under the indenture governing the notes. The support agreement may be modified, amended or terminated, at CNH Industrial N.V.’s election, upon thirty days’ prior written notice to CNH Industrial Capital LLC and the rating agencies of CNH Industrial Capital LLC, if (a) the modification, amendment or termination would not result in a downgrade of CNH Industrial Capital LLC rated indebtedness; (b) the modification, amendment or notice of termination provides that the support agreement will continue in effect with respect to the company’s rated indebtedness then outstanding; or (c) CNH Industrial Capital LLC has no long-term rated indebtedness outstanding. For more information on our outstanding indebtedness, see “Note 10: Debt” to our consolidated financial statements for the year ended December 31, 2023. Future Liquidity We have adopted formal policies and decision-making processes designed to optimize the allocation of funds, cash management processes and financial risk management. Our liquidity needs could increase in the event of an extended economic slowdown or recession that would reduce our cash flow from operations and impair the ability of our dealers and retail customers to meet their payment obligations. Any reduction of our credit ratings would increase our cost of funding and potentially limit our access to the capital markets and other sources of financing. We believe that funds available under our current liquidity facilities, those realized under existing and planned asset-backed securitization programs and issuances of debt securities and those expected from ordinary course refinancing of existing credit facilities, together with cash provided by operating activities, will allow us to satisfy our debt service requirements for the coming year. At December 31, 2023, we had available committed, unsecured facilities expiring after twelve months of $5.9 billion ($5.1 billion at December 31, 2022). Financial Services securitized debt is repaid with the cash generated by the underlying amortizing receivables. Accordingly, additional liquidity is not normally necessary for the repayment of such debt. Financial Services has traditionally relied upon the term ABS market and committed asset-backed facilities as a primary source of funding and liquidity. At December 31, 2023, Financial Services’ committed asset-backed facilities expiring after twelve months amounted to $3.7 billion ($2.9 billion at December 31, 2022), of which $3.7 billion was utilized at December 31, 2023 ($2.1 billion at December 31, 2022). 65 If Financial Services were unable to obtain ABS funding at competitive rates and at the same time were unable to access other sources of finding at similar conditions, its ability to conduct its financial services activities would be limited. Pension and Other Post-employment Benefits Pension Plans Pension plan obligations primarily comprise the obligations of our pension plans in the United States, the U.K. and Germany. Under these plans, contributions are made to a separate fund (trust) which independently administers the plan assets. Our funding policy is to contribute amounts to the plan equal to the amounts required to satisfy the minimum funding requirements pursuant to the laws of the applicable jurisdictions. The significant pension plans that we are required to fund are in the United States and the U.K. In addition, we make discretionary contributions in addition to the funding requirements. To the extent that a fund is overfunded, we are not required to make further contributions to the plan in respect of minimum performance requirements so long as the fund is in surplus. The investment strategy for the plan assets depends on the features of the plan and on the maturity of the obligations. Typically, less mature plan benefit obligations are funded by using more equity securities as they are expected to achieve long-term growth 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. At December 31, 2023 and 2022, the difference between the present value of the pension plan obligations and the fair value of the related plan assets was a deficit of $225 million and $196 million, respectively. In 2023, we contributed $41 million to the plan assets and made direct benefit payments of $12 million for our pension plans. Our expected total contribution to pension plan assets and direct benefit payments is estimated to be $46 million for 2024. Healthcare Plans Healthcare postretirement benefit plan obligations comprise obligations for healthcare and insurance plans granted to our employees working in the United States and Canada. These plans generally cover employees retiring on or after reaching the age of 55 who have completed at least 10 years of employment. United States salaried and non-represented hourly employees and Canadian employees hired after January 1, 2001 and January 1, 2002, respectively, are not eligible for postretirement healthcare and life insurance benefits under our plans. These plans are not required to be funded. Beginning in 2007, we made contributions on a voluntary basis to a separate and independently managed fund established to finance the North America healthcare plans. At December 31, 2023 and 2022, the difference between the present value of the healthcare plan obligations and the fair value of the related plan assets was a deficit of $121 million and $123 million, respectively. In 2023, we did not contribute to the plan assets and made direct benefit payments for healthcare plans of $19 million and we expect to make direct benefit payments of $16 million in 2024. Other Postemployment Benefits Other postemployment benefits consist of benefits for Italian Employee Leaving Entitlements up to December 31, 2006, loyalty bonus in Italy and various other similar plans in France, Germany and Belgium. Until December 31, 2006, Italian companies with more than 50 employees were required to accrue for benefits paid to employees upon them leaving the company. The scheme has since changed to a defined contribution plan. The obligation on our consolidated balance sheet represents the residual reserve for years until December 31, 2006. Loyalty bonuses are accrued for employees who have reached certain service seniority and are generally settled when employees leave the company. These plans are not required to be funded and, therefore, have no plan assets. At December 31, 2023 and 2022, the present value of the obligation for other postemployment benefits amounted to $100 million and $89 million, respectively. In 2023, we made direct benefit payments of $7 million for other postemployment benefits and expect to make direct benefit payments of $9 million in 2024. For further information on pension and other postemployment benefits, see “Note 12: Employee Benefit Plans and Postretirement Benefits” to our consolidated financial statements for the year ended December 31, 2023. 66 Off-Balance Sheet Arrangements We use certain off-balance sheet arrangements with unconsolidated third parties in the ordinary course of business, including financial guarantees. Our arrangements are described in more detail below. For additional information, see “Note 14: Commitments and Contingencies” to our consolidated financial statements for the year ended December 31, 2023. Financial Guarantees Our financial guarantees require us to make contingent payments upon the occurrence of certain events or changes in an underlying instrument that is related to an asset, a liability or the equity of the guaranteed party. These guarantees include arrangements that are direct obligations, giving the party receiving the guarantee a direct claim against us, as well as indirect obligations, under which we have agreed to provide the funds necessary for another party to satisfy an obligation. CNH provided guarantees on the debt or commitments of third parties and performance guarantees in the interest of non-consolidated affiliates totaling $37 million as of December 31, 2023. Tabular Disclosure of Contractual Obligations The following table sets forth our contractual obligations and commercial commitments with definitive payment terms that will require significant cash outlays in the future, as of December 31, 2023: (in millions of dollars) Total Less than 1 Year 1-3 Years 3-5 Years After 5 Years Contractual Obligations (1) Debt obligations (2) Bonds $ 9,156 $ 1,903 $ 4,292 $ 1,839 $ 1,122 Borrowings from banks 4,289 2,343 733 623 590 Asset-backed financing 11,716 5,790 4,660 1,198 68 Other debt 2,165 1,441 469 255 — Operating lease obligations 351 86 121 71 73 Purchase obligations 207 207 — — — Total $ 27,884 $ 11,770 $ 10,275 $ 3,986 $ 1,853 (1) Reserves for uncertain tax positions are not included within this table as the timing and ultimate uncertainty of settlement with the relevant taxing authorities is not known. (2) Amounts presented exclude the related interest expense that will be paid when due. The table above does not include obligations for pensions, post-retirement benefits and health care plans. Our best estimate of expected contributions including direct benefit payment to be made by us in 2024 to pension plans, healthcare plans and other post-employment plans is $46 million, $16 million and $9 million, respectively. Potential outflows in the years after 2022 are subject to a number of uncertainties, including future asset performance and changes in assumptions, and therefore we are unable to make sufficiently reliable estimates of future contributions beyond 2023. Debt Obligations For information on our debt obligations, see “Capital Resources” above and “Note 10: Debt” to our consolidated financial statements for the year ended December 31, 2023. The amount reported as debt obligations in the table above consists of our bonds, borrowings from banks, asset-backed financing and other debt which reconciles in total to the amount in the December 31, 2023 consolidated balance sheet. Operating Lease Obligations Our operating leases consist mainly of leases for commercial and industrial properties used in carrying out our businesses. The amounts reported above under “Operating Lease Obligations” include the minimal rental and payment commitments due under such leases. 67 Purchase Obligations Our purchase obligations at December 31, 2023, included the following: • commitments to purchase tangible fixed assets, largely in connection with planned capital expenditures, in an aggregate amount of approximately $207 million. Critical Accounting Estimates The financial statements included in this Annual Report and related disclosures have been prepared in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and related assumptions are based on available information at the date of preparation of the financial statements, historical experience and other relevant factors. Actual results may differ from the estimates. Particularly in light of the current economic uncertainty, developments may occur which may differ from our estimates and assumptions, and therefore might require significant adjustments to the carrying amounts of certain items, which as of the date of this Annual Report cannot be accurately estimated or predicted. The principal items affected by estimates are the allowances for credit losses receivable and inventories, long-lived assets (tangible and intangible assets), the residual values of equipment leased out under operating lease arrangements, sales allowances, product warranties, pension and other postemployment benefits, deferred tax assets and contingent liabilities. Estimates and assumptions are reviewed periodically and the effects of any changes are recognized in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The following are the critical judgments and the key assumptions concerning the future that we have made in the process of applying our accounting policies and that may have the most significant effect on the amounts recognized in our consolidated financial statements included in this Annual Report or that represent a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Allowance for Credit Losses The allowance for credit losses is our estimate of the lifetime expected credit losses inherent in the trade receivables and financing receivables owned by us. Retail customer receivables primarily include retail notes and finance leases to end use customers and revolving charge accounts, which represent financing for customers to purchase parts, service, rentals, implements and attachments from CNH dealers. Wholesale receivables include dealer floorplan financing, and to a lesser extent, the financing of dealer operations. Typically, our receivables within a geographic area have similar risk profiles and methods for assessing and monitoring risk. Retail receivables that share the same risk characteristics such as, collateralization levels, geography, product type and other relevant factors are reviewed on a collective basis using measurement models and management judgment. The allowance for retail credit losses is based on loss forecast models that consider a variety of factors that include, but are not limited to, historical loss experience, collateral value, portfolio balance and delinquency. The loss forecast models are updated on a quarterly basis. The calculation is adjusted for forward-looking macroeconomic factors, such as GDP and Net Farm Income. The forward-looking macroeconomic factors are updated quarterly. In addition, qualitative factors that are not fully captured in the loss forecast models are considered in the evaluation of the adequacy of the allowance for credit losses. These qualitative factors are subjective and require a degree of management judgment. Trade and wholesale receivables that share the same risk characteristics such as, collateralization levels, term, geography and other relevant factors are reviewed on a collective basis using measurement models and management judgment. The allowance for trade and wholesale credit losses is based on loss forecast models that consider a variety of factors that include, but are not limited to, historical loss experience, collateral value, portfolio balance and delinquency. The loss forecast models are updated on a quarterly basis. The calculation is adjusted for forward-looking macroeconomic factors, such as industry sales volumes. The forward-looking macroeconomic factors are updated quarterly. In addition, qualitative factors that are not fully captured in the loss forecast models are considered in the evaluation of the adequacy of the allowance for credit losses. These qualitative factors are subjective and require a degree of management judgment. Retail, trade and wholesale receivables that do not have similar risk characteristics are individually reviewed based on, among other items, amounts outstanding, days past due and prior collection history. Expected credit losses are measured by considering: the probability-weighted estimates of cash flows and collateral value; the time value of money; current conditions and forecasts of future economic conditions. Expected credit losses are measured as the probability-weighted present value of all cash shortfalls (including the value of the collateral, if appropriate) over the expected life of each financial asset. 68 Charge-offs of principal amounts of receivables outstanding are deducted from the allowance at the point when it is estimated that amounts due are deemed uncollectible. When delinquency reaches 120 days, revolving change accounts are generally deemed to be uncollectible and charged off to the allowance for credit losses. The total allowance for credit losses at December 31, 2023 and 2023 was $363 million and $334 million, respectively. Management’s ongoing evaluation of the adequacy of the allowance for credit losses takes into consideration historical loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of underlying collateral and current and future economic conditions. While management believes it has exercised prudent judgment and applied reasonable assumptions, there can be no assurance that, in the future, changes in economic conditions or other factors will not cause changes in the financial condition of our customers. If the financial condition of some of our customers deteriorates, the timing and level of payments received could be impacted and, therefore, could result in an increase in losses on the current portfolio. The assumptions used in evaluating the Company’s exposure to credit losses involve estimates and significant judgment. While the company believes its allowance is sufficient to provide for losses over the life of its existing receivable portfolio, different assumptions or changes in economic conditions would result in changes to the allowance for credit losses. Historically, changes in economic conditions have had limited impact on credit losses within the company’s wholesale receivable portfolio. Within the retail customer receivables portfolio, credit loss estimates are dependent on a number of factors, including historical portfolio performance, current delinquency levels, and estimated recoveries on defaulted accounts. A hypothetical 10% increase in the quantitative loss rates would have resulted in an approximately $13 million increase to the allowance for credit losses at December 31, 2023. Allowance for Obsolete and Slow-moving Inventory The allowance for obsolete and slow-moving inventory reflects our estimate of the expected loss in value, and has been determined on the basis of past experience and historical and expected future trends in the used equipment market. A worsening of the economic and financial situation could cause a further deterioration in conditions in the used equipment market compared to that taken into consideration in calculating the allowances recognized in the financial statements. Recoverability of Long-lived Assets (including Goodwill) Long-lived assets include property, plant and equipment, goodwill and other intangible assets such as patents and trademarks. We evaluate the recoverability of property, plant and equipment and finite-lived other intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. We assess the recoverability of property, plant and equipment and finite-lived other intangible assets by comparing the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the long-lived asset is not recoverable in full on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. We have identified three reporting units for the purpose of goodwill impairment testing: Agriculture, Construction, and Financial Services. Impairment testing for goodwill is done at a reporting unit level. Under the goodwill impairment test, CNH’s estimate of the fair value of the reporting unit is compared with its carrying value. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. CNH has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Goodwill and indefinite-lived other intangible assets are tested for impairment at least annually. In 2021, 2022 and 2023, we performed our annual impairment review as of December 31 and concluded that there was no impairment. We evaluate events and changes in circumstances to determine if additional testing may be required. For all reporting units, a 10% decrease in the estimated fair value would have had no effect on the carrying value of goodwill at the annual measurement date in 2023. Residual Values of Assets Leased Out Under Operating Lease Arrangements We purchase equipment from our dealers and lease such equipment to retail customers under operating leases. Income from these operating leases is recognized over the term of the lease. Our decision on whether or not to offer lease financing to customers is based, in part, upon estimated residual values of the leased equipment, which are estimated at the lease inception date and periodically updated. Realization of the residual values, a component in the profitability of a lease transaction, is dependent on our ability to market the equipment at least termination under the then prevailing market conditions. Equipment model changes and updates, as well as market strength and product acceptance, are monitored and adjustments are made to residual values in accordance with the significance of any such changes. Although realization is not assured, management believes that the estimated residual values are realizable. 69 Sales Allowances The company provides sales incentives and allowances to dealers. At the time a sale to a dealer is recognized, the company records an estimate of the future sales incentive costs as a reduction of revenue. These incentives may be based on a dealer’s purchase volume, or on retail sales incentive programs and financing programs that will be due when the dealer sells the equipment to a retail customer. The estimated cost of these programs is based on historical data, announced and expected incentive programs, field inventory levels. The final cost of these programs is determined at the end of the measurement period for volume-based incentives or when the dealer sells the equipment to the retail customer. Changes in the mix and types of programs affect these estimates, which are reviewed quarterly. Actual cost differences from the original cost estimate are recognized in “Net sales”. The total accruals recorded were $2,409 million, $1,556 million and $1,325 million in “Other liabilities” on the Consolidated Balance Sheets at December 31, 2023, 2022 and 2021, respectively. The increase in each of 2023 and 2022 were targeted initiatives to drive higher retail demand. Product Warranties For most equipment and service parts sales, the company provides a standard warranty to provide assurance that the equipment will function as intended for a specified period of time. At the time a sale is recognized, the company records the estimated future warranty costs. The company determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold to end-users and is still under warranty based on dealer inventories and retail sales. Variances in claims experience and the type of warranty programs affect these estimates, which are reviewed quarterly. The product warranty accruals at December 31, 2023, 2022 and 2021 were $610 million, $544 million and $526 million, respectively. The increase in each of 2023 and 2022 related to higher sales volume. Estimates used to determine the product warranty accruals are based on historical claims rate leveraging the last rolling 12 months and consideration of current quality developments. Pension and Other Postemployment Benefits As more fully described in “Note 12: Employee Benefit Plans and Postretirement Benefits” to our consolidated financial statements for the year ended December 31, 2023, we sponsor pension, healthcare and other postemployment plans in various countries. We actuarially determine the costs and obligations relating to such plans using several statistical and judgmental factors. These assumptions include discount rates, rates for expected returns on plan assets, rates for compensation increases, mortality rates, retirement rates, and healthcare cost trend rates, as determined by us within certain guidelines. To the extent actual experiences differ from our assumptions or our assumptions change, we may experience gains and losses that we have not yet recognized in our consolidated statements of operations but would be recognized in equity. For our pension and postemployment benefit plans, we recognize net gain or loss as a component of defined benefit plan cost for the year if, as of the beginning of the year, such unrecognized net gain or loss exceeds 10% of the greater of (1) the projected benefit obligation or (2) the fair market value of the plan assets at year end. In such case, the amount of amortization we recognize is the resulting excess divided by the average remaining service period of active employees, and by the average life expectancy for inactive employees expected to receive benefits under the plan. CNH reviews annually the mortality assumptions and demographic characteristics of its U.S. pension and healthcare plans participants. Subsequent to the Benefits Modification to the US Healthcare plan on April 16, 2018, the Company decided to change the base mortality table for the US Healthcare plan from the variants of blue-collar tables of RPH-2014 (with MP-2014 removed) to a no-collar variant. In addition, in 2018, CNH adopted the MP-2018 mortality improvement scale, which better reflected the actual recent experience over the previous mortality improvement scales. In 2021, the Company adopted the updated mortality improvement scale issued by the SOA ("MP-2021"). The adoption of the new mortality assumptions resulted in a total increase of $1.3 million to the Company’s benefit obligations at December 31, 2021, of which $0.5 million and $0.8 million were related to pension plans and healthcare plans, respectively. 70 The following table includes the effects of a one percentage-point change in our primary actuarial assumptions on pension, healthcare and other postemployment benefit obligations and expense: Year End Benefit Cost Year End Benefit Obligation (in millions of dollars) One Percentage-Point Increase One Percentage-Point Decrease One Percentage-Point Increase One Percentage-Point Decrease Pension benefits: Assumed discount rate $ (5) $ 5 $ (127) $ 154 Expected long-term rate of return on plan assets $ (10) $ 10 $ — $ — Healthcare benefits: Assumed discount rate $ 1 $ — $ (8) $ 9 Assumed health care cost trend rate (initial and ultimate) $ — $ — $ 8 $ (7) Other benefits: Assumed discount rate $ — $ — $ (8) $ 9 Realization of Deferred Tax Assets At December 31, 2023, we had a net deferred tax asset on temporary differences, including tax attributes, of $1.6 billion, of which $0.2 billion are not recognized in the financial statements. The corresponding totals at December 31, 2022, were $1.0 billion and $0.3 billion, respectively. We have recognized deferred tax assets we believe are more likely than not to be realized. The determination to record a valuation allowance requires significant judgement and is based on an assessment of positive and negative evidence, whereby objectively verifiable evidence takes precedence over other forms of evidence. In our assessments, we consider actual and forecasted results, the potential to carryback net operating losses and credits, the future reversal of certain taxable temporary differences, and tax planning strategies. We also consider risk factors, including, but not limited to, the economic conditions in the countries and, in some cases, regions in which we have significant operations as those conditions would generally impact our ability to generate taxable income in specific jurisdictions. During the fourth quarter of 2023, we recognized a significant portion of the deferred tax assets related to our operations in the UK, resulting in a $99 million non-cash tax benefit, as those operations had consistently returned to pre-tax profitability, with that trend anticipated to continue for the foreseeable future. During the fourth quarter of 2022, we recognized substantially all the deferred tax assets related to our agricultural and construction equipment operations in Italy, resulting in a $55 million non-cash tax benefit, as those operations had consistently returned to pre-tax profitability, with that trend anticipated to continue for the foreseeable future. Contingent Liabilities We are the subject of legal and indirect tax proceedings covering a range of matters, which are pending in various jurisdictions. Due to the uncertainty inherent in such matters, it is difficult to predict the final outcome of such matters. The cases and claims against us often raise difficult and complex factual and legal issues, which are subject to many uncertainties, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction and the differences in applicable law. In the normal course of business, we consult with legal counsel and other experts on matters related to litigation, taxes and other similar contingent liabilities. We accrue a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated. In the event an adverse outcome is probable, but an estimate is not determinable or is possible, the matter is disclosed. Cautionary Note on Forward-Looking Statements This Annual Report includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact contained in this presentation including competitive strengths; business strategy; future financial position or operating results; budgets; projections with respect to revenue, income, earnings (or loss) per share, capital expenditures, dividends, liquidity, capital structure or other financial items; costs; and plans and objectives of management regarding operations and products, are forward-looking statements. Forward looking statements also include statements regarding the future performance of CNH and its subsidiaries on a standalone basis. These statements may include terminology such as “may”, “will”, “expect”, “could”, “should”, “intend”, “estimate”, “anticipate”, “believe”, “outlook”, “continue”, “remain”, “on track”, “design”, “target”, “objective”, “goal”, “forecast”, “projection”, “prospects”, “plan”, or similar terminology. Forward-looking statements, are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside our control and are 71 difficult to predict. If any of these risks and uncertainties materialize (or they occur with a degree of severity that the Company is unable to predict) or other assumptions underlying any of the forward-looking statements prove to be incorrect, including any assumptions regarding strategic plans, the actual results or developments may differ materially from any future results or developments expressed or implied by the forward-looking statements. Factors, risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others: economic conditions in each of our markets, including the significant uncertainty caused by geopolitical events; production and supply chain disruptions, including industry capacity constraints, material availability, and global logistics delays and constraints; the many interrelated factors that affect consumer confidence and worldwide demand for capital goods and capital goods-related products, changes in government policies regarding banking, monetary and fiscal policy; legislation, particularly pertaining to capital goods-related issues such as agriculture, the environment, debt relief and subsidy program policies, trade and commerce and infrastructure development; government policies on international trade and investment, including sanctions, import quotas, capital controls and tariffs; volatility in international trade caused by the imposition of tariffs, sanctions, embargoes, and trade wars; actions of competitors in the various industries in which we compete; development and use of new technologies and technological difficulties; the interpretation of, or adoption of new, compliance requirements with respect to engine emissions, safety or other aspects of our products; labor relations; interest rates and currency exchange rates; inflation and deflation; energy prices; prices for agricultural commodities and material price increases; housing starts and other construction activity; our ability to obtain financing or to refinance existing debt; price pressure on new and used equipment; the resolution of pending litigation and investigations on a wide range of topics, including dealer and supplier litigation, intellectual property rights disputes, product warranty and defective product claims, and emissions and/or fuel economy regulatory and contractual issues; security breaches, cybersecurity attacks, technology failures, and other disruptions to the information technology infrastructure of CNH and its suppliers and dealers; security breaches with respect to our products; our pension plans and other post-employment obligations; political and civil unrest; volatility and deterioration of capital and financial markets, including pandemics (such as the COVID-19 pandemic), terrorist attacks in Europe and elsewhere; the remediation of a material weakness; our ability to realize the anticipated benefits from our business initiatives as part of our strategic plan, including targeted restructuring actions to optimize our cost structure and improve the efficiency of our operations; our failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures, strategic alliances or divestitures and other similar risks and uncertainties, and our success in managing the risks involved in the foregoing. Forward-looking statements are based upon assumptions relating to the factors described in this filing, which are sometimes based upon estimates and data received from third parties. Such estimates and data are often revised. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside CNH’s control. CNH expressly disclaims any intention or obligation to provide, update or revise any forward-looking statements in this announcement to reflect any change in expectations or any change in events, conditions or circumstances on which these forward-looking statements are based. Further information concerning CNH, including factors that potentially could materially affect its financial results, is included in the Company’s reports and filings with the U.S. Securities and Exchange Commission (“SEC”). All future written and oral forward-looking statements by CNH or persons acting on the behalf of CNH are expressly qualified in their entirety by the cautionary statements contained herein or referred to above. 72 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of CNH Industrial N.V. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of CNH Industrial N.V. and subsidiaries (the “Company”) as of December 31, 2023, the related consolidated statements of operations, comprehensive income, cash flows, and changes in equity, for the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2024, expressed an adverse opinion on the Company's internal control over financial reporting because of a material weakness. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 73 Revenue – Timing of Revenue Recognition — Industrial Activities — Refer to Notes 2 and 3 to the financial statements Critical Audit Matter Description The Company recognizes revenue when control of the equipment, services or parts has been transferred, and the Company’s performance obligations to the customers (e.g. dealers) have been satisfied. Transfer of control occurs when title and risk of ownership have transferred to the customer, which occurs based upon the terms specified in the agreement. In most of the jurisdictions where the Company operates, and subject to specific exceptions, transfer of control, and thus revenue recognition, occurs upon shipment. We identified the timing of revenue recognition specific to Industrial Activities as a critical audit matter due to the extent of additional audit effort required to evaluate whether the timing of revenue recognition was appropriate. This required both extensive audit effort due to the volume of transactions at year-end and a high degree of auditor judgment, especially pertaining to the evaluation of management's identification of when transfer of control has occurred. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to evaluating the timing of revenue recognition for Industrial Activities included the following, among others: • We tested the operating effectiveness of certain internal controls over the timing of revenue recognition and the identification of when transfer of control occurred. • On a selection basis, we performed the following procedures: ◦ Tested the completeness and accuracy of revenue transactions recorded for a period of time prior to and subsequent to year-end. ◦ Obtained the terms in certain dealer agreements by region and evaluated the appropriateness of management’s application of their accounting policies in the determination of revenue recognition conclusions based on the dealer terms. ◦ Agreed the evidence of shipment to support the timing of revenue recognized. ◦ Confirmed certain dealer inventory balances as of year-end. ◦ Obtained the Company's external legal analysis related to dealer agreements for certain regions to validate the performance obligation within the respective dealer agreements. • With the assistance of professionals in our firm with expertise related to the accounting for revenue, we evaluated management’s analysis of certain revenue recognition practices and the timing of revenue recognition related to such practices. /s/ Deloitte & Touche LLP Chicago, Illinois February 29, 2024 We have served as the Company's auditor since 2023. 74 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of CNH Industrial N.V. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of CNH Industrial N.V. (the Company) as of December 31, 2022, the related consolidated statements of operations, comprehensive income, cash flows and changes in equity for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We served as the Company’s auditor from 2014 to 2023. Chicago, Illinois February 28, 2023 75 CNH INDUSTRIAL N.V. CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31, 2023, 2022 and 2021 (in millions of dollars and shares, except per share amounts) 2023 2022 2021 Revenues Net sales $ 22,080 $ 21,541 $ 17,802 Finance, interest and other income 2,607 2,010 1,694 Total Revenues 24,687 23,551 19,496 Costs and Expenses Cost of goods sold 16,838 16,797 14,109 Selling, general and administrative expenses 1,863 1,752 1,454 Research and development expenses 1,041 866 642 Restructuring expenses 67 31 35 Interest expense 1,345 734 549 Other, net 830 689 768 Total Costs and Expenses 21,984 20,869 17,557 Income (loss) of Consolidated Group before Income Taxes 2,703 2,682 1,939 Income tax expense ( 594 ) ( 747 ) ( 229 ) Equity in income of unconsolidated subsidiaries and affiliates 274 104 91 Net income (loss) from continuing operations 2,383 2,039 1,801 Net income (loss) from discontinued operations — — ( 41 ) Net income (loss) 2,383 2,039 1,760 Net income attributable to noncontrolling interests 12 10 37 Net income (loss) attributable to CNH Industrial N.V. $ 2,371 $ 2,029 $ 1,723 Basic earnings (loss) per share attributable to common shareholders Continuing operations $ 1.78 $ 1.50 $ 1.32 Discontinuing operations — — ( 0.05 ) Basic earnings per share attributable to CNH Industrial N.V. $ 1.78 $ 1.50 $ 1.27 Diluted earnings (loss) per share attributable to common shareholders Continuing operations $ 1.76 $ 1.49 $ 1.32 Discontinuing operations — — ( 0.05 ) Diluted earnings per share attributable to CNH Industrial N.V. $ 1.76 $ 1.49 $ 1.27 Average shares outstanding Basic 1,332 1,351 1,354 Diluted 1,350 1,362 1,361 Cash dividends declared per common share $ 0.394 $ 0.302 $ 0.132 The accompanying notes to consolidated financial statements are an integral part of these statements. 76 CNH INDUSTRIAL N.V. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Years Ended December 31, 2023, 2022 and 2021 (in millions of dollars) 2023 2022 2021 Net income (loss) $ 2,383 $ 2,039 $ 1,760 Other comprehensive income (loss), net of tax Unrealized gain (loss) on cash flow hedges ( 56 ) 44 ( 11 ) Changes in retirement plans’ funded status ( 66 ) 41 94 Foreign currency translation 40 158 247 Share of other comprehensive income (loss) of entities using the equity method ( 11 ) ( 25 ) ( 93 ) Other comprehensive income (loss), net of tax ( 93 ) 218 237 Comprehensive income (loss) 2,290 2,257 1,997 Less: Comprehensive income attributable to noncontrolling interests 15 9 43 Comprehensive income (loss) attributable to CNH Industrial N.V. $ 2,275 $ 2,248 $ 1,954 The accompanying notes to consolidated financial statements are an integral part of these statements. 77 CNH INDUSTRIAL N.V. CONSOLIDATED BALANCE SHEETS As of December 31, 2023 and 2022 (in millions of dollars) December 31, 2023 December 31, 2022 Assets Cash and cash equivalents $ 4,322 $ 4,376 Restricted cash 723 753 Trade receivables, net 133 172 Financing receivables, net 24,249 19,260 Financial receivables from Iveco Group N.V. 380 298 Inventories, net 5,545 4,811 Property, plant and equipment, net 1,913 1,532 Investments in unconsolidated subsidiaries and affiliates 563 385 Equipment under operating leases 1,417 1,502 Goodwill 3,614 3,322 Other intangible assets, net 1,292 1,129 Deferred tax assets 979 433 Derivative assets 136 189 Other assets 1,085 1,219 Total Assets $ 46,351 $ 39,381 Liabilities and Equity Debt $ 27,326 $ 22,962 Financial payables to Iveco Group N.V 146 156 Trade payables 3,611 3,702 Deferred tax liabilities 35 85 Pension, postretirement and other postemployment benefits 476 449 Derivative liabilities 216 204 Other liabilities 6,307 4,847 Total Liabilities $ 38,117 $ 32,405 Redeemable noncontrolling interest 54 49 Common shares, € 0.01 , par value; outstanding 1,290,937,585 common shares and 371,000,610 loyalty program special voting shares in 2023; and outstanding 1,344,240,971 common shares and 371,072,953 loyalty program special voting shares in 2022 25 25 Treasury stock, at cost - 73,462,611 shares in 2023 and 20,159,225 shares in 2022 ( 865 ) ( 230 ) Additional paid in capital 1,578 1,504 Retained earnings 9,750 7,906 Accumulated other comprehensive loss ( 2,374 ) ( 2,278 ) Noncontrolling interests 66 — Total Equity $ 8,180 $ 6,927 Total Liabilities and Equity $ 46,351 $ 39,381 The accompanying notes to consolidated financial statements are an integral part of these statements. 78 CNH INDUSTRIAL N.V. CONSOLIDATED BALANCE SHEETS — (Continued) As of December 31, 2023 and 2022 The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”), which are included in the consolidated balance sheets above. The assets in the table include those assets that can only be used to settle obligations of consolidated VIEs. The liabilities in the table include third party liabilities of the consolidated VIEs, for which creditors do not have recourse to the general credit of CNH. See note 4: Receivables for additional information on the Company's VIEs. (in millions of dollars) December 31, 2023 December 31, 2022 Restricted cash $ 626 $ 595 Financing receivables, net 10,365 8,808 Total Assets $ 10,991 $ 9,403 Debt $ 10,033 $ 8,485 Total Liabilities $ 10,033 $ 8,485 The accompanying notes to consolidated financial statements are an integral part of these statements. 79 CNH INDUSTRIAL N.V. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2023, 2022 and 2021 (in millions of dollars) 2023 2022 2021 Cash Flows from Operating Activities Net income (loss) $ 2,383 $ 2,039 $ 1,760 Less: Net income (loss) from discontinued operations — — ( 41 ) Net income (loss) of continuing operations 2,383 2,039 1,801 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense excluding depreciation and amortization of assets under operating lease 377 327 295 Depreciation and amortization expense of assets under operating lease 187 208 242 (Gain) loss from disposal of assets 10 ( 42 ) — Loss on repurchase of notes — — 8 Undistributed income (loss) of unconsolidated subsidiaries ( 211 ) ( 69 ) ( 29 ) Other non-cash items 173 196 126 Changes in operating assets and liabilities: Provisions 911 189 93 Deferred income taxes ( 535 ) ( 50 ) ( 273 ) Trade and financing receivables related to sales, net ( 2,268 ) ( 2,447 ) 191 Inventories, net ( 259 ) ( 151 ) ( 555 ) Trade payables ( 157 ) 125 738 Other assets and liabilities 296 232 561 Cash flow from operating activities (discontinued operation) — — 884 Net cash provided by operating activities 907 557 4,082 Cash Flows from Investing Activities Additions to retail receivables ( 8,069 ) ( 5,971 ) ( 5,328 ) Collections of retail receivables 5,824 4,360 4,338 Proceeds from the sale of assets, net of assets under operating leases 16 97 11 Expenditures for property, plant and equipment and intangible assets excluding assets under operating lease ( 644 ) ( 461 ) ( 365 ) Expenditures for assets under operating leases ( 551 ) ( 538 ) ( 556 ) Other, net ( 275 ) ( 496 ) ( 2,670 ) Cash flow from investing activities (discontinued operation) — — ( 431 ) Net cash used in investing activities ( 3,699 ) ( 3,009 ) ( 5,001 ) Cash Flows from Financing Activities Proceeds from long-term debt 9,941 11,183 7,988 Payments of long-term debt ( 8,224 ) ( 9,223 ) ( 9,088 ) Net increase (decrease) in other financial liabilities 2,071 580 ( 111 ) Dividends paid ( 538 ) ( 423 ) ( 188 ) Purchase of treasury stock and other ( 652 ) ( 153 ) — Cash flow from financing activities (discontinued operation) — — ( 46 ) Net cash provided (used) by financing activities 2,598 1,964 ( 1,445 ) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 110 ( 228 ) ( 403 ) Net increase (decrease) in cash, cash equivalents and restricted cash ( 84 ) ( 716 ) ( 2,767 ) Cash, cash equivalents and restricted cash, beginning of year 5,129 5,845 9,629 Cash, cash equivalents and restricted cash, end of year $ 5,045 $ 5,129 $ 6,862 Cash, cash equivalents and restricted cash, end of year (discontinued operation) — — 1,017 Cash, cash equivalents and restricted cash, end of year (continuing operations) 5,045 5,129 5,845 Components of cash, cash equivalents and restricted cash Cash and cash equivalents $ 4,322 $ 4,376 $ 5,044 Restricted cash 723 753 801 Total cash, cash equivalents and restricted cash $ 5,045 $ 5,129 $ 5,845 The accompanying notes to consolidated financial statements are an integral part of these statements. 80 CNH INDUSTRIAL N.V. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the Years Ended December 31, 2023, 2022 and 2021 (in millions of dollars) Common Shares Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Noncontrolling Interests Total Redeemable Noncontrolling Interest Balance December 31, 2020 $ 25 $ ( 109 ) $ 4,388 $ 3,279 $ ( 2,676 ) $ 82 $ 4,989 $ 40 Net income (loss) — — — 1,723 — 25 1,748 12 Other comprehensive income (loss), net of tax — — — — 231 6 237 — Dividends paid 1 — — — ( 180 ) — ( 91 ) ( 271 ) ( 7 ) Common shares issued from treasury stock and capital increase for share-based compensation — 25 ( 25 ) — — — — — Share-based compensation expense — — 99 — — — 99 — Other changes — — 2 ( 4 ) — 8 6 — Balance December 31, 2021 25 ( 84 ) 4,464 4,818 ( 2,445 ) 30 6,808 45 Demerger of Iveco Group — — ( 3,044 ) 1,464 ( 52 ) ( 22 ) ( 1,654 ) — Balance January 1, 2022 25 ( 84 ) 1,420 6,282 ( 2,497 ) 8 5,154 45 Net income (loss) — — — 2,029 — ( 6 ) 2,023 16 Other comprehensive income (loss), net of tax — — — — 219 ( 1 ) 218 — Dividends paid 1 — — — ( 412 ) — — ( 412 ) ( 11 ) Acquisition of treasury stock — ( 153 ) — — — — ( 153 ) — Common shares issued from treasury stock and capital increase for share-based compensation — 7 ( 7 ) — — — — — Share-based compensation expense — — 87 — — — 87 — Other changes — — 4 7 — ( 1 ) 10 ( 1 ) Balance December 31, 2022 25 ( 230 ) 1,504 7,906 ( 2,278 ) — 6,927 49 Net income (loss) — — — 2,371 — ( 4 ) 2,367 16 Other comprehensive income (loss), net of tax — — — — ( 96 ) 3 ( 93 ) — Dividends paid 1 — — — ( 527 ) — — ( 527 ) ( 11 ) Acquisition of treasury stock — ( 652 ) — — — — ( 652 ) — Common shares issued from treasury stock and capital increase for share-based compensation — 20 ( 20 ) — — — — — Share-based compensation expense — — 99 — — — 99 — Other changes — ( 3 ) ( 5 ) — — 67 59 — Balance December 31, 2023 $ 25 $ ( 865 ) $ 1,578 $ 9,750 $ ( 2,374 ) $ 66 $ 8,180 $ 54 (1) Dividends per share of common stock of $0.394, $0.302 and $0.132 were declared in the years ended December 31 2023, 2022 and 2021, respectively. The accompanying notes to consolidated financial statements are an integral part of these statements. 81 CNH INDUSTRIAL N.V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Footnote Page Note 1 Presentation 83 Note 2 Summary of Significant Accounting Policies 85 Note 3 Revenue 96 Note 4 Receivables 96 Note 5 Inventories 102 Note 6 Property, Plant and Equipment 102 Note 7 Investments in Unconsolidated Subsidiaries and Affiliates 102 Note 8 Leases 103 Note 9 Goodwill and Other Intangibles 104 Note 10 Debt 105 Note 11 Income Taxes 108 Note 12 Employee Benefit Plans and Postretirement Benefits 111 Note 13 Other Liabilities 118 Note 14 Commitments and Contingencies 119 Note 15 Financial Instruments 121 Note 16 Shareholders' Equity 126 Note 17 Share-Based Compensation 128 Note 18 Earnings per Share 130 Note 19 Accumulated Other Comprehensive Income (Loss) 131 Note 20 Segment Reporting 133 Note 21 Related Party Information 136 Note 22 Subsequent Events 138 82 CNH INDUSTRIAL N.V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 1: Presentation CNH Industrial N.V. (“CNH” or the “Company”) is incorporated in, and under the laws of, the Netherlands. CNH is a leading company in the capital goods sector that, through its various businesses, designs, produces and sells agricultural equipment and construction equipment. In addition, CNH’s Financial Services segment offers an array of financial products and services, including retail financing for the purchase or lease of new and used CNH and other manufacturers’ products and other retail financing programs and wholesale financing to dealers. Subsequent to December 31, 2021, the Company had three reportable segments consisting of: (i) Agriculture, which designs, produces and sells agricultural equipment (ii) Construction, which designs, produces and sells construction equipment and (iii) Financial Services, which provides financial services to the customers of the Company’s products. The Company’s worldwide agricultural equipment and construction equipment segments as well as corporate functions are collectively referred to as “Industrial Activities”. The Company was formed as a result of the mergers of Fiat Industrial S.p.A. and its subsidiary CNH Global N.V. with and into CNH, effective September 29, 2013. Spin-off of On-Highway Business Until December 31, 2021, CNH Industrial N.V. owned and controlled the Commercial and Specialty Vehicles business, the Powertrain business, and the related Financial Services business (together the “Iveco Group Business” or the “On-Highway Business”), as well as the Agriculture business, the Construction business, and the related Financial Services business (collectively, the “Off-Highway Business”). Effective January 1, 2022, the Iveco Group Business was separated from CNH Industrial N.V. by way of a demerger under Dutch law (the "Demerger") to Iveco Group N.V. (the "Iveco Group"), and the Iveco Group became a public listed company independent from CNH with its common shares trading on the Euronext Milan, a regulated market organized and managed by Borsa Italiana S.p.A. In connection with the Demerger, shares of Iveco Group N.V. were distributed to shareholders in CNH Industrial N.V. on a pro rata basis. The On-Highway Business' financial results for the periods prior to the Demerger have been reflected in our Consolidated Statement of Operations, retrospectively, as discontinued operations. In order to present the financial effects of a Discontinued Operation, revenues and expenses arising from intercompany transactions were eliminated. Eliminations from transactions between Continuing and Discontinued Operations are allocated in full to Discontinued Operations. However, no profit or loss is recognized for intercompany transactions within the Consolidated Statement of Operations. The amounts of income statement items included in Discontinued Operations is detailed in the following sections. Intercompany transactions between Continuing and Discontinued Operations have been eliminated in the consolidated statement of financial position. The net balance between Assets held for distribution and Liabilities held for distribution represents the net equity of the Discontinued Operations. This amount corresponds to the reduction in the total equity of CNH due to the Demerger that occurred on January 1, 2022. 83 Details of Statement of Operations line items included in Discontinued Operations, after the eliminations, for the year ended December 31, 2021 are as follows: (in millions of dollars) 2021 Revenues Net sales $ 14,743 Finance, interest and other income 194 Total Revenues 14,937 Costs and Expenses Cost of goods sold 12,765 Selling, general and administrative expenses 989 Research and development expenses 594 Restructuring expenses 39 Interest expense 129 Other, net 380 Total Costs and Expenses 14,896 Income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates 41 Income tax (expense) benefit ( 113 ) Equity in income of unconsolidated subsidiaries and affiliates 31 Net Income (loss) from discontinued operations $ ( 41 ) 84 All cash flows from Discontinued Operations are reported in the appropriate items for operating, investing and financing activities in the Statement of Cash Flows. The cash flows represent those arising from transactions with third parties. Cash flows from Discontinued Operations for the year ended December 31, 2021 are as follows: (in millions of dollars) 2021 Cash Flows from Operating Activities Net income (loss) of discontinued operations $ ( 41 ) Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization expense excluding depreciation and amortization of assets under operating lease 316 Depreciation and amortization expense of assets under operating lease 296 (Gain) loss on disposal of assets ( 44 ) Undistributed income of unconsolidated subsidiaries ( 13 ) Other non-cash items 197 Changes in operating assets and liabilities: Provisions 87 Deferred income taxes 36 Trade and financing receivables related to sales, net 54 Inventories, net ( 216 ) Trade payables 25 Other assets and liabilities 187 Cash flow from operating activities of discontinued operation $ 884 Cash Flows from Investing Activities Additions to retail receivables $ ( 42 ) Collections of retail receivables 50 Proceeds from the sale of assets, net of assets under operating leases — Expenditures for property, plant and equipment and intangible assets excluding assets under operating leases ( 348 ) Expenditures for assets under operating leases ( 763 ) Other 672 Cash flow provided (used) by investing activities of discontinued operation $ ( 431 ) Cash Flows from Financing Activities Proceeds from long-term debt $ 3,459 Payments of long-term debt ( 3,602 ) Net increase (decrease) in other financial liabilities 97 Dividends paid — Cash flow from financing activities of discontinued operation $ ( 46 ) 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 of America (“U.S. GAAP”). The consolidated financial statements include CNH Industrial N.V. and its consolidated subsidiaries. The consolidated financial statements are expressed in U.S. dollars and, unless otherwise indicated, all financial data set forth in these consolidated financial statements are expressed in U.S. dollars. The consolidated financial statements include the accounts of CNH’s subsidiaries in which CNH has a controlling financial interest, and reflect the noncontrolling interests of the minority owners of the subsidiaries that are not fully owned for the periods presented, as applicable. A controlling financial interest may exist based on ownership of a majority of the voting interest of an entity or based on CNH’s determination that it is the primary beneficiary of a variable interest entity (“VIE”). The primary beneficiary of a VIE is the party that has the power to direct the activities that most significantly impact the economic performance of the entity and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity. The Company assesses whether it is the primary beneficiary on an ongoing 85 basis, as prescribed by the accounting guidance on the consolidation of VIEs. The consolidated status of the VIEs with which the Company is involved may change as a result of such reassessments. Investments in unconsolidated subsidiaries and affiliates are accounted for using the equity method when CNH does not have a controlling interest but exercises significant influence. 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 net income or loss. Dividends received from these entities reduce the carrying value of the investments. Business Combinations Business combinations are accounted for by applying the acquisition method. Under this method, the consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred and liabilities assumed by the Company and the equity interests issued in exchange for control of the acquiree. Acquisition-related costs are generally recognized in profit or loss as incurred. Effective October 12, 2023, CNH closed on its purchase of Hemisphere, a global satellite navigation technology leader, for a total consideration of $ 181 million. The acquisition of Hemisphere consolidates our guidance and connectivity capabilities to advance CNH's in-house precision, automation and autonomy technology for the agriculture and construction industries. At December 31, 2023, CNH recorded preliminary estimates for the fair value of assets acquired and liabilities assumed as of the acquisition date, including $ 111 million and $ 51 million in preliminary goodwill and intangible assets, respectively. The valuation of assets acquired and liabilities assumed has not been finalized as of December 31, 2023. Thus, goodwill associated with the acquisition is subject to adjustment during the measurement period. Pro forma results of operations have not been presented because the effects of the Hemisphere acquisition were not material to the Company’s consolidated results of operations. Additionally, Hemisphere's post-acquisition results were not material. On March 15, 2023, CNH acquired a controlling interest in Bennamann (ownership interest of 50.0085 %) by purchasing an additional 34.4 % interest through cash consideration of approximately $ 51 million. At March 31, 2023, CNH recorded preliminary estimates for the fair value of assets acquired and liabilities assumed as of the acquisition date, including $ 118 million and $ 46 million in preliminary goodwill and intangible assets, respectively. The valuation of assets acquired and liabilities assumed has not yet been finalized as of December 31, 2023. Thus, goodwill associated with the acquisition is subject to adjustment during the measurement period. Measurement period adjustments were made during the year reducing goodwill by $ 3 million, primarily offset by increases in intangible assets as a result of updates of certain of the valuations. Pro forma results of operations have not been presented because the effects of the Bennamann acquisition were not material to the Company’s consolidated results of operations. Additionally, Bennamann's post-acquisition results were not material. On March 13, 2023, CNH purchased Augmenta. The Company acquired the remaining 89.5 % of Augmenta it did not own for cash consideration of approximately $ 80 million and a deferred payment of $ 10 million. At March 31, 2023, CNH recorded preliminary estimates for the fair value of assets acquired and liabilities assumed as of the acquisition date, including $ 76 million and $ 35 million in preliminary goodwill and intangible assets, respectively. The valuation of assets acquired and liabilities assumed has not yet been finalized as of December 31, 2023. Thus, goodwill associated with the acquisition is subject to adjustment during the measurement period. Measurement period adjustments were recorded during the year reducing goodwill by $ 14 million primarily offset by increases in intangible assets as a result of updates of certain of the valuations. Pro forma results of operations have not been presented because the effects of the Augmenta acquisition were not material to the Company’s consolidated results of operations. Additionally, Augmenta's post-acquisition results were not material. On May 16, 2022, CNH Industrial acquired Specialty Enterprises LLC, a manufacturer of agricultural spray booms and sprayer boom accessories. Total consideration was approximately $ 50 million. The results of Specialty Enterprises have been included in the Company’s Agriculture segment. On December 30, 2021, CNH Industrial completed its purchase of 90 % capital stock of Sampierana S.p.A. ("Sampierana") for approximately $ 100 million. Sampierana is an Italian company specializing in the development, manufacture and commercialization of earthmoving machines, undercarriages and spare parts. In Q4 2022, the Company finalized the valuation of acquired assets and assumed liabilities. Sampierana is included in the Company’s Construction segment. On November 30, 2021, CNH Industrial completed its acquisition of Raven Industries, Inc. CNH Industrial acquired 100 % of the capital stock of Raven for $ 58 per share funded with available cash on hand. Cash consideration paid to Raven shareholders and Raven equity award holders totaled $ 2.1 billion. Raven, based in Sioux Falls, South Dakota, included three business divisions: Applied Technology, Engineered Films and Aerostar. The Applied Technologies division offers precision agricultural technologies in the areas of applications controls, guidance and steering, field computers, boom controls, cloud services and logistics, and injection support. At December 31, 2021, the preliminary estimates for the fair value of assets acquired and liabilities assumed of the Applied Technologies Division as of the acquisition date included $ 1.3 billion and $ 0.5 billion in preliminary goodwill and intangible assets, respectively. At December 31, 2021, the Engineered Films and Aerostar businesses were classified as held for sale with preliminary 86 estimates of $ 0.5 billion in assets held for sale (included in Other Assets) and $ 0.1 billion in liabilities held for sale (included in Other Liabilities). The Engineered Films and Aerostar businesses were subsequently sold during 2022. The acquisition of Raven has been accounted for as a business combination using the acquisition method of accounting. The acquisition method requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. In Q4 2022, the Company finalized the valuation of acquired assets and assumed liabilities. The asset and liability fair values of the remaining Raven business, Applied Technology Division, at the acquisition date are as follows: November 30, 2021 (in millions) Intangible Assets Customer Relationship $ 145 In-Process R&D 165 Developed Technology 50 Trade Names 74 Goodwill 1,404 Deferred Tax Liability and Other ( 137 ) Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses. Significant estimates in these consolidated financial statements include the realizable value of property, plant and equipment, goodwill and other intangibles; residual values of equipment on operating leases; allowance for credit losses; tax contingencies and valuation allowances; liabilities for warranties; sales allowances; and assets and obligations related to employee benefits. Actual results could differ from these estimates. Revenue Recognition Revenue is recognized when control of the equipment, services or parts has been transferred and the Company’s performance obligations to the customers have been satisfied. Revenue is measured as the amount of consideration the Company is entitled to receive in exchange for transferring goods or providing services. The timing of when the Company transfers the goods or services to the customer may differ from the timing of the customer’s payment. Revenues are stated net of discounts, allowances, settlement discounts and rebates, as well as costs for sales incentive programs, which are determined on the basis of historical costs, country by country, and charged against profit for the period in which the corresponding sales are recognized. The Company also enters into contracts with multiple performance obligations. For these contracts, the Company allocates revenue from the transaction price to the distinct goods and services in the contract on a relative standalone selling price basis. To the extent the Company sells the goods or services separately in the same market, the standalone selling price is the observable price at which the Company sells the goods or services separately. For all other goods or services, the Company estimates the standalone selling price considering all information reasonably available (including market conditions, entity-specific factors and information about the customer or class of customer). Sales of goods The Company has determined that the customers from the sale of equipment and parts are dealers, distributors, public entities and retail customers. The Company recognizes revenue at a point in time when control has transferred to the customer at a sales price that the Company is entitled to receive. In most of the jurisdictions where the Company operates, and subject to specific exceptions, transfer of control occurs upon shipment. We have elected to recognize at the time of sale costs for shipping and handling activities that occur after control has transferred. These expenses are presented in Cost of Goods Sold. For all sales, no uncertainty exists surrounding the purchaser’s obligation to pay for equipment and parts. Fixed payment schedules exist for all sales, but payment terms vary by geographic market and product line. See Note 4: Receivables for information about financing payment terms. The Company records an appropriate allowance for credit losses. 87 The cost of incentives, if any, are estimated at the inception of a contract at the amount that is expected to be paid and is recognized as a reduction to revenue at the time of the sale. If an equipment contract transaction has multiple performance obligations, the cost of incentives is allocated entirely to the equipment. If the estimate of the incentive changes following the sale to the customer, the change in estimate is recognized as an adjustment to revenue in the period of the change. CNH grants certain sales incentives to support sales of its products to retail customers. At the later of the time of sale or the time an incentive is announced to dealers, CNH records the estimated impact of sales allowances in the form of dealer and customer incentives as a reduction of revenue. Subsequent adjustments to sales incentive programs related to products previously sold are recognized as an adjustment to revenues in the period the adjustment is determinable. The determination of sales allowances requires management to make estimates based upon historical data, estimated future market demand for products, field inventory levels, announced incentive programs, competitive pricing and interest rates, among other things. With reference to the sales to dealers accompanied by “floor plan” agreements under which the Company offers wholesale financing including “interest-free” financing for specified period of time (which also vary by geographic market and product line; see Note 4: Receivables for further information), two separate performance obligations exist. The first performance obligation consists of the sale of the equipment from Industrial Activities to the dealer. Concurrent with the sale of the equipment, Industrial Activities offers to the dealer wholesale financing through loans extended by Financial Services. Industrial Activities compensates Financial Services for the cost of the interest-free period. This cost has been determined to represent a cash sale incentive on the initial sale of the good, and therefore it is recognized upfront as a reduction of net sales of Industrial Activities. The second performance obligation consists of a credit facility extended by Financial Services to the dealer. The remuneration for this performance obligation is represented by the compensation received from Industrial Activities for the period of the interest-free financing and by the interest charged to dealer for the remaining period. This remuneration is recognized by Financial Services over the period of the outstanding exposure. For parts sales, when the Company provides its customers with a right to return a transferred product, revenue and corresponding cost of sales are recognized for parts that are not expected to be returned. The expected returns are estimated based on an analysis of historical experience. The portion of revenue (and corresponding cost of sales) related to the parts that are expected to be returned is recognized at the end of the return period. The amount received or receivable that is expected to be returned is recognized as a refund liability, representing the obligation to return the customer’s consideration. Furthermore, at the time of the initial sale, CNH recognizes a return asset for the right to recover the goods returned by the customer. This asset is initially measured at the former carrying amount of the inventory. At each reporting date, both the refund liability and the return asset are remeasured to record for any revisions to the expected level of returns, as well as any decreases in the value of the returned products. Rendering of services Revenues from services provided are primarily comprised of extended warranties and maintenance and repair services and are recognized over the contract period when the costs are incurred, that is when the claims are charged by the dealer. Amounts invoiced to customers for which CNH receives consideration before the performance is satisfied are recognized as contract liability. These services are either separately-priced or included in the selling price of the equipment. In the second case, revenue for the services is allocated based on the estimated stand-alone selling price. In the event that the costs expected to be incurred to satisfy the remaining performance obligations exceed the transaction price, an estimated contract loss is recognized. Finance and interest income Finance and interest income on receivables is recorded using the effective yield method. Deferred costs on the origination of financing receivables are recognized as a reduction in finance revenue over the expected lives of the receivables using the effective yield method. Recognition of income on loans is suspended when management determines that collection of future income is not probable or when an account becomes 90 days past due, whichever occurs earlier. Income accrual is resumed when and if the receivable becomes contractually current and collection becomes probable. Previously suspended income is recognized at that time. The Company applies cash received on nonaccrual financing receivables to first reduce any unrecognized interest and then the recorded investment and any other fees. Rents and other income on operating leases Income from operating leases is recognized over the term of the lease on a straight-line basis. 88 Sales Allowances CNH grants certain sales incentives to support sales of its products to retail customers. The expense for such incentive programs is recorded as a deduction in arriving at the net sales amount at the time of the sale of the product to the dealer. The expense for new programs is accrued at the inception of the program. The amounts of incentives to be paid are estimated based upon historical data, estimated future market demand for products, field inventory levels, announced incentive programs, competitive pricing and interest rates, among other things. Warranty Costs At the time a sale of equipment or parts is recognized, CNH records the estimated future base warranty costs for the product. CNH determines its total warranty liability by applying historical claims rate experience, while considering specific contractual terms, to the part of equipment that has been sold and is still under warranty. Campaigns are formal post-production modification programs approved by management. The liabilities for such programs are recognized when approved, based on an estimate of the total cost of the program. Advertising CNH expenses advertising costs as incurred. Advertising expenses totaled $ 148 million , $ 152 million and $ 110 million for the years ended December 31, 2023, 2022 and 2021, respectively. Research and Development Research and development costs are expensed as incurred. Borrowing Costs Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalized and amortized over the useful life of the class of assets to which they refer. All other borrowing costs are expensed when incurred. Government Grants Government grants are recognized in the financial statements when there is reasonable assurance that the Company will comply with the conditions for receiving such grants and that the grants themselves will be received. Government grants are recognized as income over the periods necessary to match them with the related costs which they are intended to offset. The benefit of a government loan at a below-market rate of interest is treated as a government grant. The benefit of the below-market rate of interest is measured as the difference between the initial carrying amount of the loan (fair value plus transaction costs) and the proceeds received and is accounted for in accordance with the policies already used for the recognition of government grants. Foreign Currency Certain of CNH’s non-U.S. subsidiaries and affiliates maintain their books and accounting records using local currency as the functional currency. Assets and liabilities of these 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 consolidated balance sheets. Income and expense accounts of these non-U.S. subsidiaries are translated at the average exchange rates for the period. Gains and losses from foreign currency transactions are included in net income in the period during which they arise. Net foreign currency transaction gains and losses are reflected in “Other, net” in the accompanying consolidated statement of operations and also include the cost of hedging instruments. For the years ended December 31, 2023 and 2022 the Company recorded net gain of $ 10 million and net loss $ 185 million, respectively. For the year ended December 31, 2021 the Company recorded a net loss of $ 135 million. Included in the net losses in 2021 were charges of $ 47 million (inclusive of impact of discontinued operations) due to the devaluation of net monetary assets of Argentinian subsidiaries. There was no impact in 2023 and 2022 as the functional currency of the Argentinian subsidiary was changed to the US Dollar. As described in Note 15: Financial Instruments, the Company uses hedging instruments to mitigate foreign currency risk. Net of gains realized on foreign currency hedging instruments, the Company recorded losses of $ 119 million, $ 80 million and $ 6 million for the years ended December 31, 2023, 2022 and 2021, respectively. 89 Cash and Cash Equivalents Cash equivalents are highly liquid investments with an original maturity of three months or less. The carrying value of cash equivalents approximates fair value because of the short maturity of these investments. Restricted Cash Restricted cash includes principal and interest payments from retail notes and wholesale receivables owned by the consolidated VIEs that are payable to the VIEs’ investors, and cash pledged as a credit enhancement to the same investors. These amounts are held by depository banks in order to comply with contractual agreements. Restricted cash equivalents are highly liquid investments with an original maturity of one month or less. Cash Flow Information All cash flows from the changes in trade accounts and notes receivable are classified as operating activities in the consolidated statements of cash flows as these receivables arise from sales to CNH’s customers. Cash flows from financing receivables that are related to sales to CNH’s dealers are also included in operating activities. CNH’s financing of receivables related to equipment sold by dealers is included in investing activities. CNH paid interest of $ 1,091 million, $ 718 million and $ 539 million for the years ended December 31, 2023, 2022 and 2021, respectively. For 2023, 2022 and 2021, the amount includes a charge of $ — million , $ — million and $ 8 million, respectively, in connection with the Company’s accelerated debt redemption strategy. CNH paid taxes of $ 802 million, $ 717 million and $ 348 million in 2023, 2022 and 2021, respectively. In 2023, Other non-cash items of $ 173 million primarily included share-based payments of $ 99 million and writedowns of financial assets of $ 80 million. In 2022, Other non-cash items of $ 196 million primarily included share-based payments of $ 87 million and writedowns of financial assets of $ 77 million. In 2021, Other non-cash items of $ 126 million primarily included share-based payments of $ 90 million and writedowns of financial assets of $ 34 million. In 2023, Investing Activities - Other included cash paid for business acquisitions of $ 312 million. In 2022, Investing Activities - Other primarily consisted of change in intersegment receivable/payable (including with Iveco Group) less proceeds from the sale of the Raven EFD and Aerostar divisions and sale of certain real estate. In 2021, Investing Activities - Other included cash paid for the acquisition of Raven Industries Inc of $ 2.1 billion. Receivables Receivables are recorded at amortized cost, net of allowances for credit losses and deferred fees and costs. Periodically, the Company sells or transfers retail notes and wholesale receivables to funding facilities or in securitization transactions. In accordance with the accounting guidance regarding transfers of financial assets and the consolidation of VIEs, the majority of the retail notes and wholesale receivables sold in securitizations do not qualify as sales and are recorded as secured borrowings with no gains or losses recognized at the time of securitization. Receivables associated with these securitization transactions and receivables that the Company has the ability and intent to hold for the foreseeable future are classified as held for investment. The substantial majority of the Company’s receivables, which include unrestricted receivables and restricted receivables for securitization investors, are classified as held for investment. Allowance for Credit Losses The allowance for credit losses is the Company’s estimate of the lifetime expected credit losses inherent in the trade receivables and financing receivables owned by the Company. Retail receivables primarily include retail notes and finance leases to end use customers and revolving charge accounts, which represent financing for customers to purchase parts, service, rentals, implements and attachments from CNH dealers. Wholesale receivables include dealer floorplan financing, and to a lesser extent, the financing of dealer operations. Typically, our receivables within a geographic area have similar risk profiles and methods for assessing and monitoring risk. Retail customer receivables that share the same risk characteristics such as, collateralization levels, geography, product type and other relevant factors are reviewed on a collective basis using measurement models and management judgment. The allowance for retail credit losses is based on loss forecast models that consider a variety of factors that include, but are not limited to, historical loss experience, collateral value, portfolio balance and delinquency. The loss forecast models are updated on a quarterly basis. The 90 calculation is adjusted for forward looking macroeconomic factors, such as GDP and Net Farm Income. The forward-looking macroeconomic factors are updated quarterly. In addition, qualitative factors that are not fully captured in the loss forecast models are considered in the evaluation of the adequacy of the allowance for credit losses. These qualitative factors are subjective and require a degree of management judgment. Trade and wholesale receivables that share the same risk characteristics such as, collateralization levels, term, geography and other relevant factors are reviewed on a collective basis using measurement models and management judgment. The allowance for trade and wholesale credit losses is based on loss forecast models that consider a variety of factors that include, but are not limited to, historical loss experience, collateral value, portfolio balance and delinquency. The loss forecast models are updated on a quarterly basis. The calculation is adjusted for forward-looking macroeconomic factors, such as industry sales volumes. The forward-looking macroeconomic factors are updated quarterly. In addition, qualitative factors that are not fully captured in the loss forecast models are considered in the evaluation of the adequacy of the allowance for credit losses. These qualitative factors are subjective and require a degree of management judgment. Retail, trade and wholesale receivables that do not have similar risk characteristics are individually reviewed based on, among other items, amounts outstanding, days past due and prior collection history. Expected credit losses are measured by considering: the probability-weighted estimates of cash flows and collateral value; the time value of money; current conditions and forecasts of future economic conditions. Expected credit losses are measured as the probability-weighted present value of all cash shortfalls (including the value of the collateral, if appropriate) over the expected life of each financial asset. Charge-offs of principal amounts of receivables outstanding are deducted from the allowance at the point when it is estimated that amounts due are deemed uncollectible. Revolving charge accounts are generally deemed to be uncollectible and charged off to the allowance for credit losses when delinquency reaches 120 days. Inventories Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out method. The cost of finished goods and work-in-progress includes the cost of raw materials, other direct costs and production overheads. Property, Plant and Equipment Property, plant and equipment are stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs are expensed as incurred. Assets held under finance leases, for which the Company assumes substantially all the risks and rewards of ownership, are recognized as assets of the Company at the lower of fair value or present value of the minimum lease payments. The corresponding liability to the lessor is included in the financial statements as debt. Depreciation is recorded 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, machinery and equipment 5 - 25 years Other equipment 3 - 10 years The following paragraph presents the Company’s policy for leases for which it is a lessee. Lease policy A lease is a contract that conveys the right to control the use of an identified asset (the leased asset) for a period of time in exchange for consideration. The lease term determined by the Company comprises the non-cancellable period of lease contract together with both periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. For real estate leases, this assessment is based on an analysis by management of all relevant facts and circumstances including the leased asset’s purpose, the economic and practical potential for replacing and any plans that the Company has in place for the future use of the asset. For lease agreements, we combine lease and non-lease components. For leases with terms not exceeding twelve months (short-term leases), the Company recognizes the lease payments associated with those leases on a straight-line basis over the lease term as operating expense in the income statement. For all other leases, the right-of-use asset includes the amount of lease liability recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Correspondingly, the Company recognizes a lease liability, measured at the present value of lease payments to be made over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. The incremental 91 borrowing rate is determined considering macro-economic factors such as the specific interest rate curve based on the relevant currency and term, as well as specific factors contributing to CNH’s credit spread. The Company primarily uses the incremental borrowing rate as the discount rate for its lease liabilities. For finance leases, the right-of-use asset is classified within Property, plant and equipment, net and the lease liability, within Debt. Assets held under finance leases, which the Company assumes substantially all the risks and rewards of ownership, are recognized as assets of the Company at the lower of fair value or present value of the minimum lease payments. In case of operating leases, the right-of-use asset is classified within Other assets and the lease liability, within Other liabilities. After the commencement date, the Company recognizes in profit or loss a single lease cost, calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis. In particular, after lease commencement, the lease liability is measured at the present value of any remaining lease payments, discounted by using the rate determined at lease commencement, consistently with the model used to calculate the liability related to the finance lease. Correspondingly, the right-of-use asset is measured as the lease liability adjusted by accrued or prepaid rents (i.e., the aggregate difference between the cash payment and straight-line lease cost), remaining unamortized initial direct costs and lease incentives, and any impairments of the right-of-use asset. Equipment on Operating Leases Financial Services purchases leases and equipment from CNH dealers and other independent third parties that have leased equipment to retail customers under operating leases. Financial Services’ investment in operating leases is based on the purchase price paid for the equipment. Income from these operating leases is recognized over the term of the lease. The equipment is depreciated on a straight-line basis over the term of the lease to the estimated residual value at lease termination. Residual values are estimated at the inception of the lease and are reviewed quarterly. Realization of the residual values is dependent on Financial Services’ future ability to re-market the equipment under then prevailing market conditions. Equipment model changes and updates, as well as market strength and product acceptance, are monitored and adjustments are made to residual values in accordance with the significance of any such changes. Management believes that the estimated residual values are realizable. Expenditures for maintenance and repairs of the applicable equipment are the responsibility of the lessee. Financial Services evaluates the carrying amount of equipment on operating leases for potential impairment when it determines a triggering event has occurred. When a triggering event occurs, a test for recoverability is performed comparing projected undiscounted future cash flows to the carrying amount of the asset. If the test for recoverability identifies a possible impairment, the asset’s fair value is measured in accordance with the fair value measurement framework. An impairment charge would be recognized for the amount by which the carrying amount of the asset exceeds its estimated fair value. Equipment returned to the Company upon termination of leases and held for subsequent sale or lease is recorded in inventory at the lower of net book value or estimated fair value of the equipment, less cost to sell, and is not depreciated. Matured operating lease inventory is reported in "Other assets." Goodwill and Other Intangibles Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired. Goodwill and indefinite-lived intangible assets are reviewed for impairment at least annually. At December 31, 2023 and 2022, the Company performed its annual impairment review and concluded there was no impairment to goodwill. Other intangibles consist primarily of acquired dealer networks, trademarks, in-process research and development, product drawings, patents, and capitalized software. Other intangibles with indefinite lives principally consist of acquired trademarks which have no legal, regulatory, contractual, competitive, economic, or other factor that limits their useful life. Intangible assets with an indefinite useful life are not amortized. Other intangible assets with definite lives are being amortized on a straight-line basis over 5 to 25 years. Software costs capitalized by CNH primarily relate to cost incurred in the production of software to be embedded in our products. Capitalized software costs are included in Other intangible assets, net on our Consolidate Balance Sheets. Capitalization of costs begins when technological feasibility has been established and ends upon reaching commercialization. Amortization of the assets occurs on a straight-line basis over the assets useful life which is primarily 2 – 5 years. Reference is made to “Note 9: Goodwill and Other Intangibles” for further information regarding goodwill and other intangible assets. Impairment of Long-Lived Assets, Goodwill, and Other Intangible Assets 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. If circumstances require a long-lived asset to be tested for possible impairment, CNH compares the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. 92 Income Taxes The provision for income taxes is determined using the asset and liability method. CNH recognizes a current tax liability or asset for the estimated taxes payable or refundable on tax returns for the current year and tax contingencies estimated to be settled with taxing authorities within one year. A deferred tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences and tax attributes. The measurement of current and deferred tax liabilities and assets is based on provisions of enacted tax law. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized based on available evidence. Retirement and Post-employment Benefits CNH sponsors numerous defined benefit and defined contribution pension plans, the assets of which are held in separate trustee-administered funds. The pension plans are funded by payments from CNH. The cost of providing defined benefit pension and other postretirement benefits is calculated based upon actuarial valuations. 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 the income statement during the period of the employee’s service. Derivatives CNH’s policy is to enter into derivative transactions to manage exposures that arise in the normal course of business and not for trading or speculative purposes. CNH records derivative financial instruments in the consolidated balance 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 in current income 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 income 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 derivative financial instrument’s gain or loss is initially reported in other comprehensive income (loss) and is subsequently reclassified into income when the forecasted transaction affects income. For derivative financial instruments that are not designated as hedges but held as economic hedges, the gain or loss is recognized immediately in income. For derivative financial instruments designated as hedges, CNH formally documents the hedging relationship to the hedged item and its risk management strategy. This includes linking all derivatives that are designated as fair value hedges to specific assets and liabilities contained in the consolidated balance sheets and linking cash flow hedges to specific forecasted transactions or variability of cash flow. CNH assesses the effectiveness of its hedging instruments both at inception and on an ongoing basis. If a derivative is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable of occurring, the hedge accounting described above is discontinued and the derivative is marked to fair value and recorded in income through the remainder of its term. Reference is made to “Note 15: Financial Instruments,” for further information regarding CNH’s use of derivative financial instruments. Share-Based Compensation Plans CNH recognizes all share-based compensation as an expense based on the fair value of each award on the grant date. CNH recognizes share-based compensation costs on a straight-line basis over the requisite service period for each separately vesting portion of an award. Earnings per Share Basic earnings per share is based on the weighted average number of shares outstanding during each period. Diluted earnings per share is based on the weighted average number of shares and dilutive share equivalents outstanding during each period. Unvested performance-based awards are considered outstanding and included in the computation of diluted earnings per share based on the number of shares that would vest if the end of the reporting period were the end of the contingency period. 93 New Accounting Pronouncements Adopted in 2023 Revenue Contract Assets and Liabilities Acquired in a Business Combination In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). ASU 2021-08 requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606) as applied by the acquiree to determine what to record for the acquired revenue contract assets and liabilities instead of at fair value on the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and early adoption is permitted. The Company adopted ASU 2021-08 and applied the guidance within ASU 2021-08 on business combinations beginning January 1, 2023. The adoption did not have a material impact on our consolidated financial statements. Troubled Debt Restructurings and Vintage Disclosures In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losse s (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings (TDRs) for creditors in ASC 310-40 and amends the guidance on vintage disclosures to require disclosure of current period gross write-offs by year of origination. ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. Entities can elect to adopt the guidance on TDRs using either a prospective or modified retrospective transition. The amendments related to disclosures should be adopted prospectively. The Company adopted ASU 2022-02 and applied the guidance within ASU 2022-02 to its consolidated financial statements and disclosures prospectively beginning January 1, 2023. The adoption did not have a material impact on the Company's consolidated financial statements and note disclosures. Supplier Finance Programs Disclosures In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations ("ASU 2022-04"). ASU 2022-04 requires the buyer in a supplier finance program to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a roll forward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented. ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the disclosure of roll forward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted ASU 2022-04 and applied the guidance within ASU 2022-04 to its disclosures beginning January 1, 2023. As these amendments relate to disclosures only, there are no other impacts to the Company’s consolidated financial statements. Under the supply chain finance programs, administered by third parties, our suppliers are given the opportunity to sell receivables from us to participating financial institutions at their sole discretion. Our responsibility is limited to making payment on the terms originally negotiated with our supplier, regardless of whether the supplier sells its receivable to a financial institution. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program. As of December 31, 2023 and 2022, $ 148 million and $ 189 million, respectively, of obligations remain outstanding that we have confirmed as valid to the administrators of the supply chain finance programs. These balances are included within “ Accounts payable ” in our consolidated balance sheets and are reflected as cash flow from operating activities in our consolidated statements of cash flows when settled. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 provides temporary optional expedients and exceptions for applying U.S. GAAP to contract modifications, hedging relationships, and other transactions affected by Reference Rate Reform if certain criteria are met. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 (ASU 2022-06"). ASU 2022-06 extended the sunset date of ASC Topic 848 from December 31, 2022 to December 31, 2024. The Company elected to adopt ASU 2020-04 and ASU 2022-06 in the second quarter of 2023. The Company renegotiated its contract terms on its interest rate derivatives by changing the floating interest rate swap from LIBOR to overnight SOFR. The Company elected to make the change using the optional expedients under ASC 848, which allow the change in critical terms without 94 de-designation and results in no change to the cumulative basis adjustment reflected in earnings. The elections did not have a material impact on our consolidated financial statements. Not Yet Adopted Leases between entities under common control In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842): Common Control Arrangements ("ASU 2023-01"). ASU 2023-01 requires that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset. Additionally, the leasehold improvements are subject to the impairment guidance in Topic 360: Property, Plant and Equipment . The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company does not anticipate that the ASU will have a significant effect on its financial statements and related disclosures. Disclosure improvements In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative , to amend certain disclosure and presentation requirements for a variety of topics within the Accounting Standards Codification (“ASC”). These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective. Early adoption is prohibited. The Company does not anticipate that the ASU will have a significant effect on its financial statements and related disclosures. Improvements to reportable segment disclosures In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures , to improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses. The amendments in this update are effective date for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of adoption to our reportable segment disclosures. Improvements to income tax disclosures In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , to enhance the transparency and decision usefulness of income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this update are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have to our income tax disclosures. 95 Note 3: Revenue The following table summarize revenues for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, (in millions of dollars) 2023 2022 2021 Agriculture $ 18,148 $ 17,969 $ 14,721 Construction 3,932 3,572 3,081 Eliminations and other — — — Total Industrial Activities 22,080 21,541 17,802 Financial Services 2,573 1,996 1,672 Eliminations and other 34 14 22 Total Revenues $ 24,687 $ 23,551 $ 19,496 The following table disaggregates revenues by major source for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, (in millions of dollars) 2023 2022 2021 Revenues from: Sales of goods $ 22,036 $ 21,506 $ 17,783 Rendering of services and other revenues 44 35 19 Revenues from sales of goods and services 22,080 21,541 17,802 Finance and interest income 1,882 1,169 912 Rents and other income on operating lease 725 841 782 Finance, interest and other income 2,607 2,010 1,694 Total Revenues $ 24,687 $ 23,551 $ 19,496 Contract liabilities recorded in Other liabilities were $ 50 million, $ 33 million and $ 20 million at December 31, 2023, 2022 and 2021, respectively. Contract liabilities primarily relate to extended warranties. During the year ended December 31, 2023, 2022 and 2021, revenues included $ 11 million, $ 6 million and $ 1 million, respectively, relating to contract liabilities outstanding at the beginning of each period. As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $ 48 million (approximately $ 33 million at December 31, 2022). CNH expects to recognize revenue on approximately 32 % and 95 % of the remaining performance obligations over the next 12 and 36 months, respectively (approximately 30 % and 91 % as of December 31, 2022, respectively). Note 4: Receivables Trade Receivables, net As of December 31, 2023 and 2022, the Company had trade receivables of $ 133 million and $ 172 million, respectively. Trade receivables are shown net of allowances for credit losses of $ 24 million and $ 23 million at December 31, 2023 and 2022 respectively. Trade accounts have significant concentrations of credit risk in the Agriculture and Construction segments. There is not a disproportionate concentration of credit risk in any geographic region. The Industrial Activities businesses sell a significant portion of their trade receivables to Financial Services and provide compensation to Financial Services at approximate market interest rates. 96 Financing Receivables, net A summary of financing receivables included in the consolidated balance sheets as of December 31, 2023 and 2022 is as follows: (in millions of dollars) 2023 2022 Retail $ 13,868 $ 11,446 Wholesale 10,334 7,785 Other 47 29 Total $ 24,249 $ 19,260 CNH provides and administers retail note and lease financing, as well as revolving charge account financing, to end use customers for the purchase of new and used equipment and components sold by its dealer network. The terms of retail notes and finance leases generally range from two to seven years , and interest rates vary depending on prevailing market interest rates and certain incentive programs offered on behalf of and sustained by Industrial Activities. Revolving charge accounts are generally accompanied by higher interest rates than the Company’s other retail financing products, require minimum monthly payments, and do not have pre-determined maturity dates. Wholesale receivables arise primarily from dealer floorplan financing, and to a lesser extent, from 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 by the dealer of the underlying equipment. For the “interest-free” period, Financial Services is compensated by Industrial Activities based on market interest rates. After the expiration of any “interest-free” period, interest is charged to dealers on outstanding balances until CNH receives payment in full. The “interest-free” periods are determined based on the type of equipment sold and the time of year of the sale. The Company evaluates and assesses dealers on an ongoing basis as to their creditworthiness. CNH may be obligated to repurchase the dealer’s equipment upon cancellation or termination of the dealer’s contract for such causes as change in ownership, closeout of the business, or default. There were no significant losses in 2023, 2022 or 2021 relating to the termination of dealer contracts. Maturities of financing receivables as of December 31, 2023 are as follows: (in millions of dollars) Amount 2024 $ 14,852 2025 3,363 2026 2,657 2027 1,900 2028 1,086 2029 and thereafter 391 Total $ 24,249 It has been the Company’s experience that substantial portions of retail receivables, which include retail notes and finance leases, are repaid before their contractual maturity dates. As a result, the above table should not be regarded as a forecast of future cash collections. Financing receivables have significant concentrations of credit risk in the agriculture and construction business sectors. On a geographic basis, there is not a disproportionate concentration of credit risk in any area. The Company typically retains, as collateral, a security interest in the equipment associated with retail and wholesale receivables, while revolving charge accounts are generally not related to or secured by an identified piece of equipment. Transfers of Financial Assets As part of its overall funding strategy, the Company periodically transfers certain receivables into special purpose entities ("SPEs") as part of its asset backed securitization ("ABS") programs or into factoring transactions. SPEs utilized in the securitization programs differ from other entities included in the Company's consolidated financial statements because the assets they hold are legally isolated from the Company's assets. For bankruptcy analysis purposes, the Company has sold the receivables to the SPEs in a true sale and the SPEs are separate legal entities. Upon transfer of the receivables to the SPEs, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the SPEs' creditors. The SPEs have ownership of cash balances that also have restrictions for the benefit of the SPEs' investors. The Company's interests in the SPEs' receivables are subordinate to the interests of third-party investors. None of the receivables that are directly or indirectly sold or transferred in any of these transactions are available to pay the Company's creditors until all obligations of the SPE have been fulfilled or the receivables are removed from the SPE. 97 Certain securitization trusts are also VIEs and consequently, the VIEs are consolidated since the Company has both the power to direct the activities that most significantly impact the VIEs' economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIEs. The Company may retain all or a portion of the subordinated interests in the SPEs. No recourse provisions exist that allow holders of the asset-backed securities issued by the trusts to put those securities back to the Company, although the Company provides customary representations and warranties that could give rise to an obligation to repurchase from the trusts any receivable for which there is a breach of the representations and warranties. Moreover, the Company does not guarantee any security issued by the trusts. The trusts have a limited life and generally terminate upon final distribution of amounts owed to investors or upon exercise of a cleanup-call option by the Company, in its role as servicer. Factoring transactions may be either with recourse or without recourse; certain without recourse transfers include deferred payment clauses (for example, when the payment by the factor of a minor part of the purchase price is dependent on the total amount collected from the receivables), requiring first loss cover, meaning that the transferor takes priority participation in the losses, or requires a significant exposure to the cash flows arising from the transferred receivables to be retained. These types of transactions do not qualify for the derecognition of the assets since the risks and rewards connected with collection are not substantially transferred, and accordingly the Company continues to recognize the receivables transferred by this means in its balance sheet and a financial liability of the same amount under asset-backed financing. The secured borrowings related to the transferred receivables are obligations that are payable as the receivables are collected. At December 31, 2023 and 2022, the carrying amount of such restricted receivables included in financing receivables are the following: (in millions of dollars) 2023 2022 Retail $ 7,707 $ 6,766 Wholesale 6,381 4,582 Total $ 14,088 $ 11,348 Allowance for Credit Losses CNH's allowance for credit losses is segregated into two portfolio products: retail and wholesale. A portfolio product is the level at which CNH develops a systematic methodology for determining its allowance for credit losses. Further, the class of receivables by which CNH evaluates its portfolio products is by geographic region. Typically, CNH's receivables within a geographic area have similar risk profiles and methods for assessing and monitoring risk. The classes align with management reporting. Allowance for credit losses activity for the year ended December 31, 2023 is as follows: (in millions of dollars) Retail Wholesale Opening balance $ 270 $ 64 Provision 86 ( 6 ) Charge-offs ( 42 ) ( 5 ) Recoveries 4 — Foreign currency translation and other ( 8 ) — Ending balance $ 310 $ 53 At December 31, 2023, the allowance for credit losses included an increase in reserves due to reserve needs primarily in South America, partially offset by a decrease in reserves of $ 15 million due to the sale of CNH Capital Russia. CNH will update the macroeconomic factors and qualitative factors in future periods, as warranted. The provision for credit losses is included in selling, general and administrative expenses. Allowance for credit losses activity for the year ended December 31, 2022 is as follows: (in millions of dollars) Retail Wholesale Opening Balance $ 220 $ 65 Provision 59 7 Charge-offs, net of recoveries ( 17 ) ( 7 ) Foreign currency translation and other 8 ( 1 ) Ending balance $ 270 $ 64 98 At December 31, 2022, the allowance for credit losses included increases in reserves due to growth in the retail portfolio and additionally included $ 15 million for domestic Russian receivables, $ 9 million for the addition of revolving charge accounts in North America and $ 7 million in China related to Construction. CNH will update the macroeconomic factors and qualitative factors in future periods, as warranted. The provision for credit losses is included in selling, general and administrative expenses. Allowance for credit losses activity for the year ended December 31, 2021 is as follows: (in millions of dollars) Retail Wholesale Opening balance $ 231 $ 62 Provision 22 6 Charge-offs, net of recoveries ( 22 ) 1 Foreign currency translation and other ( 11 ) ( 4 ) Ending balance $ 220 $ 65 At December 31, 2021, the allowance for credit losses included a reduction in retail reserves primarily due to the improved outlook for the agricultural industry and a reduced expected impact on credit conditions from the COVID-19 pandemic. CNH assesses and monitors the credit quality of its financing receivables based on delinquency status. Receivables are considered past due if the required principal and interest payments have not yet been received as of the date such payments were due. Delinquency is reported on financing receivables greater than 30 days past due. Non-performing financing receivables represent receivables for which CNH has ceased accruing finance income. These receivables are generally 90 days past due. Accrued interest is charged-off to interest income. Interest income charged-off was not material for the year ended December 31, 2023. Interest accrual is resumed if the receivable becomes contractually current and collection becomes probable. Previously suspended income is recognized at that time. As the terms for retail financing receivables are greater than one year, the performing/non-performing information is presented by year of origination for North America, South America and Asia Pacific. 99 The aging of financing receivables by vintage as of December 31, 2023 is as follows: (in millions of dollars) 31-60 Days Past Due 61-90 Days Past Due Total Past Due Current Total Performing Non- Performing Total Gross Charge-offs Retail North America 2023 $ 3,976 $ 4 $ 3,980 $ 1 2022 2,133 4 2,137 10 2021 1,323 3 1,326 4 2020 561 2 563 3 2019 208 1 209 3 Prior to 2019 66 1 67 3 Total 44 3 47 8,220 8,267 15 8,282 24 South America 2023 1,986 9 1,995 — 2022 955 32 987 — 2021 573 13 586 2 2020 294 4 298 7 2019 123 2 125 1 Prior to 2019 107 1 108 1 Total 22 — 22 4,016 4,038 61 4,099 11 Asia Pacific 2023 609 — 609 — 2022 453 1 454 1 2021 255 1 256 1 2020 115 1 116 2 2019 31 1 32 2 Prior to 2019 3 — 3 1 Total 5 6 11 1,455 1,466 4 1,470 7 Europe, Middle East, Africa — — — 6 6 11 17 — Total Retail $ 71 $ 9 $ 80 $ 13,697 $ 13,777 $ 91 $ 13,868 $ 42 Wholesale North America $ — $ — $ — $ 5,154 $ 5,154 $ — $ 5,154 $ — South America — — — 1,404 1,404 2 1,406 4 Asia Pacific 4 2 6 870 876 — 876 1 Europe, Middle East, Africa 5 — 5 2,893 2,898 — 2,898 — Total Wholesale $ 9 $ 2 $ 11 $ 10,321 $ 10,332 $ 2 $ 10,334 $ 5 100 The aging of financing receivables by vintage as of December 31, 2022 is as follows: (in millions of dollars) 31-60 Days Past Due 61-90 Days Past Due Total Past Due Current Total Performing Non- Performing Total Retail North America 2022 $ 3,558 $ — $ 3,558 2021 2,035 1 2,036 2020 994 — 994 2019 472 — 472 2018 225 — 225 Prior to 2018 65 — 65 Total 42 16 58 7,291 7,349 1 7,350 South America 2022 1,179 2 1,181 2021 725 3 728 2020 408 2 410 2019 207 1 208 2018 116 — 116 Prior to 2018 95 — 95 Total 12 — 12 2,718 2,730 8 2,738 Asia Pacific 2022 601 — 601 2021 400 1 401 2020 220 1 221 2019 84 — 84 2018 35 — 35 Prior to 2018 3 — 3 Total 8 8 16 1,327 1,343 2 1,345 Europe, Middle East, Africa — — — 2 2 11 13 Total Retail $ 62 $ 24 $ 86 $ 11,338 $ 11,424 $ 22 $ 11,446 Wholesale North America $ — $ — $ — $ 3,378 $ 3,378 $ — $ 3,378 South America — — — 1,416 1,416 — 1,416 Asia Pacific — — — 494 494 — 494 Europe, Middle East, Africa 7 2 9 2,488 2,497 — 2,497 Total Wholesale $ 7 $ 2 $ 9 $ 7,776 $ 7,785 $ — $ 7,785 Troubled Debt Restructurings A restructuring of a receivable constitutes a TDR when the lender grants a concession it would not otherwise consider to a borrower that is experiencing financial difficulties. As a collateral based lender, CNH typically will repossess collateral in lieu of restructuring receivables. As such, for retail receivables, concessions are typically provided based on bankruptcy court proceedings. For wholesale receivables, concessions granted may include extended contract maturities, inclusion of interest-only periods, modification of a contractual interest rate to a below market interest rate and waiving of interest and principal. As of December 31, 2023 and 2022, CNH's TDRs for retail and wholesale receivables were immaterial. 101 Note 5: Inventories Inventories (stated at the lower of cost or market, cost being determined on a FIFO basis) as of December 31, 2023 and 2022 consist of the following: (in millions of dollars) 2023 2022 Raw materials $ 1,891 $ 1,955 Work-in-process 443 471 Finished goods 3,211 2,385 Total Inventories $ 5,545 $ 4,811 Note 6: Property, Plant and Equipment A summary of property, plant and equipment as of December 31, 2023 and 2022 is as follows: (in millions of dollars) 2023 2022 Land and industrial buildings $ 1,896 $ 1,807 Plant, machinery and equipment 3,641 3,293 Construction in progress 276 194 Other 423 364 Gross property, plant and equipment 6,236 5,658 Accumulated depreciation ( 4,323 ) ( 4,126 ) Net property, plant and equipment $ 1,913 $ 1,532 Property, plant and equipment recorded under capital leases were immaterial as of December 31, 2023 and 2022. Depreciation expense on the above property, plant and equipment totaled $ 213 million, $ 198 million and $ 210 million for the years ended December 31, 2023, 2022 and 2021, respectively. The Company had contractual commitments of $ 207 million and $ 77 million for the acquisition of property, plant and equipment at December 31, 2023 and 2022, respectively. Note 7: Investments in Unconsolidated Subsidiaries and Affiliates A summary of investments in unconsolidated subsidiaries and affiliates as of December 31, 2023 and 2022 is as follows: (in millions of dollars) 2023 2022 Equity method $ 509 $ 331 Other investments, at carrying value 54 54 Total $ 563 $ 385 102 A summary of the combined results of operations and financial position as reported by the investees that CNH accounts for using the equity method is as follows (unaudited): Years Ended December 31, (in millions of dollars) 2023 2022 2021 Net revenue $ 2,748 $ 2,096 $ 1,996 Income before taxes $ 888 $ 348 $ 332 Net income $ 733 $ 280 $ 247 As of December 31, (in millions of dollars) 2023 2022 Total assets $ 7,792 $ 7,290 Total liabilities $ 6,347 $ 6,376 Total equity $ 1,445 $ 914 The investees included in these tables primarily consists of Al Ghazi Tractors Ltd. ( 43.2 % ownership), Turk Traktor re Ziraat Makineteri A.S. ( 37.5 % ownership), New Holland HFT Japan Inc. ( 50.0 % ownership), CNH de Mexico S.A. de C.V. ( 50.0 % ownership), CIFINS S.p.a ( 50.0 % ownership) and CNH Industrial Capital Europe S.a.S ( 24.9 % ownership owned directly by CIFINS S.p.a). Note 8: Leases Lessee The Company has operating lease contracts mainly for buildings, plant and machinery, vehicles, IT equipment and machinery. Leases with a term of 12 months or less are not recorded in the balance sheet. For the leases the Company recognized, on a straight-line basis over the lease term, the Company incurred lease expense of $ 10 million and $ 13 million for the year ended December 31, 2023 and 2022, respectively. For the year ended December 31, 2023 and 2022, the Company incurred operating lease expenses of $ 93 million and $ 74 million, respectively. At December 31, 2023 and 2022, the Company recorded approximately $ 297 million and $ 225 million of a right-of-use asset, respectively, and $ 300 million and $ 228 million of lease liability included in Other assets and Other liabilities , respectively. At December 31, 2023 and 2022 the weighted-average remaining lease term (calculated on the basis of the remaining lease term and the lease liability balance for each lease) and the weighted-average discount rate for operating leases were 5.6 years and 4.4 %, and 5.9 years and 3.8 %, respectively. During the year ended December 31, 2023 and 2022, leased assets obtained in exchange for operating lease obligations were $ 153 million and $ 114 million, respectively. During the year ended December 31, 2023 and 2022, operating cash outflow for amounts included in the measurement of operating lease obligations was $ 90 million and $ 73 million, respectively. Future minimum lease payments under non-cancellable leases as of December 31, 2023 were as follows: (in millions of dollars) Operating Leases 2024 $ 86 2025 68 2026 53 2027 41 2028 30 2029 and thereafter 73 Total future minimum lease payments 351 Less: Interest 51 Total $ 300 103 Lessor The Company, primarily through its Financial Services segment, leases equipment to retail customers under operating leases. Our leases typically have terms of 3 to 5 years with options available for the lessee to purchase the equipment at the lease term date. Revenue for non-lease components are accounted for separately. A summary of equipment on operating leases as of December 31, 2023, and 2022 is as follows: (in millions of dollars) 2023 2022 Equipment on operating leases $ 1,784 $ 1,894 Accumulated depreciation ( 367 ) ( 392 ) Net equipment on operating leases $ 1,417 $ 1,502 Depreciation expense on equipment on operating leases is recorded in "Other, net" and amounted to $ 187 million, $ 207 million and $ 241 million for the years ended December 31, 2023, 2022 and 2021, respectively. The following table sets out a maturity analysis of operating lease payments, showing the undiscounted lease payments to be received after the reporting date: (in millions of dollars) Amount 2024 $ 204 2025 142 2026 78 2027 31 2028 10 2029 and thereafter — Total undiscounted lease payments $ 465 Note 9: Goodwill and Other Intangibles Changes in the carrying amount of goodwill, for the years ended December 31, 2023 and 2022 are as follows: (in millions of dollars) Agriculture Construction Financial Services Total Balance at January 1, 2022 $ 3,020 $ 49 $ 141 $ 3,210 Foreign currency translation and other 68 ( 3 ) ( 1 ) 64 Acquisitions 48 — — 48 Balance at December 31, 2022 3,136 46 140 3,322 Foreign currency translation and other 2 1 1 4 Acquisitions 288 — — 288 Balance at December 31, 2023 $ 3,426 $ 47 $ 141 $ 3,614 During 2023, the acquisitions of Augmenta, Bennamann and Hemisphere led to an increase in goodwill for Agriculture of $ 76 million, $ 118 million and $ 111 million, respectively. Goodwill related to the acquisitions was calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from the other assets acquired that could not be individually identified and separately recognized. During fiscal year 2023, measurement period adjustments were recorded reducing goodwill by $ 14 million and $ 3 million for Augmenta and Bennamann, respectively. The valuations of assets acquired and liabilities assumed have not yet been finalized as of December 31, 2023. Thus, goodwill associated with the acquisitions is subject to adjustment during the measurement period. Impairment testing for goodwill is done at a reporting unit level. Under the goodwill impairment test, CNH’s estimate of the fair value of the reporting unit is compared with its carrying value. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. CNH has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. 104 Goodwill and other indefinite-lived intangible assets are tested for impairment annually or more frequently if a triggering event occurs. At December 31, 2023, the Company completed its annual impairment assessment and concluded there were no impairments to goodwill for any of the reporting units. As of December 31, 2023 the estimated fair values of all reporting units with goodwill exceeded the carrying value by more than 40 %. Accordingly, management determined that none of the reporting units were at higher risk for impairment at December 31, 2023. As of December 31, 2023, and December 31, 2022, the Company’s other intangible assets and related accumulated amortization consisted of the following: 2023 2022 (in millions of dollars) Weighted Avg. Life Gross Accumulated Amortization Net Gross Accumulated Amortization Net Other intangible assets subject to amortization: Dealer networks 20 - 25 $ 246 $ 223 $ 23 $ 291 $ 242 $ 49 Patents, concessions, licenses and other 5 - 25 928 523 405 787 470 317 Capitalized software 2 - 5 1,070 810 260 890 683 207 2,244 1,556 688 1,968 1,395 573 Other intangible assets not subject to amortization: In-process research and development 213 — 213 165 — 165 Software in-progress 119 — 119 119 — 119 Trademarks 272 — 272 272 — 272 Total other intangible assets $ 2,848 $ 1,556 $ 1,292 $ 2,524 $ 1,395 $ 1,129 During 2023, the Company’s acquisitions lead to an increase in intangible assets of $ 35 million, $ 46 million and $ 51 million for Augmenta, Bennamann and Hemisphere, respectively. The recorded intangibles comprised for developed technology, in-process R&D, and customer relationships. Measurement period adjustments were recorded in the second and third quarters increasing intangible assets by $ 12 million and $ 5 million for Augmenta and Bennamann, respectively. The valuation of assets acquired and liabilities assumed has not been finalized as of December 31, 2023. The intangible assets associated with the acquisitions are subject to adjustment during the measurement period. CNH recorded amortization expense of $ 164 million, $ 130 million and $ 85 million during 2023, 2022 and 2021, respectively. Based on the current amount of other intangible assets subject to amortization, the estimated annual amortization expense for each of the succeeding 5 years is expected to be as follows: $ 162 million in 2024; $ 113 million in 2025; $ 87 million in 2026; $ 73 million in 2027 and $ 51 million in 2028. Note 10: Debt Credit Facilities Lenders of committed credit facilities have the obligation to make advances up to the facility amount. Lenders of uncommitted facilities have the right to terminate the agreement with prior notice to CNH. At December 31, 2023, CNH’s available committed unsecured facilities expiring after twelve months amounted to $ 5.9 billion ($ 5.1 billion at December 31, 2022). In March 2019, CNH signed a five-year committed revolving credit facility for € 4 billion ($ 4.5 billion at March 31, 2019 exchange rate) due to mature in 2024 with two extension options of 1 -year each, exercisable on the first and second anniversary of the signing date. CNH exercised the first of the two extension options as of February 28, 2020 and the second extension option as of February 26, 2021. The facility is now due to mature in March 2026 for € 3,950.5 million; € 49.5 million within the facility will mature in March 2025. The credit facility replaced the existing five-year € 1.75 billion credit facility due to mature in 2021. The € 4 billion facility is guaranteed by the parent company with cross-guarantees from each of the borrowers (i.e., CNH Industrial Finance S.p.A., CNH Industrial Finance Europe S.A. and CNH Industrial Finance North America Inc.), includes typical provisions for contracts of this type and size, such as: customary covenants mainly relating to Industrial Activities including negative pledge, a status (or pari passu) covenant, restrictions on the incurrence of indebtedness by certain subsidiaries, customary events of default (some of which are subject to minimum thresholds and customary mitigants) including cross-default, failure to pay amounts due or to comply with certain provisions under the loan agreement, the occurrence of certain bankruptcy-related events and mandatory prepayment obligations upon a change in control of CNH or the borrower and a financial covenant (Net debt/EBITDA ratio relating to Industrial Activities) that is not applicable with the current ratings levels. The failure to comply with these provisions, in certain cases if not suitably remedied, can 105 lead to the requirement to make early repayment of the outstanding advances. At December 31, 2023, the Company was in compliance with all covenants in the revolving credit facility. At December 31, 2023, Financial Services’ committed asset-backed facilities expiring after twelve months amounted to $ 3.7 billion ($ 2.9 billion at December 31, 2022), of which $ 3.7 billion at December 31, 2023 ($ 2.1 billion at December 31, 2022) were utilized. CNH entered into an 18-month committed unsecured credit facility on December 19, 2023, was undrawn at December 31, 2023 and was fully drawn on January 12, 2024. Debt A summary of issued bonds outstanding as of December 31, 2023, is as follows: (in millions of dollars, except percentages) Currency Face value of outstanding bonds Coupon Maturity Outstanding amount Industrial Activities Euro Medium Term Notes: CNH Industrial Finance Europe S.A. (1) EUR $ 750 0.000 % April 1, 2024 $ 829 CNH Industrial Finance Europe S.A. (1) EUR 650 1.750 % September 12, 2025 718 CNH Industrial Finance Europe S.A. (1) EUR 100 3.500 % November 12, 2025 111 CNH Industrial Finance Europe S.A. (1) EUR 500 1.875 % January 19, 2026 553 CNH Industrial Finance Europe S.A. (1) EUR 600 1.750 % March 25, 2027 663 CNH Industrial Finance Europe S.A. (1) EUR 50 3.875 % April 21, 2028 55 CNH Industrial Finance Europe S.A. (1) EUR 500 1.625 % July 3, 2029 553 CNH Industrial Finance Europe S.A. (1) EUR 50 2.200 % July 15, 2039 55 Other Bonds: CNH Industrial N.V. (2) USD 500 3.850 % November 15, 2027 500 Hedging effects, bond premium/discount, and unamortized issuance costs ( 51 ) Total Industrial Activities $ 3,986 Financial Services CNH Industrial Capital LLC USD $ 500 4.200 % January 15, 2024 $ 500 CNH Industrial Capital LLC USD 500 3.950 % May 23, 2025 500 CNH Industrial Capital LLC USD 400 5.450 % October 14, 2025 400 CNH Industrial Capital LLC USD 500 1.875 % January 15, 2026 500 CNH Industrial Capital LLC USD 600 1.450 % July 15, 2026 600 CNH Industrial Capital LLC USD 600 4.550 % April 10, 2028 600 CNH Industrial Capital LLC USD 500 5.500 % January 12, 2029 500 CNH Industrial Capital Australia Pty Ltd. AUD 425 1.750 % 5.800 % 2024/2026 289 CNH Industrial Capital Canada Ltd. CAD 300 1.500 % October 1, 2024 226 CNH Industrial Capital Canada Ltd. CAD 400 5.500 % August 11, 2026 302 CNH Industrial Capital Argentina S.A. USD 59 0.000 % 2025/2025 59 Banco CNH Industrial Capital S.A. BRL 3,547 12.600 % 13.440 % 2024/2028 732 Hedging effects, bond premium/discount, and unamortized issuance costs ( 38 ) Total Financial Services $ 5,170 (1) Bond listed on the Irish Stock Exchange (2) Bond listed on the New York Stock Exchange 106 A summary of total debt as of December 31, 2023 and 2022, is as follows: 2023 2022 (in millions of dollars) Industrial Activities Financial Services Total Industrial Activities Financial Services Total Total bonds $ 3,986 $ 5,170 $ 9,156 $ 4,836 $ 4,046 $ 8,882 Asset-backed debt — 11,716 11,716 — 9,751 9,751 Other debt 146 6,308 6,454 73 4,256 4,329 Intersegment debt 301 527 — 63 888 — Total Debt 4,433 23,721 27,326 4,972 18,941 22,962 Financial payables to Iveco Group N.V. 6 140 146 5 151 156 Total Debt (including Financial payables to Iveco Group N.V.) $ 4,439 $ 23,861 $ 27,472 $ 4,977 $ 19,092 $ 23,118 The weighted-average interest rate on consolidated debt at December 31, 2023, and 2022 was 5.3 % and 3.5 %, respectively. In April 2022, Banco CNH Industrial Capital S.A. issued BRL 600 million of notes in two tranches: BRL 177 million at CDI + 0.900 %, due in 2024 and BRL 423 million at CDI + 1.100 %, due in 2025. In May 2022, Banco CNH Industrial Capital S.A. issued BRL 350 million of notes at CDI + 1.100 %, due in 2025, through a private placement. In May 2022, CNH Industrial Capital LLC issued USD 500 million of 3.950 % notes due in 2025 at an issue price of 99.469 % of their principal amount. In September 2022, Banco CNH Industrial Capital S.A. issued BRL 700 million of notes in three tranches: BRL 268 million at CDI + 0.900 %, due in 2024; BRL 193 million at CDI + 1.050 %, due in 2025; and BRL 239 million at CDI + 1.300 %, due in 2026. In October 2022, CNH Industrial Capital LLC issued USD 400 million of 5.450 % notes due in 2025 at an issue price of 99.349 % of their principal amount. In October 2022, CNH Industrial Capital Argentina issued USD 23 million of 0.000 % notes due in 2025. This was a voluntary exchange offer for the outstanding USD-linked Series 1 notes issued in 2020 due August 2023. In November 2022, Banco CNH Industrial Capital S.A. issued BRL 22 million of notes at CDI + 1.050 %, due in 2025, through a private placement. In December 2022, Banco CNH Industrial Capital S.A. issued BRL 190 million of notes at CDI + 0.850 %, due in 2024, through a private placement. In April 2023, CNH Industrial Capital LLC issued USD 600 million of 4.550 % notes due 2028, with an issue price of 98.857 % of their principal amount. In May 2023, CNH Industrial Capital Argentina issued USD 36.4 million of 0.000 % notes due in 2025 at an issue price of 124.000 % of their principal amount. In May 2023, Banco CNH Industrial Capital S.A. issued BRL 500 million of notes in two tranches: BRL 400 million at CDI + 1.400 %, due in 2025 and BRL 100 million at CDI + 1.600 %, due in 2026. In July 2023, CNH Industrial Capital Australia Pty. Limited issued AUD 175 million of 5.800 % notes due in 2026 at an issue price of 99.715 % of their principal amount. In August 2023, CNH Industrial Capital Canada Ltd. issued CAD 400 million of 5.500 % notes due in 2026, with an issue price of 99.883 % of their principal amount. In September 2023, CNH Industrial Capital LLC issued USD 500 million of 5.500 % notes due in 2029 at an issue price of 99.399 % of their principal amount. In October 2023, Banco CNH Industrial Capital S.A. issued BRL 600 million of notes in three tranches: BRL 312.1 million at CDI + 0.900 %, due in 2025, BRL 172.4 million at CDI + 1.000 %, due in 2026 and BRL 115.5 million at CDI + 1.300 %, due in 2027. On January 4, 2022 Fitch Ratings raised its Long-Term Issuer Default Rating on CNH Industrial N.V. to ‘BBB+’ from ‘BBB-’. Fitch also upgraded CNH Industrial Finance Europe S.A.’s senior unsecured rating to ‘BBB+’ from ‘BBB-'. The Outlook is Stable. On January 7, 2022 Fitch has upgraded the Long-Term Issuer Default Ratings and senior unsecured debt ratings of CNH Industrial Capital LLC (CNHI Capital) and CNH Industrial Capital Canada Ltd. (CNH Canada) to 'BBB+' from 'BBB-'. The Rating Outlook is Stable. Fitch has also upgraded CNHI Capital's Short-Term IDR and commercial paper (CP) ratings to 'F2' from 'F3'. On February 25, 2022, Moody's Investors Service (Moody's) upgraded the senior unsecured ratings of CNH Industrial N.V. (CNHI) and its supported subsidiaries including CNH Industrial Capital LLC, CNH Industrial Finance Europe S.A. (CNHI Finance), CNH Industrial Capital Australia Pty. Limited and CNH Industrial Capital Canada Ltd. to Baa2 from Baa3. At the same time, Moody's withdrew CNHI Finance's short term rating of (P)P-3. The outlook is stable. 107 On November 30, 2023, Standard & Poor's ("S&P") Global Ratings raised its long-term issuer credit ratings on CNH Industrial N.V. and its subsidiary, CNH Industrial Capital LLC, to 'BBB+' from 'BBB'. S&P Global Ratings also affirmed the 'A-2' short-term issuer credit rating. Additionally, S&P Global Ratings raised the issue-level ratings on CNH Industrial N.V. and its industrial subsidiaries' debt, as well as the issue-level ratings on CNH Industrial Capital LLC's senior unsecured debt, to 'BBB+' from 'BBB'. The outlook is stable. The bonds issued by CNH may contain commitments of the issuer, and in certain cases commitments of CNH Industrial N.V. in its capacity as guarantor, which are typical of international practice for bond issues of this type such as, in particular, negative pledge (in relation to quoted indebtedness), a status (or pari passu) covenant and cross default clauses. A breach of these commitments can lead to the early repayment of the applicable notes. The bonds guaranteed by CNH Industrial N.V. under the Euro Medium Term Note Programme (and its predecessor the Global Medium Term Note Programme), as well as the notes issued by CNH Industrial N.V., contain clauses which could lead to early repayment if there is a change of control of CNH Industrial N.V. leading to a rating downgrading of CNH Industrial N.V. Other debt consists primarily of borrowings from banks which are at various terms and rates. Included in Other debt of Financial Services is approximately $ 1.5 billion and $ 1.2 billion at December 31, 2023 and 2022, respectively, of funding provided by the Brazilian development agency, Banco Nacional de Desenvolvimento Econômico e Social (BNDES). The program provides subsidized funding to financial institutions to be loaned to customers to support the purchase of agricultural or construction machinery or commercial equipment in accordance with the program. A summary of the minimum annual repayments of debt as of December 31, 2023 and thereafter is as follows: (in millions of dollars) Industrial Activities Financial Services Consolidated 2024 $ 952 $ 10,525 $ 11,477 2025 831 5,245 6,076 2026 553 3,525 4,078 2027 1,133 1,206 2,339 2028 55 1,521 1,576 2029 and thereafter 608 1,172 1,780 Financial payables to Iveco Group N.V. 6 140 146 Intersegment 301 527 — Total $ 4,439 $ 23,861 $ 27,472 Please refer to “Note 15: Financial Instruments” for fair value information on debt. Note 11: Income Taxes CNH Industrial N.V. and its subsidiaries have substantial worldwide operations and incur tax obligations in the jurisdictions in which they operate. The Company’s provision for income taxes as reported in its consolidated statements of operations for the year ended December 31, 2023 of $ 594 million consists almost entirely of income taxes related to subsidiaries of CNH Industrial N.V. The sources of income before taxes and equity in income of unconsolidated subsidiaries and affiliates for the years ended December 31, 2023, 2022 and 2021 are as follows: (in millions of dollars) 2023 2022 2021 Parent country source $ ( 48 ) $ 143 $ 161 Foreign sources 2,751 2,539 1,778 Income (loss) of Consolidated Group before Income Taxes $ 2,703 $ 2,682 $ 1,939 The provision for income taxes for the years ended December 31, 2023, 2022 and 2021 consisted of the following: (in millions of dollars) 2023 2022 2021 Current income taxes $ 1,118 $ 819 $ 498 Deferred income taxes ( 524 ) ( 72 ) ( 269 ) Total income tax provision (benefit) $ 594 $ 747 $ 229 108 CNH Industrial N.V. is incorporated in the Netherlands but is a tax resident of the United Kingdom ("U.K."). The reconciliation of the differences between the provision for income taxes and the statutory rate is presented based on the weighted average of the U.K. statutory corporation tax rates in force over each of the Company’s calendar year reporting periods; specifically, the tax rate of 23.5 % 19.0 % and 19.0 % for the years ended December 31, 2023, 2022 and 2021, respectively. Reconciliations of CNH’s income tax expense for the years ended December 31, 2023, 2022 and 2021 are as follows: (in millions of dollars) 2023 2022 2021 Tax provision at the parent statutory rate $ 635 $ 510 $ 368 Foreign income taxed at different rates 73 243 136 Change in valuation allowance ( 117 ) ( 70 ) ( 207 ) Tax contingencies 66 58 ( 18 ) Tax credits and incentives ( 136 ) ( 54 ) ( 79 ) Change in tax rate or law — — ( 5 ) Other 73 60 34 Total income tax provision (benefit) $ 594 $ 747 $ 229 The decreased tax expense in 2023, as compared to 2022, was largely attributable to the recognition of $ 99 million of previously unrecognized deferred tax assets in the United Kingdom, lower profitability in high-tax jurisdictions as a percent of total profit, higher credits and incentives, and the tax benefit related to the sale of CNH Industrial Russia, offset by increases in the tax rate due to the tax impact from the Argentina highly inflationary economy and discrete tax expense associated with prior periods. The higher tax expense in 2022, as compared to 2021, was driven by increased profitability in high-tax jurisdictions as a percent of total profit, taxes associated with the disposition of Raven’s Engineered Films Division and Raven’s Aerostar Division, additional reserves for uncertain tax positions, and the tax impacts associated with Argentina's highly inflationary economy. The 2022 tax rate was reduced by the recognition of $ 55 million of previously unrecognized deferred tax assets in Italy. The 2021 tax rate was reduced by the recognition of $ 161 million of previously unrecognized deferred tax assets in Brazil. The 2021 rate was also reduced by a reduction in reserves for uncertain tax positions and the utilization of unrecognized deferred tax assets. At December 31, 2023, undistributed earnings in certain subsidiaries outside the U.K. totaled approximately $ 2 billion for which no deferred tax liability has been recorded because the remittance of earnings from those jurisdictions would incur no tax, or because such earnings are indefinitely reinvested. The Company has determined the amount of unrecognized deferred tax liability relating to the $ 2 billion of undistributed earnings was approximately $ 206 million and was attributable to withholding taxes and incremental local country income taxes in certain jurisdictions. Further, the Company evaluated the undistributed earnings from joint ventures in which it owned 50% or less and recorded $ 13 million of deferred tax liabilities as of December 31, 2023. The repatriation of undistributed earnings from subsidiaries to the U.K. is generally exempt from U.K. income taxes and as such there is no deferred tax liability associated with undistributed earnings from non-UK jurisdictions. 109 Deferred Income Tax Assets and Liabilities The components of net deferred tax assets as of December 31, 2023 and 2022 are as follows: (in millions of dollars) 2023 2022 Deferred tax assets: Warranty and campaigns $ 94 $ 86 Allowance for credit losses 137 108 Marketing and sales incentive programs 551 359 Other risk and future charges reserve 57 40 Pension, postretirement and postemployment benefits 104 87 Leasing liabilities 69 55 Research and development costs 234 139 Other reserves 267 251 Tax credits and loss carry forwards 262 266 Less: Valuation allowances ( 207 ) ( 343 ) Total deferred tax assets 1,568 1,048 Deferred tax liabilities: Property, plant and equipment 380 370 Intangibles 192 180 Inventories 25 70 Other 27 80 Total deferred tax liabilities 624 700 Net deferred tax assets $ 944 $ 348 Net deferred tax assets are reflected in the accompanying consolidated balance sheets as of December 31, 2023 and 2022 as follows: (in millions of dollars) 2023 2022 Deferred tax assets $ 979 $ 433 Deferred tax liabilities ( 35 ) ( 85 ) Net deferred tax assets $ 944 $ 348 Valuation Allowances As of December 31, 2023, the Company has valuation allowances of $ 207 million against certain deferred tax assets, including tax loss carry forwards, tax credits and other deferred tax assets. These valuation allowances are primarily attributable to certain operations in China, Germany, and the U.K. CNH has gross tax loss carry forwards in several tax jurisdictions. These tax losses expire as follows: $ 23 million in 2024; $ 24 million in 2025; $ 4 million in 2026; $ 15 million in 2027; $ 266 million in 2028 and beyond. CNH also has tax loss carry forwards of approximately $ 672 million with indefinite lives. CNH has tax credit carry forwards of $ 45 million of which $ 5 million will expire in 2026, $ 3 million will expire in 2027, and $ 37 million will expire in 2028 and beyond. Uncertain Tax Positions The Company files income tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world. The Company has open tax years from 2006 to 2023. Due to the global nature of the Company’s business, transfer pricing disputes may arise, and the Company may seek correlative relief through the competent authority processes. The Company has considered the possibility of correlative relief when booking contingencies related to transfer pricing. The lapsing of statutes, closure of currently on-going audits, or initiation of new audits in the next 12 months is not expected to have a material adverse effect on the Company's financial positions or results of operations. 110 A reconciliation of the gross amounts of tax contingencies at the beginning and end of the year is as follows: (in millions of dollars) 2023 2022 Balance, beginning of year $ 162 $ 143 Additions based on tax positions related to the current year 52 16 Additions for tax positions of prior years 63 35 Reductions for tax positions of prior years ( 35 ) ( 16 ) Reductions for tax positions as a result of lapse of statute — ( 2 ) Settlements ( 8 ) ( 14 ) Balance, end of year $ 234 $ 162 As of December 31, 2023, there are $ 234 million of unrecognized tax benefits before consideration of interest, penalties and correlative benefits, and $ 246 million of unrecognized tax benefits after consideration of interest and penalties and correlative benefits that if recognized would affect the effective tax rate. The Company recognizes interest and penalties accrued related to tax contingencies as part of the income tax provision. During the years ended December 31, 2023, 2022 and 2021, the Company recognized expense of approximately $ 7 million, $ 6 million and $( 2 ) million for income tax related interest and penalties, respectively. The Company had approximately $ 25 million, $ 19 million and $ 13 million of income tax related interest and penalties accrued at December 31, 2023, 2022 and 2021, respectively. Note 12: Employee Benefit Plans and Postretirement Benefits CNH provides pension, healthcare and insurance plans and other postemployment benefits to their employees and retirees under defined contribution and defined benefit plans. In the case of defined contribution plans, CNH makes contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. Once the contributions have been made, the Company has no further payment obligations. CNH recognizes the contribution cost when the employees have rendered their service and includes this cost by function in cost of goods sold, SG&A expense, and R&D expense. During the years ended December 31, 2023, 2022 and 2021, CNH recorded expense of $ 145 million, $ 115 million and $ 97 million, respectively, for its defined contribution plans. Defined benefit plans are classified by CNH on the basis of the type of benefit provided as follows: pension plans, healthcare plans, and other postemployment benefit plans. Pension Plans Pension obligations primarily comprise the obligations of the Company’s pension plans in the U.S., the U.K., and Germany. Under these plans, contributions are made to a separate fund (trust) that independently administers the plan assets. The Company’s funding policy is to meet the minimum funding requirements pursuant to the laws of the applicable jurisdictions. The Company may also choose to make discretionary contributions. Healthcare Postretirement Benefit Plans Healthcare postretirement benefit plan obligations comprise obligations for healthcare and insurance plans granted to employees working in the U.S. and Canada. These plans generally cover employees retiring on or after reaching the age of 55 who have completed at least 10 years of employment. CNH U.S. salaried and non-represented hourly employees and Canadian employees hired after January 1, 2001 and January 1, 2002, respectively, are not eligible for postretirement healthcare and life insurance benefits under the CNH plans. These benefits may be subject to deductibles, co-payment provisions and other limitations, and CNH has reserved the right to change or terminate these benefits, subject to the provisions of any collective bargaining agreement. These plans are not required to be funded. However, beginning in 2007, the Company began making contributions on a voluntary basis to a separate and independently managed fund established to finance the North American healthcare plans. On February 20, 2018, CNH announced that the United States Supreme Court ruled in its favor in Reese vs. CNH Industrial N.V. and CNH Industrial America LLC. The decision allowed CNH to terminate or modify various retiree healthcare benefits previously provided to certain UAW Union represented CNH retirees. On April 16, 2018, CNH announced its determination to modify the Benefits provided to the applicable retirees (“Benefits Modification”) to make them consistent with the Benefits provided to current eligible CNH retirees who had been represented by the UAW. The Benefits Modification resulted in a reduction of the plan liability by $ 527 million. This amount was amortized from OCI to the income statement over approximately 4.5 years, which represents the average service period to attain eligibility conditions for active participants. The amount was completely amortized as of December 111 31, 2022 . For the years ended December 31, 2022, and 2021, $ 90 million and $ 119 million of amortization was recorded as a pre-tax gain in Other, net, respectively. In 2021, CNH communicated plan changes for the U.S. retiree medical plan. The plan changes resulted in a reduction of the plan liability by $ 100 million. This amount will be amortized from OCI to the income statement over approximately 4 years, which represents the average service period to attain eligibility conditions for active participants. For the year ended December 31, 2023, 2022 and 2021, $ 24 million, $ 24 million and $ 6 million of amortization was recorded as a pre-tax gain in Other, net, respectively. Effective January 1, 2022, post-retirement medical coverage for certain U.S. employees who retired prior to December 2004 was transitioned to an individual marketplace. In August 2022, the Company settled the benefits obligation related to RHRA benefits for this group. In connection with this transaction, $ 27 million of plan obligations and plan assets were transferred. The Company recognized a $ 3 million pre-tax non-cash settlement charge, primarily related to the accelerated recognition of actuarial losses. Other Postemployment Benefits Other postemployment benefits consist of obligations for Italian Employee Leaving Entitlements up to December 31, 2006, loyalty bonus in Italy and various other similar plans in France, Germany and Belgium. Until December 31, 2006, Italian companies with more than 50 employees were required to accrue for benefits paid to employees upon them leaving the Company. The scheme has since changed to a defined contribution plan. The obligation on the Company’s consolidated balance sheet represents the residual reserve for years until December 31, 2006. Loyalty bonus is accrued for employees who have reached certain service seniority and are generally settled when employees leave the Company. These plans are not required to be funded and, therefore, have no plan assets. Obligations and Funded Status The following summarizes data from CNH’s defined benefit pension, healthcare and other postemployment plans for the years ended December 31, 2023 and 2022: Pension Healthcare (1) Other (1) (in millions of dollars) 2023 2022 2023 2022 2023 2022 Change in benefit obligations: Beginning benefit obligation $ 1,175 $ 1,843 $ 181 $ 281 $ 89 $ 113 Service cost 9 11 3 4 5 5 Interest cost 54 27 9 6 4 1 Plan participants’ contributions 1 1 4 4 — — Actuarial loss (gain) 53 ( 476 ) 10 ( 52 ) 5 ( 15 ) Gross benefits paid ( 80 ) ( 77 ) ( 29 ) ( 28 ) ( 7 ) ( 7 ) Plan amendments 4 — 1 ( 6 ) — — Currency translation adjustments and other (2) 58 ( 154 ) — ( 28 ) 4 ( 8 ) Ending benefit obligation 1,274 1,175 179 181 100 89 Change in the fair value of plan assets: Beginning plan assets 979 1,474 58 130 — — Actual return on plan assets 51 ( 357 ) 6 ( 21 ) — — Employer contributions 41 46 — — — — Plan participants’ contributions 1 1 — — — — Gross benefits paid ( 68 ) ( 65 ) ( 6 ) ( 9 ) — — Currency translation adjustments and other (2) 45 ( 120 ) — ( 42 ) — — Ending plan assets 1,049 979 58 58 — — Funded status: $ ( 225 ) $ ( 196 ) $ ( 121 ) $ ( 123 ) $ ( 100 ) $ ( 89 ) (1) The healthcare and other postemployment plans are not required to be prefunded. (2) Includes the impact of the transfer of the outstanding pension benefit obligations related to certain retirees and beneficiaries within the U.S. plans through group annuity contract purchases in 2022. 112 The following summarizes data from CNH’s defined benefit pension plans by significant geographical area for the years ended December 31, 2023 and 2022: U.S. U.K. Germany (1) Other Countries (1) (in millions of dollars) 2023 2022 2023 2022 2023 2022 2023 2022 Change in benefit obligations: Beginning benefit obligation $ 128 $ 174 $ 770 $ 1,288 $ 108 $ 157 $ 169 $ 224 Service cost 2 3 — — — — 7 8 Interest cost 7 5 38 20 4 1 5 1 Plan participants’ contributions — — — — — — 1 1 Actuarial loss (gain) 7 ( 51 ) 17 ( 360 ) 12 ( 29 ) 17 ( 36 ) Gross benefits paid ( 5 ) ( 3 ) ( 48 ) ( 48 ) ( 11 ) ( 11 ) ( 16 ) ( 15 ) Plan amendments — — 4 — — — — — Currency translation adjustments and other (2) — — 44 ( 130 ) 4 ( 10 ) 10 ( 14 ) Ending benefit obligation 139 128 825 770 117 108 193 169 Change in the fair value of plan assets: Beginning plan assets 159 205 650 1,057 4 4 166 208 Actual return on plan assets 6 ( 43 ) 36 ( 292 ) — — 9 ( 22 ) Employer contributions — — 31 39 — — 10 7 Plan participants’ contributions — — — — — — 1 1 Gross benefits paid ( 4 ) ( 3 ) ( 48 ) ( 48 ) — — ( 16 ) ( 14 ) Currency translation adjustments and other (2) — — 38 ( 106 ) — — 7 ( 14 ) Ending plan assets 161 159 707 650 4 4 177 166 Funded status: $ 22 $ 31 $ ( 118 ) $ ( 120 ) $ ( 113 ) $ ( 104 ) $ ( 16 ) $ ( 3 ) (1) Pension benefits in Germany and some other countries are not required to be prefunded. (2) Includes the impact of the transfer of the outstanding pension benefit obligations related to certain retirees and beneficiaries within the U.S. plans through group annuity contract purchases in the fourth quarter of 2022. Net amounts recognized in the consolidated balance sheets as of December 31, 2023 and 2022 consist of: Pension Healthcare Other (in millions of dollars) 2023 2022 2023 2022 2023 2022 Other assets $ 30 $ 41 $ — $ — $ — $ — Pension, postretirement and other postemployment benefits ( 255 ) ( 237 ) ( 121 ) ( 123 ) ( 100 ) ( 89 ) Net liability recognized at end of year $ ( 225 ) $ ( 196 ) $ ( 121 ) $ ( 123 ) $ ( 100 ) $ ( 89 ) Pre-tax amounts recognized in accumulated other comprehensive loss as of December 31, 2023 consist of: (in millions of dollars) Pension Healthcare Other Unrecognized actuarial losses (gains) $ 407 $ 8 $ ( 9 ) Unrecognized prior service credit 2 ( 48 ) ( 7 ) Accumulated other comprehensive loss $ 409 $ ( 40 ) $ ( 16 ) 113 The following table summarizes the aggregate pension accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets: Pension (in millions of dollars) 2023 2022 Accumulated benefit obligation $ 998 $ 888 Fair value of plan assets $ 753 $ 656 The following table summarizes CNH’s pension and other post-employment plans with projected benefit obligations in excess of plan assets: Pension Healthcare Other (in millions of dollars) 2023 2022 2023 2022 2023 2022 Projected benefit obligation $ 1,091 $ 969 $ 179 $ 181 $ 100 $ 89 Fair value of plan assets $ 836 $ 733 $ 58 $ 58 $ — $ — The total accumulated benefit obligation for pension was $ 1,256 million and $ 1,156 million as of December 31, 2023 and 2022, respectively. Net Periodic Benefit Cost The following summarizes the components of net periodic benefit cost of CNH’s defined benefit for the years ended December 31, 2023, 2022 and 2021: Pension Healthcare Other (in millions of dollars) 2023 2022 2021 2023 2022 2021 2023 2022 2021 Service cost $ 9 $ 11 $ 13 $ 3 $ 4 $ 4 $ 5 $ 5 $ 6 Interest cost 54 27 19 9 6 6 4 1 1 Expected return on assets ( 45 ) ( 47 ) ( 53 ) ( 4 ) ( 5 ) ( 7 ) — — — Amortization of: Prior service cost (credit) — — — ( 36 ) ( 126 ) ( 136 ) — — — Actuarial loss (gain) 18 19 25 — 1 3 2 ( 2 ) 2 Settlement loss and other 2 ( 3 ) — — 3 — ( 1 ) 1 2 Net periodic benefit cost (credit) $ 38 $ 7 $ 4 $ ( 28 ) $ ( 117 ) $ ( 130 ) $ 10 $ 5 $ 11 Net periodic benefit cost recognized in net income and other changes in plan assets and benefit obligations that are recognized in other comprehensive loss during 2023 consist of: (in millions of dollars) Pension Healthcare Other Net periodic benefit cost $ 38 $ ( 28 ) $ 10 Benefit adjustments included in other comprehensive (income) loss: Net actuarial losses (gains) 51 9 5 Amortization of actuarial losses ( 18 ) — ( 2 ) Amortization of prior service (cost) credit — 36 — Currency translation adjustments and other 19 — ( 1 ) Total recognized in other comprehensive (income) loss 52 45 2 Total recognized in comprehensive loss $ 90 $ 17 $ 12 114 Assumptions The following assumptions were utilized in determining the funded status at December 31, 2023 and 2022, and the net periodic benefit cost of CNH’s defined benefit plans for the years ended December 31, 2023, 2022 and 2021: Pension plans Healthcare plans Other (in percentages) 2023 2022 2021 2023 2022 2021 2023 2022 2021 Weighted-average rate assumptions used to determine funded status Discount rate 4.22 4.64 1.79 4.97 5.28 2.59 3.50 4.11 1.12 Rate of compensation increase 2.91 3.03 2.41 4.00 4.00 4.00 2.94 3.19 2.33 Initial healthcare cost trend rate n/a n/a n/a 4.70 5.12 4.18 n/a n/a n/a Ultimate healthcare cost trend rate (1) n/a n/a n/a 3.74 4.00 3.58 n/a n/a n/a Weighted-average rate assumptions used to determine expense Discount rates—service cost 3.51 1.32 0.94 5.37 3.15 2.57 4.32 1.36 0.77 Discount rates—interest cost 4.65 1.59 0.98 5.17 2.87 1.55 4.08 0.99 0.47 Rate of compensation increase 3.03 2.41 2.26 4.00 4.00 n/a 3.19 2.33 2.08 Long-term rates of return on plan assets 4.54 3.42 3.71 5.75 4.76 4.85 n/a n/a n/a Initial healthcare cost trend rate n/a n/a n/a 5.12 4.18 4.39 n/a n/a n/a Ultimate healthcare cost trend rate (1) n/a n/a n/a 4.00 3.58 3.95 n/a n/a n/a (1) CNH expects to achieve the ultimate healthcare cost trend rate in 2033 for U.S. plans. A flat trend rate assumption is utilized for the Canada plans. Assumed discount rates are used in measurements of pension, healthcare and other postemployment benefit obligations and interest cost components of net periodic cost. CNH selects its assumed discount rates based on the consideration of equivalent yields on high-quality fixed income investments at the measurement date. The assumed discount rate is used to discount future benefit obligations back to today’s dollars. The discount rates for the U.S., European, U.K. and Canadian obligations are based on a benefit cash flow-matching approach and represent the rates at which the benefit obligations could effectively be settled as of the measurement date, December 31. The benefit cash flow-matching approach involves analyzing CNH’s projected cash flows against a high quality bond yield curve, mainly calculated using a wide population of AA-grade corporate bonds subject to minimum amounts outstanding and meeting other defined selection criteria. The discount rates for the Company’s remaining obligations are based on benchmark yield data of high-quality fixed income investments for which the timing and amounts of payments approximate the timing and amounts of projected benefit payments. The expected long-term rate of return on plan assets reflects management’s expectations on long-term average rates of return on funds invested to provide for benefits included in the projected benefit obligations. The expected return is based on the outlook for inflation, fixed income returns and equity returns while also considering asset allocation and investment strategy, premiums for active management to the extent asset classes are actively managed, and plan expenses. Return patterns and correlations, consensus return forecasts, and other relevant financial factors are analyzed to check for reasonability and appropriateness. The assumed healthcare trend rate represents the rate at which healthcare costs are assumed to increase. Rates are determined based on company-specific experience, consultation with actuaries and outside consultants, and various trend factors including general and healthcare sector-specific inflation projections from the United States Department of Health and Human Services Healthcare Financing Administration. The initial trend is a short-term assumption based on recent experience and prevailing market conditions. The ultimate trend is a long-term assumption of healthcare cost inflation based on general inflation, incremental medical inflation, technology, new medicine, government cost-shifting, utilization changes, an aging population, and a changing mix of medical services. CNH annually reviews the mortality assumptions and demographic characteristics of its U.S. pension plan and healthcare plan participants. In 2023 and 2022, the Company continued to use the adopted MP 2021 mortality improvement scale as it continues to be the most current . At this time the Company is not making adjustments to the MP 2021 for any short-term or long-term impacts COVID may have on mortality improvement scales issued in the future. The Company uses the spot yield curve approach to estimate the service and interest cost components of the net periodic pension and other postretirement benefit costs by applying the specific spot rates along the yield curve used to determine the benefit obligations to relevant projected cash outflows. Plan Assets The investment strategy for the plan assets depends on the features of the plan and on the maturity of the obligations. Typically, less 115 mature plan benefit obligations are funded by using more equity securities as they are expected to achieve long-term growth exceeding the rate of 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. Weighted-average target asset allocation for all plans for 2023 are as follows: All Plans Asset category: Equity securities 7 % Debt securities 61 % Cash/Other 32 % CNH determines the fair value of plan assets using observable market data obtained from independent sources when available. CNH classifies its plan assets according to the fair value hierarchy: Level 1—Quoted prices for identical instruments in active markets. Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The following summarizes the fair value of plan assets by asset category and level within the fair value hierarchy as of December 31, 2023: (in millions of dollars) Total Level 1 Level 2 Level 3 Equity securities: U.S. equities $ — $ — $ — $ — Non-U.S. equities — — — — Total Equity securities — — — — Fixed income securities: U.S. government bonds 13 12 1 — U.S. corporate bonds 17 14 3 — Non-U.S. government bonds 26 — 26 — Non-U.S. corporate bonds 13 — 13 — Mortgage backed securities 2 — 2 — Other fixed income 2 — 2 — Total Fixed income securities 73 26 47 — Other types of investments: Mutual funds (1) 919 — 919 — Insurance contracts 45 — — 45 Derivatives—credit contracts — — — — Real estate — — — — Total Other types of investments 964 — 919 45 Cash: 22 11 11 — Total of Level 1, Level 2 and Level 3 Assets $ 1,059 $ 37 $ 977 $ 45 Investments at net asset value: Mutual funds (2) 48 Total Net Assets $ 1,107 $ 37 $ 977 $ 45 (1) This category includes mutual funds, which primarily invest in non-U.S. equities and non-U.S. corporate bonds. (2) This category includes open ended mutual fund, the underlying assets of the mutual fund are illiquid in nature and are not classified in the fair value hierarchy using the net asset per share practical expedient. 116 The following table presents the changes in the Level 3 plan assets for the year ended December 31, 2023: (in millions of dollars) Level 3 Assets Balance at December 31, 2022 $ 40 Actual return on plan assets relating to assets still held at reporting date 1 Purchases 4 Settlements ( 2 ) Transfers in and/or out of level 3 — Currency impact 2 Balance at December 31, 2023 $ 45 The following summarizes the fair value of plan assets by asset category and level within the fair value hierarchy as of December 31, 2022: (in millions of dollars) Total Level 1 Level 2 Level 3 Equity securities: U.S. equities $ — $ — $ — $ — Non-U.S. equities — — — — Total Equity securities — — — — Fixed income securities: U.S. government bonds 7 6 1 — U.S. corporate bonds 20 15 5 — Non-U.S. government bonds 29 7 22 — Non-U.S. corporate bonds 13 — 13 — Mortgage backed securities 3 — 3 — Other fixed income 3 — 3 — Total Fixed income securities 75 28 47 — Other types of investments: Mutual funds (1) 901 — 901 — Insurance contracts 40 — — 40 Derivatives—credit contracts — — — — Real estate — — — — Total Other types of investments 941 — 901 40 Cash: 21 6 15 — Total $ 1,037 $ 34 $ 963 $ 40 (1) This category includes mutual funds, which primarily invest in non-U.S. equities and non-U.S. corporate bonds. The following table presents the changes in the Level 3 plan assets for the year ended December 31, 2022: (in millions of dollars) Level 3 Assets Balance at December 31, 2021 $ 45 Actual return on plan assets relating to assets still held at reporting date ( 1 ) Purchases 4 Settlements ( 7 ) Transfers in and/or out of Level 3 — Currency impact ( 1 ) Balance at December 31, 2022 $ 40 Contributions CNH expects to contribute (including through direct benefit payments) approximately $ 46 million to its pension plans, $ 16 million to its healthcare plans and $ 9 million to its other post-employment plans in 2024. 117 The benefit expected to be paid from the benefit plans, which reflect expected future years of service, and the Medicare subsidy expected to be received are as follows: (in millions of dollars) Pension Plans Healthcare Other 2024 $ 77 $ 20 $ 9 2025 77 19 10 2026 78 18 9 2027 88 17 8 2028 85 16 9 2029 - 2033 409 72 46 Total $ 814 $ 162 $ 91 Note 13: Other Liabilities A summary of “Other liabilities” as of December 31, 2023 and 2022 is as follows: (in millions of dollars) 2023 2022 Warranty and campaign programs $ 610 $ 544 Marketing and sales incentive programs 2,409 1,556 Tax payables 704 506 Accrued expenses and deferred income 946 700 Accrued employee benefits 524 535 Lease liabilities 300 228 Legal reserves and other provisions 342 263 Contract reserve 24 16 Contract liabilities 50 33 Restructuring reserve 43 30 Other 355 436 Total $ 6,307 $ 4,847 Warranty and Campaign Program As described in “Note 2: Summary of Significant Accounting Policies,” CNH pays for basic warranty and other service action costs. A summary of recorded activity for the basic warranty and campaign program accrual for the years ended December 31, 2023 and 2022 are as follows: (in millions of dollars) 2023 2022 Balance at beginning of year $ 544 $ 526 Current year additions 566 475 Claims paid ( 510 ) ( 440 ) Currency translation adjustment and other 10 ( 17 ) Balance at end of year $ 610 $ 544 Restructuring Provision The Company incurred restructuring costs of $ 67 million, $ 31 million and $ 35 million for the years ended December 31, 2023, 2022 and 2021, respectively. These costs were as follows: • In 2023, Agriculture, Construction and Financial Services recorded $ 51 million, $ 14 million and $2 million respectively. • In 2022, Agriculture and Construction recorded $ 21 million and $ 10 million, respectively. • In 2021, Agriculture and Construction recorded $ 20 million and $ 15 million, respectively. 118 The following table sets forth restructuring activity for the years ended December 31, 2023, 2022 and 2021: (in millions of dollars) Severance and Other Employee Costs Facility Related Costs Other Restructuring Total Balance at January 1, 2021 $ 5 $ 18 $ 3 $ 26 Restructuring charges 34 — 1 35 Reserves utilized: cash ( 30 ) ( 1 ) ( 1 ) ( 32 ) Reserves utilized: non-cash 8 ( 6 ) ( 2 ) — Currency translation adjustments — — — — Balance at December 31, 2021 17 11 1 29 Restructuring charges 23 4 4 31 Reserves utilized: cash ( 12 ) ( 3 ) ( 3 ) ( 18 ) Reserves utilized: non-cash ( 2 ) ( 9 ) — ( 11 ) Currency translation adjustments ( 1 ) — — ( 1 ) Balance at December 31, 2022 25 3 2 30 Restructuring charges 36 23 8 67 Reserves utilized: cash ( 19 ) ( 23 ) ( 12 ) ( 54 ) Reserves utilized: non-cash ( 3 ) 1 2 — Currency translation adjustments — — — — Balance at December 31, 2023 $ 39 $ 4 $ — $ 43 Note 14: Commitments and Contingencies CNH in the ordinary course of business is exposed to numerous legal risks, including, without limitation, dealer and supplier litigation, intellectual property right disputes, product liability, asbestos, personal injury, emissions and/or fuel economy regulatory, competition law and other regulatory investigations and environmental claims. The most significant of these matters are described below. The outcome of any current or future proceedings, claims, or investigations cannot be predicted with certainty. Adverse decisions in one or more of these proceedings, claims or investigations could require the Company to pay substantial damages or fines or undertake service actions, recall campaigns or other costly actions. It is therefore possible that legal judgments could give rise to expenses that are not covered, or not fully covered, by insurance and could affect CNH’s financial position and results. When it is probable that such a loss has been incurred and the amount can be reasonably estimated, such amounts are provided for in Company's income statement and the related accrual is recorded in “Other liabilities” on the consolidated balance sheets. Although the ultimate outcome of legal matters pending against CNH and its subsidiaries cannot be predicted, the Company believes the reasonable possible range of losses for these unresolved legal matters in addition to the amounts accrued would not have a material effect on its consolidated financial statements. Environmental Pursuant to the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“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, CNH has received inquiries for information or notices of its potential liability regarding 66 non-owned U.S. sites at which regulated materials allegedly generated by CNH were released or disposed (“Waste Sites”). Of the Waste Sites, 16 are on the National Priority List (“NPL”) promulgated pursuant to CERCLA. For 60 of the Waste Sites, the monetary amount or extent of the Company’s liability has either been resolved; it has not been named as a potentially responsible party (“PRP”), or its 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, the Company’s potential liability for remediation costs associated with the 66 Waste Sites could change. Moreover, because liability under CERCLA and similar laws can be joint and several, CNH could be required to pay amounts in excess of its pro rata share of remediation costs. However, when appropriate, the financial strength of other PRPs has been considered in the determination of the Company’s potential liability. CNH believes that the costs associated with the Waste Sites will not have a material effect on the Company’s business, financial position or results of operations. 119 The Company is conducting environmental investigatory or remedial activities at certain properties that are currently or were formerly owned and/or operated or that are being decommissioned. The Company believes that the outcome of these activities will not have a material adverse effect on its 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 in the past, CNH plans to continue funding its costs of environmental compliance from operating cash flows. Investigation, analysis and remediation of environmental sites is a time consuming activity. The Company expects such costs to be incurred and claims to be resolved over an extended period of time that could exceed 30 years for some sites. As of December 31, 2023 and 2022, environmental reserves of approximately $ 20 million and $ 25 million, respectively, were established to address these specific estimated potential liabilities. Such reserves are undiscounted and do not include anticipated recoveries, if any, from insurance companies. After considering these reserves, management is of the opinion that the outcome of these matters will not have a material adverse effect on the Company’s financial position or results of operations. Other Litigation and Investigation Follow-up on Damages Claims: in 2011 Iveco S.p.A. ("Iveco"), a subsidiary of Iveco Group N.V., and its competitors in the European Union were subject to an investigation by the European Commission (the “Commission”) into certain business practices in the European Union (in the period 1997-2011) in relation to Medium & Heavy trucks. On July 19, 2016, the Commission announced a settlement with Iveco ("the Decision"). Following the Decision, the Company, Iveco and Iveco Magirus AG ("IMAG") have been named as defendants in proceedings across Europe. Following the Demerger, CNH cannot be excluded from current and future follow on proceedings originating from the Decision because under EU competition law a company cannot use corporate reorganizations to avoid liability for private damage claims. In the event one or more of these judicial proceedings would result in a decision against CNH ordering it to compensate such claimants as a result of the conduct that was the subject matter of the Decision, and Iveco and IMAG do not comply with such decisions, as a result of various intercompany arrangements, then CNH will ultimately have recourse against Iveco and IMAG for the reimbursement of the damages effectively paid to such claimants. The Company believes that the risk of either Iveco or IMAG or Iveco Group defaulting on potential payment obligations arising from such follow-up on damage claims is remote. FPT Emissions Investigation: on July 22, 2020, a number of the Company's (pre-Demerger) offices in Europe were visited by investigators in the context of a request for assistance by the public prosecutors of Frankfurt am Main, Germany and Turin, Italy in relation to alleged noncompliance of two engine models produced by FPT Industrial S.p.A., which is a wholly-controlled subsidiary Iveco Group N.V. The Italian criminal investigation has been dismissed in 2023. As a result of FPT Industrial's full cooperation and ongoing discussions with the investigative authorities, all German criminal investigation have also been concluded in December 2023. In certain instances CNH and other third parties have also received various requests for compensation by German and Austrian customers on various contractual and tort grounds, including requests for damages resulting from the termination of the purchase contracts, or in the form of requests for an alleged lower residual value of their vehicles as a consequence of the alleged non-compliance with other approval regulations regarding emissions. In certain instances, other customers have brought judicial claims on the same legal and factual bases. While the Company had no role in the design and sale of such engine models and vehicles, the Company cannot predict at this time the extent and outcome of these requests and directly or indirectly related legal proceedings, including customer claims or potential class actions alleging emissions non-compliance. The Company believes that the risk of either FPT Industrial or Iveco Group N.V. defaulting on potential payment obligations arising from such proceedings is remote. Commitments CNH has entered operating lease contracts for the right to use industrial buildings and equipment and other assets. Refer to Note 8: Leases for future minimum lease payments under non-cancellable lease contracts. At December 31, 2023, Financial Services has various agreements to extend credit for the following financing arrangements: (in millions of dollars) Total Credit Limit Utilized Not Utilized Wholesale and dealer financing $ 8,874 $ 5,715 $ 3,159 Revolving charge accounts $ 2,557 $ 210 $ 2,347 Guarantees CNH provided guarantees on the debt or commitments of third parties and performance guarantees in the interest of non-consolidated affiliates as of December 31, 2023 and 2022 totaling $ 37 million and $ 19 million, respectively. 120 Note 15: Financial Instruments CNH may elect to measure financial instruments and certain other items at fair value. This fair value option would be applied on an instrument-by-instrument basis with changes in fair value reported in earnings. The election can be made at the acquisition of an eligible financial asset, financial liability or firm commitment or, when certain specified reconsideration events occur. The fair value election may not be revoked once made. CNH has not elected the fair value measurement option for eligible items. Fair-Value Hierarchy The hierarchy of valuation techniques for financial instruments is based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy: Level 1—Quoted prices for identical instruments in active markets. Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. This hierarchy requires the use of observable market data when available. Determination of Fair Value When available, the Company uses quoted market prices to determine fair value and classifies such items as Level 1. In some cases where a market price is not available, the Company will make use of observable market-based inputs to calculate fair value, in which case the items are classified as Level 2. If quoted or observable market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters such as interest rates, currency rates, or yield curves. Items valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified as Level 3 even though there may be some significant inputs that are readily observable. The following section describes the valuation methodologies used by the Company to measure various financial instruments at fair value, including an indication of the level in the fair value hierarchy in which each instrument is generally classified. Where appropriate, the description includes details of the valuation models and the key inputs to those models as well as any significant assumptions. 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 enter into derivatives or other financial instruments for speculative purposes. The credit and market risk related to derivatives is reduced through diversification among various counterparties, utilizing mandatory termination clauses and/or collateral support agreements. Derivative instruments are generally classified as Level 2 in the fair value hierarchy. The cash flows underlying all derivative contracts were recorded in operating activities in the consolidated statements of cash flows. Foreign Exchange Derivatives CNH has entered into foreign exchange forward contracts and swaps in order to manage and preserve the economic value of cash flows in a currency different from the functional currency of the relevant legal entity. CNH conducts its business on a global basis in a wide variety of foreign currencies and hedges foreign currency exposures arising from various receivables, liabilities, and expected inventory purchases and sales. Derivative instruments utilized to hedge the foreign currency risk associated with anticipated inventory purchases and sales in foreign currencies are designated as cash flow hedges. Gains and losses on these instruments are deferred in accumulated other comprehensive income/(loss) and recognized in earnings when the related transaction occurs. If a derivative instrument is terminated because the hedge relationship is no longer effective or because the hedged item is a forecasted transaction that is no longer determined to be probable, the cumulative amount recorded in accumulated other comprehensive income (loss) is recognized immediately in earnings. Such amounts were insignificant in all periods presented. 121 CNH also uses forwards and swaps to hedge certain assets and liabilities denominated in foreign currencies. Such derivatives are considered economic hedges and not designated as hedging instruments. The changes in the fair values of these instruments are recognized directly in income in “Other, net” and are expected to offset the foreign exchange gains or losses on the exposures being managed. All of CNH’s foreign exchange derivatives are considered Level 2 as the fair value is calculated using market data input and can be compared to actively traded derivatives. The total notional amount of CNH’s foreign exchange derivatives was $ 6.1 billion and $ 5.9 billion at December 31, 2023 and 2022, respectively. Interest Rate Derivatives CNH has entered into interest rate derivatives (swaps and caps) in order to manage interest rate exposures arising in the normal course of business. Interest rate derivatives that have been designated as cash flow hedges are being used by the Company to mitigate the risk of rising interest rates related to existing debt and anticipated issuance of fixed-rate debt in future periods. Gains and losses on these instruments are deferred in accumulated other comprehensive income (loss) and recognized in interest expense over the period in which CNH recognizes interest expense on the related debt. Interest rate derivatives that have been designated as fair value hedge relationships have been used by CNH to mitigate the volatility in the fair value of existing fixed rate bonds and medium-term notes due to changes in floating interest rate benchmarks. Gains and losses on these instruments are recorded 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 floating interest rate benchmarks. CNH also enters into offsetting interest rate derivatives with substantially similar terms that are not designated as hedging instruments to mitigate interest rate risk related to CNH’s committed asset-backed facilities. Unrealized and realized gains and losses resulting from fair value changes in these instruments are recognized directly in income. Net gains and losses on these instruments were insignificant for the years ending December 31, 2023, 2022 and 2021. All of CNH’s interest rate derivatives outstanding as of December 31, 2023 and 2022 are considered Level 2. The fair market value of these derivatives is calculated using market data input and can be compared to actively traded derivatives. The total notional amount of CNH’s interest rate derivatives was approximately $ 9.0 billion and $ 6.4 billion at December 31, 2023 and 2022, respectively. As a result of the reform and replacement of specific benchmark interest rates, the Company elected to make the replacement using the optional expedient under ASC 848, which allows the change in critical terms without de-designation and the Company also elected the optional expedient to apply a spread adjustment to hedged items cash flows that resulted in no change to the cumulative basis adjustment reflected in earnings. 122 Financial Statement Impact of CNH Derivatives The following table summarizes the gross impact of changes in the fair value of derivatives designated as cash flow hedges on accumulated other comprehensive income (loss) and net income during the year ended December 31, 2023, 2022 and 2021 (in millions of dollars): Recognized in Net Income For the Year Ended December 31, Gain (Loss) Recognized in Accumulated Other Comprehensive Income Classification of Gain (Loss) Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income 2023 Foreign exchange contracts $ ( 35 ) Net sales $ ( 7 ) Cost of goods sold ( 33 ) Other, net 7 Interest expense, net 6 Interest rate contracts ( 82 ) Total $ ( 117 ) $ ( 27 ) 2022 Foreign exchange contracts $ ( 191 ) Net sales $ ( 1 ) Cost of goods sold ( 219 ) Other, net 3 Interest expense, net 30 Interest rate contracts 59 Total $ ( 132 ) $ ( 187 ) 2021 Foreign exchange contracts $ ( 57 ) Net sales $ 2 Cost of goods sold ( 11 ) Other, net ( 4 ) Interest expense, net 3 Interest rate contracts 49 Total $ ( 8 ) $ ( 10 ) 123 The following table summarizes the activity in accumulated other comprehensive income related to the derivatives held by the Company during the years ended December 31, 2023, 2022 and 2021: (in millions of dollars) Before-Tax Amount Income Tax After-Tax Amount Accumulated derivative net losses as of December 31, 2022 $ 71 $ ( 27 ) $ 44 Net changes in fair value of derivatives ( 117 ) 39 ( 78 ) Net losses reclassified from accumulated other comprehensive income into income 27 ( 3 ) 24 Accumulated derivative net losses as of December 31, 2023 $ ( 19 ) $ 9 $ ( 10 ) (in millions of dollars) Before-Tax Amount Income Tax After-Tax Amount Accumulated derivative net losses as of December 31, 2021 $ ( 3 ) $ ( 14 ) $ ( 17 ) Impact of demerger 19 — 19 Net changes in fair value of derivatives ( 132 ) 4 ( 128 ) Net losses reclassified from accumulated other comprehensive income into income 187 ( 17 ) 170 Accumulated derivative net losses as of December 31, 2022 $ 71 $ ( 27 ) $ 44 (in millions of dollars) Before-Tax Amount Income Tax After-Tax Amount Accumulated derivative net losses as of December 31, 2020 $ ( 5 ) $ ( 1 ) $ ( 6 ) Net changes in fair value of derivatives ( 8 ) ( 12 ) ( 20 ) Net losses reclassified from accumulated other comprehensive income into income 10 ( 1 ) 9 Accumulated derivative net losses as of December 31, 2021 $ ( 3 ) $ ( 14 ) $ ( 17 ) The following tables summarize the impact of the changes in the fair value of fair value hedges and derivatives not designated as hedging instruments had on earnings for the year ended December 31, 2023, 2022 and 2021: For the Year Ended December 31, (in millions of dollars) Classification of Gain 2023 2022 2021 Fair Value Hedges Interest rate derivatives Interest expense $ ( 42 ) $ ( 104 ) $ ( 47 ) Not Designated as Hedges Foreign exchange contracts Other, Net $ ( 67 ) $ ( 16 ) $ ( 11 ) 124 The fair values of CNH’s derivatives as of December 31, 2023 and 2022 in the consolidated balance sheets are recorded as follows: December 31, 2023 December 31, 2022 (in millions of dollars) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments Interest rate contracts Derivative assets $ 60 Derivative assets $ 77 Foreign currency contracts Derivative assets 31 Derivative assets 70 Total derivative assets $ 91 $ 147 Interest rate contracts Derivative liabilities $ 117 Derivative liabilities $ 106 Foreign currency contracts Derivative liabilities 49 Derivative liabilities 56 Total derivative liabilities $ 166 $ 162 Derivatives not designated as hedging instruments Interest rate contracts Derivative assets $ 31 Derivative assets $ 28 Foreign currency contracts Derivative assets 14 Derivative assets 14 Total derivative assets $ 45 $ 42 Interest rate contracts Derivative liabilities $ 30 Derivative liabilities $ 28 Foreign currency contracts Derivative liabilities 20 Derivative liabilities 14 Total derivative liabilities $ 50 $ 42 Items Measured at Fair Value on a Recurring Basis The following tables present for each of the fair-value hierarchy levels the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2023 and 2022: Level 1 Level 2 Total (in millions of dollars) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Assets Foreign exchange derivatives $ — $ — $ 46 $ 84 $ 46 $ 84 Interest rate derivatives — — 90 105 90 105 Total Assets $ — $ — $ 136 $ 189 $ 136 $ 189 Liabilities Foreign exchange derivatives $ — $ — $ 69 $ 70 $ 69 $ 70 Interest rate derivatives — — 147 134 147 134 Total Liabilities $ — $ — $ 216 $ 204 $ 216 $ 204 Items Measured at Fair Value on a Non-Recurring Basis The Company recorded fixed asset write-downs of $ 17 million related to the suspension of operations in Russia during 2022. The following tables present fair value for nonrecurring Level 3 measurements from impairments as of December 31, 2023 and 2022: Fair Value Losses (in millions of dollars) 2023 2022 2023 2022 Property, plant and equipment $ — $ 7 $ — $ 17 The following is a description of the valuation methodologies the Company uses to non-monetary assets at fair value: Property, plant, and equipment, net: The impairments are measured at the lower of the carrying amount, or fair value. The valuations were based on a cost approach. The inputs include replacement cost estimates adjusted for physical deterioration and economic obsolescence. 125 Fair Value of Other Financial Instruments The carrying value of cash and cash equivalents, restricted cash, trade accounts receivable and accounts payable included in the consolidated balance sheets approximates its fair value. Financial Instruments Not Carried at Fair Value The estimated fair market values of financial instruments not carried at fair value in the consolidated balance sheets as of December 31, 2023 and 2022 are as follows: December 31, 2023 December 31, 2022 (in millions of dollars) Carrying Amount Fair Value Carrying Amount Fair Value Financing receivables $ 24,249 $ 24,129 $ 19,260 $ 18,827 Debt $ 27,326 $ 27,624 $ 22,962 $ 22,651 Financing Receivables The fair value of financing receivables is based on the discounted values of their related cash flows at current market interest rates and they are classified as a Level 3 fair value measurement. Debt All debt is classified as a Level 2 fair value measurement with the exception of bonds issued by CNH Industrial Finance Europe S.A. and bonds issued by CNH Industrial N.V. that are classified as a Level 1 fair value measurement. Note 16: Shareholders’ Equity The Articles of Association of CNH Industrial N.V. provide for authorized share capital of € 40 million, divided into 2 billion common shares and 2 billion special voting shares to be held with associated common shares, each with a per share par value of € 0.01 . As of December 31, 2023, the Company’s share capital was € 18 million (equivalent to $ 25 million), fully paid-in, and consisted of 1,364,400,196 common shares ( 1,290,937,585 common shares outstanding and 73,462,611 common shares held in treasury by the Company as described in the following section) and 396,474,276 special voting shares ( 371,000,610 special voting shares outstanding, net of 25,473,666 special voting shares held in treasury by the Company as described in the section below). Changes in the composition of the share capital of CNH Industrial N.V. during 2023, 2022 and 2021 are as follows: (number of shares) Common Shares Loyalty Program Special Voting Shares Total Shares Total shares at December 31, 2020 1,353,910,471 371,328,154 1,725,238,625 Capital increase 2,166,529 — 2,166,529 Common stock repurchases — — — Retirement of special voting shares — ( 109,904 ) ( 109,904 ) Total shares at December 31, 2021 1,356,077,000 371,218,250 1,727,295,250 Capital increase 554,023 — 554,023 Common stock repurchases ( 12,390,052 ) — ( 12,390,052 ) Retirement of special voting shares — ( 145,297 ) ( 145,297 ) Total shares at December 31, 2022 1,344,240,971 371,072,953 1,715,313,924 Capital increase 1,894,985 — 1,894,985 Common stock repurchases ( 55,198,371 ) — ( 55,198,371 ) Retirement of special voting shares — ( 72,343 ) ( 72,343 ) Total shares at December 31, 2023 1,290,937,585 371,000,610 1,661,938,195 During the year ended December 31, 2023 and 2022, 0.1 million and 0.1 million special voting shares, respectively, were acquired for no consideration by the Company following the deregistration of the corresponding number of qualifying common shares from the 126 Loyalty Register, net of transfer and allocation of special voting shares in accordance with the Special Voting Shares – Terms and Conditions. Furthermore, during the years ended December 31, 2023 and 2022, the Company delivered 1.9 million and 0.6 million common shares, respectively, under the Company’s stock compensation plan, primarily due to the vesting or exercise of share-based awards. See “Note 17: Share-Based Compensation” for further discussion. Loyalty Voting Program In order to reward long-term ownership of the Company’s common shares and promote stability of its shareholder base, the Articles of Association of CNH Industrial N.V. provide for a loyalty voting program that grants eligible long-term shareholders the equivalent of two votes for each CNH Industrial N.V. common share that they hold. This has been accomplished through the issuance of special voting shares. A shareholder may at any time elect to participate in the loyalty voting program by requesting the registration of all or some of the common shares held by such shareholder in a separate register (the “Loyalty Register”) of the Company. If such common shares have been registered in the Loyalty Register for an uninterrupted period of three years in the name of the same shareholder, such shares will become “Qualifying Common Shares” and the relevant shareholder will be entitled to receive one special voting share for each such Qualifying Common Share which can be retained only for so long as the shareholder retains the associated common share and registers it in the Loyalty Register. Shareholders are not required to pay any amount to the Company in connection with the allocation of the special voting shares. The common shares are freely transferable, while special voting shares are transferable exclusively in limited circumstances and they are not listed on the NYSE. In particular, at any time, a holder of common shares that are Qualifying Common Shares who wants to transfer such common shares other than in limited specified circumstances (e.g., transfers to affiliates or relatives through succession, donation or other transfers) must request a deregistration of such Qualifying Common Shares from the Loyalty Register. After deregistration from the Loyalty Register, such common shares no longer qualify as Qualifying Common Shares and, as a result, the holder of such common shares is required to transfer the special voting shares associated with the transferred common shares to the Company for no consideration. The special voting shares have minimal economic entitlements as the purpose of the special voting shares is to grant long-term shareholders with an extra voting right by means of granting an additional special voting share, without granting such shareholders with any additional economic rights. However, as a matter of Dutch law, such special voting shares cannot be fully excluded from economic entitlements. Therefore, the Articles of Association provide that only a minimal dividend accrues to the special voting shares, which is not distributed, but allocated to a separate special dividend reserve. The impact of this special dividend reserve on the earnings per share of the common shares is not material. Treasury Shares In order to maintain the necessary operating flexibility over an adequate time period, including the implementation of the program in place, on April 13, 2022, the Annual General Meeting ("AGM") granted to the Board of Directors the authority to acquire common shares in the capital of the Company through stock exchange trading on the Euronext Milan and the NYSE or otherwise for a period of 18 months. The program reached its conclusion on November 6, 2023. Upon the completion of the program, on November 7, 2023 CNH's board of directors approved a new share buyback program. Under the new program, CNH will repurchase up to $ 1 billion worth of its common shares between November 8, 2023 and March 1, 2024. Under such authorization the Board's authority is limited to a maximum of up to 10 % of the issued common shares as of the date of the AGM and, in compliance with applicable rules and regulations, subject to a maximum price per common share equal to the average of the highest price on each of the five trading days prior to the date of acquisition, as shown in the Official Price List of the NYSE (as the case may be) plus 10 % (maximum price) and to a minimum price per common share equal to the average of the lowest price on each of the five trading days prior to the date of acquisition, as shown in the Official Price List of the NYSE (as the case may be) minus 10 % (minimum price). Neither the renewal of the authorization, nor the launch of any program obliges the Company to buyback any common shares. The launch of any new program will be subject to a further resolution of the Board of Director. In any event, such programs may be suspended, discontinued or modified at any time for any reason and without previous notice, in accordance with applicable laws and regulations. During the year ended December 31, 2023, the Company repurchased 55.2 million shares of its common stock on the Euronext Milan and on multilateral trading facilities under the buyback program. As of December 31, 2023, the Company held 73.5 million common shares in treasury, net of transfers of common shares to fulfill its obligations under its stock compensation plans, at an aggregate cost 127 of $ 865 million. Depending on market and business conditions and other factors, the Company may continue or suspend purchasing its common stock at any time without notice. During the year ended December 31, 2023, the Company acquired, for no consideration, approximately 0.1 million special voting shares following the deregistration of qualifying common shares from the Loyalty Register, net of the transfer and allocation of special voting shares to those shareholders whose qualifying common shares became eligible to receive special voting shares after the uninterrupted three-year registration period in the Loyalty Register. As of December 31, 2023, the Company held 25.0 million special voting shares in treasury. Dividend On April 14, 2023, the Company's shareholders approved a dividend of € 0.36 per common share and totaling approximately € 482 million (equivalent to $ 0.394 per common share and totaling approximately $ 527 million, respectively, translated at the exchange rate reported by the European Central Bank on April 20, 2023). The Company shall only have power to make distributions to shareholders and other persons entitled to distributable profits to the extent the Company’s equity exceeds the sum of the paid-up portion of the share capital and the reserves that must be maintained in accordance with provision of law. No distribution of profits may be made to the Company itself for shares that the Company holds in its own share capital. Note 17: Share-Based Compensation For the years ended December 31, 2023, 2022 and 2021 CNH recognized total share-based compensation expense of $ 99 million, $ 87 million and $ 78 million respectively. For the years ended December 31, 2023, 2022 and 2021, CNH recognized a total tax benefit relating to share-based compensation expense of $ 14 million, $ 11 million and $ 6 million, respectively. As of December 31, 2023, CNH had unrecognized share-based compensation expense related to non-vested awards of approximately $ 103 million based on current assumptions related to achievement of specified performance objectives and period of service, when applicable. Unrecognized share-based compensation costs will be recognized over a weighted-average period of 1.6 years. CNH’s equity awards are governed by the CNH Industrial N.V. Equity Incentive Plan (“CNH EIP”) and CNH Industrial N.V. Directors’ Compensation Plan (“CNH DCP”). At the AGM held on April 16, 2014, the Company’s shareholders approved the adoption of the CNH EIP, an umbrella program defining the terms and conditions for any subsequent long-term incentive program. The EIP allows grants of the following specific types of equity awards to any current or prospective executive director, officer, employee of, or service provider to, CNH: stock options, stock appreciation rights, restricted share units, restricted stock, performance shares or performance share units and other stock-based awards that are payable in cash, common shares or any combination thereof subject to the terms and conditions established by the Compensation Committee. In February 2020, the Board of Directors approved the issuance of up to 50 million common shares under the EIP. At the AGM on April 16, 2020, the Company's shareholders approved the issuance of up to 7 million common shares to executive directors under the 2021-2023 Long-Term Incentive Plan (described below) in accordance with and under the EIP. As part of the Demerger, any awards outstanding under the CNH EIP, and held by directors, officers and other employees vesting in 2022 were accelerated in December 2021 and the related equity incentives were issued by CNH in CNH stock. As a result of the Demerger, remaining outstanding awards vesting in 2023 and 2024 were converted to the entity the participant is employed with post spin. As such, for Iveco Group employees, the underlying stock awards under the CNH EIP vesting in 2023 and 2024 were converted at the effective date of the Demerger, subject to its terms, to Common Shares of Iveco Group N.V. The conversion of the CNH EIP includes appropriate adjustment mechanisms to ensure that the value of the unvested awards granted to all the beneficiaries under such plan remain unchanged pre and post demerger for employees in both the Iveco Group N.V. and CNH Industrial N.V. Performance Share Units ("PSU") 2021-2023 Long-Term Incentive Plan In February 2020, the Board of Directors approved the 2021-2023 Long-Term Incentive Plan under the EIP. In December 2020, CNH issued a new grant of PSUs to its key executive officers and select employees with the financial performance goals covering a three-year period culminating with a cliff vest date of February 28, 2024. Two internal financial metrics, Industrial ROIC (the ratio of Adjusted EBIT (after-tax) over Average Industrial Invested Capital) and Adjusted EPS (the net income (loss) excluding any nonrecurring items (after-tax), divided by the weighted average outstanding number of common shares on a fully diluted basis), weighted 50 % each, and a multiplier-based on CNH’s percentile ranking of Total Shareholder Return among a comparator group, will determine the total PSUs earned. The internal financial metrics have a payout factor of up to 200 % and the market based TSR determinant has a payout factor of 125 %. These metrics are considered performance vesting conditions. As such, compensation cost 128 will be accrued based on whether it is considered probable that the performance conditions will be satisfied. The fair value of the PSU awards issued under this plan will be calculated by using the CNH Industrial N.V. stock price on the grant date adjusted for the present value of future dividends that would not be received during the vesting period. As of December 31, 2020, CNH issued 5 million PSUs. The total number of shares that will eventually vest may vary from the original estimate due to forfeiture or the level of achievement of the performance goals. The weighted average fair value of the awards that were issued in 2020 was $ 10.83 per share. The 2020 PSU awards distributed under this plan were issued on December 4, 2020 to key executive officers and select employees and on December 14, 2020 to the Chair of CNH. During 2021, CNH issued an additional 3 million PSUs to the CEO, key executive officers and select employees. The weighted average fair value of the awards that were issued in 2021 was $ 13.13 per share. Effective January 1, 2022, the Iveco Group Business was separated from CNH Industrial N.V. by way of a legal statutory demerger to Iveco Group N.V. (the Demerger) and Iveco Group became a public listed company independent from CNH. As part of the Demerger, any awards outstanding under the CNH Equity Incentive Plan (or “CNH EIP”), and held by directors, officers and other employees vesting in April 2022 were accelerated in December 2021 and the related equity incentives were issued by CNH in CNH stock. Further, as a result of the Demerger, remaining outstanding awards vesting in 2023 and 2024 were converted to the entity the participant is employed with post Demerger. The conversion of the CNH EIP includes appropriate adjustment mechanisms to ensure that the value of the unvested awards granted to all the beneficiaries under such plan remain unchanged pre and post demerger for employees in both the Iveco Group N.V. and CNH Industrial N.V. 2022 & 2023 Long-Term Incentive Plan In 2022 and 2023, the Board of Directors approved the 2022-2024 Long-Term Incentive Plan and the 2023-2025 Long-Term Incentive Plan, respectively, under the EIP. Both the 2022 and 2023 Long-Term Incentive Plan feature that same three year vesting period, two internal financial metrics, and financial multiplier as the 2021 Long-Term Incentive plan. Additionally the two internal financial metrics and financial multiplier are calculated as specified in the 2021 Long Term Incentive plan. However, differences between all plans exist in regards to the performance achievement threshold for both ROIC and EPS. Furthermore, the 2022 and 2023 plans feature a smaller list of comparator group for its TSR percentile ranking when compared to the 2021 plan. In 2024 the Board of Directors approved the 2024-2026 Long-Term Incentive Plan under the EIP. In 2022 and 2023 CNH issued 2.5 million and 2.8 million PSUs, respectively. The total number of shares that will eventually be issued may vary from the original estimate due to forfeiture or the level of achievement of the performance goals. The weighted average fair value of the awards that were issued in 2022 and 2023 was $ 14.04 and $ 12.29 per share, respectively. The following table reflects the activity of PSUs under the Long-Term Incentive Plans during the year ended December 31, 2023: 2023 Performance Shares Weighted Average Grant Date Fair Value Nonvested at beginning of year 10,847,408 $ 8.81 Granted 2,789,887 $ 12.29 Forfeited/Cancelled ( 257,808 ) $ 9.67 Vested — $ — Nonvested at end of year 13,379,487 $ 9.52 Restricted Share Units ("RSU") In 2021, 2022, and 2023, CNH issued approximately 1 million, 2 million and 2 million Restricted Share Units (“RSUs”) to key executive officers and select employees with a weighted average fair value of $ 14.39 , $ 13.90 and $ 11.87 per share, respectively. The fair value of the award is measured using the CNH Industrial N.V. stock price on the grant date adjusted for the present value of future dividends that employees will not receive during the vesting period. The RSUs vest upon a time-based service requirement. 2021-2023 Long-Term Incentive Plan On December 4, 2020, CNH issued two separate RSU grants to key executive officers and select employees. Under the first RSU grant, 1.1 million RSUs were awarded to select employees with a weighted average fair value of $ 11.43 . These awards vested on December 31, 2020. Under the second RSU grant, 3.3 million RSUs were awarded to select employees and are set to vest in three equal installments over a three year period. The first tranche, which consisted of 1.1 million RSUs, was set to vest on April 30, 2022. The second and third tranches are set to vest on April 30, 2023 and April 30, 2024, respectively. The weighted average fair value for the December 2020 three tranche award group are $ 11.23 , $ 11.02 , and $ 10.82 , respectively. 129 On December 14, 2020, CNH issued 120 thousand RSUs to the Chair of CNH, of which 17 thousand vested on December 31, 2020. The weighted average fair value for these awards is $ 10.96 . The remaining 103 thousand RSUs vest in three equal installments on April 30, 2022, 2023, and 2024 respectively. The fair value for these awards are $ 10.76 , $ 10.55 and $ 10.35 , respectively. During 2021, CNH issued an additional 1.5 million RSUs to the CEO, key executive officers and select employees. Of the awards that were issued, 1.2 million are set to vest in three equal installments over a three year period. The first tranche, which consists of 0.4 million RSUs, was set to vest on April 31, 2022. The second and third tranches are set to vest on April 31, 2023 and April 31, 2024, respectively. The weighted average fair value of these awards are $ 14.04 per share for the first tranche, $ 13.84 per share for the second tranche, and $ 13.66 per share for the third tranche. The remaining awards issued in 2021 had a cumulative weighted average fair value of $ 16.73 . In 2021, CNH, in anticipation of the Demerger, accelerated the vesting of awards with a vest date of April 31, 2022 to December 1, 2021, excluding shares awarded to the CEO and Chairperson. As a result, CNH recorded $ 5 million of expense due to the acceleration of these awards. The weighted average fair value of the shares vested during 2021 was $ 11.75 per share. 2022-2024 Long-Term Incentive Plan In 2022 and 2023 CNH issued 2 million and 2 million RSUs. The total number of shares that will eventually be issued may vary from the original estimate due to forfeiture or the level of achievement of the performance goals. The weighted average fair value of the awards that were issued in 2022 and 2023 were $ 13.90 and $ 11.87 per share. The following table reflects the activity of RSUs under the Long-Term Incentive Plans during the year ended December 31, 2023: 2023 Restricted Shares Weighted Average Grant Date Fair Value Nonvested at beginning of year 5,423,895 $ 9.66 Granted 2,091,819 $ 11.87 Forfeited ( 199,208 ) $ 11.58 Vested ( 1,893,449 ) $ 7.44 Nonvested at end of year 5,423,057 $ 11.21 Additional Share-Based Compensation Information The table below provides additional share-based compensation information for the years ended December 31, 2023, 2022 and 2021: (in millions of dollars) 2023 2022 2021 Total intrinsic value of options exercised and shares vested $ 52 $ 22 $ 35 Fair value of shares vested $ 14 $ 3 $ 25 Note 18: Earnings per Share The Company’s basic earnings per share (“EPS”) is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if dilutive securities were exercised into common stock. The effect of dilutive securities is calculated using the treasury stock method. 130 The following table sets forth the computation of basic EPS and diluted EPS for the years ended December 31, 2023, 2022 and 2021: (in millions of dollars, except per share data) 2023 2022 2021 Basic: Net income (loss) attributable to CNH Industrial N.V. $ 2,371 $ 2,029 $ 1,723 Net income (loss) attributable to CNH Industrial N.V. from continuing operations 2,371 2,029 1,792 Net income (loss) attributable to CNH Industrial N.V. from discontinued operations — — ( 69 ) Basic earnings (loss) per share attributable to common shareholders: Weighted average common shares outstanding—basic 1,332 1,351 1,354 Continuing operations $ 1.78 $ 1.50 $ 1.32 Discontinued operations — — ( 0.05 ) Basic earnings (loss) per share $ 1.78 $ 1.50 $ 1.27 Diluted: Net income (loss) attributable to CNH Industrial N.V. $ 2,371 $ 2,029 $ 1,723 Net income (loss) attributable to CNH Industrial N.V. from continuing operations 2,371 2,029 1,792 Net income (loss) attributable to CNH Industrial N.V. from discontinued operations — — ( 69 ) Weighted average common shares outstanding—basic 1,332 1,351 1,354 Dilutive effect of stock compensation plans 18 11 7 Weighted average common shares outstanding—diluted (1) 1,350 1,362 1,361 Continuing operations $ 1.76 $ 1.49 $ 1.32 Discontinued operations — — ( 0.05 ) Diluted earnings (loss) per share $ 1.76 $ 1.49 $ 1.27 (1) For the year ended December 31, 2023, no shares were excluded from the computation of diluted earnings per share due to an anti-dilutive impact. For the year ended December 31, 2022 and 2021, 0.50 million shares and 0.06 million shares were excluded from the computation of diluted earnings per share due to an anti-dilutive impact. Note 19: Accumulated Other Comprehensive Income (Loss) The Company’s share of comprehensive income (loss) includes net income plus other comprehensive income, which includes changes in fair value of certain derivatives designated as cash flow hedges, certain changes in pension and other retirement benefit plans, foreign currency translation gains and losses, changes in the fair value of available-for-sale securities, the Company’s share of other comprehensive income of entities accounted for using the equity method, and reclassifications for amounts included in net income less net income and other comprehensive income attributable to the noncontrolling interest. For more information on the Company’s derivative instruments, see “Note 15: Financial Instruments”. For more information on the Company’s pensions and retirement benefit obligations, see “Note 12: Employee Benefit Plans and Postretirement Benefits”. The Company’s other comprehensive income (loss) amounts are aggregated within accumulated other comprehensive income (loss). The tax effect for each component of other comprehensive income (loss) consisted of the following: Year Ended December 31, 2023 (in millions of dollars) Gross Amount Income Taxes Net Amount Unrealized gain (loss) on cash flow hedges $ ( 90 ) $ 34 $ ( 56 ) Changes in retirement plans’ funded status ( 87 ) 21 ( 66 ) Foreign currency translation 40 — 40 Share of other comprehensive loss of entities using the equity method ( 11 ) — ( 11 ) Other comprehensive income (loss) $ ( 148 ) $ 55 $ ( 93 ) 131 Year Ended December 31, 2022 (in millions of dollars) Gross Amount Income Taxes Net Amount Unrealized gain (loss) on cash flow hedges $ 56 $ ( 12 ) $ 44 Changes in retirement plans’ funded status 29 12 41 Foreign currency translation 158 — 158 Share of other comprehensive loss of entities using the equity method ( 25 ) — ( 25 ) Other comprehensive income (loss) $ 218 $ — $ 218 Year Ended December 31, 2021 (in millions of dollars) Gross Amount Income Taxes Net Amount Unrealized gain (loss) on cash flow hedges $ 2 $ ( 13 ) $ ( 11 ) Changes in retirement plans’ funded status 109 ( 15 ) 94 Foreign currency translation 247 — 247 Share of other comprehensive loss of entities using the equity method ( 93 ) — ( 93 ) Other comprehensive income (loss) $ 265 $ ( 28 ) $ 237 The changes, net of tax, in each component of accumulated other comprehensive income (loss) consisted of the following: (in millions of dollars) Unrealized Gain (Loss) on Cash Flow Hedges Change in Retirement Plans’ Funded Status Foreign Currency Translation Share of Other Comprehensive Income of Entities Using the Equity Method Total Balance, December 31, 2020 $ ( 6 ) $ ( 653 ) $ ( 1,884 ) $ ( 133 ) $ ( 2,676 ) Other comprehensive income (loss), before reclassifications ( 20 ) 202 241 ( 93 ) 330 Amounts reclassified from other comprehensive income 9 ( 108 ) — — ( 99 ) Other comprehensive income (loss) 1 ( 11 ) 94 241 ( 93 ) 231 Balance, December 31, 2021 ( 17 ) ( 559 ) ( 1,643 ) ( 226 ) ( 2,445 ) Demerger of Iveco Group 19 233 ( 316 ) 12 ( 52 ) Balance, January 1, 2022 2 ( 326 ) ( 1,959 ) ( 214 ) ( 2,497 ) Other comprehensive income (loss), before reclassifications ( 126 ) 102 159 ( 25 ) 110 Amounts reclassified from other comprehensive income 170 ( 61 ) — — 109 Other comprehensive income (loss) 1 44 41 159 ( 25 ) 219 Balance, December 31, 2022 46 ( 285 ) ( 1,800 ) ( 239 ) ( 2,278 ) Other comprehensive income (loss), before reclassifications ( 80 ) ( 54 ) 37 ( 11 ) ( 108 ) Amounts reclassified from other comprehensive income 24 ( 12 ) — — 12 Other comprehensive income (loss) 1 ( 56 ) ( 66 ) 37 ( 11 ) ( 96 ) Balance, December 31, 2023 $ ( 10 ) $ ( 351 ) $ ( 1,763 ) $ ( 250 ) $ ( 2,374 ) (1) Excluded from the table above is other comprehensive (income) loss allocated to noncontrolling interests of $ 3 million, $( 1 ) million and $ 6 million for the years ended December 31, 2023, 2022 and 2021, respectively. 132 Significant amounts reclassified out of each component of accumulated other comprehensive income (loss) at December 31, 2023 and 2022 consisted of the following: Amount Reclassified from Other Comprehensive Income (Loss) Consolidated Statement of Operations line (in millions of dollars) 2023 2022 Cash flow hedges $ 7 $ 1 Net sales 33 219 Cost of goods sold ( 7 ) ( 3 ) Other, net ( 6 ) ( 30 ) Interest expense ( 3 ) ( 17 ) Income taxes 24 170 Change in retirement plans’ funded status: Amortization of actuarial losses 20 18 (1) Amortization of prior service cost ( 36 ) ( 126 ) (1) 4 47 Income taxes ( 12 ) ( 61 ) Total reclassifications, net of tax $ 12 $ 109 (1) These amounts are included in net periodic pension and other postretirement benefit cost. See “Note 12: Employee Benefit Plans and Postretirement Benefits” for additional information. Note 20: Segment Reporting The operating segments through which the Company manages its operations are based on the internal reporting used by the Company’s Chief Operating Decision Maker (“CODM”) to assess performance and make decisions about resource allocation. The segments are organized based on products and services provided by the Company. CNH has three operating segments: Agriculture designs, manufactures and distributes a full line of farm machinery and implements, including two-wheel and four-wheel drive tractors, crawler tractors, combines, grape and sugar cane harvesters, hay and forage equipment, planting and seeding equipment, soil preparation and cultivation implements, and material handling equipment. We are also a leading provider of technology dedicated to Precision Agriculture. Agricultural equipment is sold under the New Holland Agriculture and Case IH brands. Regionally focused brands include: STEYR, for agricultural tractors; Flexi-Coil specializing in tillage and seeding systems; Miller manufacturing application equipment. The Raven brand supports Precision Agriculture, digital technology and the development of autonomous systems. Hemisphere, acquired in 2023, provides high-performance satellite positioning technology for the agriculture and construction industries. Construction designs, manufactures and distributes a full line of construction equipment including excavators, crawler dozers, graders, wheel loaders, backhoe loaders, skid steer loaders, and compact track loaders along with a wide variety of attachments. Construction equipment is sold under the CASE Construction Equipment, New Holland Construction and Eurocomach brands. Financial Services provides and administers financing to end-use customers for the purchase of new and used agricultural and construction equipment and components sold through CNH's dealer network, as well as revolving charge account financing and other financial services. Financial Services also provides wholesale financing to CNH dealers and distributors primarily to finance inventories of equipment for those dealers. Further, Financial Services provides trade receivables factoring services to CNH subsidiaries. The European Financial Services operations are supported by the Iveco Group's Financial Services segment. Financial Services also provides financial services to Iveco Group companies in the North America, South America and Asia Pacific regions. Revenues for each reported segment are those directly generated by or attributable to the segment as a result of its business activities and include revenues from transactions with third parties as well as those deriving from transactions with other segments, recognized at normal market prices. Segment expenses represent expenses deriving from each segment’s business activities both with third parties and other operating segments or which may otherwise be directly attributable to it. Expenses deriving from business activities with other segments are recognized at normal market prices. With reference to the Agriculture and Construction segments, the CODM assesses segment performance and makes decisions about resource allocation based upon Adjusted EBIT. The Company believes Adjusted EBIT more fully reflects Agriculture and Construction segments profitability. Adjusted EBIT of the Agriculture and Construction segments is defined as net income (loss) before income taxes, Financial Services' results, Industrial Activities’ segments interest expenses (net), foreign exchange gains/losses, 133 finance and non-service component of pension and other post-employment benefit costs, restructuring expenses, and certain non-recurring items. In particular, non-recurring items are specifically disclosed items that management considers rare or discrete events that are infrequent in nature and not reflective of on-going operational activities. With reference to Financial Services, the CODM assesses the performance of the segment and makes decisions about resource allocation on the basis of net income prepared in accordance with U.S. GAAP. The following table includes the reconciliation of Adjusted EBIT for Industrial Activities' segments to net income, the most comparable U.S. GAAP financial measure, for the years ended December 31, 2023, 2022 and 2021. Years Ended December 31, (in millions of dollars) 2023 2022 2021 Agriculture $ 2,732 $ 2,456 $ 1,810 Construction 238 124 90 Unallocated items, eliminations, and other (1) ( 240 ) ( 147 ) ( 137 ) Financial Services Net Income 371 338 349 Financial Services Income Taxes 136 125 107 Interest expense of Industrial Activities, net of interest income and eliminations ( 76 ) ( 119 ) ( 118 ) Foreign exchange (gains) losses, net of Industrial Activities ( 105 ) ( 59 ) ( 1 ) Finance and non-service component of Pension and other post-employment benefit costs of Industrial Activities (2) ( 4 ) 124 143 Restructuring expenses of Industrial Activities ( 65 ) ( 31 ) ( 35 ) Other discrete items of Industrial Activities (3) ( 10 ) ( 25 ) ( 178 ) Income (loss) before taxes 2,977 2,786 2,030 Income tax benefit (expense) ( 594 ) ( 747 ) ( 229 ) Net (loss) from discontinued operations — — ( 41 ) Net Income (loss) $ 2,383 $ 2,039 $ 1,760 (1) Unallocated items, eliminations and other primarily includes certain corporate costs and other operating expenses and incomes not allocated to segments’ results. (2) In the years ended December 31, 2023, 2022 and 2021, this item includes a pre-tax gain of $ 24 million, $ 24 million and $ 5 million, respectively as a result of the amortization over 4 years of the $ 101 million positive impact from the 2021 modifications of a healthcare plan in the U.S. In the years ended December 31, 2022 and 2021 this item includes the pre-tax gain of $ 90 million and $ 119 million, respectively as a result of the amortization over approximately 4.5 years of the $ 527 million positive impact from 2018 modification of a healthcare plan in the U.S. (3) In the year ended December 31, 2023, this item includes a loss of $ 23 million on the sale of the CNH Industrial Russia and CNH Capital Russia businesses, partially offset by a gain of $ 13 million for the fair value remeasurement of Augmenta and Bennamann. In the year ended December 31, 2022, this item included $ 43 million of asset write-downs, $ 25 million of separation costs incurred in a connection with our spin-off of the Iveco Group Business and $ 22 million of costs related to the activity of the Raven segments held for sale, including the loss on the sale of the Engineered Films and Aerostar divisions, partially offset by a $ 65 million dollar gain on the sale of our Canada parts depot. In the year ended December 31, 2021, this item included $ 133 million separation costs in connection with the spin-off of the Iveco Group Business and a charge of $ 57 million for transaction costs related to the acquisition of Raven Industries, Inc., partially offset by a gain of $ 12 million for a fair value adjustment of Monarch Tractor investments. The following table provides key segment information for the Financial Services segment: Years Ended December 31, (in millions of dollars) 2023 2022 2021 Financial Services Net Income $ 371 $ 338 $ 349 Financial Services Interest Revenue (1) $ 1,817 $ 1,149 $ 918 Financial Services Interest Expense $ 1,234 $ 601 $ 409 (1) This amount excludes interest included in operating leases rentals. There are no segment assets reported to the CODM for assessing performance and allocating resources. However, the CODM reviews expenditures for long-lived assets by operating segment, therefore, this information is presented below as well. 134 A summary of additional operating segment information for the years ended December 31, 2023, 2022 and 2021 is as follows: Years Ended December 31, (in millions of dollars) 2023 2022 2021 Revenues Agriculture $ 18,148 $ 17,969 $ 14,721 Construction 3,932 3,572 3,081 Eliminations and other — — — Net sales of Industrial Activities 22,080 21,541 17,802 Financial Services 2,573 1,996 1,672 Eliminations and other 34 14 22 Total Revenues $ 24,687 $ 23,551 $ 19,496 Depreciation and Amortization (1) Agriculture $ 331 $ 287 $ 254 Construction 42 38 38 Other activities and adjustments — — 1 Depreciation and amortization of Industrial Activities 373 325 293 Financial Services 4 2 2 Total Depreciation and amortization $ 377 $ 327 $ 295 Expenditures for long-lived assets (2) Agriculture $ 534 $ 393 $ 307 Construction 96 63 53 Other activities 7 — — Expenditures for long-lived assets of Industrial Activities 637 456 360 Financial Services 7 5 5 Total Expenditures for long-lived assets $ 644 $ 461 $ 365 (1) Excluding equipment on operating leases. (2) Excluding equipment on operating leases and right-of-use assets. Geographic Information CNH has its principal office in London, England, U.K. Revenues earned in the U.K. from external customers were $ 548 million, $ 557 million and $ 548 million for the years ended December 31, 2023, 2022 and 2021, respectively. Revenues earned in the rest of the world from external customers were $ 24,139 million, $ 22,994 million and $ 18,948 million for the years ended December 31, 2023, 2022 and 2021, respectively. The following highlights revenues earned from external customers in the rest of the world by destination: (in millions of dollars) 2023 2022 2021 United States $ 9,090 $ 8,189 $ 6,387 Brazil 3,540 3,904 2,414 Canada 1,712 1,530 1,341 France 1,300 1,123 1,084 Australia 1,222 982 857 Germany 633 674 564 Argentina 574 565 418 Italy 562 592 556 Poland 373 449 425 Spain 263 263 283 Other 4,870 4,723 4,619 Total Revenues from external customers in the rest of world $ 24,139 $ 22,994 $ 18,948 Total long-lived tangible and intangible assets located in the U.K. were $ 328 million and $ 128 million at December 31, 2023 and 2022, respectively, and the total of such assets located in the rest of the world totaled $ 7,908 million and $ 7,357 million at December 135 31, 2023 and 2022, respectively. The following highlights long-lived tangible and intangible assets by geography in the rest of the world: At December 31, (in millions of dollars) 2023 2022 United States $ 5,701 $ 5,669 Canada 732 548 Italy 499 437 Brazil 226 162 France 60 48 China 53 55 Germany 24 17 Spain 3 1 Other 610 420 Total Long-lived assets in the rest of the world $ 7,908 $ 7,357 In 2023, 2022 and 2021, no single external customer of CNH accounted for 10 percent or more of consolidated revenues. Note 21: Related Party Information As of December 31, 2023 and 2022 CNH’s related parties were primarily EXOR N.V. and the companies that EXOR N.V. controlled or had a significant influence over, including Stellantis N.V. (formerly Fiat Chrysler Automobiles N.V. which, effective January 16, 2021, merged with Peugeot S.A. by means of a cross-border legal merger) and its subsidiaries and affiliates ("Stellantis") and Iveco Group N.V. which effective January 1, 2022 separated from CNH Industrial N.V. by way of a demerger under Dutch law and became a public listed company independent from CNH. As of December 31, 2023, EXOR N.V. held 44.2 % of CNH’s voting power and had the ability to significantly influence the decisions submitted to a vote of CNH’s shareholders, including approval of annual dividends, the election and removal of directors, mergers or other business combinations, the acquisition or disposition of assets, and issuances of equity and the incurrence of indebtedness. The percentage above has been calculated as the ratio of (i) the aggregate number of common shares and special voting shares owned by EXOR N.V. to (ii) the aggregate number of outstanding common shares and special voting shares of CNH as of December 31, 2023. In addition, CNH engages in transactions with its unconsolidated subsidiaries and affiliates over which CNH has a significant influence or jointly controls. The Company’s Audit Committee reviews and evaluates all significant related party transactions. Transactions with EXOR N.V. and its Subsidiaries and Affiliates EXOR N.V. is an investment holding company in Europe. CNH did not enter into any significant transactions with EXOR N.V. during the years ended December 31, 2023 and 2022. In connection with the establishment of Fiat Industrial (now CNH) through the demerger from Fiat (which was subsequently merged into Fiat Chrysler Automobiles N.V. which is now Stellantis), the two companies entered into a Master Services Agreement (“MSA”) which sets forth the primary terms and conditions pursuant to which the service provider subsidiaries of CNH and Stellantis provide services to the service receiving subsidiaries. As structured, the applicable service provider and service receiver subsidiaries become parties to the MSA through the execution of an Opt-in letter that may contain additional terms and conditions. Pursuant to the MSA, service receivers are required to pay to service providers the actual cost of the services plus a negotiated margin. During the first six months of 2023 and all of 2022, Stellantis subsidiaries provided CNH with administrative services such as accounting, cash management, maintenance of plant and equipment, security, information systems and training under the terms and conditions of the MSA and the applicable Opt-in letters. At June 30, 2023, the Stellantis MSA was terminated. Costs incurred by CNH related to the termination of the contract were not material. Furthermore, CNH and Stellantis might engage in other minor transactions in the ordinary course of business. 136 The following table sets forth the related party transactions entered into for the time period presented: (in millions of dollars) 2023 2022 2021 Net sales $ — $ — $ — Purchases $ 11 $ 17 $ 31 Selling, general and administrative expenses $ 37 $ 48 $ 59 (in millions of dollars) December 31, 2023 December 31, 2022 Trade receivables $ — $ — Trade payables $ 11 $ 14 Transactions with Iveco Group post-Demerger CNH and Iveco Group post-Demerger entered into transactions consisting of the sale of engines from Iveco Group to CNH. Additionally, concurrent with the Demerger, the Companies entered into arms-length services contracts in relation to general administrative and specific technical matters, provided by either CNH to Iveco Group and vice versa as follows: Master Service Agreements : CNH and Iveco Group entered into a two-year Master Services Agreement (“MSA”) whereby each Party (and its subsidiaries) may provide services to the other (and its subsidiaries). Services provided under the MSA relate mainly to lease of premises and depots and IT services. Revenues from services provided under the MSA are presented as Finance, interest and other income on the Statement of Operations. Engine Supply Agreement : in relation to the design and supply of off-road engines from Iveco Group to CNH post-Demerger, Iveco Group and CNH entered into a ten-year Engine Supply Agreement (“ESA”) whereby Iveco Group will sell to CNH post-Demerger diesel, CNG and LNG engines and provide post-sale services. Costs related to engines purchased through this agreement are presented as Cost of goods sold on the Statement of Operations. Financial Service Agreement : in relation to certain financial services activities carried out by either CNH to Iveco Group post-Demerger or vice versa, in connection with the execution of the Demerger Deed, CNH and Iveco Group entered into a three-year Master Services Agreement (“FS MSA”), whereby each Party (and its subsidiaries) may provide services and/or financial services activities to the other (and its subsidiaries). Services provided under the FS MSA relate mainly to wholesale and retail financing activities to suppliers, distribution network and customers. Revenues from services provided under the FS MSA are presented as Finance, interest and other income on the Statement of Operations. The following table sets forth the related party transactions entered into with Iveco Group post-Demerger for the time period presented: (in millions of dollars) 2023 2022 2021 Net revenues $ 139 $ 48 $ 21 Purchases $ 1,042 $ 930 $ 948 Selling, general and administrative expenses $ — $ — $ — (in millions of dollars) December 31, 2023 December 31, 2022 Trade receivables $ 25 $ 21 Financial receivables from Iveco Group N.V. $ 380 $ 298 Trade payables $ 335 $ 184 Financial payables to Iveco Group N.V. $ 146 $ 156 137 Transactions with Unconsolidated Subsidiaries and Affiliates CNH sells agricultural and construction equipment and provides technical services to unconsolidated subsidiaries and affiliates such as CNH de Mexico SA de CV, Turk Traktor ve Ziraat Makineleri A.S. and New Holland HFT Japan Inc. CNH also purchases equipment from unconsolidated subsidiaries and affiliates, such as Turk Traktor ve Ziraat Makineleri A.S. The following table sets forth the related party transaction entered into for the time period presented: (in millions of dollars) 2023 2022 2021 Net sales $ 589 $ 400 $ 402 Purchases $ 508 $ 554 $ 496 (in millions of dollars) December 31, 2023 December 31, 2022 Trade receivables $ 2 $ — Trade payables $ 54 $ 100 At December 31, 2023 and 2022, CNH had pledged guarantees and commitments of its associated company for an amount of $ 37 million and $ 19 million, respectively, related to CNH Industrial Capital Europe S.a.S. Note 22: Subsequent Events The Company’s Board of Directors authorized a $ 500 million share buyback program under which the Company may repurchase its common shares commencing after the maturity or exhaustion of the limit of the existing $ 1 billion share buyback program in the open market or through privately negotiated or other transactions, including at the Company’s election trading plans under Rule 10b5-1 under the Securities Exchange Act of 1934 depending on share price, market conditions and other factors. On January 16, 2024, CNH Industrial Capital LLC repaid the principal amount of $ 500 million of its 4.200 % unsecured note due in 2024. 138