CNHI 20-F Report ended Dec. 31, 2019

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•	North America (formerly NAFTA) : United States, Canada and Mexico;

•	Europe : member countries of the European Union, European Free Trade Association, Ukraine and Balkans, formerly included in EMEA;

•	South America (formerly LATAM) : Central and South America, and the Caribbean Islands; and

•	Rest of World : Continental Asia (including Turkey and Russia), Oceania and member countries of the Commonwealth of Independent States (excluding Ukraine), formerly included in APAC, and African continent and Middle East, formerly included in EMEA.

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Item 1.	Identity of Directors, Senior Management and Advisers

Item 2.	Offer Statistics and Expected Timetable

Item 3.	Key Information

(1)

On March 3, 2020, the Board of Directors recommended to the Company’s shareholders a dividend of € 0.18 per common share, totaling approximately €243 million (equivalent to approximately $267 million, translated at the exchange rate reported by the European Central Bank on February 28, 2020). The recommended dividend is subject to the approval of the Company’s shareholders at the Annual General Meeting of shareholders to be held on April 16, 2020. For 2019, CNH Industrial declared and paid a dividend of € 0.18 per common share. For 2018, CNH Industrial declared and paid a dividend of € 0.14 per common share. For 2017, CNH Industrial declared and paid a dividend of € 0.11 per common share. For 2016, CNH Industrial declared and paid a dividend of €0.13 per common share. For 2015, CNH Industrial declared and paid a dividend of € 0.20 . The cash dividends for 2019, 2018, 2017, 2016, and 2015 were paid on May 2, 2019, May 2, 2018, May 2, 2017, May 3, 2016, and April 29, 2015, respectively, and shareholders who held common shares on the record date traded on the NYSE received the dividend in U.S. dollars at the USD/EUR exchange rate reported by the European Central Bank on April 17, 2019 ($ 0.2034 ), April 19, 2018 ($ 0.1722 ) April 20, 2017 ($ 0.1182 ), April 21, 2016 ($ 0.1476 ), and April 16, 2015 ($ 0.2142 ), respectively.

(2)	Excludes loyalty program special voting shares at December 31, 2019, 2018, 2017, 2016, and 2015 of 388 million, 389 million, 389 million, 412 million and 413 million, respectively.

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•	changes in laws, regulations and policies that affect, among other things:

–	import and export duties and quotas;

–	currency restrictions;

–	the design, manufacture and sale of our products, including, for example, engine emissions regulations;

–	interest rates and the availability of credit to our dealers and customers;

–	property, contract rights and intellectual property;

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–	where, to whom, and what type of products may be sold, including new or additional trade or economic sanctions imposed by the U.S., EU or other governmental authorities and supranational organizations (e.g., the United Nations); and

–	taxes;

•	regulations from changing world organization initiatives and agreements;

•	changes in the dynamics of the industries and markets in which we operate;

•	labor disruptions;

•	disruption in the supply of raw materials and components (e.g. as a consequence of epidemics and pandemics), including rare materials (the latter might be more easily the target of sudden increases due to a variety of factors, including speculative measures or unforeseen political changes);

•	changes in governmental debt relief and subsidy program policies in certain significant markets such as Argentina and Brazil, including the Brazilian government discontinuing programs subsidizing interest rates on equipment loans;

•	withdrawal from or changes to trade agreements or trade terms, negotiation of new trade agreements and the imposition of new (and retaliatory) tariffs on certain countries or covering certain products or raw materials, including developments in U.S.-China trade relations; and

•	war, civil unrest and terrorism.

•	the price of agricultural commodities and the ability to competitively export agricultural commodities;

•	the profitability of agricultural enterprises, farmers’ income and their capitalization;

•	the demand for food products; and

•	agricultural policies, including aid and subsidies to agricultural enterprises provided by governments and/or supranational organizations, policies impacting commodity prices or limiting the export or import of commodities, and alternative fuel mandates.

•	public infrastructure spending; and

•	new residential and non-residential construction; and

•	capital spending in oil and gas and, to a lesser extent, in mining.

•	changes in global market conditions, including interest rates;

•	changes in business investment, including timing of fleet renewals; and

•	public infrastructure spending.

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•	technological and product synergies, economies of scale and cost reductions not occurring as expected;

•	unexpected liabilities;

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•	incompatibility of operating, information or other systems;

•	unexpected changes in laws;

•	inability to retain key employees;

•	protecting intellectual property rights;

•	inability to source certain products or components (or the cost thereof);

•	significant costs associated with terminating or modifying alliances; and

•	problems in retaining customers and integrating operations, services, personnel, and customer bases.

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•	we may not be able to secure additional funds for working capital, capital expenditures, debt service requirements or general corporate purposes;

•	we may need to use a portion of our projected future cash flow from operations to pay principal and interest on our indebtedness, which may reduce the amount of funds available to us for other purposes;

•	we may be more financially leveraged than some of our competitors, which could put us at a competitive disadvantage;

•	we may not be able to invest in the development or introduction of new products or new business opportunities;

•	we may not be able to adjust rapidly to changing market conditions, which may make us more vulnerable to a downturn in general economic conditions; and

•	we may not be able to access the capital markets on favorable terms, which may adversely affect our ability to provide competitive retail and wholesale financing programs.

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•	incur additional indebtedness by certain subsidiaries;

•	make certain investments;

•	enter into certain types of transactions with affiliates;

•	sell or acquire certain assets or merge with or into other companies; and/or

•	use assets as security in other transactions.

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•	in Japan, we own 50.0% of New Holland HFT Japan Inc. (“HFT”), which distributes its products in Japan. HFT imports and sells the full range of New Holland agricultural equipment;

•	in Pakistan, we own 43.2% of Al Ghazi Tractors Ltd., which manufactures and distributes New Holland tractors;

•	in Turkey, we own 37.5% of Turk Traktor ve Ziraat Makineleri A.S., which manufactures and distributes various models of both New Holland and Case IH tractors;

•	in Mexico, we own 50.0% of CNH de Mexico S.A. de C.V., which manufactures New Holland agricultural equipment and distributes our agricultural equipment through one or more of its wholly-owned subsidiaries;

•	in China, we own 50.0% of Naveco (Nanjing Iveco Motor Co.) Ltd., a company that manufactures light and other commercial vehicles in China;

•	in China, we control 60.0% of SAIC Fiat Powertrain Hongyan Ltd (“SFH”), a manufacturing company located in Chongqing, which produces diesel engines under license from us to be sold in the Chinese market and to be exported to Europe, the U.S. and Latin America; and

•	in South Africa, we own 60.0% of Iveco South Africa Works (Pty) Ltd., which manufactures medium and heavy-duty commercial vehicles and buses.

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Item 4A.	Unresolved Staff Comments

Item 5.	Operating and Financial Review and Prospects

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(1)

In the year ended December 31, 2019 and 2018, this item includes the pre-tax gain of $119 million and $80 million, respectively, as a result of the amortization over approximately 4.5 years of the $527 million passive income impact from the modification of a healthcare plan in the U.S. In the year ended December 31, 2019, this item also includes a $116 million pre-tax non-cash settlement charge resulting from the purchase of a group annuity contract to settle a portion of the outstanding U.S. pension obligations.

(2)	In the year ended December 31, 2019, this item mainly includes other asset optimization charges for $165 million due to actions included in the “Transform2Win” strategy.

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•	$ 1,454 million in net income;

•	plus $1,215 million in non-cash charges for depreciation and amortization ($ 660 million excluding assets sold with buy-back commitments and equipment on operating leases);

•	plus $ 189 million in losses on the disposal of assets and other non-cash items;

•	plus $ 27 million in cost of repurchase of notes;

•	less $ 2 million of undistributed loss of unconsolidated subsidiaries (netted against dividends received from equity investees);

•	plus changes in deferred income taxes of $ (472) million less change in provisions of $ 93 million; and

•	plus $ (496) million in change in working capital and other operating assets and liabilities.

•	investments in tangible and intangible assets that used $1,962 million in cash. Excluding investments for our long-term rental operations and relating to vehicles sold under buy-back commitments, investments amounted to $ 637 million;

•	$ 74 million employed in retail receivables, net of collections; and

•	less $61 million of proceeds from the sale of assets

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•	To fund Industrial Activities’ short-term financing requirements and to ensure near-term liquidity, Industrial Activities will continue to sell certain of its receivables to Financial Services and rely on internal cash flows including managing working capital. 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.

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Financial Services’ funding strategy is to maintain a sufficient level of 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 committed asset-backed facilities, unsecured notes, bank facilities and, in an effort to further diversify funding sources and reduce the average cost of funding, Financial Services has implemented commercial paper programs, both in the U.S. and Europe.

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(**)	The net intersegment (receivable)/payable balance owed by Financial Services relating to Industrial Activities was $ (212) million and $ 66 million as of December 31, 2019 and 2018 , respectively.

(***)	Total Debt of Industrial Activities includes Intersegment notes payable to Financial Services of $1,332 million and $ 1,136 million at December 31, 2019 and 2018 , respectively. Total Debt of Financial Services includes Intersegment notes payable to Industrial Activities of $1,120 million and $1,202 million at December 31, 2019 and 2018 , respectively.

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•	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 Industrial or the borrower;

•	a financial covenant (Net debt/EBITDA ratio relating to Industrial Activities). Such covenant is not applicable with the current ratings levels.

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(1)

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 2020 to pension plans, healthcare plans and other postemployment plans is $65 million, $21 million and $31 million, respectively. Potential outflows in the years after 2020 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 2020.

•	the repurchase price guaranteed to certain customers on sales with a buy-back commitment which is included in the line item “Other liabilities” in our consolidated balance sheets in an aggregate amount of $1,472 million; and

•	commitments to purchase tangible fixed assets, largely in connection with planned capital expenditures, in an aggregate amount of approximately $118 million.

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•	Jacqueline A. Tammenoms Bakker, Director (Non-Executive Director—independent), Member of the Governance and Sustainability Committee, Member of the Compensation Committee,

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•	Suzanne Heywood, Chairperson (Executive-Director)

•	Léo W. Houle , Director (Senior Non-Executive Director—independent), Chairperson of the Compensation Committee, Member of the Governance and Sustainability Committee

•	John Lanaway , Director (Non-Executive Director—independent), Member of the Audit Committee

•	Alessandro Nasi, Director (Non-Executive Director), Chairperson of the Governance and Sustainability Committee, Member of the Compensation Committee

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•	Hubertus M. Mühlhäuser, Chief Executive Officer (Executive-Director)

•	Silke C. Scheiber , Director (Non-Executive Director—independent), Member of the Audit Committee

•	Lorenzo Simonelli , Director (Non-Executive Director—independent), Member of the Audit Committee

•	Jacques Theurillat, Director (Non-Executive Director—independent), Chairperson of the Audit Committee

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•	Jay Iyengar, Chief Technology Officer

•	Luc Billiet, General Manager Aftermarket Solutions

•	Massimiliano (Max) Chiara, Chief Financial Officer and Chief Sustainability Officer

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•	Vilmar Fistarol, General Manager South America

•	Oddone Incisa, President, Financial Services

•	Gerrit Marx, President Commercial and Specialty Vehicles

•	Derek Neilson, President, Agriculture

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•	Stefano Pampalone, President, Construction; General Manager, Asia, Middle East and Africa

•	Annalisa Stupenengo, President, Powertrain

•	Tom Verbaeten, Supply Chain Officer

•	Andreas G. Weishaar, Chief Strategy, Talent, ICT and Digital Officer

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▪	Net sales of Industrial Activities of $26.1 billion, a 2.1% decline at constant currency from 2018, amid lower market demand;

▪	Adjusted Net Income of $1.2 billion, up 5% compared to 2018;

▪	Adjusted diluted Earnings Per Share (“EPS”) up 5% year-over-year at $0.84 per share;

▪	Net debt of Industrial Activities at the end of 2019 at $0.9 billion, up by $255 million from end of 2018, due to higher working capital and cash investments related to the Merger & Acquisition activity performed during the year;

▪	Fitch Ratings improved the outlook of CNH Industrial N.V. to positive from stable and affirmed CNH Industrial N.V.’s and CNH Industrial Capital LLC’s long-term issuer default rating at “BBB- “;

▪	Total of $332 million returned to shareholders in 2019 through cash dividends and share buy-back.

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▪	Pay for Performance: through variable incentives, the Company aligns and rewards our executives on the achievement of the sustainable financial and operating goals as well as the leadership values that drive the attainment of those goals.

▪	Long-term value creation: further linkage supported by a requirement to hold equity awards for a minimum of five years from date of grant.

(1)	Base salary included in the Summary Remuneration table in a later section includes earnings from previously deferred salary. Current base salary is $1.1 million, unchanged in 2019.

(2)

The 2019 LTI value reflects retention-based Restricted Share Units (RSUs) when granted and Company performance-based Performance Share Units (PSUs) when vested, consistent with the realized equity award valuation used by corporate governance advisory firms. In 2019, an RSU award was granted (as indicated) and no PSUs vested. For the value of equity awards that vested during 2019, the CEO earned $4.5 million, including a “Make Whole” award (which was an agreed award upon hire to compensate for forfeited equity with prior employer) of $3.7 million. All the details at grant, vesting and outstanding of each award are reported in the share table in a later section.

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(1)	Base salary included in the Summary Remuneration table in a later section includes the prorated Chairperson fees from November 29, 2019 through December 31, 2019, paid in January 2020. Current annual salary is $250,000, unchanged in 2019.

(2)

The 2019 LTI value reflects retention-based Restricted Share Units (RSUs) when granted and Company performance-based Performance Share Units (PSUs) when vested, consistent with the realized equity award valuation used by corporate governance advisory firms. For the value of RSU equity awards that vested during 2019, the Chairperson earned $0.1 million, as reported in the share table in a later section.

(1)

For 2019, CEO compensation is per the Summary Remuneration table excluding the 2019 accounting value of the CEO’s one-time “Make Whole” award, granted upon hire in September 2018 and vested in September 2019. Including the 2019 Make Whole accounting value of $2.8 mil, the CEO pay ratio would be 156. The 2019 CEO Pay Ratio calculation includes $2.9 mil in accounting value related to the 2017-2019 PSUs that did not meet the threshold achievement for any payout and have been forfeited. The CEO Pay Ratio excluding the forfeited PSU award would be 62.

(2)	For 2018, given a partial year in the CEO role, a targeted full year compensation is shown for year-over-year comparison.

(3)	For 2017, CEO compensation included the accounting value of equity awards, $2.9 million, as reported in the Summary Remuneration table in the 2017 Remuneration Report. The amount represented the net impact of the cancellation of the prior

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(4)	For 2016, CEO compensation did not include the accounting value of equity awards which was income of $3.0 million due to reversal of previously recognized expense linked to non-market conditions that the Company deemed not probable to achieve, as footnoted in the Summary Remuneration table in the 2016 Remuneration Report.

(5)

For 2015, CEO compensation did not include the accounting value of equity awards as the reporting convention in 2015 was value of awards at grant and no equity awards were granted in 2015. The comparable accounting value in 2015 was $8.0 million, which in part was reversed in 2016 for not achieving non-market conditions. In 2017, the related award for the market conditions was canceled for non-performance.

(6)	Average Employee compensation is derived from personnel costs reported under IFRS, which does not include personnel costs for the Executive Directors, divided by the average headcount.

(1)	Includes non-GAAP metrics derived from financial information prepared in accordance with U.S. GAAP.

(2)	2017 and 2016 figures have been recast following the retrospective adoption, on January 1, 2018, of the updated standard for revenue recognition (ASC 606). 2015 figures have not been recast.

(3)	In 2015, Consolidated Adjusted EBIT Margin % was not reported; the figure represents the most comparable metric, Consolidated Operating Margin %.

(4)	In 2015, Net income and and Basic EPS before restructuring and other exceptional items were the comparable metrics reported.

(5)	Using 21-day average average at the beginning and ending of each year and indexing from a 2014 baseline (i.e., index at 100).

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▪	The target incentive for the annual bonus program is 125% of base salary, linked to approved targets each year which are consistent with our public guidance to investors.

▪	To earn any incentive by metric, the threshold performance must be at least 90% of the specific target established, with an additional hurdle of achieving at least 70% of the Consolidated Adjusted EBIT Margin % for any payout. Achieving threshold performance earns 30% of target incentive.

▪	To earn the maximum payout of 200% of target incentive, actual results must be at least 120% of the target performance for Consolidated Adjusted EBIT Margin % and 130% for the other performance metrics.

▪	No individual performance adjustment factor applies to the CEO, in line with DCGC to have no discretion applicable to the bonus calculation.

▪	Consolidated revenue growth targets replaced consolidated revenue targets, to focus on year-over-year revenue gains without the adverse impact of currency fluctuations, allowing for enhanced line-of-sight.

▪	Adjusted EBIT Margin % of revenue replaced absolute Adjusted EBIT Margin to concentrate on structural profitability gains in a down market.

▪	Cash conversion ratio was introduced to emphasize the efficiency of converting profit into cash, an important capability for industrial companies.

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(a)	Performance metrics, weighting, goals, achievement and performance payout factor.

(b)	CEO bonus amounts at threshold, target, outstanding performance and actual payout.

▪	Align the interests of our Executive Directors and other key contributors with the interests of our shareholders;

▪	Motivate the attainment of Company performance goals and reward sustained long-term value creation; and

▪	Serve as an important attraction and long-term retention tool that management and the Compensation Committee uses to strengthen loyalty to the Company.

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(1)	The stated amount includes the use of transportation, (company car and personal usage of aircraft), company cost of life and health insurance benefits, and tax preparation services.

(2)	The amounts represent the bonus earned for the performance year and paid in the following year, e.g. 2019 which will be paid in 2020.

(3)

The amounts represent the Company's share-based compensation (SBC) expense under applicable accounting standards relating to grants issued to the Executive Directors under LTI programs covered by the CNH Industrial N.V. Equity Incentive Plan (EIP). The amounts include SBC expense related to the 2017-2019 PSUs that did not meet the threshold achievement for any payout, $2.9 million and $0.3 million respectively for the CEO and Chairperson in 2019 and $0.8 million and $0.3 million respectively in 2018. Not included in this column is the SBC expense for the “Make Whole” equity award granted to the CEO as a condition of his accepting the CEO role with the Company in 2018. The “Make Whole” award vested over the first anniversary from the CEO’s hire date and the related 2019 and 2018 expenses were $2.8 million and $1.14 million respectively. The related SBC expense is reported under the Extraordinary Items column.

(4)	The stated amount includes relocation benefits and the SBC expense related to the CEO’s “Make Whole” award, $2.8 million and $1.14 million 2019 and 2018 respectively.

(5)	For the CEO, the stated amount includes company contributions to U.S. Social Security and Medicare, the Company defined contribution plan and the service cost for future retiree healthcare benefits and for the other Directors, company contributions into the U.K. National Insurance.

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(6)	The ratio of the percentage of fixed pay elements over the percentage of variable pay elements. Variable elements include variable Incentives, extraordinary items and the pension benefits derived from variable remuneration.

(7)	The compensation reflects a partial year as the CEO was hired on September 17, 2018.

(8)	The stated amount includes the prorated fees for the Chairperson role from November 29, 2018 through December 31, 2018 paid in January 2019. Full year fees are $250,000.

(9)	The stated amount covers the CNH Industrial N.V. Board of Director fees earned in 2018, but paid directly to EXOR N.V., as disclosed in the 2018 Remuneration Report.

(1)	The stated amount is the fees for the Chairman of IVECO Defence S.p.A role.

(2)	The stated amount is the share-based compensation for Mr. Nasi prorated from the date of his appointment to CNH Industrial N.V. Board of Director to the end of the year. The amount includes $374k in SBC expense related to the 2017-2019 PSUs that did not meet the threshold achievement for any payout.

(3)	The stated amount includes the company social contributions in Italy on employment income.

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(1)

During 2018, the Company’s Executive Directors changed. At the end of April, the former CEO, Richard Tobin, left the Company voluntarily, and Derek Neilson, one of our senior managers, was appointed as Chief Executive Officer, Ad Interim. On September 17, 2018, Hubertus Mühlhäuser, recruited externally, assumed the position of CEO. On July 21, 2018, the Board of Directors, having been apprised of the deteriorating health situation of its Chairman Sergio Marchionne, appointed Lady Heywood as Chairperson with immediate effect. On July 25, 2018, Mr. Marchionne passed away. Shareholders appointed Lady Heywood and Mr. Mühlhäuser as Executive Directors at the November 29, 2018 Extraordinary General Meeting. Lady Heywood’s Chairperson fees prorated from November 29, 2018 through December 31, 2018 were paid in January 2019.

(6)	Ms. Jacqueline Tammenoms Bakker became a member of the Compensation Committee in 2019 in addition to the Governance and Sustainability Committee.

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(1)	This PSU award was the equity award for the 2017-2019 performance period, based on Company Performance: Relative TSR, weighted 100%, and maintaining investment credit rating. The threshold achievement was not met and all outstanding PSUs under this plan forfeited.

(2)	This RSU award is the retention-based equity award for the remainder of the three-year period, 2017-2019. Vesting is in two equal installments; the first installment vested on June 30, 2019 and second will vest on June 30, 2020.

(3)	As a condition of hiring, the CEO was granted a “Make Whole” RSU to compensate for forfeited equity awards from his prior employer. The “Make Whole” award vested over the first anniversary from the CEO’s hire date.

(4)

These awards were granted to Mr. Nasi when an employee of CNH Industrial, and per the Company’s agreement, the balances shown would continue to vest according to the terms and conditions of the awards. The 2017-2019 RSU awards at the beginning of the period have two installments; the first vested on 6/30/2019 and the second will vest on 6/30/2020. No holding period after vesting applies to any of Mr. Nasi's awards.

(5)	The gross shares of the awards that vested during 2019 are shown in the table, but only the related after-tax shares delivered are subject to the holding period. Shares were sold to cover withholdings.

(6)	The accounting valuation of share-based compensation expense (“SBC expense”) is the value reported for equity awards in the Summary Remuneration table. The SBC expense for the CEO’s “Make Whole” award is reported in the Extraordinary Items column.

(7)	On December 14, 2018, the Compensation Committee and the Non-Executive Directors approved the Chairperson’s compensation package, including a prorated award, under the 2017-2019 LTIP, for period remaining in the three-year program, split 75% for performance based awards (61,000 PSUs) and 25% for retention based awards (20,300 RSUs).

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Item 7.	Major Shareholders and Related Party Transactions

a)

In addition, EXOR N.V. holds 366,927,900 special voting shares; EXOR N.V.'s beneficial ownership in CNH Industrial is 42.2%, calculated as the ratio of (i) the aggregate number of common and special voting shares owned by EXOR N.V. and (ii) the aggregate number of outstanding common shares and special voting shares of CNH Industrial. There were 1,738,119,416 outstanding common shares and special voting shares at January 31, 2020.

b)	Harris Associates L.P.'s beneficial ownership in CNH Industrial is 10.6% calculated as the ratio of (i) the number of common shares owned by Harris Associates L.P. and (ii) the aggregate number of outstanding common shares and special voting shares of CNH Industrial. There were 1,738,119,416 outstanding common shares and special voting shares at January 31, 2020.

c)	There were 1,350,168,250 common shares outstanding as of January 31, 2020. All these common shares have the same rights and entitlements. The “Percent of Common Shares” was calculated by using the publicly disclosed number of owned common shares as the numerator, respectively, and the number of the Company’s outstanding common shares as of January 31, 2020 as the denominator.

•	If a shareholder holds common shares directly in his or her own name in the United States, such shares are held in registered form in an account at Computershare Trust Company, N.A., our transfer agent.

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Interests in our common shares that are traded on the NYSE are held through the book-entry system provided by The Depository Trust Company (“DTC”) and are registered in the register of shareholders in the name of Cede & Co., as DTC’s nominee. Interests in the common shares traded on the MTA are held through Monte Titoli S.p.A., the Italian central clearing and settlement system, as a participant in DTC.

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Special voting shares and the associated common shares are registered in the books and records of the Company’s transfer agents in the United States and Italy. As noted above, the special voting shares and associated common shares are not tradable. The associated common shares are only tradable after they are de-registered from the loyalty voting program at which time the associated special voting shares are surrendered to the Company. There is no possibility to hold a special voting share without holding an associated common share.

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Item 8.	Financial Information

Item 9.	The Offer and Listing

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Item 10.	Additional Information

•	operate in, among other areas, the mechanical, electrical, electromechanical, thermo mechanical, electronic, nuclear, chemical, mining, steel and metallurgical industries, as well as in telecommunications, civil, industrial and agricultural engineering, publishing, information services, tourism and other service industries;

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engage in, and/or participate in and operate, manage and control one or more companies engaged in the design, engineering, manufacture, marketing, sales, distribution, maintenance, repair, remanufacturing and/or resale of agricultural, construction, transport and similar equipment, tractors, commercial vehicles, buses, specialized vehicles for firefighting, defense and other uses, other capital goods, engines and transmissions for any of the foregoing equipment and/or vehicles and/or for marine and power generation applications, and/or replacement parts for any of the foregoing;

•	provide, and/or participate in and operate, manage and control one or more companies providing financing to dealers, end customers and others for the acquisition and/or lease of products and/or services described above, through the making of loans and leases and/or otherwise, and to borrow money for that purpose;

•	acquire shareholdings and interests, engage in or participate in companies and enterprises of any kind or form and purchase, sell or place shares and debentures;

•	provide financing to, and guarantee the obligations of, companies and entities it wholly or partially owns, and borrow money for that purpose, and carry on the technical, commercial, financial and administrative coordination of their activities;

•	purchase or otherwise acquire, on its own behalf or on behalf of companies and entities it wholly or partially owns, the ownership or right of use of intangible assets providing them for use by those companies and entities;

•	promote and ensure the performance of research and development activities, as well as the use and exploitation of the results thereof;

•	undertake, on its own behalf or on behalf of companies and entities it wholly or partially owns, any investment, real estate, financial, commercial, or partnership transaction whatsoever, including the assumption of loans and financing in general and the granting to third parties of endorsements, suretyships, warranting performance and other guarantees, including real security; and

•	render management and advisory services as well as anything which a company may lawfully do under the laws of the Netherlands which may be deemed conducive to the attainment of the objects set out in the above paragraphs.

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•	a resolution to reduce the issued share capital;

•	a resolution to amend the Articles of Association;

•	a resolution to limit or exclude rights of pre-emption;

•	a resolution to authorize the Board of Directors to limit or exclude rights of pre-emption;

•	a resolution to enter into a legal merger or a legal demerger; or

•	a resolution to dissolve the Company.

•	the general meeting of shareholders has authorized the Board of Directors to make such acquisition—which authorization shall be valid for a period of not more than eighteen months—and has specified the number of shares which may be acquired, the manner in which they may be acquired and the limits within which the price must be set;

•	our equity, less the amount to be paid for the shares to be acquired, exceeds the sum of (1) our share capital account, plus (2) any reserves required to be maintained by the laws of the Netherlands; and

•	after the acquisition of shares, we and our subsidiaries would not hold, or hold as pledges, shares having an aggregate par value that exceeds 50% of our issued share capital account, as these amounts would be calculated under generally accepted accounting principles in the Netherlands.

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•	an order requiring appropriate disclosure;

•	suspension of the right to exercise the voting rights for a period of up to three years as determined by the court;

•	voiding a resolution adopted by the general meeting, if the court determines that the resolution would not have been adopted but for the exercise of the voting rights of the person with a duty to disclose, or suspension of a resolution adopted by the general meeting of shareholders until the court makes a decision about such voiding; and

•	an order to refrain, during a period of up to five years as determined by the court, from acquiring shares and/or voting rights in the Company.

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•	a dealer in securities or foreign currencies;

•	regulated investment companies;

•	a trader in securities that elects to use a mark-to-market method of accounting for securities holdings;

•	a tax-exempt organization;

•	a bank, financial institution, or insurance company;

•	a person liable for alternative minimum tax;

•	a person that actually or constructively owns 10% or more, by vote or value, of CNH Industrial;

•	a person that holds shares as part of a straddle or a hedging, conversion, or other risk reduction transaction for U.S. federal income tax purposes;

•	a person that acquired shares pursuant to the exercise of employee stock options or otherwise as compensation; or

•	a person whose functional currency is not the U.S. dollar.

•	an individual that is a citizen or resident of the U.S.;

•	a corporation, or other entity taxable as a corporation, created or organized under the laws of the U.S.;

•	an estate whose income is subject to U.S. federal income tax regardless of its source; or

•	a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust.

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•	a pension fund;

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•	a charity;

•	persons acquiring their shares in connection with an office or employment;

•	a dealer in securities;

•	an insurance company; or

•	a collective investment scheme.

•	any shareholders that, either alone or together, with one or more associated persons, such as personal trusts and connected persons, control directly or indirectly at least 10% of the voting rights or of any class of share capital of CNH Industrial; or

•	any person holding shares as a borrower under a stock loan or an interim holder under a repo.

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1.	an owner of one or more shares, who in addition to the title to such shares, has an economic interest in such shares;

2.	a person who, or an entity that holds the entire economic interest in one or more shares;

3.	a person who, or an entity that holds an interest in an entity, such as a partnership or a mutual fund, that is transparent for Dutch tax purposes, the assets of which comprise one or more shares, within the meaning of 1. or 2. above; or

4.	a person who is deemed to hold an interest in shares, as referred to under 1. to 3., pursuant to the attribution rules of article 2.14a, of the Dutch Income Tax Act 2001 (Wet inkomstenbelasting 2001), with respect to property that has been segregated, for instance, in a trust or a foundation.

1.

such holder derives profits from an enterprise, directly, or pursuant to a co-entitlement to the net value of such enterprise, or other than as a holder of securities which enterprise is either managed in the Netherlands or carried on, in whole or in part, through a permanent establishment or a permanent representative which is taxable in the Netherlands, and such holder’s CNH Industrial common shares and/or special voting shares are attributable to such enterprise; or

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2.

such holder is an individual and such holder derives benefits from CNH Industrial common shares and / or special voting shares that are taxable as benefits from miscellaneous activities in the Netherlands. Benefits derived or deemed to be derived from certain miscellaneous activities by a child or a foster child who is under eighteen years of age are attributed to the parent who exercises, or the parents who exercise, authority over the child, irrespective of the country of residence of the child.

Item 11.	Quantitative and Qualitative Disclosures about Market Risk

•	credit risk related to our financing activities;

•	market risk (primarily exchange rates and interest rates).

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•	USD/EUR, in relation to the production/purchases of Agriculture and Construction in the euro area and to sales in dollars made by Commercial and Specialty Vehicles;

•	USD/BRL and EUR/BRL, in relation to production in Brazil and the respective import/export flows;

•	USD/AUD, mainly in relation to sales made by Agriculture and Construction in Australia;

•	EUR/GBP, predominately in relation to sales on the U.K. market.

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Item 12.	Description of Securities Other than Equity Securities

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Item 13.	Defaults, Dividend Arrearages and Delinquencies

Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds

Item 15.	Controls and Procedures

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Item 16A.	Audit Committee Financial Expert

Item 16B.	Code of Ethics

Item 16C.	Principal Accountant Fees and Services

Item 16D.	Exemptions from the Listing Standards for Audit Committees

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Item 16E.	Purchase of Equity Securities by the Issuer and Affiliated Purchasers

(1)	On April 27, 2018, the Company announced a buy-back program to repurchase up to $700 million in the Company’s common shares. This buy-back program was approved by the Company’s shareholders at the AGM on April 13, 2018 and expired on October 12, 2019.

(2)	On November 7, 2019, the Company announced its new share buy-back program, which covers the repurchase up to $700 million in common shares. The buy-back program implements the resolution adopted by the Company's shareholders at the annual general meeting of shareholders (“AGM”) held on April 12, 2019. This program has a duration up to and including October 11, 2020.

(3)	Share repurchases are made on the Mercato Telematico Azionario (“MTA”) and have been translated from euros at the exchange rate reported by the European Central Bank on the respective transaction dates.

Item 16F.	Change in Registrant’s Certifying Accountant

Item 16G.	Corporate Governance

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Item 16H.	Mine Safety Disclosure

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Item 17.	Financial Statements

Item 18.	Financial Statements

Item 19.	Exhibits

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CNH Industrial N.V. (“CNH Industrial” or the “Company”) is incorporated in, and under the laws of, the Netherlands. CNH Industrial is a leading company in the capital goods sector that, through its various businesses, designs, produces and sells agricultural equipment and construction equipment, trucks, commercial vehicles, buses and specialty vehicles for firefighting, defense and other uses, as well as engines, transmissions and axles for those vehicles and engines for marine and power generation applications (see “Note 20: Segment Reporting”). In addition, CNH Industrial’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 Industrial and other manufacturers’ products and other retail financing programs and wholesale financing to dealers.

The Company has five reportable segments consisting of: (i) Agriculture, which designs, produces and sells agricultural equipment (ii) Construction, which designs, produces and sells construction equipment (iii) Commercial and Specialty Vehicles, which designs, produces and sell trucks, commercial vehicles, buses, and specialty vehicles (iv) Powertrain, which produces and sells engines, transmissions and axles for those vehicles and engines for marine and power generation applications; and (v) Financial Services, which provides financial services to the customers of the Company’s products. The Company’s worldwide agricultural equipment, construction equipment, commercial vehicles, powertrain operations 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 Industrial, effective September 29, 2013.

Planned Spin-off of On-Highway Business

On September 3, 2019, the Company announced its intention to separate its "On-Highway" (commercial vehicles and powertrain) and "Off-Highway" (agriculture, construction and specialty vehicles) businesses. The separation is expected to be effected through the spin-off of CNH Industrial N.V.’s equity interest in "On-Highway" to CNH Industrial N.V. shareholders. The proposed spin-off is expected to be completed in early 2021, subject to approval at an Extraordinary General Meeting of shareholders.

Principles of Consolidation and Basis of Presentation

CNH Industrial 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 Industrial’s subsidiaries in which CNH Industrial 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 Industrial’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 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 Industrial 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 Industrial’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.

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In 2019, CNH Industrial completed the acquisitions of K-Line AG, a tillage and crop implement manufacturer; ATI, Inc, a manufacturer of rubber track systems for high horsepower tractors and combine harvesters; and AgDNA, a developer in Farm Managed Information Systems for a total amount of approximately $ 100 million in aggregate. There were no significant transactions in 2018 .

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 vehicles, 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 expects 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 vehicles, equipment and parts are generally dealers, distributors and retail customers.

Transfer of control, and thus related revenue recognition, generally corresponds to when the vehicles, equipment and parts are made available to the customer. Therefore, the Company recognizes revenue at a point in time when control is transferred to the customer at a sale price that the Company expects to receive.

For all sales, no significant uncertainty exists surrounding the purchaser’s obligation to pay for vehicles, equipment and parts. The Company records appropriate allowance for credit losses and anticipated returns as required. Fixed payment schedules exist for all sales, but payment terms vary by geographic market and product line.

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 a vehicle or equipment contract transaction has multiple performance obligations, the cost of incentives is allocated entirely to vehicle or equipment as the intent of the incentives is to encourage sales of vehicles or 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 Industrial 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 Industrial 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/vehicles 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), two separate performance obligations exist. The first performance obligation consists of the sale of the equipment/vehicle from Industrial Activities to the dealer. Concurrent with the sale of the equipment/vehicle, 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 should be 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

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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 Industrial 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 Industrial 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 vehicle. 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.

Shipping and other transportation activities performed as an agent are recognized on a net basis, which is netting the related freight cost against the freight revenue.

Rents and other income on assets sold with a buy-back commitment

Commercial and Specialty Vehicles enters into transactions for the sale of vehicles to some customers with an obligation to repurchase (“buy-back commitment”) the vehicles at the end of a period (“buy-back period”) at the customer’s request. For these types of arrangements, at inception, CNH Industrial assesses whether a significant economic incentive exists for the customer to exercise the option.

If CNH Industrial determines that a significant economic incentive exists for the customer to exercise the buy-back option, the transaction is accounted for as an operating lease. In such case, vehicles are accounted for as Property, plant and equipment because the agreements typically have a long-term buy-back period. The difference between the carrying value (corresponding to the manufacturing cost) and the estimated resale value (net of refurbishing costs) at the end of the buy-back period is depreciated on a straight-line basis over the same period. The initial sale price received is recognized in “Other liabilities” and is comprised of the repurchase value of the vehicle, and the rents to be recognized in the future recorded as contract liability. These rents are determined at the inception of the contract as the difference between the initial sale price and the repurchase price and are recognized as revenue on a straight-line basis over the term of the agreement. At the end of the agreement term, upon exercise of the option, the used vehicles are reclassified from Property, plant and equipment to Inventories. The proceeds from the sale of such vehicles are recognized as Revenues.

If CNH Industrial determines that a significant economic incentive does not exist for the customer to exercise the buy-back option, the transaction is treated as a sale with a variable consideration whose variable component is the buy-back provision accrual. The buy-back provision accrual is the difference between the repurchase price and the estimated market value of the used vehicle at the end of the buy-back period and is recorded only when the repurchase price is greater than the estimated market value of the used vehicle. The buy-back provision accrual is estimated and recognized as a reduction of revenues at the time of the sale. Any subsequent change following such periodic reassessment is recognized as a reduction of revenues at that time.

Finance and interest income

Finance and interest income on retail and other notes receivables and finance leases 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 120 days delinquent, whichever occurs earlier. Interest 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. Receivables are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Delinquency is reported on receivables greater than 30 days past due. Charge-offs of principal amounts of receivables outstanding are deducted from the allowance at the point when it is determined to be probable that all amounts due will not be collected.

Rents and other income on operating leases

Income from operating leases is recognized over the term of the lease on a straight-line basis.

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Sales Allowances

CNH Industrial 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 to a dealer is recognized, CNH Industrial records the estimated future base warranty costs for the product. CNH Industrial determines its total warranty liability by applying historical claims rate experience, while considering specific contractual terms, to the park 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 Industrial expenses advertising costs as incurred. Advertising expense totaled $ 167 million , $ 170 million , and $ 165 million for the years ended December 31, 2019 , 2018 , and 2017 , 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 concerned 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 Industrial’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, 2019 , 2018 and 2017 , the Company recorded net losses of $ 155 million , $ 450 million and $ 78 million , respectively. Included in the net losses in 2019 , 2018 and 2017 were charges of $ 71 million , $ 159 million and $ 21 million due to the devaluation of net monetary assets of Argentinian subsidiaries in 2019 , 2018 , and 2017 , as well as the re-measurement charges of $ 5 million , and $ 27 million , in 2018 and 2017 , on the Venezuelan bolivar fuerte (“Bs.F., or “bolivars”) rate described below. 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 $ 80 million , $ 199 million and $ 140 million for the three years ended December 31, 2019 , 2018 and 2017 , respectively.

Venezuela Currency Regulations, Re-measurement and Deconsolidation

In the fourth quarter of 2017, the deterioration of conditions in Venezuela and the persisting restrictive exchange control regulations, which prevent any payments out of the country, resulted in an other-than-temporary lack of exchangeability. Therefore, effective December 31, 2017, CNH Industrial determined that it no longer had the ability to control its Venezuelan operations. As a result, the Company recorded a non-cash pre- and after-tax charge of $ 92 million to impair and deconsolidate its operations in Venezuela and began reporting

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operating results under the cost method. The pre-tax charge included the write-off of the Company’s investment in Venezuela, including properties and all inter-company balances. The charge also included the reversal through income statement of foreign currency translation losses previously included in Accumulated other comprehensive income. CNH Industrial is no longer including the results of its Venezuelan operations in its Consolidated Financial Statements. If cash were to be received from the Venezuelan legal entities in future periods, income will be recognized. The Company expects the current economic conditions in Venezuela to continue and does not anticipate any payments to be made in the foreseeable future. CNH Industrial’s results of operations in Venezuela for the year ended December 31, 2019 and 2018 were immaterial as a percentage of both CNH Industrial’s net revenues and operating profit.

Subsequent to the deconsolidation under the voting interest consolidation model, the Company determined that the Venezuelan subsidiaries are considered to be variable interest entities. As the Company does not have the power to direct the activities that most significantly affect the Venezuelan subsidiaries' economic performance, the Company is not the primary beneficiary of the variable interest entities and therefore would not consolidate the entities. Due to the lack of ability to settle U.S. dollar obligations, the Company does not intend to sell into, nor purchase inventory from, the Venezuela entities at this time. Additionally, the Company has no remaining financial commitments to the Venezuelan subsidiaries and therefore believes the exposure to future losses is not material.

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, wholesale receivables and commercial revolving accounts receivable 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.

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 Industrial’s customers. Cash flows from financing receivables that are related to sales to CNH Industrial’s dealers are also included in operating activities. CNH Industrial’s financing of receivables related to equipment sold by dealers is included in investing activities.

CNH Industrial paid interest of $ 762 million , $ 807 million , and $ 896 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively. For 2019 , 2018 , and 2017 , the amount includes a charge of $ 27 million , $ 22 million , and $ 64 million , respectively, in connection with the Company’s accelerated debt redemption strategy.

CNH Industrial paid taxes of $ 208 million , $ 355 million , and $ 224 million in 2019 , 2018 , and 2017 , respectively.

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, wholesale receivables and commercial revolving accounts receivable to funding facilities or in securitization transactions. In accordance with the accounting guidance regarding transfers of financial assets and the consolidation of VIEs, the retail notes, wholesale receivables and commercial revolving accounts receivable 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 probable losses on receivables owned by the Company and consists of two components, depending on whether the receivable has been individually identified as being impaired. The first component of the allowance for credit losses covers the receivables specifically reviewed by management for which the Company has determined it is probable that it will not collect all of the contractual principal and interest. Receivables are individually reviewed for impairment based on, among other items, amounts outstanding, days past due and prior collection history. These receivables are subject to impairment measurement at the loan level based either on the present value of expected future cash flows discounted at the receivables’ effective interest rate or the fair value of the collateral for collateral-dependent receivables.

The second component of the allowance for credit losses covers all receivables that have not been individually reviewed for impairment. The allowance for these receivables is based on aggregated portfolio evaluations, generally by financial product. 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 allowance for wholesale credit losses is based on loss forecast models that consider

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the same factors as the retail models plus dealer risk ratings. The loss forecast models are updated on a quarterly basis. In addition, qualitative factors that are not fully captured in the loss forecast models, including industry trends, and macroeconomic factors, 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.

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.

Property, plant and equipment also include vehicles sold with a buy-back commitment, which are recognized under the method described in the paragraph Revenue Recognition .

Assets held under capital 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. 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 after the adoption of the new accounting standard ASU 2016-02 on January 1, 2019.

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 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 Industrial’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.

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Equipment on Operating Leases

Financial Services purchases leases and equipment from CNH Industrial dealers and other independent third parties that have leased equipment to retail customers under operating leases. For lease contracts where CNH Industrial acts as a lessor each of its leases is classified as either an operating lease or a finance lease. Leases where a significant portion of the risks and rewards are retained by the lessor are classified as operating leases. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee.

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 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. 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.

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.

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. During 2019 and 2018 , the Company performed its annual impairment review as of December 31 and concluded that there was no impairment in either year.

Other intangibles consist primarily of acquired dealer networks, trademarks, product drawings, patents, and 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.

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 Industrial 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 Industrial 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.

Income Taxes

The provision for income taxes is determined using the asset and liability method. CNH Industrial 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 Postemployment Benefits

CNH Industrial 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 Industrial. 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 Industrial contributions to defined contribution plans are charged to the income statement during the period of the employee’s service.

Derivatives

CNH Industrial’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 Industrial 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 Industrial’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 Industrial’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

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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 Industrial formally documents the hedging relationship to the hedged item and its risk management strategy for all derivatives designated as hedges. 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 Industrial 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, or the derivative is terminated, 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 Industrial’s use of derivative financial instruments.

Share-Based Compensation Plans

CNH Industrial recognizes all share-based compensation as an expense based on the fair value of each award on the grant date. CNH Industrial 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.

New Accounting Pronouncements

Adopted

Derivatives and Hedging

In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which amends ASC 815, Derivatives and Hedging. The purpose of this ASU is to better align a company’s risk management activities and financial reporting for hedging relationships, simplify the hedge accounting requirements and improve the disclosures of hedging arrangements. Among other provisions, the new standard (1) requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported, (2) eliminates the separate measurement and reporting of hedge ineffectiveness and (3) permits an entity to recognize in earnings the initial value of an excluded component under a systematic and rational method over the life of the derivative instrument. The Company adopted ASU 2017-12 on January 1, 2019. The adoption did not have a material impact on our results of operations, financial position and cash flows.

Leases

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes ASC 840, Leases. Subsequently, the FASB has issued additional ASUs which further clarify this guidance. The ASU's most prominent change is the requirement for lessees to recognize leased assets and liabilities classified as operating leases under the previous standard. The ASU does not significantly change the lessee’s recognition, measurement and presentation of expenses and cash flows from the previous accounting standard. Lessors’ accounting under the ASC is largely unchanged from the previous accounting standard. ASU 2016-02 also will require disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases.

CNH Industrial has adopted the new standard effective January 1, 2019, using the modified retrospective approach, without recasting prior periods. CNH Industrial has applied certain practical expedients upon transition, including not to reassess under the new guidance its prior conclusions about lease identification, lease classification and initial direct costs; and, those provided for short-term leases. In such case, the lease payments associated with leases are recognized as expense in the income statement. In addition, the Company has elected not to separate lease and non-lease components.

At January 1, 2019 , the Company recognized approximately $ 480 million of right-of-use assets and lease liabilities without transition effect to equity.

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Comprehensive Income

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which amends ASC 220, Income Statement - Reporting Comprehensive Income . In December 2017, the U.S. government enacted the U.S. Tax Act. Included in the provisions of the U.S. Tax Act was a reduction of the corporate income tax rate from 35 percent to 21 percent . U.S. GAAP requires that the remeasurement of deferred taxes to the new corporate tax rate occur in the period in which the legislation is enacted with the deferred tax adjustment being recorded in the provision for income taxes, including items for which the tax effects were originally recorded in Other Comprehensive Income (“OCI”). This treatment results in the items in OCI reflecting a disproportionate tax rate, a result often referred to as stranded tax effects. This ASU allows a reclassification from accumulated OCI to retained earnings for stranded tax effects resulting from U.S. Tax Reform. ASU 2018-02 is effective for annual reporting periods beginning after December 15, 2018 including interim periods within those fiscal years. The Company adopted this standard on January 1, 2019, and reclassified $ 65 million of tax effects from "Accumulated other comprehensive income (loss)" to "Retained earnings" within its Consolidated Balance Sheet.

Changes in Stockholders' Equity and Noncontrolling Interests

In August 2018, the SEC adopted a final rule that amends certain disclosure requirements that have become duplicative, overlapping, or outdated in light of other SEC disclosure requirements, U.S. GAAP, or changes in the information environment. However, the guidance also added requirements for registrants to include in their interim financial statements a reconciliation of changes in stockholders’ equity for each period for which an income statement is required (both year-to-date and quarterly periods). The Company first-time adopted the new interim disclosure requirement in its U.S. GAAP quarterly report for the three months ended March 31, 2019, which had no material impact to the Statement of Changes in Equity.

Not Yet Adopted

Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which establishes ASC 326, Financial Instruments - Credit Losses . In November 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses (“ASU 2018-19”), which supersedes existing Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The ASU introduced a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Additional disclosures about significant estimates and credit quality are also required. ASU 2018-19 is effective for annual periods beginning after December 15, 2019. CNH Industrial will adopt the new standard effective January 1, 2020, using the modified retrospective approach which requires the Company to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, without recasting prior periods. The Company anticipates adoption of this standard will have an immaterial impact to equity at January 1, 2020.

Fair Value Measurement

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which amends ASC 820, Fair Value Measurement . This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The effective date is the first quarter of fiscal year 2020. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

Intangibles - Cloud Computing Arrangements

In August 2018, the FASB issued ASU No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement ("ASU 2018-15"), which expands upon the guidance set forth in ASU 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement . ASU 2018-15 aligns the requirements for capitalization of implementation costs in a cloud computing service contract with those requirements for capitalization of implementation costs incurred for an internal-use software license. ASU 2018-15 may be applied prospectively from the date the guidance is first applied or retrospectively.

ASU 2018-15 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. The Company expects to adopt the ASU on a prospective basis, and, as such, this standard is not expected to have a material impact at adoption.

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Related Party Guidance for Variable Interest Entities

In October 2018, the FASB issued ASU No. 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities ("ASU 2018-17"), which expands the application of a specific private company alternative related to VIEs and changes the guidance for determining whether a decision-making fee is a variable interest. Under the new guidance, to determine whether decision-making fees represent a variable interest, an entity considers indirect interests held through related parties under common control on a proportionate basis, rather than in their entirety. ASU 2018-17 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted in any interim period. ASU 2018-17 is required to be applied retrospectively from the date the guidance is first applied. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

Defined Benefit Plans Disclosure

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General: Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14"), which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. ASU 2018-14 is effective for annual periods ending after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact of adoption of this ASU on its related disclosures.

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”). This ASU eliminates certain exceptions to the general principles in ASC 740, Income Taxes . Specifically, it eliminates the exception to (1) the incremental approach for intraperiod tax allocation when there is a loss from continuing operations, and income or a gain from other items; (2) the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; (3) the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and (4) the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. ASU 2019-12 will be effective for the annual periods beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of the adoption of this standard on its consolidated financial statements.

Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which makes targeted changes to standards on credit losses, hedging, and recognizing and measuring financial instruments to clarify them and address implementation issues. The amendments clarify the scope of the credit losses standard and address issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other things. On recognizing and measuring financial instruments, the amendments address the scope of the guidance, the requirement for remeasurement under ASC 820 when using the measurement alternative, certain disclosure requirements and which equity securities have to be remeasured at historical exchange rates. CNH Industrial will adopt the amendments related to ASU 2016-13, ASU 2017-12 and ASU 2016-01 at January 1, 2020. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

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The following tables summarize previously reported revenues for the years ended December 31, 2019 , 2018 and 2017 :

		Year Ended December 31,
		2019				2018				2017
		(in millions)
Agriculture		$	10,959			$	11,682			$	10,683
Construction		2,768				3,021				2,530
Commercial and Specialty Vehicles		10,439				10,939				10,562
Powertrain		4,117				4,565				4,369
Eliminations and Other		( 2,134		)		( 2,376		)		( 2,375		)
Total Industrial Activities		26,149				27,831				25,769
Financial Services		2,011				1,989				2,028
Eliminations and Other		( 81		)		( 114		)		( 96		)
Total Revenues		$	28,079			$	29,706			$	27,701

The following table disaggregates previously reported revenues by major source for the years ended December 31, 2019 , 2018 and 2017 :

			Year Ended December 31,
			2019				2018				2017
			(in millions)
	Revenues from:
	Sales of goods		$	25,103			$	26,838			$	24,987
	Rendering of services and other revenues		660				527				438
	Rents on assets sold with a buy-back commitment		386				466				344
	Revenues from sales of goods and services		$	26,149			$	27,831			$	25,769
	Finance and interest income		1,164				1,115				1,185
	Rents and other income on operating lease		766				760				747
	Finance, interest and other income		$	1,930			$	1,875			$	1,932
	Total Revenues		$	28,079			$	29,706			$	27,701

Contract liabilities recorded in Other liabilities were $ 1,236 million, $ 1,368 million and $ 1,498 million at December 31, 2019 , 2018 and 2017 , respectively. Contract liabilities primarily relate to extended warranties/maintenance and repair contracts, and transactions for the sale of vehicles with a buy-back commitment. During the year ended December 31, 2019 , 2018 and 2017 , revenues included $ 508 million , $ 544 million and $ 496 million , respectively, relating to contract liabilities outstanding at the beginning of each period.

As of December 31, 2019 , the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $ 2.0 billion (approximately $ 2.2 billion at December 31, 2018 ). CNH Industrial expects to recognize revenue on approximately 39 % and 84 % of the remaining performance obligations over the next 12 and 36 months, respectively (approximately 40 % and 84 % as of December 31, 2018 , respectively) with the remaining recognized thereafter.

Trade Receivables, net

As of December 31, 2019 and 2018 , the Company had trade receivables of $ 416 million and $ 399 million , respectively. Trade receivables are shown net of allowances for doubtful accounts of $ 60 million and $ 82 million at December 31, 2019 and 2018 respectively. Trade accounts have significant concentrations of credit risk in the Agriculture, Construction and Commercial and Specialty Vehicles segments. There is not a disproportionate concentration of credit risk in any geographic area.

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.

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Financing Receivables, net

A summary of financing receivables included in the consolidated balance sheets as of December 31, 2019 and 2018 is as follows:

		2019				2018
		(in millions)
Retail		$	9,218			$	9,350
Wholesale		10,081				9,749
Other		129				68
Total		$	19,428			$	19,167

CNH Industrial provides and administers financing for retail purchases of new and used equipment sold through its dealer network. The terms of retail and other notes and finance leases generally range from two to six years , and interest rates on retail and other notes and finance leases vary depending on prevailing market interest rates and certain incentive programs offered by Industrial Activities.

Wholesale receivables arise primarily from the sale of goods to dealers and distributors and, to a lesser extent, the financing of dealer operations. Under the standard terms of the wholesale receivable agreements, these receivables typically have “interest-free” periods of up to twelve months and stated original maturities of up to twenty-four months, with repayment accelerated upon the sale of the underlying equipment by the dealer. During the “interest free” period, Financial Services is compensated by Industrial Activities for the difference between market interest rates and the amount paid by the dealer. After the expiration of any “interest-free” period, interest is charged to dealers on outstanding balances until CNH Industrial 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. Interest rates are set based on market factors and based on Euribor or the equivalent financial market rate (e.g. FHBR, Finance House Base Rate for UK). CNH Industrial evaluates and assesses dealers on an ongoing basis as to their credit worthiness. CNH Industrial 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 2019 , 2018 or 2017 relating to the termination of dealer contracts.

Financing receivables generally have significant concentrations of credit risk in the agriculture, construction and truck industries. 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 notes, wholesale notes and finance leases.

As part of the Company’s overall funding strategy, the Company periodically transfers certain receivables into VIEs that are special purposes entities (“SPEs”) as part of its asset-back securitization program and are not available to the Company’s general creditors. Please see the securitization discussion at the end of this footnote.

Contractual maturities of financing receivables as of December 31, 2019 are as follows:

		Amount
		(in millions)
2020		$	12,608
2021		2,247
2022		1,918
2023		1,410
2024		1,019
2025 and thereafter		226
Total		$	19,428

It has been the Company’s experience that substantial portions of retail receivables are repaid before their contractual maturity dates. As a result, the above table should not be regarded as a forecast of future cash collections.

Past due balances of financing receivables still accruing finance income represent the total balance held (principal plus accrued interest) with any payment amounts greater than 30 days or more past the contractual payment due date. Non-performing financing receivables represent loans for which the Company has ceased accruing finance income. These receivables are generally 120 days delinquent. Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is resumed when the receivable becomes contractually current and collections are reasonably assured.

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The aging of financing receivables as of December 31, 2019 and 2018 is as follows (in millions):

			2019
			31-60 Days Past Due				61-90 Days Past Due				Greater Than 90 Days				Total Past Due				Current				Total Performing				Non Performing				Total
	Retail
	North America		$	24			$	4			$	—			$	28			$	6,123			$	6,151			$	16			$	6,167
	Europe		—				—				—				—				136				136				—				136
	South America		9				2				6				17				1,974				1,991				18				2,009
	Rest of World		3				1				2				6				900				906				—				906
	Total Retail		$	36			$	7			$	8			$	51			$	9,133			$	9,184			$	34			$	9,218
	Wholesale
	North America		$	—			$	—			$	—			$	—			$	3,641			$	3,641			$	26			$	3,667
	Europe		24				9				7				40				4,857				4,897				—				4,897
	South America		2				—				1				3				829				832				55				887
	Rest of World		5				3				$	6			14				616				630				—				630
	Total Wholesale		$	31			$	12			$	14			$	57			$	9,943			$	10,000			$	81			$	10,081

			2018
			31-60 Days Past Due				61-90 Days Past Due				Greater Than 90 Days				Total Past Due				Current				Total Performing				Non Performing				Total
	Retail
	North America		$	21			$	5			$	—			$	26			$	6,285			$	6,311			$	12			$	6,323
	Europe		1				—				10				11				164				175				40				215
	South America		11				9				7				27				1,885				1,912				83				1,995
	Rest of World		2				1				—				3				814				817				—				817
	Total Retail		$	35			$	15			$	17			$	67			$	9,148			$	9,215			$	135			$	9,350
	Wholesale
	North America		$	—			$	—			$	—			$	—			$	3,613			$	3,613			$	18			$	3,631
	Europe		20				9				—				29				4,727				4,756				—				4,756
	South America		—				—				—				—				656				656				—				656
	Rest of World		7				3				—				10				696				706				—				706
	Total Wholesale		$	27			$	12			$	—			$	39			$	9,692			$	9,731			$	18			$	9,749

Allowance for credit losses activity for the three years ended December 31, 2019 , 2018 and 2017 is as follows (in millions):

		December 31, 2019
		Retail				Wholesale
Opening balance		$	326			$	164
Provision		44				12
Charge-offs, net of recoveries		( 51		)		( 18		)
Foreign currency translation and other		( 20		)		1
Ending balance		299				159
Ending balance: Individually evaluated for impairment		194				125
Ending balance: Collectively evaluated for impairment		105				34
Receivables:
Ending balance		9,218				10,081
Ending balance: Individually evaluated for impairment		326				278
Ending balance: Collectively evaluated for impairment		$	8,892			$	9,803

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		December 31, 2018
		Retail				Wholesale
Opening balance		$	383			$	200
Provision		53				( 5		)
Charge-offs, net of recoveries		( 85		)		( 15		)
Foreign currency translation and other		( 25		)		( 16		)
Ending balance		326				164
Ending balance: Individually evaluated for impairment		204				135
Ending balance: Collectively evaluated for impairment		122				29
Receivables:
Ending balance		9,350				9,749
Ending balance: Individually evaluated for impairment		359				314
Ending balance: Collectively evaluated for impairment		$	8,991			$	9,435

		December 31, 2017
		Retail				Wholesale
Opening balance		$	374			$	200
Provision		72				11
Charge-offs, net of recoveries		( 103		)		( 15		)
Foreign currency translation and other		40				4
Ending balance		383				200
Ending balance: Individually evaluated for impairment		212				164
Ending balance: Collectively evaluated for impairment		171				36
Receivables:
Ending balance		9,725				10,001
Ending balance: Individually evaluated for impairment		347				540
Ending balance: Collectively evaluated for impairment		$	9,378			$	9,461

Financing receivables are considered impaired when it is probable the Company will be unable to collect all amounts due according to the contractual terms. Receivables reviewed for impairment generally include those that are either past due, have provided bankruptcy notification, or require significant collection efforts. Impaired receivables are generally classified as non-performing.

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		2019																2018
		Recorded Investment				Unpaid Principal Balance				Related Allowance				Average Investment				Recorded Investment				Unpaid Principal Balance				Related Allowance				Average Investment
		(in millions)
With an allowance recorded
Retail
North America		$	40			$	38			$	21			$	41			$	31			$	30			$	16			$	33
Europe		$	199			$	199			$	148			$	214			$	234			$	234			$	167			$	249
South America		$	80			$	80			$	22			$	86			$	91			$	91			$	20			$	88
Rest of World		$	7			$	7			$	3			$	4			$	3			$	3			$	1			$	4
Wholesale
North America		$	29			$	29			$	3			$	37			$	25			$	23			$	5			$	27
Europe		$	226			$	226			$	94			$	224			$	256			$	256			$	107			$	260
South America		$	19			$	11			$	16			$	22			$	23			$	14			$	16			$	26
Rest of World		$	4			$	4			$	12			$	7			$	10			$	10			$	7			$	9
Total
Retail		$	326			$	324			$	194			$	345			$	359			$	358			$	204			$	374
Wholesale		$	278			$	270			$	125			$	290			$	314			$	303			$	135			$	322

Troubled Debt Restructurings

A restructuring of a receivable constitutes a troubled debt restructuring (“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 Industrial 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.

TDRs are reviewed along with other receivables as part of management’s ongoing evaluation of the adequacy of the allowance for credit losses. The allowance for credit losses attributable to TDRs is based on the most probable source of repayment, which is normally the liquidation of the collateral. In determining collateral value, the Company estimates the current fair market value of the equipment collateral and considers credit enhancements such as additional collateral and third-party guarantees.

Before removing a receivable from TDR classification, a review of the borrower is conducted. If concerns exist about the future ability of the borrower to meet its obligations based on a credit review, the TDR classification is not removed from the receivable.

As of December 31, 2019 , the Company had 279 retail and finance lease contracts classified as TDRs in North America where a court has determined the concession. The pre-modification value of these contracts was $ 10 million and the post-modification value was $ 9 million . Additionally, the Company had 323 accounts with a balance of $ 15 million in North America undergoing bankruptcy proceedings where a concession has not yet been determined. As of December 31, 2018 , the Company had 254 retail and finance lease contracts classified as TDRs in North America where a court has determined the concession. The pre-modification value of these contracts was $ 8 million and the post-modification value was $ 7 million . Additionally, the Company had 371 accounts with a balance of $ 17 million in North America undergoing bankruptcy proceedings where a concession has not yet been determined. As the outcome of the bankruptcy cases is determined by the court based on available assets, subsequent re-defaults are unusual and were not material for retail and finance lease contracts that were modified in a TDR during the previous twelve months ended December 31, 2019 and 2018 .

As of December 31, 2019, the Company had retail and finance lease receivable contracts classified as TDRs in Europe. The pre-modification value was $ 87 million and the post-modification value was $ 80 million . Subsequent re-defaults were not material for retail and finance lease receivable contracts that were modified in a TDR during the previous twelve months ended December 31, 2019.

As of December 31, 2019 and 2018 , CNH Industrial's wholesale TDRs were immaterial.

Transfers of Financial Assets

The Company transfers a number of its financing receivables to securitization programs or factoring transactions.

A securitization transaction entails the sale of a portfolio of receivables to a securitization vehicle. This SPE finances the purchase of the receivables by issuing asset-backed securities (i.e. securities whose repayment and interest flow depend upon the cash flow generated by the portfolio). SPEs utilized in securitizations differ from other entities included in the Company’s consolidated financial statements

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because the assets they hold are legally isolated. 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.

These trusts were determined to be VIEs and, consequently, the Company has consolidated these trusts. In its role as servicer, the Company has the power to direct the trusts’ activities. Through its retained interests, the Company has an obligation to absorb certain losses or the right to receive certain benefits that could potentially be significant to the trusts.

No recourse provisions exist that allow holders of the asset-backed securities issued by the trusts to return those securities to the Company, although the Company provides customary representations and warranties that could give rise to an obligation to repurchase from the trusts any receivables for which there is a breach of the representations and warranties. Moreover, the Company does not guarantee any securities 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.

Furthermore, 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 require 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.

At December 31, 2019 and 2018 , the carrying amount of such restricted receivables included in financing receivables above are the following (in millions):

		2019				2018
Retail note and finance lease receivables		$	6,340			$	6,371
Wholesale receivables		7,266				7,052
Total		$	13,606			$	13,423

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Inventories (stated at the lower of cost or market, cost being determined on a FIFO basis) as of December 31, 2019 and 2018 consist of the following:

		2019				2018
		(in millions)
Raw materials		$	1,332			$	1,293
Work-in-process		612				576
Finished goods		5,138				4,857
Total Inventories		$	7,082			$	6,726

A summary of property, plant and equipment as of December 31, 2019 and 2018 is as follows:

		2019				2018
		(in millions)
Land and industrial buildings		$	3,279			$	3,332
Plant, machinery and equipment		8,621				8,417
Assets sold with buy-back commitment		2,649				3,100
Construction in progress		164				162
Other		793				815
Gross property, plant and equipment		15,506				15,826
Accumulated depreciation		( 10,237		)		( 9,925		)
Net property, plant and equipment		$	5,269			$	5,901

Property, plant and equipment recorded under capital leases were immaterial as of December 31, 2019 and 2018 .

Depreciation expense on the above property, plant and equipment totaled $ 853 million , $ 965 million , and $ 929 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively. Excluding depreciation for assets sold with buy-back commitments, depreciation expenses totaled $ 548 million , $ 587 million , and $ 610 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively.

Commercial and Specialty Vehicles recognized an impairment loss on new and used vehicles of $ 86 million , $ 76 million and $ 86 million on assets sold with a buy-back commitment for the years ended December 31, 2019 , 2018 , and 2017 , respectively. The losses are recognized in “Cost of goods sold.”

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A summary of investments in unconsolidated subsidiaries and affiliates as of December 31, 2019 and 2018 is as follows:

		2019				2018
		(in millions)
Equity method		$	513			$	523
Cost method		118				3
Total		$	631			$	526

On September 3, 2019, CNH Industrial announced a strategic and exclusive Heavy-Duty Truck partnership with Nikola Corporation, a U.S. based leader in fuel cell truck technology. In this context, CNH Industrial made an initial subscription to Nikola's share capital (approximately 2.5 % shareholding) through a cash contribution of $ 50 million and an in-kind contribution of $ 50 million , granting Nikola access to certain Iveco technology (reported as revenue). The investment in Nikola is accounted for using the cost method and is expected to grow to reflect an additional $ 150 million of contributions ( $ 50 million of cash and $ 100 million in services).

A summary of the combined results of operations and financial position as reported by the investees that CNH Industrial accounts for using the equity method is as follows:

		For The Years Ended December 31,
		2019				2018				2017
		(in millions)
Net revenue		$	2,480			$	2,875			$	3,273
Income before taxes		$	71			$	150			$	265
Net income		$	29			$	109			$	198

		As of December 31,
		2019				2018
		(in millions)
Total Assets		$	7,709			$	7,789
Total Liabilities		$	6,611			$	6,662
Total Equity		$	1,098			$	1,127

Lessee

The Company has mainly operating lease contracts 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. The Company recognizes lease expense of $ 17 million for the year ended December 31, 2019 for these leases on a straight-line basis over the lease term.

For the year ended December 31, 2019 , the Company incurred operating lease expenses of $ 162 million .

At December 31, 2019 , the Company has recorded approximately $ 450 million of a right-of-use asset and $ 449 million of lease liability included in Other Assets and Other Liabilities, respectively.

During the year ended December 31, 2019 , leased assets obtained in exchange for operating lease obligations were $ 117 million . The operating cash outflow for amounts included in the measurement of operating lease obligations was $ 162 million .

At December 31, 2019 , 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 6.9 years and 3.4 % , respectively.

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Future minimum lease payments under non-cancellable leases as of December 31, 2019 were as follows:

Operating Leases		($ million)
2020		$	126
2021		96
2022		70
2023		53
2024		38
2025 and thereafter		125
Total future minimum lease payments		$	508
Less: Interest		( 59		)
Total		$	449

Lessor

The Company, primarily through its Financial Services segment, leases equipment and vehicles 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, 2019 , and 2018 is as follows:

		2019				2018
		(in millions)
Equipment on operating leases		$	2,212			$	2,139
Accumulated depreciation		( 355		)		( 365		)
Net equipment on operating leases		$	1,857			$	1,774

Depreciation expense on equipment on operating leases is recorded in "Other, net" and amounted to $ 250 million , $ 256 million and $ 305 million for the years ended December 31, 2019 , 2018 and 2017 , 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:

		Amount
		(in millions)
2020		$	200
2021		149
2022		82
2023		30
2024		8
2025 and thereafter		3
Total undiscounted lease payments		$	472

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The following table sets out a maturity analysis of finance lease payments, showing the undiscounted lease payments to be received after the reporting date:

		Amount
		(in millions)
2020		$	74
2021		60
2022		45
2023		42
2024		14
2025 and thereafter		22
Total undiscounted lease payments		$	257
Unearned Finance Income		( 18		)
Present Value of Future minimum lease payments		$	239

Changes in the carrying amount of goodwill, for the years ended December 31, 2019 and 2018 are as follows:

		Agriculture				Construction				Commercial & Specialty Vehicles				Powertrain				Financial Services				Total
		(in millions)
Balance at January 1, 2018		$	1,654			$	593			$	64			$	5			$	156			$	2,472
Impact of foreign exchange and other		( 8		)		( 6		)		( 2		)		—				( 3		)		( 19		)
Balance at December 31, 2018		$	1,646			$	587			$	62			$	5			$	153			$	2,453
Impact of foreign exchange and other		6				—				( 3		)		—				2				5
Acquisitions		80				—				—				—				—				80
Balance at December 31, 2019		$	1,732			$	587			$	59			$	5			$	155			$	2,538

Goodwill and other indefinite-lived intangible assets are tested for impairment annually or more frequently if a triggering event occurs. In 2019 and 2018 , CNH Industrial performed its annual impairment review as of December 31.

Impairment testing for goodwill is done at a reporting unit level. Under the goodwill impairment test, CNH Industrial’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 Industrial has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

The vast majority of goodwill, representing approximately 97 % of the total, as of December 31, 2019 , related to Agriculture ( 68 % ), Construction ( 23 % ) and Financial Services ( 6 % ) and as such, the impairment testing of these reporting units is discussed in detail below.

The carrying values for each reporting unit include material allocations of the Company’s assets and liabilities and costs and expenses that are common to all of the reporting units. CNH Industrial believes that the basis for such allocations has been consistently applied and is reasonable.

CNH Industrial determines the fair value of its reporting units using multiple valuation methodologies, relying largely on an income approach but also incorporating value indicators from a market approach, with reference to the reporting units with the most significant allocated goodwill.

Under the income approach, CNH Industrial calculates the fair value of a reporting unit based on the present value of estimated future cash flows. The income approach is dependent on several critical management assumptions, including estimates of future sales in the discrete future period and the weighted average cost of capital (discount rate), and also less significant assumptions such as gross margins, operating costs, income tax rates, terminal value growth rates, capital expenditures, and changes in working capital requirements. Discount rate assumptions include an assessment of the risk inherent in the future cash flows of the respective reporting units. Expected cash flows used under the income approach are developed in conjunction with CNH Industrial budgeting and forecasting process.

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Under the market approach, CNH Industrial estimates the fair value of the Agriculture and Construction reporting units using revenue and EBITDA multiples and estimates the fair value of the Financial Services reporting unit using book value, tangible book value and interest margin multiples. The multiples are derived from comparable publicly-traded companies with similar operating and investment characteristics as the respective reporting units. The guideline company method makes use of market price data of corporations whose stock is actively traded in a public, free and open market, either on an exchange or over-the counter basis. Although it is clear no two companies are entirely alike, the corporations selected as guideline companies must be engaged in the same, or a similar, line of business or be subject to similar financial and business risks, including the opportunity for growth.

As of December 31, 2019 , the estimated fair values of the Agriculture, Construction and Financial Services reporting units exceeded the carrying value by approximately 143 % , 28 % , and 43 % respectively. Thus, we did not recognize an impairment for the respective reporting units. While there is positive margin between the fair value and carrying value for the Construction reporting unit, the fair value can be significantly impacted by changes in assumptions used in the fair value valuation model including expected sales growth in the discrete future period, the weighted average cost of capital (discount rate), and also less significant assumptions such as expected improvements in margin, long term growth rates along with other judgments. Based on our assessment of these circumstances, CNH Industrial has determined that the goodwill at the Construction reporting unit is at risk for impairment going forward should there be a deterioration of projected cash flows of the reporting unit as a result of the Company’s inability to successfully execute its plans to achieve further growth projections.

The sum of the fair values of CNH Industrial’s reporting units was in excess of CNH Industrial’s market capitalization. CNH Industrial believes that the difference between the fair value and market capitalization is reasonable (in the context of assessing whether any asset impairment exists) when market-based control premiums are taken into consideration.

As of December 31, 2019 , and 2018 , the Company’s other intangible assets and related accumulated amortization consisted of the following:

				2019												2018
		Weighted Avg. Life		Gross				Accumulated Amortization				Net				Gross				Accumulated Amortization				Net
				(in millions)
Other intangible assets subject to amortization:
Dealer networks		15		$	320			$	224			$	96			$	320			$	207			$	113
Patents, concessions and licenses and other		5-25		1,965				1,528				437				1,879				1,477				402
				2,285				1,752				533				2,199				1,684				515
Other intangible assets not subject to amortization:
Trademarks				273				—				273				273				—				273
Total Other intangible assets				$	2,558			$	1,752			$	806			$	2,472			$	1,684			$	788

CNH Industrial recorded amortization expense of $ 112 million , $ 116 million , and $ 115 million during 2019 , 2018 , and 2017 , respectively.

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 Industrial. At December 31, 2019 , CNH Industrial’s available committed unsecured facilities expiring after twelve months amounted to $ 5.5 billion ( $ 3.1 billion at December 31, 2018 ).

In March 2019, CNH Industrial 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. The credit facility replaces the existing five-year € 1.75 billion credit facility due to mature in 2021. The first 1 -year option has been exercised and accepted by all lenders, the facility is now due to mature in March 2025. 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

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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 Industrial 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 lead to the requirement to make early repayment of the outstanding advances. At December 31, 2019 , the Company was in compliance with all covenants in the revolving credit facility.

At December 31, 2019 , Financial Services’ committed asset-backed facilities expiring after twelve months amounted to $ 4.1 billion ( $ 3.9 billion at December 31, 2018 ), of which $ 3.0 billion at December 31, 2019 ( $ 3.0 billion at December 31, 2018 ) were utilized.

Debt

A summary of issued bonds outstanding as of December 31, 2019 , is as follows:

		Currency		Face value of outstanding bonds (in millions)			Coupon			Maturity		Outstanding amount ($ millions)
Industrial Activities
Euro Medium Term Notes:
CNH Industrial Finance Europe S.A. (1)		EUR		367			2.875	%		September 27, 2021		413
CNH Industrial Finance Europe S.A. (1)		EUR		75			1.625	%		March 29, 2022		84
CNH Industrial Finance Europe S.A. (1)		EUR		316			1.375	%		May 23, 2022		355
CNH Industrial Finance Europe S.A. (1)		EUR		369			2.875	%		May 17, 2023		414
CNH Industrial Finance Europe S.A. (1)		EUR		650			1.750	%		September 12, 2025		730
CNH Industrial Finance Europe S.A. (1)		EUR		100			3.500	%		November 12, 2025		112
CNH Industrial Finance Europe S.A. (1)		EUR		500			1.875	%		January 19, 2026		562
CNH Industrial Finance Europe S.A. (1)		EUR		600			1.750	%		March 25, 2027		674
CNH Industrial Finance Europe S.A. (1)		EUR		50			3.875	%		April 21, 2028		56
CNH Industrial Finance Europe S.A. (1)		EUR		500			1.625	%		July 3, 2029		562
CNH Industrial Finance Europe S.A. (1)		EUR		50			2.200	%		July 15, 2039		56
Other Bonds:
CNH Industrial N.V. (2)		USD		600			4.500	%		August 15, 2023		600
CNH Industrial N.V. (2)		USD		500			3.850	%		November 15, 2027		500
Hedging effects, bond premium/discount, and unamortized issuance costs												( 57		)
Total Industrial Activities												$	5,061
Financial Services
CNH Industrial Capital LLC		USD		600			4.375	%		November 6, 2020		600
CNH Industrial Capital LLC		USD		500			4.875	%		April 1, 2021		500
CNH Industrial Capital LLC		USD		400			3.875	%		October 15, 2021		400
CNH Industrial Capital LLC		USD		500			4.375	%		April 5, 2022		500
CNH Industrial Capital Australia Pty Ltd.		AUD		175			2.100	%		December 12, 2022		123
CNH Industrial Capital LLC		USD		500			4.200	%		January 15, 2024		500
Hedging effects, bond premium/discount, and unamortized issuance costs												26
Total Financial Services												$	2,649

(1) Bond listed on the Irish Stock Exchange

(2) Bond listed on the New York Stock Exchange

A summary of total debt as of December 31, 2019 and 2018 , is as follows:

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		2019												2018
		Industrial Activities				Financial Services				Total				Industrial Activities				Financial Services				Total
		(in millions)
Total Bonds		$	5,061			$	2,649			$	7,710			$	4,888			$	2,990			$	7,878
Asset-backed debt		—				11,757				11,757				—				11,268				11,268
Other debt		165				5,222				5,387				323				4,976				5,299
Intersegment debt		1,332				1,120				—				1,136				1,202				—
Total Debt		$	6,558			$	20,748			$	24,854			$	6,347			$	20,436			$	24,445

The weighted-average interest rate on consolidated debt at December 31, 2019 , and 2018 was 3.0 % and 3.0 % , respectively.

In March 2017, CNH Industrial Finance Europe S.A. issued as a private placement € 75 million of notes at an annual fixed rate of 1.625 % due in 2022 (the “ 1.625 % CIFE Notes”) at an issue price of 99.407 percent of their principal amount. The 1.625 % CIFE Notes were issued under the € 10 billion Global Medium Term Note Programme (subsequently converted into the Euro Medium Term Note Programme) guaranteed by CNH Industrial N.V.

In April 2017, CNH Industrial Capital LLC issued at par $ 500 million of notes at an annual fixed rate of 4.375 % due in 2022 .

In May 2017, CNH Industrial Finance Europe S.A. issued € 500 million of notes at an annual fixed rate of 1.375 % due in 2022 (the “ 1.375 % CIFE Notes”) at an issue price of 99.335 percent of their principal amount. The 1.375 % CIFE Notes were issued under the € 10 billion Euro Medium Term Note Programme guaranteed by CNH Industrial N.V.

In September 2017, CNH Industrial Finance Europe S.A. issued € 650 million of notes at an annual fixed rate of 1.750 % due in 2025 (the “ 1.750 % CIFE Notes”) at an issue price of 99.248 percent of their principal amount. The 1.750 % CIFE Notes were issued under the € 10 billion Euro Medium Term Note Programme guaranteed by CNH Industrial N.V.

In September 2017, CNH Industrial Finance Europe S.A. repurchased a total of € 800 million in principal amount of its 6.250 % Notes due 2018 and its 2.750 % Notes due 2019.

On October 24, 2017, Fitch Ratings assigned to CNH Industrial N.V. and CNH Industrial Capital LLC new investment grade long-term issuer default ratings of “BBB-”. This rating action and the S&P upgrade on June 15, 2017 made CNH Industrial’s securities eligible for the main investment grade indices in the U.S. market, which CNH Industrial believes has improved its access to funding at better rates.

In November 2017, CNH Industrial N.V. issued $ 500 million of notes at an annual fixed rate of 3.850 % due 2027 with an issue price of 99.384 % .

In August 2018, 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-'. The outlook is stable. 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-'.

In August 2018, CNH Industrial Capital LLC refinanced an April 2018 maturity by issuing $ 500 million of notes at an annual fixed rate of 4.200 % due in January 2024 with an issue price of 99.701 percent of their principal.

In September 2018 CNH Industrial Finance Europe S.A. issued € 500 million of notes at an annual fixed rate of 1.875 % due in 2026 (the “ 1.875 % CIFE Notes”) at an issue price of 98.944 percent of their principal amount. The 1.875 % CIFE Notes were issued under the € 10 billion Euro Medium Term Note Programme guaranteed by CNH Industrial N.V .

In December 2018, Moody's Investors Service ("Moody's") upgraded the senior unsecured ratings of CNH Industrial N.V. and its subsidiaries CNH Industrial Capital LLC and CNH Industrial Finance Europe S.A from Ba1 to Baa3. The outlook is stable.

In December 2018, in order to manage its liabilities, CNH Industrial Finance Europe S.A repurchased, through a public tender, an aggregate nominal amount of € 268 million of the outstanding € 700 million 2.875 % Notes due September 27, 2021 issued under the EMTN.

In March 2019, CNH Industrial Finance Europe S.A. issued € 600 million of notes at an annual fixed rate of 1.75 % due in 2027, at an issue price of 98.597 percent of their principal amount. The 1.75 % CIFE Notes were issued under the € 10 billion Euro Medium Term Note Programme guaranteed by CNH Industrial N.V.

In July 2019, CNH Industrial Finance Europe S.A. issued € 500 million of notes at an annual fixed rate of 1.625 % notes due in 2029 (the “ 1.625 % CIFE Notes”) at with an issue price of 98.926 percent of their principal amount. The 1.625 % CIFE Notes were issued under the € 10 billion Euro Medium Term Note Programme guaranteed by CNH Industrial N.V.

In July 2019, CNH Industrial Finance Europe S.A. issued as a private placement € 50 million of notes at an annual fixed rate of 2.200 % due in 2039 (the “ 2.200 % CIFE Notes”) at an issue price of 98.285 percent of their principal amount. The 2.200 % CIFE Notes were issued under the € 10 billion Euro Medium Term Note Programme guaranteed by CNH Industrial N.V.

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In December 2019, CNH Industrial Capital Australia Pty. Limited issued AUD 175 million of notes at an annual fixed rate of 2.1 % due in 2022 at an issue price of 99.899 percent of their principal amount.

In December 2019, in order to manage its liabilities, CNH Industrial Finance Europe S.A. repurchased, through a public tender, an aggregate nominal amount of € 64 million of the 2.875 % notes due September 27, 2021 issued under the EMTN; an aggregate nominal amount of € 184 million of the 1.375 % notes due May 23, 2022 issued under the EMTN, and an aggregate nominal amount of € 131 million of the 2.875 % notes due May 17, 2023 issued under the EMTN.

In July 2019, Fitch Ratings (“Fitch”) improved the outlook of CNH Industrial N.V. to positive from stable. Fitch also affirmed CNH Industrial N.V.’s and CNH Industrial Capital LLC’s long-term issuer default rating at “BBB-”.

With the purpose of further diversifying Financial Services’ funding structure, CNH Industrial Capital LLC has established a commercial paper program in the U.S. This program had an outstanding amount of $ 387 million at December 31, 2019. CNH Industrial Financial Services S.A. in Europe issues commercial paper under a program which had an outstanding amount of $ 105 million at December 31, 2019.

The bonds issued by the Group 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 $ 1.5 billion at December 31, 2019 and 2018 , 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 vehicles in accordance with the program.

A summary of the minimum annual repayments of debt as of December 31, 2019 , for 2020 and thereafter is as follows:

		Industrial Activities				Financial Services				Consolidated
		(in millions)
2020		$	34			$	10,439			$	10,473
2021		427				4,757				5,184
2022		458				2,372				2,830
2023		1,034				905				1,939
2024		4				987				991
2025 and thereafter		3,269				168				3,437
Intersegment		1,332				1,120				—
Total		$	6,558			$	20,748			$	24,854

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CNH Industrial N.V. and its subsidiaries have substantial worldwide operations. CNH Industrial N.V.’s subsidiaries incur tax obligations in the jurisdictions in which they operate. The Company’s provision (benefit) for income taxes as reported in its consolidated statements of operations for the year ended December 31, 2019 of $( 271 ) 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, 2019 , 2018 , and 2017 are as follows:

		2019				2018				2017
		(in millions)
Parent country source		$	( 3	)		$	( 6	)		$	( 211	)
Foreign sources		1,173				1,472				870
Income (loss) before taxes and equity in income of unconsolidated subsidiaries and affiliates		$	1,170			$	1,466			$	659

The provision for income taxes for the years ended December 31, 2019 , 2018 and 2017 consisted of the following:

		2019				2018				2017
		(in millions)
Current income taxes		$	203			$	353			$	354
Deferred income taxes		( 474		)		64				103
Total income tax provision (benefit)		$	( 271	)		$	417			$	457

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 on the basis of the weighted average of the U.K. statutory corporation tax rates in force over each of the Company’s calendar year reporting periods of 19.25 % in 2017 , 19 % in 2018 and 19 % in 2019 . A reconciliation of CNH Industrial’s income tax expense for the years ended December 31, 2019 , 2018 and 2017 is as follows:

		2019				2018				2017
		(in millions)
Tax provision at the parent statutory rate		$	222			$	278			$	127
Foreign income taxed at different rates		79				102				94
Change in valuation allowance		( 502		)		31				166
Italian IRAP taxes		14				21				17
Tax contingencies		7				29				18
Tax credits and incentives		( 88		)		( 66		)		( 48		)
Venezuela remeasurement, and impairment and deconsolidation charges		—				—				18
Change in tax rate or law		( 5		)		( 8		)		46
Withholding taxes		2				7				6
Other		—				23				13
Total income tax provision (benefit)		$	( 271	)		$	417			$	457

The effective tax rate reduction in 2019 was primarily caused by the Company reporting, during the three and nine month periods ending September 30, 2019, a $ 539 million discrete tax benefit associated with recognizing a substantial portion the deferred tax assets associated with its Italian operations, increased tax credit and incentive benefits associated with multiple jurisdictions in which the Company operates and a reduced impact of tax contingencies, which was also associated with multiple tax jurisdictions.

The effective tax rate reduction in 2018 was primarily caused by the difference in tax accruals attributable to the U.S. Tax Act and other tax law changes, a reduced negative impact of recording valuation allowances against certain of our deferred tax assets, a more favorable geographic mix of pre-tax earnings, and a reduced U.S. tax rate pursuant to the U.S. Tax Act. As described further below, during 2017 the Company reported provisional tax impacts associated with the U.S. Tax Act, which was enacted in December 2017. In 2018 and in accordance with Staff Accounting Bulletin No. 118, the Company finalized its accounting for the impacts of the U.S. Tax Act, which

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resulted in an $ 8 million tax benefit being reported during 2018. In addition, amongst other items, the U.S. Tax Act enacted a tax upon global intangible low tax income, a so-called GILTI tax. The Company has made a policy election to account for the GILTI tax as a current period cost, rather than under the deferred tax method.

During the last quarter of 2017, new tax legislation was enacted in several jurisdictions, primarily including the U.S. and the U.K. In connection with these legislative changes, the Company reported a $ 46 million tax expense related to the U.S. mandatory deemed repatriation tax and the write-down of deferred tax assets in the relevant jurisdictions. In addition, also in the last quarter of 2017, the Company established an $ 84 million valuation allowance against deferred tax assets in its U.K. operations as a result of new tax legislation in the U.K.

At December 31, 2019 , undistributed earnings in certain subsidiaries outside the U.K. totaled approximately $ 5 billion for which no deferred tax liability has been recorded because the remittance of earnings from certain jurisdictions would incur no tax or such earnings are indefinitely reinvested. The Company has determined the amount of unrecognized deferred tax liability relating to the $ 5 billion undistributed earnings was approximately $ 68 million and attributable to foreign withholding taxes in certain jurisdictions. Further, the Company evaluated the undistributed earnings from its joint ventures in which it owned 50% or less and recorded $ 8 million of deferred tax liabilities as of December 31, 2019 . The repatriation of undistributed earnings to the U.K. is generally exempt from U.K. income taxes under a full participation exemption.

Deferred Income Tax Assets and Liabilities

The components of net deferred tax assets as of December 31, 2019 and 2018 are as follows:

		2019				2018
		(in millions)
Deferred tax assets:
Inventories		$	66			$	104
Warranty and campaigns		170				192
Allowance for credit losses		155				163
Marketing and sales incentive programs		285				268
Other risk and future charges reserve		265				273
Pension, postretirement and postemployment benefits		253				237
Leasing liabilities		114				—
Research and development costs		311				420
Other reserves		347				393
Tax credits and loss carry forwards		677				616
Less: Valuation allowances		( 993		)		( 1,626		)
Total deferred tax assets		$	1,650			$	1,040
Deferred tax liabilities:
Property, plant and equipment		$	523			$	357
Other		165				206
Total deferred tax liabilities		688				563
Net deferred tax assets		$	962			$	477

Net deferred tax assets are reflected in the accompanying consolidated balance sheets as of December 31, 2019 and 2018 as follows:

		2019				2018
		(in millions)
Deferred tax assets		$	1,134			$	591
Deferred tax liabilities		( 172		)		( 114		)
Net deferred tax assets		$	962			$	477

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Valuation Allowances

As of December 31, 2019 , the Company has valuation allowances of $ 993 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 operations in Brazil, Germany, Italy and the U.K.

CNH Industrial has gross tax loss carry forwards in several tax jurisdictions. These tax losses expire as follows: $ 68 million in 2020 ; $ 122 million in 2021 ; $ 86 million in 2022 ; $ 123 million in 2023 ; $ 418 million in 2024 and beyond. CNH Industrial also has tax loss carry forwards of approximately $ 2 billion with indefinite lives. CNH Industrial has tax credit carry forwards. The years in which these tax credits expire are as follows: $ 1 million in 2023 ; and $ 53 million in 2024 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 2009 to 2018 . Due to the global nature of the Company’s business, transfer pricing disputes may arise and the Company may seek correlative relief through competent authority processes.

A reconciliation of the gross amounts of tax contingencies at the beginning and end of the year is as follows:

		2019				2018
		(in millions)
Balance, beginning of year		$	268			$	320
Additions based on tax positions related to the current year		26				22
Additions for tax positions of prior years		32				46
Reductions for tax positions of prior years		( 32		)		( 60		)
Reductions for tax positions as a result of lapse of statute		( 14		)		( 24		)
Settlements		( 25		)		( 36		)
Balance, end of year		$	255			$	268

As of December 31, 2019 , there are $ 209 million of unrecognized tax 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, 2019 , 2018 and 2017 , the Company recognized expense of approximately $ 6 million , $ 13 million and $( 1 ) million for income tax related interest and penalties, respectively. The Company had approximately $ 25 million , $ 21 million and $ 11 million of income tax related interest and penalties accrued at December 31, 2019 , 2018 and 2017 , respectively.

CNH Industrial 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 Industrial 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 Industrial 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, 2019 , 2018 , and 2017 , CNH Industrial recorded expense of $ 188 million , $ 198 million , and $ 189 million , respectively, for its defined contribution plans.

Defined benefit plans are classified by CNH Industrial 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.

In November 2019, CNH Industrial signed a group annuity contract to transfer the outstanding pension benefit obligations related to certain retirees and beneficiaries within the U.S. plans. In connection with this transaction, $ 431 million of plan obligations were transferred along with $ 451 million of plan assets. The Company also recognized a $ 116 million pre-tax non-cash settlement charge, primarily related to the accelerated recognition of actuarial losses in those plans in the fourth quarter of 2019.

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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 Industrial 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 Industrial plans. These benefits may be subject to deductibles, co-payment provisions and other limitations, and CNH Industrial 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 Industrial 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 Industrial to terminate or modify various retiree healthcare benefits previously provided to certain UAW Union represented CNH Industrial retirees. On April 16, 2018, CNH Industrial 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 Industrial retirees who had been represented by the UAW. The Benefits Modification resulted in a reduction of the plan liability by $ 527 million . This amount will be 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. For the years ended December 31, 2019 and 2018 , $ 119 million and $ 80 million of amortization was recorded as a pre-tax gain in Other, net, respectively.

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 Industrial’s defined benefit pension, healthcare and other postemployment plans for the years ended December 31, 2019 and 2018 :

		Pension								Healthcare (1)								Other (1)
		2019				2018				2019				2018				2019				2018
		(in millions)
Change in benefit obligations:
Beginning benefit obligation		$	3,029			$	3,365			$	434			$	1,120			$	422			$	470
Service cost		23				25				5				6				13				15
Interest cost		74				71				14				24				3				3
Plan participants’ contributions		3				3				10				9				—				—
Actuarial loss (gain)		377				( 140		)		45				( 129		)		37				( 8		)
Gross benefits paid		( 156		)		( 207		)		( 42		)		( 63		)		( 37		)		( 37		)
Plan amendments		( 2		)		22				( 47		)		( 530		)		—				—
Currency translation adjustments and other (2)		( 410		)		( 110		)		( 7		)		( 3		)		( 7		)		( 21		)
Ending benefit obligation		$	2,938			$	3,029			$	412			$	434			$	431			$	422
Change in the fair value of plan assets:
Beginning plan assets		2,281				2,517				141				184				—				—
Actual return on plan assets		305				( 46		)		27				( 6		)		—				—
Employer contributions		53				55				—				—				—				—
Plan participants’ contributions		3				3				—				—				—				—
Gross benefits paid		( 130		)		( 179		)		( 16		)		( 37		)		—				—
Currency translation adjustments and other (2)		( 416		)		( 69		)		—				—				—				—
Ending plan assets		2,096				2,281				152				141				—				—
Funded status:		$	( 842	)		$	( 748	)		$	( 260	)		$	( 293	)		$	( 431	)		$	( 422	)

(1)	The healthcare and other postemployment plans are not required to be prefunded.

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(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 a group annuity contract purchase in November 2019.

The following summarizes data from CNH Industrial’s defined benefit pension plans by significant geographical area for the years ended December 31, 2019 and 2018 :

		U.S.								U.K								Germany (1)								Other Countries (1)
		2019				2018				2019				2018				2019				2018				2019				2018
		(in millions)
Change in benefit obligations:
Beginning benefit obligation		$	1,015			$	1,173			$	1,290			$	1,409			$	409			$	453			$	315			$	330
Service cost		3				4				4				4				3				4				13				13
Interest cost		36				35				30				29				4				4				4				3
Plan participants’ contributions		—				—				—				—				—				—				3				3
Actuarial loss (gain)		132				( 85		)		166				( 39		)		39				( 4		)		40				( 10		)
Gross benefits paid		( 70		)		( 112		)		( 47		)		( 56		)		( 25		)		( 28		)		( 14		)		( 11		)
Plan amendments		—				—				—				21				—				—				( 2		)		—
Currency translation adjustments and other (2)		( 450		)		—				45				( 78		)		( 6		)		( 20		)		1				( 13		)
Ending benefit obligation		$	666			$	1,015			$	1,488			$	1,290			$	424			$	409			$	360			$	315
Change in the fair value of plan assets:
Beginning plan assets		1,030				1,207				951				1,005				5				5				295				300
Actual return on plan assets		190				( 65		)		88				14				—				—				27				3
Employer contributions		—				—				42				44				—				—				11				11
Plan participants’ contributions		—				—				—				—				—				—				3				3
Gross benefits paid		( 69		)		( 112		)		( 47		)		( 56		)		—				—				( 14		)		( 11		)
Currency translation adjustments and other (2)		( 451		)		—				33				( 56		)		—				—				2				( 11		)
Ending plan assets		$	700			$	1,030			$	1,067			$	951			$	5			$	5			$	324			$	295
Funded status:		$	34			$	15			$	( 421	)		$	( 339	)		$	( 419	)		$	( 404	)		$	( 36	)		$	( 20	)

(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 a group annuity contract purchase in November 2019.

Net amounts recognized in the consolidated balance sheets as of December 31, 2019 and 2018 consist of:

		Pension								Healthcare								Other
		2019				2018				2019				2018				2019				2018
		(in millions)
Other assets		$	45			$	25			$	—			$	—			$	—			$	—
Pension, postretirement and other postemployment benefits		( 887		)		( 773		)		( 260		)		( 293		)		( 431		)		( 422		)
Net liability recognized at end of year		$	( 842	)		$	( 748	)		$	( 260	)		$	( 293	)		$	( 431	)		$	( 422	)

Pre-tax amounts recognized in accumulated other comprehensive loss as of December 31, 2019 consist of:

		Pension				Healthcare				Other
		(in millions)
Unrecognized actuarial losses		$	859			$	50			$	103
Unrecognized prior service credit		1				( 374		)		( 5		)
Accumulated other comprehensive loss		$	860			$	( 324	)		$	98

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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
		2019				2018
		(in millions)
Accumulated benefit obligation		$	2,108			$	1,753
Fair value of plan assets		$	1,240			$	991

The following table summarizes CNH Industrial’s pension and other postemployment plans with projected benefit obligations in excess of plan assets:

		Pension								Healthcare								Other
		2019				2018				2019				2018				2019				2018
		(in millions)
Projected benefit obligation		$	2,219			$	1,951			$	412			$	434			$	431			$	422
Fair value of plan assets		$	1,332			$	1,178			$	152			$	141			$	—			$	—

The total accumulated benefit obligation for pension was $ 2,915 million and $ 3,011 million as of December 31, 2019 and 2018 , respectively.

Net Periodic Benefit Cost

The following summarizes the components of net periodic benefit cost of CNH Industrial’s defined benefit for the years ended December 31, 2019 , 2018 , and 2017 :

		Pension												Healthcare												Other
		2019				2018				2017				2019				2018				2017				2019				2018				2017
		(in millions)
Service cost		$	23			$	25			$	30			$	5			$	6			$	6			$	13			$	15			$	15
Interest cost		74				71				74				14				24				36				3				3				3
Expected return on assets		( 99		)		( 112		)		( 111		)		( 7		)		( 7		)		( 7		)		—				—				—
Amortization of:
Prior service cost (credit)		1				( 1		)		( 1		)		( 125		)		( 82		)		( 2		)		1				1				1
Actuarial loss (gain)		67				74				90				( 2		)		7				6				14				4				5
Settlement loss and other		125				1				4				—				—				—				2				1				2
Net periodic benefit cost		$	191			$	58			$	86			$	( 115	)		$	( 52	)		$	39			$	33			$	24			$	26

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 2019 consist of:

		Pension				Healthcare				Other
		(in millions)
Net periodic benefit cost		$	191			$	( 115	)		$	33
Benefit adjustments included in other comprehensive (income) loss:
Net actuarial losses (gains)		55				25				35
Amortization of actuarial losses		( 67		)		2				( 14		)
Amortization of prior service (cost) credit		( 2		)		125				( 1		)
Currency translation adjustments and other		13				( 55		)		—
Total recognized in other comprehensive (income) loss		( 1		)		97				20
Total recognized in comprehensive loss		$	190			$	( 18	)		$	53

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Pre-tax amounts expected to be amortized in 2020 from accumulated other comprehensive loss consist of:

		Pension				Healthcare				Other
		(in millions)
Actuarial losses		$	41			$	3			$	1
Prior service cost (credit)		—				( 131		)		—
Total		$	41			$	( 128	)		$	1

Actuarial gains and losses are recorded in accumulated other comprehensive income (loss). To the extent unamortized gains and losses exceed 10 % of the higher of the market-related value of assets or the benefit obligation, the excess is amortized as a component of net periodic cost over the remaining service period of the active participants. For plans in which all or almost all of the plan's participants are inactive, the amortization period is the remaining life expectancy of the inactive participants.

Assumptions

The following assumptions were utilized in determining the funded status at December 31, 2019 and 2018 , and the net periodic benefit cost of CNH Industrial’s defined benefit plans for the years ended December 31, 2019 , 2018 , and 2017 :

		Pension plans						Healthcare plans						Other
(in %)		2019		2018		2017		2019		2018		2017		2019		2018		2017
Assumptions used to determine funded status at December 31
Weighted-average discount rate		1.88		2.91		2.57		2.99		4.12		3.53		0.69		1.62		1.47
Weighted-average rate of compensation increase		2.99		3.00		3.01		n/a		n/a		n/a		1.91		1.41		1.11
Weighted-average, initial healthcare cost trend rate		n/a		n/a		n/a		4.68		6.17		6.46		n/a		n/a		n/a
Weighted-average, ultimate healthcare cost trend rate(*)		n/a		n/a		n/a		4.20		5.00		5.00		n/a		n/a		n/a
Assumptions used to determine expense
Weighted-average discount rates - service cost		1.97		1.79		2.15		4.03		3.58		3.96		1.76		1.64		1.67
Weighted-average discount rates - interest cost		2.58		2.20		2.33		3.53		3.19		3.39		1.50		1.34		1.40
Weighted-average rate of compensation increase		3.00		3.01		2.95		n/a		n/a		n/a		1.41		1.11		1.19
Weighted-average long-term rates of return on plan assets		4.68		4.58		4.74		5.50		4.50		6.25		n/a		n/a		n/a
Weighted-average, initial healthcare cost trend rate		n/a		n/a		n/a		6.17		6.46		6.72		n/a		n/a		n/a
Weighted-average, ultimate healthcare cost trend rate(*)		n/a		n/a		n/a		5.00		5.00		5.00		n/a		n/a		n/a

(*)	CNH Industrial expects to achieve the ultimate healthcare cost trend rate in 2025 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 Industrial 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 Industrial’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,

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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.

In October 2014, the Society of Actuaries (“SOA”) in the U.S. issued an updated mortality table (“RP-2014”) and mortality improvement scale (“MP-2014”). Accordingly, CNH Industrial reviewed the historical mortality experience and demographic characteristics of its U.S. pension plan participants and has decided to adopt the variants of blue-collar tables of RP-2014 (with MP-2014 removed) as the base mortality tables. This table with a newer version of the mortality improvement scale, MP-2017, was used at December 31, 2017.

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 which led to an increase of $ 4.3 million to the Company's benefit obligations at December 31, 2018. In addition, in 2018, CNH Industrial adopted the MP-2018 mortality improvement scale, which better reflects the actual recent experience over the previous mortality improvement scales. The adoption of the new mortality assumptions resulted in a total decrease of $ 3.6 million to the Company’s benefit obligations at December 31, 2018, of which, $ 3 million and $ 0.6 million were related to pension plans and healthcare plans, respectively.

In October 2019, the SOA issued an updated mortality base table ("Pri-2012") as well as an updated mortality improvement scale (“MP-2019”). The Pri-2012 mortality base table reflects more recent mortality experience, uses a larger data set than the previous base table and includes separate mortality rates for survivors of deceased participants still benefiting under the plans. In 2019, the Company adopted the variant of blue-collar tables of the Pri-2012 for the US pension plans and the no collar variant of the PriH-2012 for the US Healthcare plans, including the new survivor mortality as well as MP-2019 mortality improvement scale. Management believes the new mortality assumptions most appropriately represent its plans’ experience and characteristics. The adoption of the new mortality assumptions resulted in a total decrease of $ 14 million to the Company’s benefit obligations at December 31, 2019, of which, $ 11 million and $ 3 million were related to pension plans and healthcare plans, respectively.

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.

A one percentage point change in the assumed healthcare cost trend rates would have the following effect:

		One Percentage- Point Increase				One Percentage- Point Decrease
		(in millions)
Total increase/(decrease) in service cost and interest cost components of 2019 Healthcare Plan benefit expense		$	2			$	( 1	)
Total increase/(decrease) in accumulated Healthcare benefit obligations as of December 31, 2019		$	22			$	( 19	)

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 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.

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Weighted average target asset allocation for all plans for 2019 are as follows:

		All Plans
Asset category:
Equity securities		17	%
Debt securities		54	%
Cash/Other		29	%

CNH Industrial determines the fair value of plan assets using observable market data obtained from independent sources when available. CNH Industrial 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, 2019 :

		Total				Level 1				Level 2				Level 3
		(in millions)
Equity securities:
U.S. equities		$	—			$	—			$	—			$	—
Non-U.S. equities		—				—				—				—
Total Equity securities		—				—				—				—
Fixed income securities:
U.S. government bonds		124				122				2				—
U.S. corporate bonds		34				5				29				—
Non-U.S. government bonds		47				9				38				—
Non-U.S. corporate bonds		25				—				25				—
Mortgage backed securities		—				—				—				—
Other fixed income		—				—				—				—
Total Fixed income securities		230				136				94				—
Other types of investments:
Mutual funds (A)		1,802				20				1,782				—
Insurance contracts		171				—				—				171
Derivatives—credit contracts		—				—				—				—
Real estate		—				—				—				—
Total Other types of investments		1,973				20				1,782				171
Cash:		45				17				28				—
Total		$	2,248			$	173			$	1,904			$	171

(A) This category includes mutual funds, which primarily invest in non-U.S. equities and non-U.S. corporate bonds.

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The following table presents the changes in the Level 3 plan assets for the year ended December 31, 2019 :

		Insurance Contracts (in millions)
Balance at December 31, 2018		$	152
Actual return on plan assets relating to assets still held at reporting date		12
Purchases		8
Settlements		( 3		)
Transfers in and/or out of level 3		—
Currency impact		2
Balance at December 31, 2019		$	171

The following summarizes the fair value of plan assets by asset category and level within the fair value hierarchy as of December 31, 2018 :

		Total				Level 1				Level 2				Level 3
		(in millions)
Equity securities:
U.S. equities		$	288			$	16			$	272			$	—
Non-U.S. equities		—				—				—				—
Total Equity securities		288				16				272				—
Fixed income securities:
U.S. government bonds		356				349				7				—
U.S. corporate bonds		421				—				421				—
Non-U.S. government bonds		47				9				38				—
Non-U.S. corporate bonds		73				—				73				—
Mortgage backed securities		—				—				—				—
Other fixed income		11				—				11				—
Total Fixed income securities		908				358				550				—
Other types of investments:
Mutual funds (A)		990				—				990				—
Insurance contracts		152				—				—				152
Derivatives—credit contracts		—				—				—				—
Real estate		—				—				—				—
Total Other types of investments		1,142				—				990				152
Cash:		84				46				38				—
Total		$	2,422			$	420			$	1,850			$	152

(A) This category includes mutual funds, which primarily invest in non-U.S. equities and non-U.S. corporate bonds.

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The following table presents the changes in the Level 3 plan assets for the year ended December 31, 2018 :

		Insurance Contracts (in millions)
Balance at December 31, 2017		$	149
Actual return on plan assets relating to assets still held at reporting date		3
Purchases		8
Settlements		( 4		)
Transfers in and/or out of Level 3		—
Currency impact		( 4		)
Balance at December 31, 2018		$	152

Contributions

CNH Industrial expects to contribute (including through direct benefit payments) approximately $ 65 million to its pension plans, $ 21 million to its healthcare plans and $ 31 million to its other postemployment plans in 2020 .

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:

		Pension Plans				Healthcare				Medicare Part D Reimbursement				Other
	(in millions)
2020		$	136			$	33			$	—			$	31
2021		135				32				—				27
2022		138				30				—				30
2023		142				30				—				28
2024		138				29				—				28
2025 - 2029		713				139				( 1		)		137
Total		$	1,402			$	293			$	( 1	)		$	281

A summary of “Other liabilities” as of December 31, 2019 and 2018 is as follows:

		2019				2018
		(in millions)
Advances on buy-back agreements		$	1,472			$	1,870
Warranty and campaign programs		919				925
Marketing and sales incentive programs		1,279				1,329
Tax payables		696				685
Accrued expenses and deferred income		639				609
Accrued employee benefits		562				680
Lease liabilities		449				—
Legal reserves and other provisions		299				368
Contract reserve		319				262
Contract liabilities		1,236				1,368
Restructuring reserve		103				71
Other		866				791
Total		$	8,839			$	8,958

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Warranty and Campaign Program

As described in “Note 2: Summary of Significant Accounting Policies,” CNH Industrial 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, 2019 and 2018 are as follows:

		2019				2018
		(in millions)
Balance, beginning of year		$	925			$	932
Current year additions		801				826
Claims paid		( 749		)		( 724		)
Currency translation adjustment and other		( 58		)		( 109		)
Balance, end of year		$	919			$	925

Advance on Buy-back Agreements

As described in “Note 2: Summary of Significant Accounting Policies,” the repurchase value of the asset relating to new vehicle sales with a buy-back commitment by Commercial and Specialty Vehicles is recognized as advances on buy-back agreements.

Restructuring Provision

The Company incurred restructuring costs of $ 109 million , $ 61 million and $ 93 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively. These costs were as follows:

•	In 2019 , Commercial and Specialty Vehicles, Agriculture, Construction and Powertrain recorded $ 37 million , $ 41 million , $18 million and $7 million respectively, which were primarily attributable to actions including the “Transform2Win” strategy.

•	In 2018 , Commercial and Specialty Vehicles and Agriculture recorded $ 30 million and $ 26 million respectively, which were primarily attributable to actions as part of the Efficiency Program launched in 2014.

•

In 2017 , Commercial and Specialty Vehicles recorded $ 69 million mainly due to additional capacity realignment in the firefighting business and actions to reduce selling, general and administrative expenses as part of CNH Industrial’s Efficiency Program launched in 2014. Agricultural Equipment recorded $ 14 million , mainly as a result of footprint rationalization actions included in the Efficiency Program of the Company.

The following table sets forth restructuring activity for the years ended December 31, 2019 , 2018 and 2017 :

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		Severance and Other Employee Costs				Facility Related Costs				Other Restructuring				Total
		(in millions)
Balance at January 1, 2017		$	23			$	7			$	—			$	30
Restructuring charges		76				17				—				93
Reserves utilized: cash		( 53		)		( 1		)		—				( 54		)
Reserves utilized: non-cash		( 2		)		( 13		)		—				( 15		)
Currency translation adjustments		4				2				—				6
Balance at December 31, 2017		$	48			$	12			$	—			$	60
Restructuring charges		39				17				5				61
Reserves utilized: cash		( 36		)		—				( 2		)		( 38		)
Reserves utilized: non-cash		( 9		)		1				—				( 8		)
Currency translation adjustments		( 2		)		—				( 2		)		( 4		)
Balance at December 31, 2018		$	40			$	30			$	1			$	71
Restructuring charges		98				( 2		)		13				109
Reserves utilized: cash		( 77		)		25				( 4		)		( 56		)
Reserves utilized: non-cash		3				( 16		)		( 7		)		( 20		)
Currency translation adjustments		( 2		)		1				—				( 1		)
Balance at December 31, 2019		$	62			$	38			$	3			$	103

As a global company with a diverse business portfolio, CNH Industrial is exposed to numerous legal risks, including dealer and supplier litigation, intellectual property right disputes, product warranty and defective product claims, product performance, asbestos, personal injury, emissions and/or fuel economy regulatory and contractual issues, and environmental claims that arise in the ordinary course of business. 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 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 insurers’ compensation payments and could affect CNH Industrial’s financial position and results. When it is probable that such a loss has been incurred and the amount can be reasonably estimated, an accrual has been made against the Company’s earnings and included in “Other liabilities” on the consolidated balance sheets.

Although the ultimate outcome of legal matters pending against CNH Industrial 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 Industrial 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 Industrial 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 Industrial 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

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Industrial 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.

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 Industrial 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, 2019 and 2018 , environmental reserves of approximately $ 32 million and $ 38 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: Iveco S.p.A., the Company’s wholly owned subsidiary, and its competitors were subject to an investigation by the European Commission (the “Commission”) into certain business practices in the European Union in relation to M&H trucks. On July 19, 2016, the Commission announced a settlement with Iveco. Following the settlement, CNH Industrial has been named as defendant in private litigation commenced in various European jurisdictions and Israel by customers and other third parties, either acting individually or as part of a wider group or class of claimants. These claims remain at an early stage. Further, on the basis of the letters issued by a significant number of customers indicating that they may commence proceedings in the future, CNH Industrial expects to face further claims based on the same legal grounds in the same and various other jurisdictions. The extent and outcome of these claims cannot be predicted at this time.

Commitments

CNH Industrial has entered operating lease contracts for the right to use industrial buildings and equipment and other assets.

Refer to Note 8 for future minimum lease payments under non-cancellable lease contracts .

At December 31, 2019 , Financial Services has various agreements to extend credit for the following financing arrangements:

Facility		Total Credit Limit				Utilized				Not Utilized
		(in millions)
Wholesale and dealer financing		$	6,817			$	3,864			$	2,953

Guarantees

The Company 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. The Company did not elect 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.

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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 Industrial 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 Industrial 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 Industrial 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 Industrial 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. The maturity of these instruments does not exceed 24 months and the after-tax gains (losses) deferred in accumulated other comprehensive income (loss) that will be recognized in net sales and cost of goods sold over the next twelve months assuming foreign exchange rates remain unchanged is approximately $( 73 ) million . 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.

CNH Industrial 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 Industrial’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 Industrial’s foreign exchange derivatives was $ 6.9 billion and $ 7.2 billion at December 31, 2019 and 2018 , respectively.

Interest Rate Derivatives

CNH Industrial 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

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which CNH Industrial recognizes interest expense on the related debt. The after-tax gains (losses) deferred in accumulated other comprehensive income (loss) that will be recognized in interest expense over the next twelve months is insignificant.

Interest rate derivatives that have been designated as fair value hedge relationships have been used by CNH Industrial 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 Industrial 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 Industrial’s committed asset-backed facilities. Unrealized and realized gains and losses resulting from fair value changes in these instruments are recognized directly in income. These facilities require CNH Industrial to enter into interest rate derivatives. To ensure that these transactions do not result in the Company being exposed to this risk, CNH Industrial enters into a compensating position. Net gains and losses on these instruments were insignificant for the years ending December 31, 2019 , 2018 , and 2017 .

All of CNH Industrial’s interest rate derivatives outstanding as of December 31, 2019 and 2018 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 Industrial’s interest rate derivatives was approximately $ 5.4 billion and $ 5.4 billion at December 31, 2019 and 2018 , respectively.

Financial Statement Impact of CNH Industrial 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, 2019 , December 31, 2018 and December 31, 2017 (in millions):

						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
2019
Foreign exchange contracts		$	( 113	)		Net sales		$	—
						Cost of goods sold		( 69		)
						Other, net		( 16		)
						Interest expense, net		( 8		)
Interest rate contracts		( 22		)
Total		$	( 135	)				$	( 93	)
2018
Foreign currency contracts		$	2			Net sales		$	( 7	)
						Cost of goods sold		15
						Other, net		20
						Interest expense, net		( 4		)
Interest rate contracts		1
Total		$	3					$	24
2017
Foreign currency contracts		$	48			Net sales		$	6
						Cost of goods sold		( 47		)
						Other, net		10
						Interest expense, net		—
Interest rate contracts		5
Total		$	53					$	( 31	)

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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, 2019 and 2018 :

(in millions)		Before-Tax Amount				Income Tax				After-Tax Amount
Accumulated derivative net losses as of December 31, 2018		$	( 20	)		$	( 2	)		$	( 22	)
Net changes in fair value of derivatives		( 135		)		24				( 111		)
Net losses reclassified from accumulated other comprehensive income into income		93				( 14		)		79
Accumulated derivative net losses as of December 31, 2019		$	( 62	)		$	8			$	( 54	)

(in millions)		Before-Tax Amount				Income Tax				After-Tax Amount
Accumulated derivative net losses as of December 31, 2017		$	1			$	—			$	1
Net changes in fair value of derivatives		3				( 4		)		( 1		)
Net losses reclassified from accumulated other comprehensive income into income		( 24		)		2				( 22		)
Accumulated derivative net losses as of December 31, 2018		$	( 20	)		$	( 2	)		$	( 22	)

(in millions)		Before-Tax Amount				Income Tax				After-Tax Amount
Accumulated derivative net losses as of December 31, 2016		$	( 83	)		$	( 5	)		$	( 88	)
Net changes in fair value of derivatives		53				3				56
Net losses reclassified from accumulated other comprehensive income into income		31				2				33
Accumulated derivative net losses as of December 31, 2017		$	1			$	—			$	1

The following tables summarize the impact that 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, 2019 and 2018 :

				For the Year Ended December 31,
(in millions)		Classification of Gain		2019				2018			2017
Fair Value Hedges
Interest rate derivatives		Interest expense		$	31			$	9		$	( 12	)
Not Designated as Hedges
Foreign exchange contracts		Other, Net		$	( 73	)		$	68		$	( 3	)

The fair values of CNH Industrial’s derivatives as of December 31, 2019 and December 31, 2018 in the condensed consolidated balance sheets are recorded as follows:

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		December 31, 2019					December 31, 2018
(in millions)		Balance Sheet Location		Fair Value			Balance Sheet Location		Fair Value
Derivatives designated as hedging instruments under Subtopic 815-20
Interest rate contracts		Derivative assets		44			Derivative assets		21
Foreign currency contracts		Derivative assets		17			Derivative assets		52
Total derivative assets designated as hedging instruments				61					73
Interest rate contracts		Derivative liabilities		29			Derivative liabilities		29
Foreign currency contracts		Derivative liabilities		69			Derivative liabilities		41
Total derivative liabilities designated as hedging instruments				98					70
Derivatives not designated as hedging instruments under Subtopic 815-20
Interest rate contracts		Derivative assets		—			Derivative assets		1
Foreign currency contracts		Derivative assets		12			Derivative assets		24
Total derivative assets not designated as hedging instruments				12					25
Interest rate contracts		Derivative liabilities		—			Derivative liabilities		—
Foreign currency contracts		Derivative liabilities		23			Derivative liabilities		38
Total derivative liabilities not designated as hedging instruments				23					38

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, 2019 and December 31, 2018 :

	Level 1								Level 2								Total
	December 31, 2019				December 31, 2018				December 31, 2019				December 31, 2018				December 31, 2019				December 31, 2018
	(in millions)
Assets
Foreign exchange derivatives	$	—			$	—			$	29			$	76			$	29			$	76
Interest rate derivatives	—				—				44				22				44				22
Investments	1				1				—				—				1				1
Total Assets	$	1			$	1			$	73			$	98			$	74			$	99
Liabilities
Foreign exchange derivatives	$	—			$	—			$	( 92	)		$	( 79	)		$	( 92	)		$	( 79	)
Interest rate derivatives	—				—				( 29		)		( 29		)		( 29		)		( 29		)
Total Liabilities	$	—			$	—			$	( 121	)		$	( 108	)		$	( 121	)		$	( 108	)

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 condensed consolidated balance sheets approximates its fair value.

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Financial Instruments Not Carried at Fair Value

The estimated fair market values of financial instruments not carried at fair value in the condensed consolidated balance sheets as of December 31, 2019 and 2018 are as follows:

	December 31, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in millions)
Financing receivables	$ 19,428		$ 19,375		$ 19,167		$ 19,017
Debt	$ 24,854		$ 25,249		$ 24,445		$ 24,841

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.

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, 2019 , the Company’s share capital was € 18 million (equivalent to $ 25 million ), fully paid-in, and consisted of 1,364,400,196 common shares ( 1,350,132,117 common shares outstanding, net of 14,268,079 common shares held in treasury by the Company as described in the following section) and 396,474,276 special voting shares ( 387,951,166 special voting shares outstanding, net of 8,523,110 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 during 2019 , 2018 , and 2017 are as follows:

(number of shares)		CNH Industrial N.V. Common Shares			CNH Industrial N.V. Loyalty Program Special Voting Shares			Total CNH Industrial N.V. Shares
Total CNH Industrial N.V. shares at December 31, 2016		1,361,630,903			412,268,203			1,773,899,106
Capital increase		5,271,344			—			5,271,344
Common Stock Repurchase		( 3,309,741	)		—			( 3,309,741	)
Retirement of special voting shares		—			( 23,361,513	)		( 23,361,513	)
Total CNH Industrial N.V. shares at December 31, 2017		1,363,592,506			388,906,690			1,752,499,196
Capital increase		2,741,322			—			2,741,322
Common stock repurchases		( 12,501,870	)		—			( 12,501,870	)
Retirement of special voting shares		—			( 181,066	)		( 181,066	)
Total CNH Industrial N.V. shares at December 31, 2018		1,353,831,958			388,725,624			1,742,557,582
Capital increase		2,568,751			—			2,568,751
Common stock repurchases		( 6,268,592	)		—			( 6,268,592	)
Retirement of special voting shares		—			( 774,458	)		( 774,458	)
Total CNH Industrial N.V. shares at December 31, 2019		1,350,132,117			387,951,166			1,738,083,283

During the year ended December 31, 2019 and 2018 , 0.8 million and 0.2 million special voting shares, respectively, were acquired by the Company following the de-registration of the corresponding number of qualifying common shares from the Loyalty Register, net of transfer and allocation of special voting shares in accordance with the Special Voting Shares – Terms and Conditions. On September 15, 2017, the Company canceled 78,000,000 special voting shares held in treasury, consequently, the total amount of issued special voting shares was reduced from 474,474,276 to 396,474,276 .

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Furthermore, during the years ended December 31, 2019 and 2018 , the Company delivered 2.6 million and 2.7 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 or the MTA. 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 de-registration of such Qualifying Common Shares from the Loyalty Register. After de-registration 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 voting 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 12, 2019 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 MTA and the NYSE or otherwise for a period of 18 months (i.e., up to and including October 11, 2020). 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 MTA or 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 MTA or NYSE (as the case may be) minus 10 % (minimum price). In the framework of the buy-back authorization granted by the AGM held on April 12, 2019 and following the expiration of the buy-back program previously in place, in November 2019 the Company launched its new share buy-back program (the "Program"). The Program involves the repurchase from time to time of up to $ 700 million in the Company’s common shares and is intended to optimize the capital structure of the Company and to meet the obligations arising from the Company’s equity incentive plans. The Program has a duration up to and including October 11, 2020 and will be funded by the Company’s liquidity.

Neither the renewal of the authorization nor the launch of any program obliges the Company to buy-back any common shares. In any event, such program 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, 2019 , the Company repurchased 6.3 million shares of its common stock on the MTA and on multilateral trading facilities ("MTFs") under the buy-back program at an aggregate cost of $ 57 million . As of December 31, 2019 , the Company held 14.3 million common shares in treasury, net of transfers of common shares to fulfill its obligations under its stock compensation plans, at an aggregate cost of $ 153 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.

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At the 2020 Annual General Meeting of Shareholders, the Board of Directors intends to recommend to the Company’s shareholders the renewal of the authorization to repurchase up to a maximum of 10 % of the Company’s issued common shares.

During the year ended December 31, 2019 , the Company acquired approximately 0.8 million special voting shares following the de-registration 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, 2019 , the Company held 8.5 million special voting shares in treasury.

Dividend

On March 3, 2020 the Board of Directors of CNH Industrial N.V. recommended and proposed to the Company’s shareholders that the Company declare a dividend of € 0.18 per common share, totaling approximately € 243 million (equivalent to approximately $ 267 million , translated at the exchange rate reported by the European Central Bank on February 28, 2020). The proposal is subject to the approval of the Company’s shareholders at the AGM to be held on April 16, 2020.

At the AGM held by CNH Industrial on April 12, 2019, shareholders approved the payment of a dividend of € 0.18 per common share. The dividend was paid in May 2018 for a total amount of € 244 million ( $ 275 million ). 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.

For the years ended December 31, 2019 , 2018 , and 2017 CNH Industrial recognized total share-based compensation expense of $ 33 million , $ 35 million , and $ 19 million respectively. For the years ended December 31, 2019 , 2018 and 2017 , CNH Industrial recognized a total tax benefit relating to share-based compensation expense of $ 3 million , $ 3 million and $ 1 million , respectively. As of December 31, 2019 , CNH Industrial had unrecognized share-based compensation expense related to nonvested awards of approximately $ 10 million based on current assumptions related to achievement of specified performance objectives, when applicable. Unrecognized share-based compensation costs will be recognized over a weighted-average period of 0.6 years .

CNH Industrial’s equity awards are governed by several plans: i) CNH Industrial N.V. Equity Incentive Plan (“CNH Industrial EIP”); ii) CNH Industrial N.V. Directors’ Compensation Plan (“CNH Industrial DCP”); iii) CNH Global N.V. Directors’ Compensation Plan (“CNH DCP”); and, iv) CNH Global N.V. Equity Incentive Plan (“CNH EIP”).

CNH Industrial N.V. Equity Incentive Plan (“CNH Industrial EIP”)

At the AGM held on April 16, 2014, the Company’s shareholders approved the adoption of the CNH Industrial EIP, an umbrella program defining the terms and conditions for any subsequent long-term incentive program, whose main features are as follows:

•

The EIP allows grants of the following specific types of equity awards to any current or prospective executive director, officer or employee of, or service provider to, CNH Industrial: 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.

•	The EIP authorized 25 million common shares over a five years period, of which a maximum of 7 million would be authorized for awards to executive directors. These shares may be newly issued shares or treasury shares.

•	The EIP will terminate at, and no more awards will be permitted to be granted thereunder ten years after its adoption by the Board of Directors of CNH Industrial. The termination of the EIP will not affect previously granted awards.

Performance Share Units

In 2014, CNH Industrial issued a one-time grant of Performance Share Units ("PSU’s") to its then Chief Executive Officer and selected key employees, with financial performance goals covering the five -year period from January 1, 2014 to December 31, 2018. This PSU grant totaled approximately 12 million units. Prorated share amounts covering performance through this same period were issued to new employees entering the plan. One third of the total grant was expected to vest in February 2017, but such grants did not vest as both the performance and market conditions for the performance period 2014 through 2016 were not met.

In December 2017, CNH Industrial canceled all PSU’s issued in 2014, 2015 and 2016 and issued a grant of PSU's to its then Chief Executive Officer and selected key employees, with financial performance goals covering the three -year period from January 1, 2017 to December 31, 2019. This PSU grant totaled approximately 7 million units. In 2018 and 2019, prorated share amounts covering performance through this same period were issued to new employees entering the plan. 0.6 million additional PSU's were granted in 2018 . Furthermore,

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in 2019 , 0.4 million additional PSU's were granted. The performance goal is a market condition with a payout schedule ranging from 0 % to 130 % . In addition, there is a performance condition that if not met, reduces the payout by 30 % . Accordingly, the total number of shares that will eventually be granted may vary from the original estimate of 7 million shares. The awards cliff vest on February 28, 2020 to the extent that the market condition is met upon completion of the performance period on December 31, 2019 .

The fair values of the awards are calculated using the Monte Carlo Simulation model. The weighted average fair value of the awards that were issued in 2019 and 2018 is $ 5.19 and $ 8.69 per share, respectively. As a significant majority of the awards (approximately 79 % of total awards as of December 31, 2019 ) were issued on December 22, 2017, the key assumptions utilized to calculate the grant-date fair values for awards issued on this grant date are listed below:

		Key Assumptions for awards issued on
		December 22, 2017
Expected Volatility		31.1 %
Dividend yield		0.87 %
Risk-free rate		2.01 %

The expected volatility is based on the daily stock price movements experienced by the common shares of CNH Industrial over a three years period ending on the grant date. The expected dividend yield was based on CNH Industrial’s historical dividend payout as management expected the dividend payout for future years to be consistent. The risk-free interest rate was based on the yields of three-year U.S. Treasury bonds.

The following table reflects the activity of performance-based share units under CNH Industrial EIP for the year ended December 31, 2019 :

		2019
		Performance Shares			Weighted Average Grant-Date Fair Value
Nonvested at beginning of year		5,308,740			$	7.92
Granted		447,105			$	5.19
Forfeited/Cancelled		( 872,366	)		$	9.54
Vested		—			$	—
Nonvested at end of year		4,883,479			$	7.82

Restricted Share Units

In 2017 , 2018 , and 2019 , CNH Industrial issued approximately 4 million , 1 million , and 0.8 million Restricted Share Units (“RSUs”) to the Chairperson, CEO and selected employees with a weighted average fair value of $ 13.23 , $ 11.63 , and $ 9.95 per share, respectively. These shares are primarily set to vest in three equal tranches over a three years period. The fair value of the award is measured using the stock price on the grant date adjusted for the present value of future dividends that employees will not receive during the vesting period.

CNH Industrial issued 500 thousand restricted share units to the CEO of CNH Industrial on September 17, 2018. The weighted average fair value of these shares was $ 11.63 per share, measured using the stock price on the grant date adjusted for the present value of future dividends that the CEO would not receive during the vesting period. These shares are service based and vest in 3 tranches. The first and second tranches of 82 thousand and 339 thousand shares vested on June 30, 2019 and September 17, 2019, respectively. The third tranche of 82 thousand is due to vest on June 30, 2020. On April 3, 2019 CNH Industrial issued an additional 97 thousand restricted share units to the CEO of CNH Industrial. The weighted average fair value of these shares was $ 10.18 per share. These shares are scheduled to vest on February 1, 2021.

CNH Industrial issued 20 thousand restricted share units to the Chairperson of CNH Industrial on January 15, 2019. The weighted average fair value of these shares was $ 9.69 per share measured using the stock price on the grant date adjusted for the present value of future dividends that the Chairperson would not receive during the vesting period. These shares are service based and vested in 2 tranches. The first tranche of 10 thousand shares vested on June 30, 2019. The second tranche of 10 thousand shares is due to vest on June 30, 2020.

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The following table reflects the activity of restricted share units under CNH Industrial EIP for the year ended December 31, 2019 :

		2019
		Restricted Shares			Weighted Average Grant-Date Fair Value
Nonvested at beginning of year		3,364,447			$	11.88
Granted		832,105			$	9.95
Forfeited		( 320,993	)		$	12.28
Vested		( 2,032,892	)		$	11.19
Nonvested at end of year		1,842,667			$	11.69

CNH Industrial N.V. Directors’ Compensation Plan (“CNH Industrial DCP”)

On September 9, 2013, the CNH Industrial DCP was approved by the shareholders and adopted by the Board of Directors of CNH Industrial. On April 14, 2017, shareholders approved a proposed amendment to the CNH Industrial DCP pursuant to which non-executive directors would only be paid cash compensation for their service as a director. The CNH Industrial DCP provides for the payment of the following to eligible members of the CNH Industrial Board in the form of cash, provided that such members do not receive salary or other employment compensation from CNH Industrial or FCA, and their subsidiaries and affiliates:

•	$ 125,000 annual retainer fee for each Non-Executive Director

•	An additional $ 25,000 for each member of the Audit Committee and $ 35,000 for the Audit Committee Chairperson.

•	An additional $ 20,000 for each member of every other Board committee and $ 25,000 for the committee chairperson (collectively, the “fees”).

Prior to the amendment of the CNH Industrial DCP, each quarter of the CNH Industrial DCP year, the eligible directors elected the form of payment of their fees. If the elected form was common shares, the eligible director would receive as many common shares as equal to the amount of fees the director elected to be paid in common shares, divided by the fair market value of a CNH Industrial common share on the date that the quarterly payment was made. Common shares issued to the eligible director vested immediately upon grant. If an eligible director elected to receive all or a portion of fees in the form of a stock option, the number of common shares underlying the stock option was determined by dividing (i) by (ii) where (i) equals the dollar amount of the quarterly payment that the eligible director elected to receive in the form of stock options multiplied by four and (ii) the fair market value of the common shares on the date that the quarterly payment was made. The CNH Industrial DCP defined fair market value, as applied to each ordinary share, to be equal to the average of the highest and lowest sale price of a CNH Industrial common share during normal trading hours on the last trading day of each plan quarter in which sales of common shares on the New York Stock Exchange are recorded. Stock options granted as a result of such an election vested immediately, but shares purchased under options cannot be sold for six months following the date of exercise. Stock options terminate upon the earlier of: (1) ten years after the grant date; or (2) six months after the date an individual ceases to be a director.

There were 0.2 million common shares authorized for issuance under the CNH Industrial DCP. The weighted average fair value for the stock options that were issued in 2015 was $ 1.65 . No stock options were issued under this plan in 2019 or 2018 and as of December 31, 2019 , no stock options were outstanding under the CNH Industrial DCP.

CNH Global Directors’ Compensation Plan (“CNH DCP”)

CNH Global Directors’ Compensation Plan stipulated the right for directors of former CNH Global to be compensated in the form of cash, and/or common shares of CNH Global N.V., and/or options to purchase common shares of CNH Global. On September 29, 2013, CNH Industrial assumed the sponsorship of the CNH DCP in connection with the Merger. Stock options issued under the CNH DCP were converted using the CNH Global exchange ratio of 3.828 CNH Industrial shares for each CNH Global common share and exercisable for common shares of CNH Industrial N.V. upon September 29, 2013. All of the outstanding stock options from the CNH DCP were exercised or forfeited during 2018. The CNH DCP was terminated effective as of the Merger and no new equity awards will be issued under the CNH DCP.

CNH Global Equity Incentive Plan (the “CNH EIP”)

The CNH Global Equity Incentive Plan provides for grants of stock options, restricted share units and performance share units to former officers and employees of CNH Global. On September 29, 2013, CNH Industrial assumed the sponsorship of the CNH EIP in connection

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with the Merger. CNH Industrial can not issue any new equity awards under the CNH EIP; however, CNH Industrial is required to issue shares under the CNH EIP to settle the exercise or vesting of the existing equity awards.

On September 29, 2013, outstanding stock options, unvested restricted share units and performance share units under the CNH EIP became exercisable or convertible for common shares of CNH Industrial N.V. The number of shares of outstanding equity awards was increased and exercise price of stock options reduced to take into account the CNH Global exchange ratio of 3.828 CNH Industrial shares for each CNH Global common share. The conversion did not change the aggregate fair value of the outstanding equity awards and, therefore, resulted in no additional share-based compensation expense in 2013.

Stock Option Plan

In September 2012, approximately 2.7 million performance-based stock options (at target award levels) were issued under the CNH EIP (the “2012 Grant”). Upon the achievement of CNH Global’s 2012 target performance objective, approximately 4 million of options were granted. These options vested in three equal tranches in February 2012, 2013 and 2014. Options granted under the CNH EIP have a contractual life of five years from the initial vesting date.

No stock options were issued in 2017 , 2018 or 2019 under the CNH EIP. There were no outstanding stock options under the CNH EIP at December 31, 2018 and 2019.

Additional Share-Based Compensation Information

The table below provides additional share-based compensation information for the years ended December 31, 2019 , 2018 , and 2017 :

		2019				2018				2017
		(in millions)
Total intrinsic value of options exercised and shares vested		$	21			$	27			$	23
Fair value of shares vested		$	23			$	26			$	17
Cash received from share award exercises		$	—			$	2			$	28
Tax benefit of options exercised and shares vested		$	—			$	—			$	—

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.

The following table sets forth the computation of basic EPS and diluted EPS for the years ended December 31, 2019 , 2018 and 2017 .

		2019				2018				2017
		(in millions, except per share data)
Basic:
Net income (loss) attributable to CNH Industrial		$	1,422			$	1,068			$	272
Weighted average common shares outstanding—basic		1,352				1,357				1,364
Basic earnings per share		$	1.05			$	0.79			$	0.20
Diluted:
Net income (loss) attributable to CNH Industrial		$	1,422			$	1,068			$	272
Weighted average common shares outstanding—basic		1,352				1,357				1,364
Effect of dilutive securities (when dilutive):
Stock compensation plans		2				4				3
Weighted average common shares outstanding—diluted (A)		1,354				1,361				1,367
Diluted earnings per share		$	1.05			$	0.78			$	0.20

(A)	For the twelve months ended December 31, 2019 , 2018 and 2017, no shares were excluded from the computation of diluted earnings per share due to an anti-dilutive impact.

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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, 2019
(in millions)		Gross Amount				Income Taxes				Net Amount
Unrealized gain (loss) on cash flow hedges		$	( 42	)		$	10			$	( 32	)
Changes in retirement plans’ funded status		( 115		)		3				( 112		)
Foreign currency translation		71				—				71
Share of other comprehensive loss of entities using the equity method		( 8		)		—				( 8		)
Other comprehensive loss		$	( 94	)		$	13			$	( 81	)

		Year Ended December 31, 2018
(in millions)		Gross Amount				Income Taxes				Net Amount
Unrealized gain (loss) on cash flow hedges		$	( 21	)		$	( 2	)		$	( 23	)
Changes in retirement plans’ funded status		620				( 143		)		477
Foreign currency translation		( 317		)		—				( 317		)
Share of other comprehensive loss of entities using the equity method		( 35		)		—				( 35		)
Other comprehensive income		$	247			$	( 145	)		$	102

		Year Ended December 31, 2017
(in millions)		Gross Amount				Income Taxes				Net Amount
Unrealized gain (loss) on cash flow hedges		$	84			$	5			$	89
Changes in retirement plans’ funded status		116				( 30		)		86
Foreign currency translation		( 414		)		—				( 414		)
Share of other comprehensive loss of entities using the equity method		32				—				32
Other comprehensive loss		$	( 182	)		$	( 25	)		$	( 207	)

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The changes, net of tax, in each component of accumulated other comprehensive income (loss) consisted of the following:

(in millions)		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, 2016		$	( 88	)		$	( 1,036	)		$	( 485	)		$	( 153	)		$	( 1,762	)
Other comprehensive income (loss), before reclassifications		56				13				( 414		)		35				( 310		)
Amounts reclassified from other comprehensive income		33				73				—				—				106
Other comprehensive income (loss) 1		89				86				( 414		)		35				( 204		)
Balance, December 31, 2017		1				( 950		)		( 899		)		$	( 118	)		$	( 1,966	)
Other comprehensive income (loss), before reclassifications		( 1		)		473				( 317		)		( 30		)		125
Amounts reclassified from other comprehensive income (loss)		( 22		)		4				—				—				( 18		)
Other comprehensive income (loss) 1		( 23		)		477				( 317		)		( 30		)		107
Balance, December 31, 2018		$	( 22	)		$	( 473	)		$	( 1,216	)		$	( 148	)		$	( 1,859	)
Other comprehensive income (loss), before reclassifications		( 111		)		( 68		)		71				( 5		)		( 113		)
Amounts reclassified from other comprehensive income		79				( 44		)		—				—				35
Other comprehensive income (loss) 1		( 32		)		( 112		)		71				( 5		)		( 78		)
Reclassification of certain tax effects		—				( 65		)		—				—				( 65		)
Balance, December 31, 2019		$	( 54	)		( 650		)		$	( 1,145	)		$	( 153	)		$	( 2,002	)

(1)	Excluded from the table above is other comprehensive (income) loss allocated to noncontrolling interests of $( 3 ) million, $( 5 ) million and $( 3 ) million for the years ended December 31, 2019 , 2018 and 2017 , respectively.

Significant amounts reclassified out of each component of accumulated other comprehensive income (loss) in December 31, 2019 and 2018 consisted of the following:

		Amount Reclassified from Other Comprehensive Income (Loss)								Consolidated Statement of Operations line
		2019				2018
		(in millions)
Cash flow hedges		$	—			$	7			Net sales
		69				( 15		)		Cost of goods sold
		16				( 20		)		Other, net
		8				4				Interest expense
		( 14		)		2				Income taxes
		$	79			$	( 22	)
Change in retirement plans’ funded status:
Amortization of actuarial losses		$	79			$	85			*
Amortization of prior service cost		( 123		)		( 82		)		*
		—				1				Income taxes
		$	( 44	)		$	4
Total reclassifications, net of tax		$	35			$	( 18	)

(*)	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.

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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 Industrial has five 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 (Quadtrac ^® ), combines, cotton pickers, grape and sugar cane harvesters, hay and forage equipment, planting and seeding equipment, soil preparation and cultivation implements and material handling equipment. Agricultural equipment is sold under the New Holland Agriculture and Case IH brands, as well as the STEYR, Kongskilde and Överum brands in Europe and the Miller brand, primarily in North America and Australia.

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. Construction equipment is sold under the CASE Construction and New Holland Construction brands.

Commercial and Specialty Vehicles designs, manufactures and distributes a full range of light, medium, and heavy vehicles for the transportation and distribution of goods under the IVECO brand, commuter buses and touring coaches under the IVECO BUS (previously Iveco Irisbus) and Heuliez Bus brands, quarry and mining equipment under the IVECO ASTRA brand, firefighting vehicles under the Magirus brand, and vehicles for civil defense and peace-keeping missions under the Iveco Defence Vehicles brand.

Powertrain designs, manufactures and distributes, under the FPT Industrial Brand, a range of engines, transmission systems and axles for on- and off-road applications, as well as for marine and power generation.

Financial Services offers a range of financial services to dealers and customers. Financial Services provides and administers retail financing to customers for the purchase or lease of new and used industrial equipment or vehicles and other equipment sold by CNH Industrial dealers. In addition, Financial Services provides wholesale financing to CNH Industrial dealers. Wholesale financing consists primarily of floor plan financing and allows the dealers to purchase and maintain a representative inventory of products. Financial Services also provides trade receivables factoring services to CNH Industrial companies.

Revenues for each reported segment are those directly generated by or attributable to the segment as a result of its usual 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.

The CODM assesses segment performance and makes decisions about resource allocation based upon Adjusted EBIT and Adjusted EBITDA. The Company believes Adjusted EBIT and Adjusted EBITDA more fully reflect segment and consolidated profitability. Adjusted EBIT is defined as net income/(loss) before income taxes, interest expenses of Industrial Activities, net, restructuring expenses, the finance and non-service component of pension and other post-employment benefits costs, foreign exchange gains/(losses) and certain non-recurring items. In particular, non-recurring items are specifically disclosed items that management considers to be rare or discrete events that are infrequent in nature and not reflective of on-going operational activities.

Adjusted EBITDA is defined as Adjusted EBIT plus depreciation and amortization (including on assets under operating leases and assets sold under buy-back commitments). With reference to Financial Services, the CODM assesses the performance of the segment on the basis of net income prepared in accordance with U.S. GAAP.

The following table includes the reconciliation of Adjusted EBIT and Adjusted EBITDA, non-GAAP financial measures, to net income, the most comparable U.S. GAAP financial measure, for the years ended December 31, 2019 , 2018 , and 2017 .

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		Years Ended December 31,
		2019				2018				2017
		(in millions)
Net income		$	1,454			$	1,099			$	290
Income tax (expense)		( 271		)		417				457
Interest expenses of Industrial Activities, net of interest income and eliminations		282				368				482
Foreign exchange (gains) losses, net		56				171				124
Finance and non-service component of Pension and other post-employment benefit costs		63				( 15		)		102
Restructuring expenses		109				61				93
Other discrete items		187				—				—
Venezuelan re-measurement and impairment of assets, and 2017 year-end deconsolidation of Venezuelan operations		—				—				92
Adjusted EBIT		$	1,880			$	2,101			$	1,640
Depreciation and Amortization		660				703				725
Depreciation of assets under operating leases and assets sold with buy-back commitments		555				634				625
Adjusted EBITDA		$	3,095			$	3,438			$	2,990

Segment Information

The following summarizes Adjusted EBIT by reportable segment:

		Years Ended December 31,
		2019				2018				2017
		(in millions)
Agriculture		$	897			$	1,036			$	791
Construction		51				91				( 16		)
Commercial and Specialty Vehicles		224				299				195
Powertrain		363				406				360
Unallocated items, eliminations and other		( 145		)		( 247		)		( 187		)
Total Industrial Activities		$	1,390			$	1,585			$	1,143
Financial Services		490				516				497
Adjusted EBIT		$	1,880			$	2,101			$	1,640

The following summarizes Adjusted EBITDA by reportable segment:

		Years Ended December 31,
		2019				2018				2017
		(in millions)
Agriculture		$	1,178			$	1,339			$	1,106
Construction		106				152				49
Commercial and Specialty Vehicles		729				890				735
Powertrain		487				536				488
Unallocated items, eliminations and other		( 143		)		( 246		)		( 187		)
Total Industrial Activities		$	2,357			$	2,671			$	2,191
Financial Services		738				767				799
Adjusted EBITDA		$	3,095			$	3,438			$	2,990

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A summary of additional operating segment information as of and for the years ended December 31, 2019 , 2018 , and 2017 is as follows:

		Years Ended December 31,
		2019				2018				2017
		(in millions)
Revenues:
Agriculture		$	10,959			$	11,682			$	10,683
Construction		2,768				3,021				2,530
Commercial and Specialty Vehicles		10,439				10,939				10,562
Powertrain		4,117				4,565				4,369
Eliminations and other		( 2,134		)		( 2,376		)		( 2,375		)
Net sales of Industrial Activities		26,149				27,831				25,769
Financial Services		2,011				1,989				2,028
Eliminations and other		( 81		)		( 114		)		( 96		)
Total Revenues		$	28,079			$	29,706			$	27,701
Depreciation and Amortization (*):
Agriculture		281				301				315
Construction		55				61				65
Commercial and Specialty Vehicles		195				206				212
Powertrain		124				130				128
Other activities and adjustments		2				1				—
Depreciation and amortization of Industrial Activities		657				699				720
Financial Services		3				4				5
Depreciation and amortization		$	660			$	703			$	725
Expenditures for long-lived assets (**):
Agriculture		$	232			$	224			$	208
Construction		46				40				36
Commercial and Specialty Vehicles		258				195				152
Powertrain		96				91				90
Other activities		1				—				2
Expenditures for long-lived assets of Industrial Activities		633				550				488
Financial Services		4				8				4
Expenditures for long-lived assets		$	637			$	558			$	492

(*)	Excluding assets sold with buy-back commitments and equipment on operating leases

(**)	Excluding assets sold with buy-back commitments, equipment on operating leases and right of use assets

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Geographic Information

CNH Industrial has its principal office in London, England, U.K. Revenues earned in the U.K. from external customers were $ 888 million , $ 1,006 million , and $ 864 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively. Revenues earned in the rest of the world from external customers were $ 27,191 million , $ 28,700 million , and $ 26,837 million for the years ended December 31, 2019 , 2018 , and 2017 , respectively. The following highlights revenues earned from external customers in the rest of the world by destination:

		2019				2018				2017
		(in millions)
United States		$	5,610			$	5,719			$	5,014
Italy		3,253				3,383				3,021
France		3,030				2,994				2,658
Brazil		2,105				2,093				1,789
Germany		1,875				2,062				1,833
Canada		1,087				1,124				1,182
Australia		739				929				1,063
Spain		987				1,084				1,016
Argentina		509				524				984
Poland		604				658				507
Other		7,392				8,130				7,770
Total Revenues from external customers in the rest of world		$	27,191			$	28,700			$	26,837

Total long-lived tangible and intangible assets located in the U.K. were $ 178 million and $ 218 million at December 31, 2019 and 2018 , respectively, and the total of such assets located in the rest of the world totaled $ 10,292 million and $ 10,699 million at December 31, 2019 and 2018 , respectively. The following highlights long-lived tangible and intangible assets by geographic in the rest of the world:

		At December 31,
		2019				2018
		(in millions)
United States		$	4,823			$	5,311
Italy		1,398				1,531
France		723				830
Germany		573				671
Spain		643				626
Canada		557				240
Brazil		294				308
China		219				534
Other		1,062				648
Total Long-lived assets in the rest of the world		$	10,292			$	10,699

CNH Industrial’s related parties are primarily EXOR N.V. and the companies that EXOR N.V. controls or has significant influence over, including Fiat Chrysler Automobiles N.V. and its subsidiaries and affiliates (“FCA”) and Ferrari N.V. and its subsidiaries and affiliates (“Ferrari”). As of January 31, 2020, EXOR N.V. held 42.2 % of CNH Industrial’s voting power and had the ability to significantly influence the decisions submitted to a vote of CNH Industrial’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 beneficially owned by EXOR N.V. to (ii) the aggregate number of outstanding common shares and special voting shares of CNH Industrial as of January 31, 2020. In addition, CNH Industrial engages in transactions with its unconsolidated subsidiaries and affiliates over which CNH Industrial has a significant influence or jointly controls.

The Company’s Audit Committee reviews and evaluates all significant related party transactions.

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Transactions with EXOR N.V. and its Subsidiaries and Affiliates

EXOR N.V. is an investment holding company in Europe. Among other things, EXOR N.V. manages a portfolio that includes investments in FCA and Ferrari. CNH Industrial did not enter into any significant transactions with EXOR N.V. during the years ended December 31, 2019 and 2018 .

In connection with the establishment of Fiat Industrial (now CNH Industrial) through the demerger from Fiat (now FCA), 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 Industrial and FCA 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. FCA subsidiaries provide CNH Industrial 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.

Additionally, CNH Industrial sells engines and light commercial vehicles to and purchases engine blocks and other components from FCA subsidiaries. Furthermore, CNH Industrial and FCA may engage in other minor transactions in the ordinary course of business.

These transactions with FCA are reflected in the Company’s consolidated financial statements as follows:

		2019				2018				2017
		(in millions)
Net sales		$	719			$	748			$	699
Cost of goods sold		$	319			$	433			$	555
Selling, general and administrative expenses		$	147			$	151			$	155

		December 31, 2019				December 31, 2018
		(in millions)
Trade receivables		$	4			$	10
Trade payables		$	83			$	118

Transactions with Unconsolidated Subsidiaries and Affiliates

CNH Industrial sells commercial vehicles, agricultural and construction equipment and provides technical services to unconsolidated subsidiaries and affiliates such as IVECO—OTO MELARA Società Consortile a responsabilità limitata, CNH de Mexico SA de CV, Turk Traktor ve Ziraat Makineleri A.S. and New Holland HFT Japan Inc. CNH Industrial also purchases equipment from unconsolidated subsidiaries and affiliates, such as Turk Traktor ve Ziraat Makineleri A.S. These transactions primarily affected revenues, finance, interest and other income, cost of goods sold, trade receivables and payables and are presented as follows:

		2019				2018				2017
		(in millions)
Net sales		$	911			$	1,068			$	1,028
Cost of goods sold		$	514			$	522			$	446

		December 31, 2019				December 31, 2018
		(in millions)
Trade receivables		$	121			$	107
Trade payables		$	70			$	103

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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 Industrial. This supplemental information does not purport to represent the operations of each group as if each group were to operate on a standalone basis. For example, Industrial Activities presents the cost of “interest free” periods for wholesale receivables as Interest Compensation to Financial Services and not as a reduction of sales in their Statements of Operations. 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 business has been included using the equity method of accounting whereby the net income and net assets of Financial Services business are reflected, respectively, in “Equity in income of unconsolidated subsidiaries and affiliates” in the accompanying statement of operations, and in “Investments in unconsolidated subsidiaries and affiliates” in the accompanying balance sheets.

Financial Services —The financial information captioned “Financial Services” reflects the consolidation or combination of Financial Services business.

Transactions between the “Industrial Activities” and “Financial Services” have been eliminated to arrive at the consolidated financial statements.

Certain prior period balances have been reclassified to conform to the current period presentation resulting from the adoption of new accounting pronouncements.

		Statement of Operations
		Industrial Activities												Financial Services
		2019				2018				2017				2019				2018				2017
		(in millions)
Revenues
Net sales		$	26,149			$	27,831			$	25,769			$	—			$	—			$	—
Finance, interest and other income		98				100				122				2,011				1,989				2,028
Total Revenues		$	26,247			$	27,931			$	25,891			$	2,011			$	1,989			$	2,028
Costs and Expenses
Cost of goods sold		$	21,832			$	22,958			$	21,572			$	—			$	—			$	—
Selling, general & administrative expenses		1,998				2,136				2,056				218				215				259
Research and development expenses		1,030				1,061				957				—				—				—
Restructuring expenses		105				61				90				4				—				3
Interest expense		380				468				604				597				558				555
Other, net		187				267				420				737				730				744
Total Costs and Expenses		$	25,532			$	26,951			$	25,699			$	1,556			$	1,503			$	1,561
Income (loss) before income taxes and equity in income of unconsolidated subsidiaries and affiliates		715				980				192				455				486				467
Income tax (expense)		391				( 286		)		( 415		)		( 120		)		( 131		)		( 42		)
Equity income of unconsolidated subsidiaries and affiliates		( 13		)		20				61				26				30				27
Results from intersegment investments		361				385				452				—				—				—
Net income (loss)		$	1,454			$	1,099			$	290			$	361			$	385			$	452

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		Balance Sheets
		Industrial Activities								Financial Services
		2019				2018				2019				2018
		(in millions)
ASSETS
Cash and cash equivalents		$	4,407			$	4,553			$	468			$	478
Restricted cash		120				—				778				772
Trade receivables, net		416				398				28				34
Financing receivables, net		1,223				1,253				20,657				20,252
Inventories, net		6,907				6,510				175				216
Property, plant and equipment, net		5,268				5,899				1				2
Investments in unconsolidated subsidiaries and affiliates		3,213				3,126				237				219
Equipment under operating leases		51				34				1,806				1,740
Goodwill		2,383				2,301				155				152
Other intangible assets, net		790				774				16				14
Deferred tax assets		1,090				635				178				175
Derivative assets		34				81				47				24
Other assets		2,148				1,707				319				323
TOTAL ASSETS		$	28,050			$	27,271			$	24,865			$	24,401
LIABILITIES AND EQUITY
Debt		6,558				6,347				20,748				20,436
Trade payables		5,490				5,771				191				173
Deferred tax liabilities		19				83				286				250
Pension, postretirement and other postemployment benefits		1,558				1,470				20				18
Derivative liability		97				89				32				26
Other liabilities		8,172				8,413				771				681
TOTAL LIABILITIES		$	21,894			$	22,173			$	22,048			$	21,584
Equity		6,121				5,068				2,817				2,817
Redeemable noncontrolling interest		35				30				—				—
TOTAL LIABILITIES AND EQUITY		$	28,050			$	27,271			$	24,865			$	24,401

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		Cash Flow Statements
		Industrial Activities												Financial Services
		2019				2018				2017				2019				2018				2017
		(in millions)
Operating activities:
Net income (loss)		$	1,454			$	1,099			$	290			$	361			$	385			$	452
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization expense, net of assets under operating lease and assets sold under buy-back commitments		657				699				720				3				4				5
Depreciation and amortization expense of assets under operating lease and assets sold under buy-back commitments		310				387				328				245				247				297
(Gain) loss from disposal of assets		( 20		)		2				—				—				—				—
Loss on repurchase of Notes		27				22				56				—				—				8
Undistributed income (loss) of unconsolidated subsidiaries		51				( 93		)		( 107		)		( 26		)		( 31		)		( 27		)
Other non-cash items		151				111				188				58				47				87
Changes in operating assets and liabilities:
Provisions		( 85		)		( 54		)		224				( 8		)		6				( 6		)
Deferred income taxes		( 507		)		10				219				35				38				( 95		)
Trade and financing receivables related to sales, net		( 41		)		35				147				( 414		)		( 207		)		( 823		)
Inventories, net		( 65		)		( 396		)		207				505				508				475
Trade payables		( 200		)		280				359				18				( 8		)		8
Other assets and liabilities		( 391		)		( 319		)		160				92				46				50
Net cash provided by operating activities		$	1,341			$	1,783			$	2,791			$	869			$	1,035			$	431
Investing activities:
Additions to retail receivables		—				—				—				( 4,145		)		( 4,269		)		( 4,078		)
Collections of retail receivables		—				—				—				4,219				4,016				4,384
Proceeds from sale of assets, net of assets sold under operating leases and assets sold under buy-back commitments		61				7				17				—				—				—
Expenditures for property, plant and equipment and intangible assets, net of assets under operating lease and sold under buy-back commitments		( 633		)		( 550		)		( 488		)		( 4		)		( 8		)		( 4		)
Expenditures for assets under operating lease and assets sold under buy-back commitments		( 568		)		( 625		)		( 1,079		)		( 757		)		( 719		)		( 664		)
Other		123				720				( 275		)		( 303		)		( 532		)		272
Net cash used in investing activities		$	( 1,017	)		$	( 448	)		$	( 1,825	)		$	( 990	)		$	( 1,512	)		$	( 90	)
Financing activities:
Proceeds from long-term debt		1,315				629				2,006				11,882				15,582				13,890
Payments of long-term debt		( 1,204		)		( 1,684		)		( 2,580		)		( 11,721		)		( 15,237		)		( 14,222		)
Net increase (decrease) in other financial liabilities		( 44		)		27				( 308		)		318				359				362
Dividends paid		( 283		)		( 243		)		( 168		)		( 384		)		( 264		)		( 357		)
Other		( 57		)		( 156		)		( 25		)		20				40				46
Net cash provided by (used in) financing activities		( 273		)		( 1,427		)		( 1,075		)		115				480				( 281		)
Effect of foreign exchange rate changes on cash and cash equivalents		( 77		)		( 256		)		361				2				( 52		)		34
Increase (decrease) in cash and cash equivalents		( 26		)		( 348		)		252				( 4		)		( 49		)		94
Cash and cash equivalents, beginning of year		4,553				4,901				4,649				1,250				1,299				1,205
Cash and cash equivalents, end of year		$	4,527			$	4,553			$	4,901			$	1,246			$	1,250			$	1,299

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On February 25, 2020, IVECO BUS, a brand of CNH Industrial N.V., signed an agreement with Otokar Otomotiv ve Savunma Sanayi A., a bus manufacturer in Turkey, to locally manufacture products under the IVECO BUS brand at its facilities in Sakarya, Turkey. This contractual partnership covers existing models in the IVECO BUS portfolio for international distribution, as well as the production of a model specifically catered to the Eastern Europe, Africa, Middle East and Asia markets. The models will be powered by engines from FPT Industrial, the first of which are expected to be produced within 2021.

On February 28, 2020, CNH Industrial extended its € 4 billion committed revolving credit facility for one additional year with all lenders, by exercising the first one-year extension option. The facility is therefore due to mature in March 2025.

The recent outbreak of Coronavirus, a virus causing potentially deadly respiratory tract infections originating in China and spreading in various jurisdictions, may negatively affect economic conditions regionally as well as globally, disrupt operations situated in countries particularly exposed to the contagion, affect supply chains or otherwise impact our businesses. Governments in affected countries are imposing travel bans, quarantines and other emergency public safety measures. Those measures, though temporary in nature, may continue and increase depending on developments in the virus’ outbreak. The ultimate severity of the Coronavirus outbreak is uncertain at this time and therefore the Company cannot reasonably estimate the impact it may have on our end markets and our operations.

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