Caterpillar Reports Fourth-Quarter and Full-Year Financial Results
PEORIA, Ill., Jan. 27, 2015 -- Caterpillar Inc. (NYSE: CAT) today
announced fourth-quarter 2014 sales and revenues of $14.244 billion, slightly
down from $14.402 billion in the fourth quarter of 2013. Profit per share in
the fourth quarter of 2014 was $1.23, compared with profit per share of $1.54
in the fourth quarter of 2013. Excluding restructuring costs, fourth-quarter
2014 profit per share was $1.35, compared with profit per share of $1.68 in the
fourth quarter of 2013.
Sales and revenues for the full-year 2014 were $55.184 billion, down slightly
from $55.656 billion in 2013. Profit per share was $5.88, up from $5.75 per
share in 2013. Excluding restructuring costs, 2014 profit per share was $6.38,
up from $5.97 per share in 2013.
"Overall, we had many positives and a better year in 2014 than 2013," said
Caterpillar Chairman and Chief Executive Officer Doug Oberhelman. "Our emphasis
on cost management, operational execution and cash flow helped us deliver
better profit per share than both 2013 and the 2014 outlook we provided at the
start of the year. At the mid-point of our original 2014 outlook, we
anticipated sales and revenues of $56 billion and profit of $5.30 per share, or
$5.85 per share excluding restructuring costs. We ended the year with sales and
revenues within 2 percent of $56 billion and delivered much better profit per
share. In addition to improved profit, Machinery, Energy & Transportation (ME&
T) operating cash flow was higher than we expected and the third best year in
our history," Oberhelman said.
"It was a great year for Energy & Transportation with record sales and profit.
Sales were also up and profit improved substantially in Construction Industries
. The increase in Construction Industries' sales was primarily in North America
and was partially offset by sales declines in other regions. While our
construction sales were up in 2014, the industry is still well below prior
peaks in every major region due to relatively weak economic growth for most of
the world. Prices for key mined commodities, particularly copper, coal and iron
ore, declined in 2014. Weakening commodity prices, along with improved mine
productivity, led to lower sales for Resource Industries. We haven't seen
evidence of an upturn in equipment orders yet-and sales of mining equipment
remain depressed," Oberhelman added.
"We are disappointed that we missed our profit outlook in the fourth quarter.
That said, 2014 overall was a successful year as we continued to execute on the
things we can control. Our overall market position for machines improved for
the fourth consecutive year; the quality of the machines delivered to customers
was better; safety in our factories continued to improve and inventory turns
were better. Our balance sheet is strong, and we repurchased $4.2 billion of
stock in 2014 and raised the quarterly dividend by 17 percent," Oberhelman
said.
2015 Outlook
We expect world economic growth to only improve modestly in 2015. The
relatively slow growth in the world economy and continued weakness in commodity
prices-particularly oil, copper, coal and iron ore-are expected to be negative
for our sales. We expect sales and revenues in 2015 to be about $50 billion. To
provide a better understanding of our expectations for 2015 profit, we are
providing our outlook with and without anticipated restructuring costs. Over
the past two years, we have undertaken restructuring activities designed to
lower our long-term cost structure. Additional restructuring actions are
anticipated in our outlook for 2015. In total, we expect the cost of these
restructuring actions in 2015 to be about $150 million or about $0.15 per
share. Our profit outlook for 2015 is about $4.60 per share, or $4.75 per share
excluding restructuring costs.
"The recent dramatic decline in the price of oil is the most significant reason
for the year-over-year decline in our sales and revenues outlook. Current oil
prices are a significant headwind for Energy & Transportation and negative for
our construction business in the oil producing regions of the world. In
addition, with lower prices for copper, coal and iron ore, we've reduced our
expectations for sales of mining equipment. We've also lowered our expectations
for construction equipment sales in China. While our market position in China
has improved, 2015 expectations for the construction industry in China are
lower," Oberhelman said.
"While we are, without a doubt, facing a tough year in 2015, we're driving cost
management through additional restructuring actions and continued operational
improvements gained from our focus on Lean Management. While 2015 will be
difficult, the work we've done to improve our cost structure, market position
and quality will position us for better results when the world economy and the
key industries we serve improve," Oberhelman added.
Notes:
* Glossary of terms is included on pages 20-21; first occurrence of terms
shown in bold italics.
* Information on non-GAAP financial measures is included on page 22.
About Caterpillar:
For 90 years, Caterpillar Inc. has been making sustainable progress possible
and driving positive change on every continent. Customers turn to Caterpillar
to help them develop infrastructure, energy and natural resource assets. With
2014 sales and revenues of $55.184 billion, Caterpillar is the world's leading
manufacturer of construction and mining equipment, diesel and natural gas
engines, industrial gas turbines and diesel-electric locomotives. The company
principally operates through its three product segments - Construction
Industries, Resource Industries and Energy & Transportation - and also provides
financing and related services through its Financial Products segment. For more
information, visit caterpillar.com. To connect with us on social media, visit
caterpillar.com/social-media.
Forward-Looking Statements
Certain statements in this press release relate to future events and
expectations and are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Words such as "believe,"
"estimate," "will be," "will," "would," "expect," "anticipate," "plan,"
"project," "intend," "could," "should" or other similar words or expressions
often identify forward-looking statements. All statements other than statements
of historical fact are forward-looking statements, including, without
limitation, statements regarding our outlook, projections, forecasts or trend
descriptions. These statements do not guarantee future performance, and we do
not undertake to update our forward-looking statements.
Caterpillar's actual results may differ materially from those described or
implied in our forward-looking statements based on a number of factors,
including, but not limited to: (i) global economic conditions and economic
conditions in the industries we serve; (ii) government monetary or fiscal
policies and infrastructure spending; (iii) commodity price changes, component
price increases, fluctuations in demand for our products or significant
shortages of component products; (iv) disruptions or volatility in global
financial markets limiting our sources of liquidity or the liquidity of our
customers, dealers and suppliers; (v) political and economic risks, commercial
instability and events beyond our control in the countries in which we operate;
(vi) failure to maintain our credit ratings and potential resulting increases
to our cost of borrowing and adverse effects on our cost of funds, liquidity,
competitive position and access to capital markets; (vii) our Financial
Products segment's risks associated with the financial services industry;
(viii) changes in interest rates or market liquidity conditions; (ix) an
increase in delinquencies, repossessions or net losses of Cat Financial's
customers; (x) new regulations or changes in financial services regulations;
(xi) a failure to realize, or a delay in realizing, all of the anticipated
benefits of our acquisitions, joint ventures or divestitures; (xii)
international trade policies and their impact on demand for our products and
our competitive position; (xiii) our ability to develop, produce and market
quality products that meet our customers' needs; (xiv) the impact of the highly
competitive environment in which we operate on our sales and pricing; (xv)
failure to realize all of the anticipated benefits from initiatives to increase
our productivity, efficiency and cash flow and to reduce costs; (xvi)
additional restructuring costs or a failure to realize anticipated savings or
benefits from past or future cost reduction actions; (xvii) inventory
management decisions and sourcing practices of our dealers and our OEM
customers; (xviii) compliance with environmental laws and regulation; (xix)
alleged or actual violations of trade or anti-corruption laws and regulations;
(xx) additional tax expense or exposure; (xxi) currency fluctuations; (xxii)
our or Cat Financial's compliance with financial covenants; (xxiii) increased
pension plan funding obligations; (xxiv) union disputes or other employee
relations issues; (xxv) significant legal proceedings, claims, lawsuits or
investigations; (xxvi) compliance requirements imposed if additional carbon
emissions legislation and/or regulations are adopted; (xxvii) changes in
accounting standards; (xxviii) failure or breach of IT security; (xxix) adverse
effects of unexpected events including natural disasters; and (xxx) other
factors described in more detail under "Item 1A. Risk Factors" in our Form 10-K
filed with the SEC on February 18, 2014 for the year ended December 31, 2013
and in our Form 10-Q filed with the SEC on August 1, 2014 for the quarter ended
June 30, 2014.
Key Points
Fourth Quarter 2014
(Dollars in millions except per share data)
Fourth Quarter Fourth Quarter
2014 2013 $ Change % Change
Machinery, Energy & $ 13,500 $ 13,646 $ (146) (1) %
Transportation Sales
Financial Products Revenues 744 756 (12) (2) %
Total Sales and Revenues $ 14,244 $ 14,402 $ (158) (1) %
Profit $ 757 $ 1,003 $ (246) (25) %
Profit per common share - $ 1.23 $ 1.54 $ (0.31) (20) %
diluted
Profit per common share -
diluted (excluding $ 1.35 $ 1.68 $ (0.33) (20) %
restructuring costs)
Full Year 2014
(Dollars in millions except per share data)
Full Year Full Year
$ Change % Change
2014 2013
Machinery, Energy & $ 52,142 $ 52,694 $ (552) (1) %
Transportation Sales
Financial Products Revenues 3,042 2,962 80 3 %
Total Sales and Revenues $ 55,184 $ 55,656 $ (472) (1) %
Profit $ 3,695 $ 3,789 $ (94) (2) %
Profit per common share - $ 5.88 $ 5.75 $ 0.13 2 %
diluted
Profit per common share -
diluted (excluding $ 6.38 $ 5.97 $ 0.41 7 %
restructuring costs)
Fourth-Quarter 2014 Highlights
* Fourth-quarter sales and revenues were $14.244 billion, slightly down from
the fourth quarter of 2013. Sales declines in Construction Industries and
Resource Industries were nearly offset by increases in Energy &
Transportation.
* Restructuring costs were $97 million in the fourth quarter of 2014 with an
after-tax impact of $0.12 per share.
* Profit per share was $1.23 in the fourth quarter of 2014 and $1.35 per
share excluding restructuring costs. Profit in the fourth quarter of 2013
was $1.54 per share and $1.68 per share excluding restructuring costs.
Full-Year 2014 Highlights
* 2014 sales and revenues were $55.184 billion, slightly down from 2013.
Sales declines in Resource Industries were nearly offset by increases in
Energy & Transportation and Construction Industries.
* Restructuring costs were $441 million in 2014 with an after-tax impact of
$0.50 per share.
* Profit per share was $5.88 in 2014 and $6.38 per share excluding
restructuring costs. Profit in 2013 was $5.75 per share and $5.97 per share
excluding restructuring costs.
Cash Flow/Financial Position
* Inventory declined about $1.1 billion during the fourth quarter of 2014.
This decline was positive to operating cash flow, but unfavorable to
profit. For the full year, inventory decreased about $420 million.
* ME&T operating cash flow for 2014 was $7.5 billion.
* ME&T debt-to-capital ratio was 37.4 percent compared with 29.7 percent at
the end of 2013. We ended the year with $7.3 billion of cash.
* During the year, we repurchased $4.2 billion of Caterpillar stock and
increased the quarterly dividend by 17 percent.
2015 Outlook
* The 2015 outlook reflects sales and revenues of about $50 billion and
profit of $4.60 per share, or $4.75 per share excluding restructuring costs
of about $150 million.
* We do not expect ME&T capital expenditures in 2015 to be significantly
different than 2014 capital expenditures of $1.6 billion.
CONSOLIDATED RESULTS
Consolidated Sales and Revenues
Consolidated Sales and Revenues Comparison
Fourth Quarter 2014 vs. Fourth Quarter 2013
To access this chart, go to http://www.caterpillar.com/en/investors/
quarterly-results.html for the downloadable version of Caterpillar 4Q and
full-year 2014 earnings.
The chart above graphically illustrates reasons for the change in Consolidated
Sales and Revenues between the fourth quarter of 2013 (at left) and the fourth
quarter of 2014 (at right). Items favorably impacting sales and revenues appear
as upward stair steps with the corresponding dollar amounts above each bar,
while items negatively impacting sales and revenues appear as downward stair
steps with dollar amounts reflected in parentheses above each bar. Caterpillar
management utilizes these charts internally to visually communicate with the
company's Board of Directors and employees.
Sales and Revenues
Total sales and revenues were $14.244 billion in the fourth quarter of 2014,
compared with $14.402 billion in the fourth quarter of 2013, a decline of $158
million or 1 percent. The decrease was primarily due to currency impacts from
weakening of the euro and Japanese yen. The impacts from sales volume, price
realization and Financial Products' revenues were not significant. While sales
for new equipment were slightly lower, aftermarket parts sales were slightly
higher than the fourth quarter of 2013.
While the overall sales change was not significant, sales in North America
improved and were about offset by declines in Asia/Pacific and Latin America.
In North America, sales increased 10 percent due to higher demand primarily for
transportation and oil and gas applications, and the favorable impact of
changes in dealer inventories. Asia/Pacific sales declined 16 percent primarily
due to lower demand for construction equipment and the unfavorable impact of
changes in dealer inventories. Sales decreased 14 percent in Latin America
primarily due to lower end-user demand for construction and mining equipment,
partially offset by the favorable impact of changes in dealer inventories.
Sales in EAME were about flat as increases in deliveries to end users were
about offset by the unfavorable impact of changes in dealer inventories and the
impact of currency as our sales in euros translated into fewer U.S. dollars.
By segment, sales decreases in Construction Industries and Resource Industries
were about offset by increased sales in Energy & Transportation. Construction
Industries' sales decreased 9 percent primarily due to lower dealer deliveries
to end users. Resource Industries' sales declined 10 percent primarily due to
lower end-user demand for mining equipment, partially offset by the favorable
impact of changes in dealer inventories. Energy & Transportation's sales
increased 11 percent primarily due to higher demand for oil and gas,
transportation and power generation applications, partially offset by the
unfavorable impact of changes in dealer inventories. Financial Products'
segment revenues were about flat.
Consolidated Operating Profit
Consolidated Operating Profit Comparison
Fourth Quarter 2014 vs. Fourth Quarter 2013
To access this chart, go to http://www.caterpillar.com/en/investors/
quarterly-results.html for the downloadable version of Caterpillar 4Q and
full-year 2014 earnings.
The chart above graphically illustrates reasons for the change in Consolidated
Operating Profit between the fourth quarter of 2013 (at left) and the fourth
quarter of 2014 (at right). Items favorably impacting operating profit appear
as upward stair steps with the corresponding dollar amounts above each bar,
while items negatively impacting operating profit appear as downward stair
steps with dollar amounts reflected in parentheses above each bar. Caterpillar
management utilizes these charts internally to visually communicate with the
company's Board of Directors and employees. The bar entitled Other includes
consolidating adjustments and Machinery, Energy & Transportation other
operating (income) expenses.
Operating profit for the fourth quarter of 2014 was $1.063 billion, down $389
million from the fourth quarter of 2013. The decline was primarily due to
increased selling, general and administrative and research and development (SG&
A and R&D) expenses and higher manufacturing costs, partially offset by
favorable price realization.
A majority of the increase in SG&A and R&D expenses was for new product
introduction programs and higher incentive compensation expense. In addition,
SG&A expenses were higher as a result of the timing of spending on company-wide
initiatives.
About two-thirds of the unfavorable change in manufacturing costs was related
to inventory-the absence of LIFO inventory decrement benefits of $115 million
from the fourth quarter of 2013 and the unfavorable impact of cost absorption,
as inventory declined more significantly in the fourth quarter of 2014 than in
the fourth quarter of 2013. In addition, incentive compensation expense and
warranty, as well as spending on growth-related programs in Energy &
Transportation, increased. These items were partially offset by favorable
material costs.
Restructuring costs of $97 million in the fourth quarter of 2014 were related
to a reduction in workforce at our Gosselies, Belgium, facility and several
other restructuring programs across the company. In the fourth quarter of 2013,
restructuring costs were $130 million, primarily related to our mining
business.
Fourth-quarter 2013 operating profit included a gain on a legal settlement of
$68 million.
Other Profit/Loss Items
* Other income/expense was income of $3 million compared with income of $44
million in the fourth quarter of 2013. The unfavorable change was primarily
due to lower gains on the sale of securities in the fourth quarter of 2014.
In addition, the fourth quarter of 2014 included losses on commodity
forward contracts.
* The provision for income taxes for the fourth quarter of 2014 reflects an
effective tax rate of 28 percent, compared with 28.5 percent for fourth
quarter of 2013, excluding the items discussed below.
The provision for income taxes for the fourth quarter of 2014 also includes
benefits of $62 million. This is related to a decrease from the third-quarter
estimated annual effective tax rate of 29.5 percent primarily due to the
renewal in the fourth quarter of the U.S. research and development tax credit
for 2014 and $23 million for the release of a valuation allowance against the
deferred tax assets of a non-U.S. subsidiary. This compares to a $19 million
benefit recorded for the fourth quarter of 2013 related to a decrease from the
third-quarter 2013 estimated annual effective tax rate.
Global Workforce
Caterpillar worldwide full-time employment was 114,233 at the end of 2014,
compared with 118,501 at the end of 2013, or a decrease of 4,268 full-time
employees. The flexible workforce increased 1,657, resulting in a total
decrease in the global workforce of 2,611. The decrease was primarily the
result of restructuring programs.
December 31
Increase/
2014 2013 (Decrease)
Full-time employment 114,233 118,501 (4,268)
Flexible workforce 16,510 14,853 1,657
Total 130,743 133,354 (2,611)
Summary of change
U.S. workforce 54
Non-U.S. workforce (2,665)
Total (2,611)
SEGMENT RESULTS
Sales and Revenues by Geographic Region
% North % Latin % % Asia/ %
(Millions of Total Change America Change America Change EAME Change Pacific Change
dollars)
Fourth Quarter
2014
Construction $ 4,420 (9) % $ 1,996 13 % $ 549 (24) % $ 934 (10) % $ 941 (30) %
Industries¹
Resource 2,385 (10) % 850 (11) % 401 (13) % 566 (16) % 568 1 %
Industries²
Energy & 6,191 11 % 2,730 19 % 541 (5) % 1,980 17 % 940 (6) %
Transportation³
All Other 531 (10) % 354 (6) % 61 9 % 77 (17) % 39 (41) %
Segments⁴
Corporate Items (27) (26) - (3) 2
and Eliminations
Machinery, Energy $13,500 (1) % $ 5,904 10 % $ 1,552 (14) % $ 3,554 2 % $2,490 (16) %
& Transportation
Financial $ 811 (1) % $ 451 3 % $ 112 6 % $ 115 (12) % $ 133 (7) %
Products Segment
Corporate Items (67) (37) (13) (6) (11)
and Eliminations
Financial $ 744 (2) % $ 414 2 % $ 99 3 % $ 109 (12) % $ 122 (7) %
Products Revenues
Consolidated
Sales and $14,244 (1) % $ 6,318 9 % $ 1,651 (13) % $ 3,663 1 % $2,612 (16) %
Revenues
Fourth Quarter
2013
Construction $ 4,869 $ 1,763 $ 726 $ 1,035 $1,345
Industries¹
Resource 2,649 958 459 670 562
Industries²
Energy & 5,565 2,296 567 1,697 1,005
Transportation³
All Other 590 375 56 93 66
Segments⁴
Corporate Items (27) (27) 1 (1) -
and Eliminations
Machinery, Energy $13,646 $ 5,365 $ 1,809 $ 3,494 $2,978
& Transportation
Financial $ 816 $ 436 $ 106 $ 131 $ 143
Products Segment
Corporate Items (60) (31) (10) (7) (12)
and Eliminations
Financial $ 756 $ 405 $ 96 $ 124 $ 131
Products Revenues
Consolidated
Sales and $14,402 $ 5,770 $ 1,905 $ 3,618 $3,109
Revenues
1 Does not include inter-segment sales of $52 million and $73
million in fourth quarter 2014 and 2013, respectively.
2 Does not include inter-segment sales of $183 million and $109
million in fourth quarter 2014 and 2013, respectively.
3 Does not include inter-segment sales of $542 million and $567
million in fourth quarter 2014 and 2013, respectively.
4 Does not include inter-segment sales of $843 million and $796
million in fourth quarter 2014 and 2013, respectively.
Sales and Revenues by Segment
Fourth Sales Price Fourth $ %
Quarter 2013 Volume Realization Currency Other Quarter 2014 Change Change
(Millions of
dollars)
Construction $ 4,869 $ (419) $ 63 $ (93) $ - $ 4,420 $ (449) (9) %
Industries Resource 2,649 (212) (12) (40) - 2,385 (264) (10) %
Industries
Energy & 5,565 657 37 (68) - 6,191 626 11 %
Transportation
All Other 590 (54) (1) (4) - 531 (59) (10) %
Segments
Corporate Items and (27) (1) 1 - - (27) -
Eliminations
Machinery, Energy & $ 13,646 $ (29) $ 88 $ (205) $ - $ 13,500 $ (146) (1) %
Transportation
Financial Products 816 - - - (5) 811 (5) (1) %
Segment
Corporate Items and (60) - - - (7) (67) (7)
Eliminations
Financial $ 756 $ - $ - $ - $ (12) $ 744 $ (12) (2) %
Products
Revenues
Consolidated
Sales and $ 14,402 $ (29) $ 88 $ (205) $ (12) $ 14,244 $ (158) (1) %
Revenues
Operating Profit
by Segment
Fourth Quarter Fourth Quarter $ %
(Millions of 2014 2013 Change Change
dollars)
Construction $ 362 $ 489 $ (127) (26) %
Industries
Resource 72 217 (145) (67) %
Industries
Energy & 1,077 982 95 10 %
Transportation
All Other 164 143 21 15 %
Segments
Corporate Items (754) (561) (193)
and Eliminations
Machinery,
Energy & $ 921 $ 1,270 $ (349) (27) %
Transportation
Financial 197 266 (69) (26) %
Products Segment
Corporate Items 12 (16) 28
and Eliminations
Financial $ 209 $ 250 $ (41) (16) %
Products
Consolidating (67) (68) 1
Adjustments
Consolidated $ 1,063 $ 1,452 $ (389) (27) %
Operating Profit
CONSTRUCTION INDUSTRIES
(Millions of dollars)
Sales Comparison
Fourth Price Fourth $ %
Quarter 2013 Sales Volume Realization Currency Quarter 2014 Change Change
Sales $4,869 ($419) $63 ($93) $4,420 ($449) (9) %
Comparison[1]
Sales by Geographic Region
Fourth Fourth $ %
Quarter 2014 Quarter 2013 Change Change
North $1,996 $1,763 $233 13 %
America
Latin 549 726 (177) (24) %
America
EAME 934 1,035 (101) (10) %
Asia/ 941 1,345 (404) (30) %
Pacific
Total1 $4,420 $4,869 ($449) (9) %
Operating Profit
Fourth Fourth $ %
Quarter 2014 Quarter 2013 Change Change
Operating Profit $362 $489 ($127) (26) %
1 Does not include inter-segment sales of $52 million and $73 million in the
fourth quarter 2014 and 2013, respectively.
Construction Industries' sales were $4.420 billion in the fourth quarter of
2014, a decrease of $449 million, or 9 percent, from the fourth quarter of
2013. The decrease in sales was due to lower volume and the unfavorable impact
of currency primarily the Japanese yen and the euro. These unfavorable items
were partially offset by improved price realization. Sales of new equipment
decreased, while sales of aftermarket parts were about flat.
* The sales volume decrease was primarily related to lower deliveries to end
users. About one-third of the decline in sales volume was due to the
absence of a large government order in Brazil that occurred during the
fourth quarter of 2013.
* Price realization was favorable. About half of the overall improvement was
due to the absence of the same large government order in Brazil that
occurred during the fourth quarter of 2013.
Sales decreased in all regions except North America.
* In Asia/Pacific, the sales decline was primarily due to lower sales in
China and Japan. In China, the lower sales resulted from weaker
construction activity. In Japan, sales during the fourth quarter of 2013
were favorably impacted by customer demand in advance of a 2014 emissions
change. Sales in Japan also declined due to a weaker Japanese yen as sales
in yen translated into fewer U.S. dollars.
* Decreases in Latin America were primarily related to the absence of a large
government order in Brazil that occurred during the fourth quarter of 2013
and weak construction activity.
* In EAME, the sales decline was primarily due to the unfavorable impact of
changes in dealer inventories as dealers reduced inventory more
significantly in the fourth quarter of 2014 than in the fourth quarter of
2013. In addition, the impact of currency was unfavorable as sales in euros
translated into fewer U.S. dollars.
* Sales increased in North America primarily due to higher end-user demand as
construction-related spending increased in the United States. Although
still below prior peaks, construction-related spending continues to
improve. In addition, the impact of changes in dealer inventories was
favorable.
Construction Industries' profit was $362 million in the fourth quarter of 2014,
compared with $489 million in the fourth quarter of 2013. Profit decreased
primarily due to lower sales volume, increased incentive compensation expense
and higher spending on new product introduction programs. These unfavorable
items were partially offset by the favorable impacts of currency and price
realization.
RESOURCE INDUSTRIES
(Millions of dollars)
Sales Comparison
Fourth Price Fourth $ %
Quarter 2013 Sales Volume Realization Currency Quarter 2014 Change Change
Sales $2,649 ($212) ($12) ($40) $2,385 ($264) (10) %
Comparison[1]
Sales by Geographic Region
Fourth Fourth $ %
Quarter 2014 Quarter 2013 Change Change
North $850 $958 ($108) (11) %
America
Latin 401 459 (58) (13) %
America
EAME 566 670 (104) (16) %
Asia/ 568 562 6 1 %
Pacific
Total1 $2,385 $2,649 ($264) (10) %
Operating Profit
Fourth Fourth $ %
Quarter 2014 Quarter 2013 Change Change
Operating
Profit $72 $217 ($145) (67)%
1 Does not include inter-segment sales of $183 million and $109 million in the
fourth quarter 2014 and 2013, respectively.
Resource Industries' sales were $2.385 billion in the fourth quarter of 2014, a
decrease of $264 million, or 10 percent from the fourth quarter of 2013,
primarily due to lower sales volume. While sales of new equipment continued to
decline, sales of aftermarket parts improved.
The sales volume decrease was primarily related to lower end-user demand. This
decrease was partially offset by the favorable impact of changes in dealer
inventories. While dealers continued to reduce inventories during the fourth
quarter of 2014, the reductions were less significant than in the fourth
quarter of 2013.
Sales decreased in all geographic regions except Asia/Pacific. Sales in Asia/
Pacific were about flat, reflecting continued weak end-user demand. Although
prices of some mined commodities remained above investment thresholds,
customers in most geographic regions continued to reduce spending. We believe
that mining companies are increasing productivity at existing mines and
improving their transportation infrastructure rather than investing in
expansions or new mine openings, which results in lower demand for our mining
products. In addition, projects started in prior years have led to an increased
supply of coal and iron ore which has outpaced demand and resulted in prices
below investment thresholds for those commodities. As a result, new orders for
mining equipment continued to be weak in the quarter.
Resource Industries' profit was $72 million in the fourth quarter of 2014
compared with $217 million in the fourth quarter of 2013. The decrease was
primarily the result of increased SG&A and R&D expenses, mostly due to higher
spending for new product introduction programs and increased incentive
compensation expense. In addition, sales volume and currency impacts were
unfavorable. These items were partially offset by favorable material costs.
Inter-segment sales of components to Energy & Transportation increased
substantially and about $45 million of Resource Industries' profit in the
fourth quarter of 2014 was related to these inter-segment sales, an increase of
about $40 million from the fourth quarter of 2013.
Segment profit for 2014 is based on fixed exchange rates set at the beginning
of 2014, while segment profit for 2013 is based on fixed exchange rates set at
the beginning of 2013. The difference in these fixed exchange rates resulted in
an unfavorable currency impact for Resource Industries.
ENERGY & TRANSPORTATION
(Millions of dollars)
Sales Comparison
Fourth Price Fourth $ %
Quarter 2013 Sales Volume Realization Currency Quarter 2014 Change Change
Sales $5,565 $657 $37 ($68) $6,191 $626 11 %
Comparison[1]
Sales by Geographic Region
Fourth Fourth $ %
Quarter 2014 Quarter 2013 Change Change
North $2,730 $2,296 $434 19 %
America
Latin 541 567 (26) (5) %
America
EAME 1,980 1,697 283 17 %
Asia/ 940 1,005 (65) (6) %
Pacific
Total1 $6,191 $5,565 $626 11 %
Operating Profit
Fourth Fourth $ %
Quarter 2014 Quarter 2013 Change Change
Operating $1,077 $982 $95 10 %
Profit
1 Does not include inter-segment sales of $542 million and $567 million in the
fourth quarter 2014 and 2013, respectively.
Energy & Transportation's sales were $6.191 billion in the fourth quarter of
2014, an increase of $626 million, or 11 percent, compared with the fourth
quarter of 2013. Sales increased for oil and gas, power generation and
transportation applications and decreased for industrial applications.
* Oil and Gas - Sales increases in North America and EAME were partially
offset by declines in Latin America and Asia/Pacific. In North America,
sales increased primarily due to higher end-user demand and the favorable
impact from changes in dealer inventory. Increases in end-user demand were
primarily for equipment used in well servicing, gas compression and
drilling applications. The sales increase in EAME was primarily due to the
timing of large projects. In Latin America, lower sales were primarily due
to weaker end-user demand. Sales declined in Asia/Pacific primarily due to
the unfavorable impact of changes in dealer inventory, partially offset by
higher deliveries to end users.
* Power Generation - Sales increased in EAME and North America and were about
flat in Latin America and Asia/Pacific. Sales improved in EAME primarily
due to sales recognition for a large project. In North America, sales
increased primarily due to higher end-user demand.
* Transportation - Sales increased in EAME and North America and were about
flat in Latin America and Asia/Pacific. In EAME, sales increased as we
continue to focus on expansion of our rail business. In North America,
sales strengthened due to customer demand in advance of the 2015 emissions
change for locomotives.
* Industrial - Sales decreased in EAME and were about flat in all other
geographic regions. In EAME, sales decreased primarily due to lower demand
for engines used by original equipment manufacturers for agriculture
applications.
Energy & Transportation's profit was $1.077 billion in the fourth quarter of
2014, compared with $982 million in the fourth quarter of 2013. The improvement
was primarily due to higher sales volume, which included negative product mix
due to sales recognition for a large power generation project in EAME. In
addition, price realization was favorable. These favorable items were partially
offset by increased spending on growth-related programs.
FINANCIAL PRODUCTS SEGMENT
(Millions of dollars)
Revenues by Geographic Region
Fourth Fourth $ %
Quarter 2014 Quarter 2013 Change Change
North America $451 $436 $15 3 %
Latin America 112 106 6 6 %
EAME 115 131 (16) (12) %
Asia/Pacific 133 143 (10) (7) %
Total $811 $816 ($5) (1) %
Operating Profit
Fourth Fourth $ %
Quarter 2014 Quarter 2013 Change Change
Operating Profit $197 $266 ($69) (26) %
Financial Products' revenues were $811 million in the fourth quarter of 2014, a
decrease of $5 million from the fourth quarter of 2013. The decline was
primarily due to lower average financing rates in North America and Europe and
lower average earning assets in Asia/Pacific, partially offset by higher
average earning assets in North America.
Financial Products' profit was $197 million in the fourth quarter of 2014,
compared with $266 million in the fourth quarter of 2013. The unfavorable
change was primarily due to a $25 million increase in the provision for credit
losses at Cat Financial (largely a result of the absence of a favorable
adjustment that occurred during the fourth quarter of 2013), a $17 million
decrease in gains on sales of securities at Caterpillar Financial Insurance
Services and the absence of a $17 million currency gain that occurred during
the fourth quarter of 2013 at Cat Financial.
At the end of 2014, past dues at Cat Financial were 2.17 percent compared with
2.81 percent at the end of the third quarter of 2014 and 2.37 percent at the
end of 2013. Write-offs, net of recoveries, were $104 million for the full-year
2014, compared with $123 million for the full-year 2013.
As of December 31, 2014, Cat Financial's allowance for credit losses totaled
$401 million, or 1.36 percent of net finance receivables, compared with $378
million or 1.30 percent of net finance receivables at year-end 2013.
Corporate Items and Eliminations
Expense for corporate items and eliminations was $742 million in the fourth
quarter of 2014, an increase of $165 million from the fourth quarter of 2013.
Corporate items and eliminations include: corporate-level expenses;
restructuring costs; timing differences, as some expenses are reported in
segment profit on a cash basis; retirement benefit costs other than service
cost; currency differences for ME&T, as segment profit is reported using annual
fixed exchange rates and inter-segment eliminations.
The increase in expense from the fourth quarter of 2013 was primarily due to
higher corporate costs, the absence of a LIFO inventory decrement benefit of
$115 million and a gain on a legal settlement of $68 million from the fourth
quarter of 2013, partially offset by lower retirement benefits and other
methodology differences.
2015 Outlook
From an economic perspective, the company does not anticipate significant
improvement in the world economy. The company expects world GDP growth of about
2.7 percent in 2015, up from about 2.5 percent in 2014. The company believes
that the improvement will come primarily from developed countries and that
economies in developing countries will, overall, grow at a rate similar to
2014.
Despite our outlook for modest improvement in global economic growth,
significant risks and uncertainties remain that could temper growth in 2015.
Political conflicts and social unrest continue to disrupt economic activity in
several regions, in particular, the Commonwealth of Independent States, Africa
and the Middle East. The Chinese government's push for structural reforms is
slowing growth, and the ongoing uncertainty around the direction and timing of
U.S. fiscal and monetary policy actions may temper business confidence. In
addition, over the last several months, the price of oil has declined
substantially. The depth and duration of the price decline will influence the
impact of our 2015 results.
Sales and Revenues Outlook
While we anticipate modest improvement in world economic growth, we expect our
sales and revenues to decline from $55.2 billion in 2014 to about $50 billion
in 2015. The primary factors contributing to the decline include:
* Lower oil prices are the most significant reason we expect lower sales in
2015. About one-third of Energy & Transportation's sales in 2014 were
related to oil and gas. Based on the recent sharp decline in oil prices, we
expect sales of reciprocating engines will be significantly lower than in
2014. In addition to the impact in Energy & Transportation, we expect lower
oil prices will be negative for Construction Industries' sales in
oil-producing countries around the world, including some regions of the
United States that rely heavily on oil revenues to drive economic growth.
* We believe lower oil prices will be positive for consumers around the world
and act like a fiscal stimulus for net oil importing countries. While this
should be positive for world economic growth, we do not believe it will
occur soon enough to have a significant impact on our 2015 sales.
* In addition to oil, prices for many mined commodities have also declined.
Copper, coal and iron ore prices have continued to decline. Order rates for
mining equipment have remained at low levels and we do not expect recovery
in 2015. Because of the weakening commodity prices and low order rates, we
expect our mining sales will be lower in 2015.
* The U.S. dollar has strengthened over the past several months and is
expected to negatively impact 2015 sales.
* We also expect that sales in our rail business will be lower. As a result
of a strong rail industry and customers purchasing locomotives in advance
of the 2015 emissions change in North America, 2014 was a particularly good
year for locomotive sales. We expect that locomotive sales in 2015 will be
lower.
* We have also lowered our expectations for construction equipment sales in
China. While our market position in China has improved, 2015 expectations
for the construction industry in China are lower.
* By segment, we expect sales to decline from 2014 by 5 to 10 percent for
Construction Industries, about 10 percent for Resource Industries and 10 to
15 percent for Energy & Transportation.
Profit Outlook
As a result of the expected decline in sales and revenues, we expect lower
profit in 2015. Our outlook for profit is about $4.60 per share, or $4.75 per
share excluding restructuring costs of about $150 million or about $0.15 per
share. That compares to profit of $5.88 per share, or $6.38 excluding
restructuring costs in 2014.
Our target for incremental operating profit as a percent of incremental sales
is 25 percent, and our target "decremental margin" rate when sales decline is a
range of 25 to 30 percent. The 2015 outlook excluding restructuring costs is
within the 25 to 30 percent range.
While the profit outlook is consistent with our decremental operating profit
target range, there are a number of positive and negative factors.
Positive Factors:
* Lower incentive compensation expense - in 2014 incentive compensation
expense was significantly higher than target as we substantially exceeded
our 2014 incentive compensation metrics.
* Lower variable costs - as a result of our continuing work improving costs
and efficiency, material and variable labor and overhead costs are expected
to be favorable.
* Lower restructuring costs - while we are continuing restructuring actions
in 2015 to improve our long-term cost structure, the costs expected in 2015
are lower than the $441 million of restructuring costs in 2014. In 2015, we
are expecting restructuring costs of about $150 million.
* The strength of the U.S. dollar, while negative for sales, is positive for
costs and overall is expected to be positive to profit.
* We expect a small improvement in price realization (less than 0.5 percent
of sales).
Negative Factors:
* Higher R&D expense.
* Unfavorable cost absorption - we expect more reduction in inventory in 2015
than in 2014. While positive for cash flow, it would have a negative impact
on costs.
* With a greater proportion of the expected decline in sales occurring in
higher margin products for the oil and gas and mining industries, we
anticipate an unfavorable impact on operating margin.
* Higher pension expense.
* Higher tax rate - We had $44 million of net favorable discrete tax items in
2014 that we do not expect in 2015. Our outlook for 2015 assumes a tax rate
of 29 percent. Excluding the discrete items, the tax rate was 28 percent in
2014. The increase in the rate is primarily related to the expiration of
the U.S. research and development tax credit.
QUESTIONS AND ANSWERS
Q1: Oil and gas prices have changed dramatically over the last six months. Can
you discuss how these changes are impacting your sales?
A: Caterpillar sells products that are used in a variety of different oil and
gas applications, including offshore and land drilling, well servicing, oil
and gas production and gas compression. The products we sell to the oil
and gas industry include gas turbines and centrifugal natural gas
compressors, reciprocating engines, transmissions and well stimulation
pumps. Although we are confident in the long-term fundamentals of the oil
and gas industry, in the near term and especially in the latter part of
2015, we expect the substantial decline in oil prices will have a negative
impact on our sales. We expect that well servicing and drilling will be
impacted the earliest and to the greatest magnitude. Gas compression, due
to the continued need for global infrastructure build, is expected to
remain relatively strong in 2015 and sales related to large projects that
take years to execute will likely be impacted to a lesser extent in the
short-term.
In addition to Energy & Transportation, we support the oil and gas industry
directly with construction and mining equipment-such as sales of equipment
for drill site preparation and infrastructure development and sales of
mining equipment to the Canadian oil sands. There are also a variety of
indirect exposures, as countries that depend on oil revenues may reduce
expenditures for roads and other infrastructure projects.
Lower oil and gas prices are having a substantial negative impact on our
outlook for sales and revenues. While we believe lower oil prices will be
positive for consumers around the world and act like a fiscal stimulus for
net oil importing countries, we do not think the positive impact to the
overall economy will occur soon enough to have a significant impact on our
2015 sales.
Q2: Can you discuss changes in dealer inventories-for the fourth quarter and
full year of 2014 and your expectations for 2015?
A: Dealer machine and engine inventories decreased about $600 million in both
the fourth quarter of 2014 and the fourth quarter of 2013. For the full
year of 2014, dealer machine and engine inventories decreased about $1
billion compared with a decrease of more than $3 billion during 2013.
We expect that dealers will continue to reduce inventories in 2015 as they
align inventory levels with expected demand.
Q3: Can you comment on the substantial decline in your inventory in the fourth
quarter of 2014 and your expectations for 2015?
A: Our inventory declined $1.1 billion during the fourth quarter of 2014. A
fourth-quarter decline is not unusual as some of our businesses have
seasonally higher sales in the fourth quarter.
While an inventory decline in the fourth quarter is not unusual, the
magnitude of the fourth-quarter decline in 2014 was larger than we
expected. This contributed to our profit being lower than our outlook as
we experienced a more significant unfavorable impact from inventory cost
absorption.
During the quarter, production levels were lower than previously expected
as we began preparing for weakening macro-economic factors in several of
our businesses. In addition, year-end inventory in our Product
Distribution Centers (PDCs) was lower than we expected.
For 2015, we are anticipating lower sales, which is expected to lead to a
larger inventory reduction in 2015 than in 2014. That said, as we
experienced in the fourth quarter of 2014, our inventory balance is
impacted by future expectations. While we are expecting 2015 inventory to
decline, as the year unfolds and we have a better view of 2016, it could
affect our ending inventory in 2015.
Q4: Can you comment on expense related to your short-term incentive
compensation plans and your expectations for 2015?
A: Short-term incentive compensation expense is directly related to financial
and operational performance measured against targets set annually. The
fourth-quarter 2014 expense was about $310 million and was about $1.3
billion for the full year. Short-term incentive compensation expense in
the fourth quarter of 2013 was about $200 million, and full-year 2013 was
about $545 million.
For 2015, our outlook reflects short-term incentive compensation expense of
about $900 million.
Q5: Can you comment on your year-end 2014 order backlog?
A: At the end of the fourth quarter of 2014, the order backlog was $17.3
billion. This represents a $2.4 billion reduction from the end of the
third quarter of 2014. The decrease was primarily in Energy &
Transportation. In addition, the order backlog for both Resource
Industries and Construction Industries declined.
Compared to year-end 2013, the order backlog declined about $700 million.
Decreases in Resource Industries were partially offset by increases in
Energy & Transportation.
Q6: Can you comment on your balance sheet and ME&T operating cash flow in 2014?
A: ME&T operating cash flow for the full year of 2014 was $7.5 billion
compared with $9.0 billion in 2013. The decrease was primarily the result
of the absence of the significant inventory decline that occurred during
2013.
Our top cash deployment priority is to maintain a strong financial position
in support of our "mid-A" credit rating. The ME&T debt-to-capital ratio
was 37.4 percent, up from 29.7 percent at the end of 2013 but within our
target range of 30 to 45 percent. The increase was primarily due to a
return of capital to stockholders of $5.8 billion ($4.2 billion stock
repurchase and $1.6 billion dividends) and an unfavorable year-end
adjustment to equity of $1.6 billion for retirement benefits. These items
were partially offset by profit. Our cash and liquidity positions remained
strong with an enterprise cash balance of $7.3 billion at December 31,
2014.
Our priorities for the use of cash are to maintain a strong financial
position in support of our credit rating, provide capital to support
growth, appropriately fund employee benefit plans, pay dividends and
repurchase common stock. During the year, capital expenditures totaled
$1.6 billion and funding for defined benefit pension plans was $0.7
billion.
Q7: What are your plans for share repurchases in 2015?
A: In the first quarter of 2014, the Board of Directors approved a $10 billion
authorization which expires in December 2018. At the end of 2014, we had
$7.5 billion remaining in the authorization. Our strong balance sheet and
cash position provide us with the ability to repurchase additional stock.
We expect our repurchase activity to be consistent with our stated cash
deployment priorities and are considering additional repurchases in 2015.
Q8: What were your total restructuring costs in 2014? What are plans for 2015?
A: Restructuring costs for 2014 were $441 million, the most significant item
was related to a reduction in workforce at our Gosselies, Belgium,
facility. The remaining costs were for a wide range of actions across the
company as part of our ongoing efforts to optimize our cost structure and
improve the efficiency of our operations.
In 2015, we will continue to incur costs related to programs started in
2014 and we expect to take additional actions to further improve our
long-term cost structure. Our 2015 outlook assumes restructuring costs of
about $150 million.
In your third-quarter financial release, you announced a 2015 preliminary
Q9: sales and revenues outlook of flat to slightly up from 2014. In your
fourth-quarter financial release, you lowered your outlook for 2015 sales
and revenues. What is driving this change?
A: The substantial and continued decline in oil prices is the most significant
reason for the decrease in our sales and revenues outlook. Lower oil
prices are negative for Energy & Transportation and Construction
Industries. In addition, prices for mined commodities such as copper, coal
and iron ore have continued to decline, and order rates for mining
equipment have remained at low levels. As a result, we have reduced our
expectations for Resource Industries. We have also lowered our forecast
for the China construction industry and our expectation for sales in
China. Lastly, the U.S. dollar has strengthened over the last three months
and is expected to negatively impact 2015 sales.
GLOSSARY OF TERMS
1. All Other Segments - Primarily includes activities such as: the
remanufacturing of Cat(R) engines and components and remanufacturing services
for other companies as well as the business strategy, product management,
development, manufacturing, marketing and product support of undercarriage,
specialty products, hardened bar stock components and ground engaging tools
primarily for Cat products, paving products, forestry products and
industrial and waste products; the product management, development,
marketing, sales and product support of on-highway vocational trucks for
North America; parts distribution; distribution services responsible for
dealer development and administration including a wholly-owned dealer in
Japan, dealer portfolio management and ensuring the most efficient and
effective distribution of machines, engines and parts.
2. Consolidating Adjustments - Eliminations of transactions between Machinery,
Energy & Transportation and Financial Products.
3. Construction Industries - A segment primarily responsible for supporting
customers using machinery in infrastructure and building construction
applications. Responsibilities include business strategy, product design,
product management and development, manufacturing, marketing and sales and
product support. The product portfolio includes backhoe loaders, small
wheel loaders, small track-type tractors, skid steer loaders, multi-terrain
loaders, mini excavators, compact wheel loaders, telehandlers, select work
tools, small, medium and large track excavators, wheel excavators, medium
wheel loaders, compact track loaders, medium track-type tractors,
track-type loaders, motor graders and pipe layers. In addition,
Construction Industries has responsibility for an integrated manufacturing
cost center.
4. Currency - With respect to sales and revenues, currency represents the
translation impact on sales resulting from changes in foreign currency
exchange rates versus the U.S. dollar. With respect to operating profit,
currency represents the net translation impact on sales and operating costs
resulting from changes in foreign currency exchange rates versus the U.S.
dollar. Currency includes the impact on sales and operating profit for the
Machinery, Energy & Transportation lines of business only; currency impacts
on Financial Products revenues and operating profit are included in the
Financial Products portions of the respective analyses. With respect to
other income/expense, currency represents the effects of forward and option
contracts entered into by the company to reduce the risk of fluctuations in
exchange rates (hedging) and the net effect of changes in foreign currency
exchange rates on our foreign currency assets and liabilities for
consolidated results (translation).
5. Debt-to-Capital Ratio - A key measure of Machinery, Energy &
Transportation's financial strength used by both management and our credit
rating agencies. The metric is defined as Machinery, Energy &
Transportation's short-term borrowings, long-term debt due within one year
and long-term debt due after one year (debt) divided by the sum of
Machinery, Energy & Transportation's debt and stockholders' equity. Debt
also includes Machinery, Energy & Transportation's borrowings from
Financial Products.
6. EAME - A geographic region including Europe, Africa, the Middle East and
the Commonwealth of Independent States (CIS).
7. Earning Assets - Assets consisting primarily of total finance receivables
net of unearned income, plus equipment on operating leases, less
accumulated depreciation at Cat Financial.
8. Energy & Transportation (formerly Power Systems) - A segment primarily
responsible for supporting customers using reciprocating engines, turbines,
diesel-electric locomotives and related parts across industries serving
power generation, industrial, oil and gas and transportation applications,
including marine and rail-related businesses. Responsibilities include
business strategy, product design, product management, development,
manufacturing, marketing, sales and product support of turbines and
turbine-related services, reciprocating engine-powered generator sets,
integrated systems used in the electric power generation industry,
reciprocating engines and integrated systems and solutions for the marine
and oil and gas industries; reciprocating engines supplied to the
industrial industry as well as Cat machinery; the business strategy,
product design, product management, development, manufacturing,
remanufacturing, leasing and service of diesel-electric locomotives and
components and other rail-related products and services.
9. Financial Products Segment - Provides financing to customers and dealers
for the purchase and lease of Cat and other equipment, as well as some
financing for Caterpillar sales to dealers. Financing plans include
operating and finance leases, installment sale contracts, working capital
loans and wholesale financing plans. The segment also provides various
forms of insurance to customers and dealers to help support the purchase
and lease of our equipment. Financial Products Segment profit is determined
on a pretax basis and includes other income/expense items.
10. Latin America - Geographic region including Central and South American
countries and Mexico.
11. Lean Management - A holistic management system that uses a sequential
cadence of principles to drive the highest quality and lowest total cost to
achieve customer requirements.
12. LIFO Inventory Decrement Benefits - A significant portion of Caterpillar's
inventory is valued using the last-in, first-out (LIFO) method. With this
method, the cost of inventory is comprised of "layers" at cost levels for
years when inventory increases occurred. A LIFO decrement occurs when
inventory decreases, depleting layers added in earlier, generally lower
cost, years. A LIFO decrement benefit represents the impact on operating
profit of charging cost of goods sold with prior-year cost levels rather
than current period costs.
13. Machinery, Energy & Transportation (ME&T) - Represents the aggregate total
of Construction Industries, Resource Industries, Energy & Transportation
and All Other Segments and related corporate items and eliminations.
14. Machinery, Energy & Transportation Other Operating (Income) Expenses -
Comprised primarily of gains/losses on disposal of long-lived assets, gains
/losses on divestitures, long-lived asset impairment charges and legal
settlements. Restructuring costs, which are classified as other operating
expenses on the Results of Operations, are presented separately on the
Operating Profit Comparison.
15. Manufacturing Costs - Manufacturing costs exclude the impacts of currency
and represent the volume-adjusted change for variable costs and the
absolute dollar change for period manufacturing costs. Variable
manufacturing costs are defined as having a direct relationship with the
volume of production. This includes material costs, direct labor and other
costs that vary directly with production volume such as freight, power to
operate machines and supplies that are consumed in the manufacturing
process. Period manufacturing costs support production but are defined as
generally not having a direct relationship to short-term changes in
volume. Examples include machinery and equipment repair, depreciation on
manufacturing assets, facility support, procurement, factory scheduling,
manufacturing planning and operations management.
16. Price Realization - The impact of net price changes excluding currency and
new product introductions. Consolidated price realization includes the
impact of changes in the relative weighting of sales between geographic
regions.
17. Resource Industries - A segment primarily responsible for supporting
customers using machinery in mining and quarrying applications.
Responsibilities include business strategy, product design, product
management and development, manufacturing, marketing and sales and product
support. The product portfolio includes large track-type tractors, large
mining trucks, hard rock vehicles, longwall miners, electric rope shovels,
draglines, hydraulic shovels, drills, highwall miners, large wheel loaders,
off-highway trucks, articulated trucks, wheel tractor scrapers, wheel
dozers, select work tools, machinery components and electronics and control
systems. Resource Industries also manages areas that provide services to
other parts of the company, including integrated manufacturing and research
and development. In addition, segment profit includes the impact from
divestiture of portions of the Bucyrus distribution business.
18. Restructuring Costs - Primarily costs for employee separation costs and
long-lived asset impairments.
19. Sales Volume - With respect to sales and revenues, sales volume represents
the impact of changes in the quantities sold for Machinery, Energy &
Transportation as well as the incremental revenue impact of new product
introductions, including emissions-related product updates. With respect
to operating profit, sales volume represents the impact of changes in the
quantities sold for Machinery, Energy & Transportation combined with
product mix as well as the net operating profit impact of new product
introductions, including emissions-related product updates. Product mix
represents the net operating profit impact of changes in the relative
weighting of Machinery, Energy & Transportation sales with respect to total
sales.
NON-GAAP FINANCIAL MEASURES
The following definition is provided for "non-GAAP financial measures" in
connection with Regulation G issued by the Securities and Exchange Commission.
This non-GAAP financial measure has no standardized meaning prescribed by U.S.
GAAP and therefore is unlikely to be comparable to the calculation of similar
measures for other companies. Management does not intend this item to be
considered in isolation or substituted for the related GAAP measure.
Profit Per Share Excluding Restructuring Costs
We incurred significant restructuring costs in 2014 and expect to incur
additional restructuring costs in 2015. We believe it is important to
separately quantify the profit per share impact of restructuring costs in order
for our results to be meaningful to our readers. We have also provided 2013
profit per share excluding restructuring costs comparable to the 2014 and 2015
presentation. Reconciliation of profit per share excluding restructuring costs to
the most directly comparable GAAP measure, profit per share is as follows:
Fourth Quarter Full Year Outlook
2013 2014 2013 2014 Original 2014[1] 2015[2]
Profit per share $1.54 $1.23 $5.75 $5.88 $5.30 $4.60
Per share restructuring costs $0.14 $0.12 $0.22 $0.50 $0.55 $0.15
Profit per share excluding $1.68 $1.35 $5.97 $6.38 $5.85 $4.7
restructuring costs
1 2014 Sales and Revenues Outlook of $56 billion in a range of plus or minus 5
percent (as of January 27, 2014).
2 2015 Sales and Revenues Outlook of about $50 billion.
Machinery, Energy & Transportation
Caterpillar defines Machinery, Energy & Transportation as it is presented in
the supplemental data as Caterpillar Inc. and its subsidiaries with Financial
Products accounted for on the equity basis. Machinery, Energy & Transportation
information relates to the design, manufacture and marketing of our products.
Financial Products information relates to the financing to customers and
dealers for the purchase and lease of Caterpillar and other equipment. The
nature of these businesses is different, especially with regard to the
financial position and cash flow items. Caterpillar management utilizes this
presentation internally to highlight these differences. We also believe this
presentation will assist readers in understanding our business. Pages 26-31
reconcile Machinery, Energy & Transportation with Financial Products on the
equity basis to Caterpillar Inc. consolidated financial information.
Caterpillar's latest financial results and outlook are also available via:
Telephone:
800-228-7717 (Inside the United States and Canada)
858-764-9492 (Outside the United States and Canada)
Internet:
http://www.caterpillar.com/en/investors.html
http://www.caterpillar.com/en/investors/quarterly-results.html (live broadcast
/replays of quarterly conference call)
Caterpillar contact: Rachel Potts, 309-675-6892 (Office), 309-573-3444 (Mobile)
or Potts_Rachel_A@cat.com
Caterpillar Inc.
Condensed Consolidated Statement of Results of Operations
(Unaudited)
(Dollars in millions except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2014 2013 2014 2013
Sales and revenues:
Sales of Machinery, Energy & $ 13,500 $ 13,646 $ 52,142 $ 52,694
Transportation
Revenues of Financial Products 744 756 3,042 2,962
Total sales and revenues 14,244 14,402 55,184 55,656
Operating costs:
Cost of goods sold 10,499 10,541 39,767 40,727
Selling, general and administrative 1,522 1,417 5,697 5,547
expenses
Research and development expenses 578 467 2,135 2,046
Interest expense of Financial Products 154 175 624 727
Other operating (income) expenses 428 350 1,633 981
Total operating costs 13,181 12,950 49,856 50,028
Operating profit 1,063 1,452 5,328 5,628
Interest expense excluding Financial 126 109 484 465
Products
Other income (expense) 3 44 239 (35)
Consolidated profit before taxes 940 1,387 5,083 5,128
Provision (benefit) for income taxes 179 376 1,380 1,319
Profit of consolidated companies 761 1,011 3,703 3,809
Equity in profit (loss) of 2 (5) 8 (6)
unconsolidated affiliated companies
Profit of consolidated and affiliated 763 1,006 3,711 3,803
companies
Less: Profit (loss) attributable to 6 3 16 14
noncontrolling interests
Profit[1] $ 757 $ 1,003 $ 3,695 $ 3,789
Profit per common share $ 1.25 $ 1.57 $ 5.99 $ 5.87
Profit per common share - diluted2 $ 1.23 $ 1.54 $ 5.88 $ 5.75
Weighted-average common shares
outstanding (millions)
- Basic 605.8 637.0 617.2 645.2
- Diluted[2] 616.0 649.6 628.9 658.6
Cash dividends declared per common $ 1.40 $ 1.20 $ 2.70 $ 2.32
share
1 Profit attributable to common stockholders.
2 Diluted by assumed exercise of stock-based compensation awards using the
treasury stock method.
Caterpillar Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
December 31, December 31,
2014 2013
Assets
Current assets:
Cash and short-term investments $ 7,341 $ 6,081
Receivables - trade and other 7,737 8,413
Receivables - finance 9,027 8,763
Deferred and refundable income taxes 1,739 1,553
Prepaid expenses and other current assets 818 900
Inventories 12,205 12,625
Total current assets 38,867 38,335
Property, plant and equipment - net 16,577 17,075
Long-term receivables - trade and other 1,364 1,397
Long-term receivables - finance 14,644 14,926
Investments in unconsolidated affiliated companies 257 272
Noncurrent deferred and refundable income taxes 1,404 594
Intangible assets 3,076 3,596
Goodwill 6,694 6,956
Other assets 1,798 1,745
Total assets $ 84,681 $ 84,896
Liabilities
Current liabilities:
Short-term borrowings:
-- Machinery, Energy & Transportation $ 9 $ 16
-- Financial Products 4,699 3,663
Accounts payable 6,515 6,560
Accrued expenses 3,548 3,493
Accrued wages, salaries and employee benefits 2,438 1,622
Customer advances 1,697 2,360
Dividends payable 424 382
Other current liabilities 1,754 1,849
Long-term debt due within one year:
-- Machinery, Energy & Transportation 510 760
-- Financial Products 6,283 6,592
Total current liabilities 27,877 27,297
Long-term debt due after one year:
-- Machinery, Energy & Transportation 9,493 7,999
-- Financial Products 18,291 18,720
Liability for postemployment benefits 8,963 6,973
Other liabilities 3,231 3,029
Total liabilities 67,855 64,018
Stockholders' equity
Common stock 5,016 4,709
Treasury stock (15,726) (11,854)
Profit employed in the business 33,887 31,854
Accumulated other comprehensive income (loss) (6,431) (3,898)
Noncontrolling interests 80 67
Total stockholders' equity 16,826 20,878
Total liabilities and stockholders' equity $ 84,681 $ 84,896
Caterpillar Inc.
Condensed Consolidated Statement of Cash Flow
(Unaudited)
(Millions of dollars)
Twelve Months Ended
December 31,
2014 2013
Cash flow from operating activities:
Profit of consolidated and affiliated companies $ 3,711 $ 3,803
Adjustments for non-cash items:
Depreciation and amortization 3,163 3,087
Other 553 482
Changes in assets and liabilities, net of
acquisitions and divestitures:
Receivables - trade and other (25) 680
Inventories 101 2,658
Accounts payable 410 289
Accrued expenses (10) (108)
Accrued wages, salaries and employee benefits 901 (279)
Customer advances (593) (301)
Other assets - net (300) (49)
Other liabilities - net 146 (71)
Net cash provided by (used for) operating activities 8,057 10,191
Cash flow from investing activities:
Capital expenditures - excluding equipment leased to (1,539) (2,522)
others
Expenditures for equipment leased to others (1,840) (1,924)
Proceeds from disposals of leased assets and 904 844
property, plant and equipment
Additions to finance receivables (11,278) (11,422)
Collections of finance receivables 9,841 9,567
Proceeds from sale of finance receivables 177 220
Investments and acquisitions (net of cash acquired) (30) (195)
Proceeds from sale of businesses and investments 199 365
(net of cash sold)
Proceeds from sale of securities 810 449
Investments in securities (825) (402)
Other - net (46) (26)
Net cash provided by (used for) investing activities (3,627) (5,046)
Cash flow from financing activities:
Dividends paid (1,620) (1,111)
Distribution to noncontrolling interests (7) (13)
Contribution from noncontrolling interests 4 -
Common stock issued, including treasury shares 239 128
reissued
Treasury shares purchased (4,238) (2,000)
Excess tax benefit from stock-based compensation 182 96
Proceeds from debt issued (original maturities 10,649 9,328
greater than three months)
Payments on debt (original maturities greater than (9,248) (10,870)
three months)
Short-term borrowings - net (original maturities 1,043 (69)
three months or less)
Net cash provided by (used for) financing activities (2,996) (4,511)
Effect of exchange rate changes on cash (174) (43)
Increase (decrease) in cash and short-term 1,260 591
investments
Cash and short-term investments at beginning of 6,081 5,490
period
Cash and short-term investments at end of period $ 7,341 $ 6,081
All short-term investments, which consist primarily of highly liquid
investments with original maturities of three months or less, are considered to
be cash equivalents.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended December 31, 2014
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Consolidated Energy & Financial Consolidating
Transportation[1] Products Adjustments
Sales and revenues:
Sales of Machinery, Energy $ 13,500 $ 13,500 $ - $ -
& Transportation
Revenues of Financial 744 - 829 (85) 2
Products
Total sales and 14,244 13,500 829 (85)
revenues
Operating costs:
Cost of goods sold 10,499 10,501 - (2) 3
Selling, general and 1,522 1,381 158 (17) 3
administrative expenses
Research and development 578 578 - -
expenses
Interest expense of Financial 154 - 156 (2) 4
Products
Other operating (income) expenses 428 119 306 3 3
Total operating costs 13,181 12,579 620 (18)
Operating profit 1,063 921 209 (67)
Interest expense excluding 126 136 - (10) 4
Financial Products
Other income (expense) 3 (51) (3) 57 5
Consolidated profit before 940 734 206 -
taxes
Provision(benefit) for 179 117 62 -
income taxes
Profit of consolidated 761 617 144 -
companies
Equity in profit (loss) of
unconsolidated affiliated 2 2 - -
companies
Equity in profit of Financial - 142 - (142) 6
Products' subsidiaries
Profit of consolidated and 763 761 144 (142)
affiliated companies
Less: Profit
(loss)
attributable to 6 4 2 -
noncontrolling
interests
Profit[7] $ 757 $ 757 $ 142 $ (142)
1 Represents Caterpillar Inc. and its subsidiaries with Financial Products
accounted for on the equity basis.
2 Elimination of Financial Products' revenues earned from Machinery, Energy &
Transportation.
3 Elimination of net expenses recorded by Machinery, Energy & Transportation
paid to Financial Products.
4 Elimination of interest expense recorded between Financial Products and
Machinery, Energy & Transportation.
Elimination of discount recorded by Machinery, Energy & Transportation on
5 receivables sold to Financial Products and of interest earned between
Machinery, Energy & Transportation and Financial Products.
6 Elimination of Financial Products' profit due to equity method of accounting.
7 Profit attributable to common stockholders.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended December 31, 2013
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Consolidated Energy & Financial Consolidating
Transportation[1] Products Adjustments
Sales and revenues:
Sales of Machinery, Energy $ 13,646 $ 13,646 $ - $ -
& Transportation
Revenues of Financial 756 - 840 (84) 2
Products
Total sales and 14,402 13,646 840 (84)
revenues
Operating costs:
Cost of goods sold 10,541 10,541 - -
Selling, general and 1,417 1,308 131 (22) 3
administrative expenses
Research and development 467 467 - -
expenses
Interest expense of Financial 175 - 177 (2) 4
Products
Other operating 350 60 282 8 3
(income) expenses
Total operating costs 12,950 12,376 590 (16)
Operating profit 1,452 1,270 250 (68)
Interest expense excluding 109 120 - (11) 4
Financial Products
Other income (expense) 44 (49) 36 57 5
Consolidated profit before 1,387 1,101 286 -
taxes
Provision(benefit) for 376 306 70 -
income taxes
Profit of consolidated 1,011 795 216 -
companies
Equity in profit (loss)
of unconsolidated affiliated companies (5) (5) - -
Equity in profit of Financial - 211 - (211) 6
Products' subsidiaries
Profit of consolidated and 1,006 1,001 216 (211)
affiliated companies
Less: Profit (loss) attributable to 3 (2) 5 -
noncontrolling interests
Profit[7] $ 1,003 $ 1,003 $ 211 $ (211)
1 Represents Caterpillar Inc. and its subsidiaries with Financial Products
accounted for on the equity basis.
2 Elimination of Financial Products' revenues earned from Machinery, Energy &
Transportation.
3 Elimination of net expenses recorded by Machinery, Energy & Transportation
paid to Financial Products.
4 Elimination of interest expense recorded between Financial Products and
Machinery, Energy & Transportation.
Elimination of discount recorded by Machinery, Energy & Transportation on
5 receivables sold to Financial Products and of interest earned between
Machinery, Energy & Transportation and Financial Products.
6 Elimination of Financial Products' profit due to equity method of accounting.
7 Profit attributable to common stockholders.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Twelve Months Ended December 31, 2014
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Consolidated Energy & Financial Consolidating
Transportation1 Products Adjustments
Sales and revenues:
Sales of Machinery, Energy $ 52,142 $ 52,142 $ - $ -
& Transportation
Revenues of Financial 3,042 - 3,386 (344) 2
Products
Total sales and revenues 55,184 52,142 3,386 (344)
Operating costs:
Cost of goods sold 39,767 39,769 - (2) 3
Selling, general and 5,697 5,098 635 (36) 3
administrative expenses
Research and development 2,135 2,135 - -
expenses
Interest expense of Financial 624 - 631 (7) 4
Products
Other operating (income) expenses 1,633 419 1,235 (21) 3
Total operating costs 49,856 47,421 2,501 (66)
Operating profit 5,328 4,721 885 (278)
Interest expense excluding 484 526 - (42) 4
Financial Products
Other income (expense) 239 (21) 24 236 5
Consolidated profit before taxes 5,083 4,174 909 -
Provision (benefit) for 1,380 1,120 260 -
income taxes
Profit of consolidated 3,703 3,054 649 -
companies
Equity in profit (loss) of unconsolidated 8 8 - -
affiliated companies
Equity in profit of Financial - 640 - (640) 6
Products' subsidiaries
Profit of consolidated and 3,711 3,702 649 (640)
affiliated companies
Less: Profit (loss) attributable to 16 7 9 -
noncontrolling interests
Profit[7] $ 3,695 $ 3,695 $ 640 $ (640)
1 Represents Caterpillar Inc. and its subsidiaries with Financial Products
accounted for on the equity basis.
2 Elimination of Financial Products' revenues earned from Machinery, Energy &
Transportation.
3 Elimination of net expenses recorded by Machinery, Energy & Transportation
paid to Financial Products.
4 Elimination of interest expense recorded between Financial Products and
Machinery, Energy & Transportation.
Elimination of discount recorded by Machinery, Energy & Transportation on
5 receivables sold to Financial Products and of interest earned between
Machinery, Energy & Transportation and Financial Products.
6 Elimination of Financial Products' profit due to equity method of accounting.
7 Profit attributable to common stockholders.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Twelve Months Ended December 31, 2013
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Consolidated Energy & Financial Consolidating
Transportation1 Products Adjustments
Sales and revenues:
Sales of Machinery, Energy $ 52,694 $ 52,694 $ - $ -
& Transportation
Revenues of Financial 2,962 - 3,302 (340) 2
Products
Total sales and revenues 55,656 52,694 3,302 (340)
Operating costs:
Cost of goods sold 40,727 40,727 - -
Selling, general and 5,547 5,029 566 (48) 3
administrative expenses
Research and development 2,046 2,046 - -
expenses
Interest expense of Financial 727 - 734 (7) 4
Products
Other operating (income) expenses 981 (23) 1,019 (15) 3
Total operating costs 50,028 47,779 2,319 (70)
Operating profit 5,628 4,915 983 (270)
Interest expense excluding 465 508 - (43) 4
Financial Products
Other income (expense) (35) (299) 37 227 5
Consolidated profit before 5,128 4,108 1,020 -
taxes
Provision (benefit) for 1,319 1,039 280 -
income taxes
Profit of consolidated 3,809 3,069 740 -
companies
Equity in profit (loss) of
unconsolidated affiliated companies (6) (6) - -
Equity in profit of Financial - 726 - (726) 6
Products' subsidiaries
Profit of consolidated and 3,803 3,789 740 (726)
affiliated companies
Less: Profit (loss) attributable to 14 - 14 -
noncontrolling interests
Profit[7] $ 3,789 $ 3,789 $ 726 $ (726)
1 Represents Caterpillar Inc. and its subsidiaries with Financial Products
accounted for on the equity basis.
2 Elimination of Financial Products' revenues earned from Machinery, Energy &
Transportation.
3 Elimination of net expenses recorded by Machinery, Energy & Transportation
paid to Financial Products.
4 Elimination of interest expense recorded between Financial Products and
Machinery, Energy & Transportation.
Elimination of discount recorded by Machinery, Energy & Transportation on
5 receivables sold to Financial Products and of interest earned between
Machinery, Energy & Transportation and Financial Products.
6 Elimination of Financial Products' profit due to equity method of accounting.
7 Profit attributable to common stockholders.
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Twelve Months Ended December 31, 2014
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Consolidated Energy & Financial Consolidating
Transportation[1] Products Adjustments
Cash flow from operating
activities:
Profit of consolidated and $ 3,711 $ 3,702 $ 649 $ (640) 2
affiliated companies
Adjustments for non-cash items:
Depreciation and 3,163 2,253 910 -
amortization
Undistributed profit of - (170) - 170 3
Financial Products
Other 553 395 (114) 272 4
Changes in assets and liabilities,
net of acquisitions and divestitures:
Receivables - trade and other (25) 598 43 (666) 4,5
Inventories 101 128 - (27) 4
Accounts payable 410 400 (43) 53 4
Accrued expenses (10) 54 (64) -
Accrued wages, salaries and 901 892 9 -
employee benefits
Customer advances (593) (593) - -
Other assets - net (300) (393) (56) 149 4
Other liabilities - net 146 204 91 (149) 4
Net cash provided by (used for) 8,057 7,470 1,425 (838)
operating activities
Cash flow from investing
activities:
Capital expenditures - excluding (1,539) (1,519) (20) -
equipment leased to others
Expenditures for equipment leased (1,840) (122) (1,797) 79 4
to others
Proceeds from disposals of
leased assets 904 81 837 (14) 4
and property, plant and
equipment
Additions to finance (11,278) - (14,380) 3,102 5,8
receivables
Collections of finance 9,841 - 12,607 (2,766) 5
receivables
Net intercompany purchased - - 10 (10) 5
receivables
Proceeds from sale of finance 177 - 180 (3) 5
receivables
Net intercompany borrowings - - 13 (13) 6
Investments and acquisitions (30) (30) - -
(net of cash acquired)
Proceeds from sale of
businesses and 199 219 - (20) 8
investments (net of cash sold)
Proceeds from sale of 810 403 407 -
securities
Investments in securities (825) (425) (400) -
Other - net (46) (17) (34) 5 9
Net cash provided by (used for) (3,627) (1,410) (2,577) 360
investing activities
Cash flow from financing
activities:
Dividends paid (1,620) (1,620) (470) 470 7
Distribution to noncontrolling (7) (7) - -
interests
Contribution from 4 4 - -
noncontrolling interests
Common stock issued,including 239 239 5 (5) 9
treasury shares reissued
Treasury shares (4,238) (4,238) - -
purchased
Excess tax benefit from 182 182 - -
stock-based compensation
Net intercompany - borrowings (13) - 13 6
Proceeds from debt issued
(original 10,649 1,994 8,655 -
maturities greater than three months)
Payments on debt
(original maturities (9,248) (785) (8,463) -
greater than three months)
Short-term borrowings - net
(original 1,043 - 1,043 -
maturities three months or less)
Net cash provided by (used for) (2,996) (4,244) 770 478
financing activities
Effect of exchange rate changes on (174) (96) (78) -
cash
Increase(decrease) in cash 1,260 1,720 (460) -
and short-term investments
Cash and short-term
investments at beginning of 6,081 4,597 1,484 -
period
Cash and short-term $ 7,341 $ 6,317 $ 1,024 $ -
investments at end of period
1 Represents Caterpillar Inc. and its subsidiaries with Financial Products
accounted for on the equity basis.
2 Elimination of Financial Products' profit after tax due to equity method of
accounting.
3 Elimination of non-cash adjustment for the undistributed earnings from
Financial Products.
4 Elimination of non-cash adjustments and changes in assets and liabilities
related to consolidated reporting.
5 Reclassification of Financial Products' cash flow activity from investing to
operating for receivables that arose from the sale of inventory.
6 Elimination of net proceeds and payments to/from Machinery, Energy &
Transportation and Financial Products.
7 Elimination of dividend from Financial Products to Machinery, Energy &
Transportation.
Elimination of proceeds received from Financial Products related to
8 Machinery, Energy & Transportation's sale of portions of the Bucyrus
distribution business to Cat dealers.
9 Elimination of change in investment and common stock related to Financial
Products.
Caterpillar Inc.
Supplemental Data for Cash Flow
For The Twelve Months Ended December 31, 2013
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery
Consolidated Energy & Financial Consolidating
Transportation [1] Products Adjustments
Cash flow from operating
activities:
Profit of consolidated and $ 3,803 $ 3,789 $ 740 $ (726) 2
affiliated companies
Adjustments for non-cash items:
Depreciation and amortization 3,087 2,273 814 -
Undistributed profit of - (401) - 401 3
Financial Products
Other 482 376 (101) 207 4
Changes in assets and liabilities,
net of acquisitions and
divestitures:
Receivables - trade and other 680 563 16 101 4,5
Inventories 2,658 2,665 - (7) 4
Accounts payable 289 381 (70) (22) 4
Accrued expenses (108) (24) (84) -
Accrued wages,salaries and (279) (277) (2) -
employee benefits
Customer advances (301) (301) - -
Other assets - net (49) (60) 2 9 4
Other liabilities - net (71) (22) (40) (9) 4
Net cash provided by (used for) 10,191 8,962 1,275 (46)
operating activities
Cash flow from investing
activities:
Capital expenditures - excluding (2,522) (2,508) (14) -
equipment leased to others
Expenditures for equipment leased (1,924) (97) (1,897) 70 4
to others
Proceeds from disposals of leased
assets and property, plant and equipment 844 122 738 (16) 4
Additions to finance (11,422) - (14,095) 2,673 5,8
receivables
Collections of finance 9,567 - 12,253 (2,686) 5
receivables
Net intercompany purchased - - 181 (181) 5
receivables
Proceeds from sale of finance 220 - 227 (7) 5
receivables
Net intercompany - (935) 36 899 6
borrowings
Investments and acquisitions (net (195) (195) - -
of cash acquired)
Proceeds from sale of
businesses and 365 497 - (132) 8
investments (net of cash sold)
Proceeds from sale of 449 31 418 -
securities
Investments in securities (402) (25) (377) -
Other - net (26) (31) 5 -
Net cash provided by (used for) (5,046) (3,141) (2,525) 620
investing activities
Cash flow from financing
activities:
Dividends paid (1,111) (1,111) (325) 325 7
Distribution to noncontrolling (13) (13) - -
interests
Common stock issued, including 128 128 - -
treasury shares
reissued
Treasury shares purchased (2,000) (2,000) - -
Excess tax benefit from 96 96 - -
stock-based compensation
Net intercompany - borrowings (36) 935 (899) 6
Proceeds from debt issued
(original 9,328 195 9,133 -
maturities greater than three months)
Payments on debt (original
maturities (10,870) (1,769) (9,101) -
greater than three months)
Short-term borrowings - net
(original (69) 1 (70) -
maturities three months or less)
Net cash provided by (used for) (4,511) (4,509) 572 (574)
financing
activities
Effect of exchange rate changes on (43) (21) (22) -
cash
Increase (decrease) in cash 591 1,291 (700) -
and short-term investments
Cash and short-term investments at 5,490 3,306 2,184 -
beginning of period
Cash and short-term $ 6,081 $ 4,597 $ 1,484 $ -
investments at end of period
1 Represents Caterpillar Inc. and its subsidiaries with Financial Products
accounted for on the equity basis.
2 Elimination of Financial Products' profit after tax due to equity method of
accounting.
3 Elimination of non-cash adjustment for the undistributed earnings from
Financial Products.
4 Elimination of non-cash adjustments and changes in assets and liabilities
related to consolidated reporting.
5 Reclassification of Financial Products' cash flow activity from investing to
operating for receivables that arose from the sale of inventory.
6 Elimination of net proceeds and payments to/from Machinery, Energy &
Transportation and Financial Products.
7 Elimination of dividend from Financial Products to Machinery, Energy &
Transportation.
8 Elimination of proceeds received from Financial Products related to
Machinery, Energy & Transportation's sale of portions of the Bucyrus
distribution business to Cat dealers.
SOURCE Caterpillar Inc.
CONTACT: Rachel Potts, 309-675-6892 (Office), 309-573-3444 (Mobile) or
Potts_Rachel_A@cat.com
