PEORIA, Illinois, January 26, 2017 /PRNewswire/ --
FOURTH QUARTER FULL YEAR
($ in billions except per share data) 2016 2015 2016 2015
Sales and Revenues $9.574 $11.030 $38.537 $47.011
Profit (Loss) Per Share ($2.00) ($0.16) ($0.11) $4.18
Adjusted Profit Per Share $0.83 $0.83 $3.42 $5.35
Caterpillar Inc. (NYSE: CAT) today announced fourth-quarter and
full-year results for 2016.
Sales and revenues in the fourth quarter of 2016 were
$9.6 billion, down from $11.0 billion in the fourth quarter of 2015.
Fourth-quarter 2016 was a loss of $2.00 per share, compared with a loss of
$0.16 per share in the fourth quarter
of 2015.
Full-year sales and revenues in 2016 were $38.5 billion, down about 18 percent from
$47.0 billion in 2015. The company
lost $0.11 per share in 2016,
compared with a profit of $4.18 per
share in 2015.
Our fourth-quarter 2016 results included three large non-cash
charges and higher than expected restructuring
costs. These items resulted in a loss for the quarter and
were the primary reason our results were lower than the outlook
provided in October 2016. A
discussion of these items - mark-to-market
losses for remeasurement of pension and
OPEB plans, a goodwill impairment charge, a deferred
tax valuation allowance and restructuring costs - and their
applicable impact on each period is in Q&A #1 on page 16.
Because we do not consider these items to be indicative of earnings
from ongoing business activities, the table above shows adjusted
profit per share that excludes them. We believe adjusted profit per
share provides a useful perspective on underlying business results
and period-over-period changes.
Adjusted profit per share in the fourth quarter of 2016 was
$0.83, the same as the fourth quarter
of 2015, but higher than the outlook for profit per share excluding
restructuring costs provided in October
2016. Adjusted profit per share in 2016 was $3.42, down from $5.35 per share in 2015. For the year, the impact
on profit from lower sales and revenues was mitigated by a
$2.3 billion reduction
in period costs and variable
manufacturing costs.
"Our results for the fourth quarter, while slightly better than
expected, continued to reflect pressure in many of our end markets
from weak economic conditions around much of the world. Our team
did a great job in the quarter, as they have all year, aligning our
cost structure with current demand while preserving capacity for
the future. I'm confident we are focusing on the right areas:
controlling costs, maintaining a strong balance sheet and investing
in the key areas important to our future," said Caterpillar Chief
Executive Officer Jim Umpleby.
2017 Outlook - Background
Positives
We are seeing positive signs that could be early indications of
modest recovery in several of our businesses.
Resource Industries - Commodity prices at
higher levels than a year ago, along with sequential improvements
in parts sales in each of the last three quarters and improvements
in quoting and order activity in the fourth quarter, suggest that
mining-related sales may have bottomed.
Construction Industries - Sales in
China began recovering in 2016;
sales in Europe seem to have
stabilized and could improve some in 2017; and sales in
Brazil, which are off their peak
by over 80 percent, could improve if the Brazilian economy begins
to recover from recession.
Energy & Transportation - Gas compression
remains strong, and we have a solid backlog for turbines. If oil
prices rise modestly and stabilize, it would be positive for our
businesses that support drilling and well servicing.
Prospects for tax reform and an infrastructure spending bill in
the United States are encouraging.
While these initiatives would likely be a solid positive for many
of our businesses, we would not expect to begin to see meaningful
effects of these changes until sometime in 2018.
Concerns
Resource Industries - While quoting interest in
mining products has improved, we are expecting miners' capital
spending to be about flat in 2017 after several years of decline.
Sales of some large construction equipment within Resource
Industries are likely to be down in 2017, compared with 2016.
Construction Industries - North America
and EAME are the most concerning regions.
While better economic growth and increased infrastructure spending
may be on the horizon, the availability of used equipment has
negatively impacted sales in North
America during 2016 and we expect some negative impact in
2017. We expect sales in Africa/Middle
East to be down again in 2017 due to overall economic
weakness and continued pressure on economies that rely on oil
revenues to drive economic growth. In addition, continuing
uncertainty related to Brexit remains a concern in Europe.
Energy & Transportation - Rail remains
challenged with low traffic volume and a significant number of idle
locomotives. Additionally, weakness in shipbuilding is expected to
be negative for our marine-related sales; power generation sales
are projected to remain weak; and industrial engine sales to
original equipment manufacturers are expected to be lower than
2016.
2017 Outlook - Sales and Revenues and
Profit
Our expectations for 2017 are similar to those shared with
investors in early December 2016. At
that time, we believed the analyst consensus for 2017 sales and
revenues of about $38 billion was a
reasonable midpoint expectation. Our expectation for sales and
revenues in 2017 are now slightly lower due to the strengthening of
the U.S. dollar over the past two months, and as a result, our
current outlook for sales and revenues in 2017 is a range of
$36 billion to $39 billion with a
midpoint of $37.5 billion.
We expect profit per share of about $2.30 at the midpoint of the sales and revenues
outlook range. Excluding restructuring costs of about $500 million, we expect adjusted profit of about
$2.90 per share at the midpoint,
which reflects decremental operating profit pull
through of about 30 percent from 2016.
"We continue to execute in a challenging economic environment
and are focused on improving operating margins, profitability and
shareholder returns. While we see signs of positive activity in
some of our key end markets, the overall economic environment
remains challenging," added Umpleby.
Highlights
- Sales and revenues were $38.5
billion in 2016 - 18 percent decrease from
2015 and slightly lower than expected
- Period costs and variable manufacturing costs were
$2.3 billion lower in
2016 - restructuring and cost reduction actions and
lower incentive pay helped mitigate the impact of lower sales
- Restructuring costs and three large non-cash items in the
fourth quarter impacted profit substantially - resulting
in a loss for the quarter and the year
- Machinery, Engines & Transportation operating cash flow
was $3.9 billion in
2016 - more than sufficient to cover capital
expenditures and dividends
- 2017 sales and revenues are expected to be
$36 billion to $39 billion with a
midpoint of $37.5
billion - some signs of recovery, but risk and
uncertainty continue
- At the midpoint of the sales and revenues range, 2017 profit
per share is expected to be about $2.30 with adjusted profit of about $2.90 per share
Notes:
- Glossary of terms is included on pages 19-20; first
occurrence of terms shown in bold italics.
- Information on non-GAAP financial measures is included on
page 21.
- Caterpillar will conduct a teleconference and live webcast,
with a slide presentation, beginning at 10
a.m. Central Time on Thursday,
January 26, 2017, to discuss its 2016 fourth-quarter and
full-year financial results. The accompanying slides will be
available before the webcast on the Caterpillar website
at http://www.caterpillar.com/investors/events-and-presentations.
About Caterpillar:
For more than 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 2016 sales
and revenues of $38.537 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 and
regional 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
regulations; (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 government investigations; (xxvi) changes in
accounting standards; (xxvii) failure or breach of IT security;
(xxviii) adverse effects of unexpected events including natural
disasters; and (xxix) other factors described in more detail under
"Item 1A. Risk Factors" in our Form 10-K filed with the SEC on
February 16, 2016 for the year ended
December 31, 2015.
CONSOLIDATED RESULTS
Consolidated Sales and Revenues
Consolidated Sales and Revenues Comparison
Fourth Quarter 2016 vs. Fourth Quarter
2015
To access this chart, go
to http://www.caterpillar.com/en/investors/quarterly-results.html for
the downloadable version of Caterpillar 4Q
2015 earnings.
The chart above graphically illustrates reasons for the change
in Consolidated Sales and Revenues between the fourth quarter of
2015 (at left) and the fourth quarter of 2016 (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 $9.574
billion in the fourth quarter of 2016, a decline of
$1.456 billion, or 13 percent,
compared with $11.030 billion in the
fourth quarter of 2015. The decrease was almost entirely due to
lower sales volume, resulting from lower
end-user demand attributable to continued weak commodity prices
globally and economic weakness in many countries. Although some
commodity prices improved in the fourth quarter of 2016, the
improvement was too recent to significantly impact our sales for
the quarter. Sales for new equipment declined, while aftermarket
parts sales were about flat. The unfavorable impact
of price realization also contributed to
the decline.
Sales declined in all regions except Asia/Pacific. In EAME, sales declined 30
percent primarily in Africa/Middle
East due to weak economic conditions resulting from the
continuing impact of low oil prices and an uncertain investment
environment. In North America,
sales decreased 15 percent primarily due to lower end-user demand
for equipment used for infrastructure, the impact of continued low
oil prices and an uncertain economic environment. Sales decreased
16 percent in Latin
America primarily due to continued widespread
economic weakness and inflation across the region. Asia/Pacific sales increased 10 percent
primarily due to increased infrastructure and residential
investment in China.
Energy & Transportation's sales declined 15 percent largely
due to lower end-user demand for most applications. Resource
Industries' sales declined 23 percent mostly due to continued low
end-user demand. Construction Industries' sales decreased 8 percent
primarily due to lower demand from end users, partially offset by
favorable changes in dealer inventories. Financial
Products' segment revenues were about flat with the
fourth quarter of 2015.
Consolidated Operating Profit / (Loss)
Consolidated Operating Profit Comparison
Fourth Quarter 2016 vs. Fourth Quarter
2015
To access this chart, go
to http://www.caterpillar.com/en/investors/quarterly-results.html for
the downloadable version of Caterpillar 4Q
2015 earnings.
The chart above graphically illustrates reasons for the change
in Consolidated Operating Profit (Loss) between the fourth quarter
of 2015 (at left) and the fourth quarter of 2016 (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 loss for the fourth quarter of 2016 was $1.262 billion, compared with a loss of
$175 million in the fourth quarter of
2015, an unfavorable change of $1.087
billion. The most significant items were the unfavorable
impact from mark-to-market losses related to pension and OPEB plans
and a goodwill impairment charge in Resource Industries. Excluding
these items, operating profit improved $279
million compared to the fourth quarter of 2015. The
improvement was mostly due to lower period costs, a decrease in
restructuring costs and favorable variable manufacturing costs,
partially offset by lower sales volume. The unfavorable price
realization resulted from competitive market conditions, primarily
in Resource Industries.
Period costs were lower primarily due to substantial
restructuring and cost reduction actions over the past year. The
reductions impacted period manufacturing costs, selling, general
and administrative expenses and research and development expenses
about equally. Variable manufacturing costs were favorable mostly
due to the impact of cost absorption as inventory decreased more
significantly in the fourth quarter of 2015, compared to the fourth
quarter of 2016.
Restructuring costs of $395
million in the fourth quarter of 2016 were related to
restructuring programs across the company. In the fourth quarter of
2015, restructuring costs were $679
million, primarily related to a reduction in workforce.
Other Profit/Loss Items
- Other income/expense in the fourth quarter of 2016
was income of $34 million, compared
with income of $54 million in the
fourth quarter of 2015. The unfavorable change was primarily due to
lower gains from the sales of securities in the fourth quarter of
2016, compared to the fourth quarter of 2015, and the impact
from currency translation and hedging gains
and losses. The unfavorable change in currency translation and
hedging gains and losses was due to higher net losses in the fourth
quarter of 2016, compared to the fourth quarter of 2015.
- The provision for income taxes in the fourth
quarter reflects an annual effective tax rate of approximately 36
percent, compared to 25.5 percent for the full-year 2015, excluding
the items discussed below. The effective tax rate related to
full-year adjusted profit before tax is 26 percent.
The provision for income taxes for the fourth quarter of 2016
also includes a $170 million charge
related to the change from the third-quarter estimated annual tax
rate. This change was primarily due to the negative impact from the
portion of the goodwill impairment not deductible for tax purposes
offsetting benefits related to the majority of pension and OPEB
mark-to-market losses taxed at higher U.S. rates. In addition, the
valuation allowance against U.S. state deferred tax assets was
increased due to recent losses incurred in the United States resulting in a $141 million non-cash charge. The provision for
income taxes for the fourth quarter of 2015 also included a benefit
of $92 million related to the
decrease from the third-quarter estimated annual tax rate. This
benefit was primarily due to the renewal in the fourth quarter of
the U.S. research and development tax credit for 2015.
Global Workforce
Caterpillar worldwide, full-time employment was about 95,400 at
the end of 2016, compared with about 105,700 at the end of 2015, a
decrease of about 10,300 full-time employees. The flexible
workforce decreased by about 2,000 for a total decrease in the
global workforce of about 12,300. The decrease was primarily the
result of restructuring programs and lower production volumes.
December 31
Increase/
2016 2015 (Decrease)
Full-time employment 95,400 105,700 (10,300)
Flexible workforce 11,000 13,000 (2,000)
Total 106,400 118,700 (12,300)
Geographic summary of change
U.S. workforce (7,700)
Non-U.S. workforce (4,600)
Total (12,300)
SEGMENT RESULTS
Sales and Revenues
by Geographic Region
% North % Latin
(Millions of dollars) Total Change America Change America
Fourth
Quarter 2016
Construction Industries(1) $ 3,589 (8) % $ 1,569 (16) % $ 264
Resource Industriessquared 1,443 (23) % 471 (24) % 221
Energy & Transportation cubed 3,849 (15) % 1,722 (11) % 347
All Other Segments(4) 32 (14) % 11 (35) % -
Corporate Items and
Eliminations (28) (23) (2)
Machinery, Energy &
Transportation $ 8,885 (14) % $ 3,750 (15) % $ 830
Financial Products
Segment $ 742 (1) % $ 464 3 % $ 83
Corporate Items and
Eliminations (53) (29) (9)
Financial Products
Revenues $ 689 (3) % $ 435 (2) % $ 74
Consolidated Sales and
Revenues $ 9,574 (13) % $ 4,185 (14) % $ 904
Fourth
Quarter 2015
Construction Industries(1) $ 3,905 $ 1,863 $ 298
Resource Industriessquared 1,878 616 280
Energy &
Transportationcubed 4,544 1,944 411
All Other Segments(4) 37 17 1
Corporate Items and
Eliminations (46) (47) -
Machinery, Energy &
Transportation $10,318 $ 4,393 $ 990
Financial Products
Segment $ 746 $ 452 $ 97
Corporate Items and
Eliminations (34) (6) (13)
Financial Products
Revenues $ 712 $ 446 $ 84
Consolidated
Sales and Revenues $11,030 $ 4,839 $ 1,074
1 Does not include inter-segment sales of $31 million and $43 million in fourth
quarter 2016 and 2015, respectively.
2 Does not include inter-segment sales of $87 million and $82 million in fourth
quarter 2016 and 2015, respectively.
3 Does not include inter-segment sales of $621 million and $615 million in fourth
quarter 2016 and 2015, respectively.
4 Does not include inter-segment sales of $117 million and $99 million in fourth
quarter 2016 and 2015, respectively.
Table continues...
SEGMENT RESULTS
Sales and Revenues
by Geographic Region
% % Asia/ %
(Millions of dollars) Change EAME Change Pacific Change
Fourth Quarter 2016
Construction Industries(1) (11) % $ 624 (34) % $ 1,132 41 %
Resource
Industriessquared (21) % 297 (35) % 454 (14) %
Energy &
Transportation cubed (16) % 1,063 (26) % 717 (5) %
All Other Segments (4) (100) % 5 (17) % 16 23 %
Corporate Items and
Eliminations (2) (1)
Machinery, Energy &
Transportation (16) % $ 1,987 (30) % $ 2,318 10 %
Financial Products
Segment (14) % $ 99 2 % $ 96 (4) %
Corporate Items and
Eliminations (4) (11)
Financial Products
Revenues (12) % $ 95 3 % $ 85 (6) %
Consolidated
Sales and Revenues (16) % $ 2,082 (29) % $ 2,403 10 %
Fourth Quarter 2015
Construction
Industries(1) $ 942 $ 802
Resource
Industriessquared 454 528
Energy &
Transportationcubed 1,431 758
All Other Segments(4) 6 13
Corporate Items and
Eliminations - 1
Machinery, Energy &
Transportation $ 2,833 $ 2,102
Financial Products
Segment $ 97 $ 100
Corporate Items and
Eliminations (5) (10)
Financial Products
Revenues $ 92 $ 90
Consolidated
Sales and
Revenues $ 2,925 $ 2,192
1 Does not include inter-segment sales of $31 million and $43 million in fourth
quarter 2016 and 2015, respectively.
2 Does not include inter-segment sales of $87 million and $82 million in fourth
quarter 2016 and 2015, respectively.
3 Does not include inter-segment sales of $621 million and $615 million in fourth
quarter 2016 and 2015, respectively.
4 Does not include inter-segment sales of $117 million and $99 million in fourth
quarter 2016 and 2015, respectively.
Sales and Revenues by Segment
Fourth Sales Price
(Millions of dollars) Quarter 2015 Volume Realization Currency
Construction
Industries $ 3,905 $ (363) $ 1 $ 46
Resource Industries 1,878 (388) (62) 15
Energy &
Transportation 4,544 (663) (21) (11)
All Other Segments 37 (5) - -
Corporate Items and
Eliminations (46) 16 2 -
Machinery, Energy &
Transportation $ 10,318 $ (1,403) $ (80) $ 50
Financial Products
Segment $ 746 $ - $ - $ -
Corporate Items and
Eliminations (34) - - -
Financial Products
Revenues $ 712 $ - $ - $ -
Consolidated Sales
and Revenues $ 11,030 $ (1,403) $ (80) $ 50
Table continues...
Sales and Revenues by Segment
Fourth $ %
(Millions of dollars) Other Quarter 2016 Change Change
Construction
Industries $ - $ 3,589 $ (316) (8) %
Resource Industries - 1,443 (435) (23) %
Energy & Transportation - 3,849 (695) (15) %
All Other Segments - 32 (5) (14) %
Corporate Items and
Eliminations - (28) 18
Machinery, Energy &
Transportation $ - $ 8,885 $ (1,433) (14) %
Financial Products
Segment $ (4) $ 742 $ (4) (1) %
Corporate Items and
Eliminations (19) (53) (19)
Financial Products
Revenues $ (23) $ 689 $ (23) (3) %
Consolidated Sales
and Revenues $ (23) $ 9,574 $ (1,456) (13) %
Operating
Profit (Loss)
by Segment
Fourth Fourth $ %
(Millions of dollars) Quarter 2016 Quarter 2015 Change Change
Construction
Industries $ 334 $ 178 $ 156 88 %
Resource
Industries (711) (80) (631) (789) %
Energy &
Transportation 638 741 (103) (14) %
All Other Segments (34) (39) 5 13 %
Corporate Items and
Eliminations (1,572) (1,088) (484)
Machinery,
Energy & Transportation $ (1,345) $ (288 )$ (1,057) (367) %
Financial Products
Segment $ 149 $ 191 $ (42) (22) %
Corporate Items and
Eliminations (9) (15) 6
Financial Products $ 140 $ 176 $ (36) (20) %
Consolidating
Adjustments (57) (63) 6
Consolidated Operating
Profit (Loss) $ (1,262) $ (175) $ (1,087) (621) %
CONSTRUCTION INDUSTRIES
(Millions of
dollars)
Sales
Comparison
Fourth Sales Price Fourth $ %
Quarter Volume Realization Currency Quarter Change Change
2015 2016
Sales
Comparison[1] $3,905 ($363) $1 $46 $3,589 ($316) (8) %
Sales by
Geographic Region
Fourth Fourth $ %
Quarter 2016 Quarter 2015 Change Change
North
America $1,569 $1,863 ($294) (16) %
Latin
America 264 298 (34) (11) %
EAME 624 942 (318) (34) %
Asia/Pacific 1,132 802 330 41 %
Total[1] $3,589 $3,905 ($316) (8) %
Operating
Profit
Fourth Fourth $ %
Quarter 2016 Quarter 2015 Change Change
Operating
Profit $334 $178 $156 88 %
[1] Does not include inter-segment sales of $31 million and $43 million in fourth
quarter 2016 and 2015, respectively.
Construction Industries' sales were $3.589 billion in the fourth quarter of 2016, a
decrease of $316 million, or 8
percent, from the fourth quarter of 2015. The decrease was mostly
due to lower volume. Sales declined for new equipment and were
about flat for aftermarket parts.
- Sales volume declined primarily due to lower end-user demand,
partially offset by a smaller decline in dealer inventories in the
fourth quarter of 2016, compared with the fourth quarter of
2015.
Sales decreased in EAME, North
America and Latin America
and increased in Asia/Pacific.
- Sales in EAME decreased primarily due to lower end-user demand.
The sales decline was primarily in oil-producing economies in
Africa/Middle East due to continued low oil prices
and an uncertain investment environment.
- In North America, the sales
decline was primarily due to lower end-user demand. Although
residential and non-residential building construction activity
improved, we believe demand for new construction equipment has
remained low due to end users' utilization of existing used
equipment.
- In Latin America, sales
decreased slightly as lower end-user demand, attributable to weak
economic conditions across the region, was partially offset by
favorable changes in dealer inventories. Dealers reduced
inventories more significantly in the fourth quarter of 2015 than
in the fourth quarter of 2016.
- Sales in Asia/Pacific were
higher as a result of an increase in end-user demand primarily in
China stemming from increased
government support in infrastructure and residential investment. In
addition, changes in Asia/Pacific
dealer inventories were favorable as dealers increased inventories
in the fourth quarter of 2016, compared with a decrease in the
fourth quarter of 2015.
Construction Industries' profit was $334
million in the fourth quarter of 2016, compared with
$178 million in the fourth quarter of
2015. The increase in profit was primarily due to lower period
costs and the absence of an unfavorable impact from litigation in
the fourth quarter of 2015, partially offset by lower sales volume,
which includes a favorable mix of products. The lower period costs
were mostly a result of the favorable impact of restructuring and
cost reduction actions.
RESOURCE INDUSTRIES
(Millions of
dollars)
Sales Comparison
Fourth Price Fourth $ %
Quarter Sales Realization Currency Quarter Change Change
2015 Volume 2016
Sales
Comparison[1] $1,878 ($388) ($62) $15 $1,443 ($435) (23) %
Sales by
Geographic Region
Fourth Fourth $ %
Quarter 2016 Quarter 2015 Change Change
North
America $471 $616 ($145) (24) %
Latin
America 221 280 (59) (21) %
EAME 297 454 (157) (35) %
Asia/Pacific 454 528 (74) (14) %
Total[1] $1,443 $1,878 ($435) (23) %
Operating Profit (Loss)
Fourth Fourth $ %
Quarter 2016 Quarter 2015 Change Change
Operating
Profit
(Loss) ($711) ($80) ($631) (789) %
[1] Does not include inter-segment sales of $87 million and $82 million in fourth quarter
2016 and 2015, respectively.
Resource Industries' sales were $1.443
billion in the fourth quarter of 2016, a decrease of
$435 million, or 23 percent, from the
fourth quarter of 2015. The decline was primarily due to lower
sales volume and the unfavorable impact of price realization
resulting from competitive market conditions. Sales of new
equipment decreased while sales of aftermarket parts increased
slightly. Aftermarket parts sales have increased sequentially in
each of the last three quarters.
The sales decrease was primarily due to lower end-user demand
across all regions. While most commodity prices improved in the
fourth quarter over a year earlier, current prices have not been
sufficient to drive much increase in short-term demand for new
equipment. We believe commodity prices now need to stabilize for a
longer period of time to positively impact our sales. Mining
customers continued to focus on improving productivity in existing
mines and reducing their total capital expenditures, as they have
for several years. In addition, sales of heavy construction
equipment are lower, primarily in North
America.
Resource Industries incurred a loss of $711 million in the fourth quarter of 2016,
compared with a loss of $80 million
in the fourth quarter of 2015. The most significant item impacting
the fourth quarter of 2016 was a goodwill impairment charge of
$595 million related to
the Surface Mining &
Technology reporting unit, discussed in Q&A #1 on
page 16. Excluding the impairment charge, the fourth quarter of
2016 operating loss was unfavorable $36
million, compared with the fourth quarter of 2015. The
unfavorable change was due to lower sales volume and unfavorable
price realization, mostly offset by the favorable impact of
restructuring and cost reduction actions.
ENERGY & TRANSPORTATION
(Millions of
dollars)
Sales Comparison
Fourth Price Fourth $ %
Quarter Sales Realization Currency Quarter Change Change
2015 Volume 2016
Sales
Comparison[1] $4,544 ($663) ($21) ($11) $3,849 ($695) (15) %
Sales by
Geographic Region
Fourth Fourth $ %
Quarter 2016 Quarter 2015 Change Change
North
America $1,722 $1,944 ($222) (11) %
Latin
America 347 411 (64) (16) %
EAME 1,063 1,431 (368) (26) %
Asia/Pacific 717 758 (41) (5) %
Total[1] $3,849 $4,544 ($695) (15) %
Operating
Profit
Fourth Fourth $ %
Quarter 2016 Quarter 2015 Change Change
Operating
Profit $638 $741 ($103) (14) %
[1] Does not include inter-segment sales of $621 million and $615 million in fourth
quarter 2016 and 2015, respectively.
Energy & Transportation's sales were $3.849 billion in the fourth quarter of 2016, a
decrease of $695 million, or 15
percent, from the fourth quarter of 2015. The decrease was
primarily the result of lower sales volume.
- Transportation - Sales decreased in North America, Asia/Pacific and EAME primarily due to
continued weakness in the rail industry, with the most significant
decline in North America. The
North American rail industry continues to be depressed with a
significant number of idle locomotives that impacted demand for
rail services and aftermarket. The decline in Asia/Pacific was mostly due to lower demand
for equipment used in marine applications, primarily for work
boats. Sales in Latin America were
about flat.
- Oil and Gas - Sales decreased in much of the world
due to the impact from low oil prices. The sales decline was
primarily related to lower demand across all regions for equipment
used for production, partially offset by increased demand for
turbines used for gas compression.
- Power Generation - Sales decreased in EAME and were
about flat in all other regions. The decline in EAME was primarily
a result of continued weakness in the Middle East with continued low oil prices
limiting investments.
- Industrial - Sales were about flat as an increase
in Asia/Pacific was mostly offset
by a decrease in EAME, both attributable to changes in end-user
demand for most industrial applications.
Energy & Transportation's profit was $638 million in the fourth quarter of 2016,
compared with $741 million in the
fourth quarter of 2015. The decline was primarily due to a decrease
in sales volume, partially offset by the impact of restructuring
and cost reduction actions and a favorable impact of cost
absorption as inventory decreased more significantly in the fourth
quarter of 2015 than the fourth quarter of 2016.
FINANCIAL PRODUCTS SEGMENT
(Millions of dollars)
Revenues by Geographic Region
Fourth Fourth $ %
Quarter 2016 Quarter 2015 Change Change
North America $464 $452 $12 3 %
Latin America 83 97 (14) (14) %
EAME 99 97 2 2 %
Asia/Pacific 96 100 (4) (4) %
Total $742 $746 ($4) (1) %
Operating
Profit
Fourth Fourth $ %
Quarter 2016 Quarter 2015 Change Change
Operating
Profit $149 $191 ($42) (22) %
Financial Products' revenues were $742
million in the fourth quarter of 2016, a decrease of
$4 million, or 1 percent, from the
fourth quarter of 2015. The decline was primarily due to lower
average earning assets in North America and Latin America, an unfavorable impact from
returned or repossessed equipment primarily in North America and lower average financing
rates in Latin America. These
decreases were partially offset by higher average financing rates
in North America.
Financial Products' profit was $149
million in the fourth quarter of 2016, compared with
$191 million in the fourth quarter of
2015. The decrease was primarily due to lower gains on sales of
securities at Insurance Services and an unfavorable impact from
returned or repossessed equipment.
At the end of 2016, past dues at Cat Financial were 2.38
percent, compared with 2.14 percent at the end of 2015. The
increase in past dues was primarily driven by the European marine
portfolio. Write-offs, net of recoveries, were $123 million for the full-year 2016, compared
with $155 million for the full-year
2015.
As of December 31, 2016, Cat
Financial's allowance for credit losses totaled $343 million, or 1.29 percent of net finance
receivables, compared with $338
million, or 1.22 percent of net finance receivables at
year-end 2015.
Corporate Items and Eliminations
Expense for corporate items and eliminations was $1.581 billion in the fourth quarter of 2016, an
increase of $478 million from the
fourth quarter of 2015. 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; cost of sales methodology differences
as segments use a current cost methodology; and inter-segment
eliminations.
The increase was due to the unfavorable impact of higher
mark-to-market losses related to our pension and OPEB plans.
Mark-to-market losses in the fourth quarter of 2016 were
$985 million, compared to
mark-to-market losses of $214 million
in the fourth quarter of 2015. This was partially offset by a
decrease in restructuring costs of $284
million compared to the fourth quarter of 2015.
2017 OUTLOOK
Positives
We are seeing positive signs that could be early indications of
modest recovery in several of our businesses.
Resource Industries - Commodity prices at higher
levels than a year ago, along with sequential improvements in parts
sales in each of the last three quarters and improvements in
quoting and order activity in the fourth quarter, suggest that
mining-related sales may have bottomed.
Construction Industries - Sales in China began recovering in 2016; sales in
Europe seem to have stabilized and
could improve some in 2017; and sales in Brazil, which are off their peak by over 80
percent, could improve if the Brazilian economy begins to recover
from recession.
Energy & Transportation - Gas compression
remains strong, and we have a solid backlog for turbines. If oil
prices rise modestly and stabilize, it would be positive for our
businesses that support drilling and well servicing.
Prospects for tax reform and an infrastructure spending bill in
the United States are encouraging.
While these initiatives would likely be a solid positive for many
of our businesses, we would not expect to begin to see meaningful
effects of these changes until sometime in 2018.
Concerns
Resource Industries - While quoting interest in
mining products has improved, we are expecting miners' capital
spending to be about flat in 2017 after several years of decline.
Sales of some large construction equipment within Resource
Industries are likely to be down in 2017, compared with 2016.
Construction Industries - North America and EAME are the most concerning
regions. While better economic growth and increased infrastructure
spending may be on the horizon, the availability of used equipment
has negatively impacted sales in North
America during 2016 and we expect some negative impact in
2017. We expect sales in Africa/Middle
East to be down again in 2017 due to overall economic
weakness and continued pressure on economies that rely on oil
revenues to drive economic growth. In addition, continuing
uncertainty related to Brexit remains a concern in Europe.
Energy & Transportation - Rail remains
challenged with low traffic volume and a significant number of idle
locomotives. Additionally, weakness in shipbuilding is expected to
be negative for our marine-related sales; power generation sales
are projected to remain weak; and industrial engine sales to
original equipment manufacturers are expected to be lower than
2016.
2017 Outlook - Sales and Revenues and
Profit
Our expectations for 2017 are similar to those shared with
investors in early December 2016. At
that time, we believed the analyst consensus for 2017 sales and
revenues of about $38 billion was a
reasonable midpoint expectation. Our expectations for sales and
revenues in 2017 are now slightly lower due to the strengthening of
the U.S. dollar over the past two months, and as a result, our
current outlook for sales and revenues in 2017 is a range of
$36 billion to $39 billion with a
midpoint of $37.5 billion.
We expect profit per share of about $2.30 at the midpoint of the sales and revenues
outlook range. Excluding restructuring costs of about $500 million, we expect adjusted profit of about
$2.90 per share at the midpoint,
which reflects decremental operating profit pull through of about
30 percent from 2016.
Our 2016 results included several significant items:
restructuring costs, mark-to-market losses for remeasurement of
pension and OPEB plans, a goodwill impairment charge and a deferred
tax valuation allowance. In 2017, we expect to incur about
$500 million of restructuring costs
primarily related to ongoing manufacturing facility consolidations
to lower our cost structure in response to weak economic
conditions. No estimate of potential restructuring costs for
contemplated actions at Gosselies, Belgium, or Aurora,
Illinois, has been included in our outlook. At this time,
our outlook does not include a mark-to-market gain or loss for
remeasurement of pension and OPEB plans. Our outlook does not
include a goodwill impairment charge or significant changes to
deferred tax asset valuation allowances in 2017.
The following factors are expected to contribute to an
anticipated decline in profit in 2017:
- An expected decline in sales volume is anticipated to have a
negative impact on profit, including the effect of an unfavorable
sales mix as the decline is expected to be more concentrated in
products with higher than average margin rates.
- Short-term employee incentive compensation and labor cost
inflation are expected to be unfavorable by about $600 million.
- Financial Products segment profit is expected to be lower in
2017 in part due to gains on the sale of securities at Insurance
Services in 2016 that we are not expecting to repeat in 2017.
- The tax rate is expected to be about 27 percent in 2017.
The following factors are expected to partially offset an
anticipated decline in profit in 2017:
- The primary positive is the continuation of substantial cost
reduction in 2017. Not including short-term incentive compensation
and labor inflation noted above, Caterpillar is expecting about
$750 million of additional cost
reduction in 2017.
- About two-thirds is expected to be from lower period costs and
is a result of restructuring actions taken in recent years and the
company's continued focus on cost management.
- About one-third is expected from variable costs. A reduction in
material costs is the most significant factor. While we do not
expect material cost reduction from commodity prices, we expect
continued improvement in material costs from supplier
collaboration, sourcing and design-related improvements.
- In 2016, price realization was a substantial negative. While
the pricing environment remains very competitive, we believe price
realization has begun to level off. We expect price realization to
be neutral to slightly positive in
2017.
QUESTIONS AND ANSWERS
Q1:
Can you provide more information on the four significant items impacting
2016 profit?
A:
In order for our results to be more meaningful to our readers, we have
separately quantified the impact of several significant items.
-
Mark-to-Market Losses - Effective January 1, 2016, we made a change in accounting principle related to our
pension and OPEB plans. Under the new accounting
principle, we recognize actuarial gains and losses as a
mark-to-market gain or loss when incurred rather than
amortizing them to earnings over time. For 2016, the
mark-to-market adjustment was a net loss of $985 million,
primarily due to lower interest rates. Accounting rules
require us to remeasure our future benefit payments using
an interest rate as of each year-end. If interest rates
drop, the present value of future benefit payments
increases resulting in a mark-to-market loss. If interest
rates increase, the present value of the future benefit
payments decreases resulting in a mark-to-market gain.
Differences in actual versus expected investment
performance of plan assets and changes in other economic
and demographic factors also impact the adjustment. We
believe profit excluding the impact of mark-to-market
gains or losses better reflects earnings from ongoing
business performance because this adjustment has no
impact on current year cash flow or on benefits paid to
plan participants.
-
Goodwill Impairment Charge - Step 1 of the annual
goodwill impairment test performed as of October 1, 2016,
indicated that the fair value of the Surface Mining &
Technology reporting unit, included in Resourcen
Industries, was lower than its carrying value. We
completed step 2 of the impairment testing process during
the fourth quarter of 2016 and recognized a non-cash
impairment charge of $595 million. The mining industry
has experienced weakness for several years and, while we
continue to expect the industry to improve, we believe
the pace of the improvement will be slower and cash flows
and profitability will be lower than previously
forecasted. After the impairment charge, goodwill of
approximately $600 million remains in Surface Mining &
Technology.
-
State Deferred Tax Valuation Allowance - Based on recent
losses incurred in the United States, we recorded a
non-cash charge of $141 million to increase the valuation
allowance against the related state net deferred tax
assets during the fourth quarter of 2016. If
profitability improves in future periods, the valuation
allowance can be reversed.
-
Restructuring Costs - For the past several years, we have
incurred substantial restructuring costs as a result of
actions to lower our cost structure in response to weak
economic conditions in the key industries we serve.
During 2016, we incurred $1.019 billion of restructuring
costs primarily related to Resource Industries and Energy
& Transportation.
To help improve the understanding of results for the quarter and
the year, the following tables show the impact of these items:
Fourth Quarter 2016 Fourth Quarter 2015
($ in millions
except per Profit (Loss) Profit (Loss) Profit (Loss) Profit (Loss)
share data) Before Taxes per Share* Before Taxes per Share*
Profit (Loss) ($1,348) ($2.00) ($247) ($0.16)
Restructuring
Costs $395 $0.45 $679 $0.76
Mark-to-Market
Losses $985 $1.14 $214 $0.23
Goodwill
Impairment Charge $595 $0.98
Deferred State Tax
Valuation
Allowance $0.24
Adjusted
Profit $627 $0.83 $646 $0.83
Full Year 2016 Full Year 2015
($ in millions
except per Profit Before Profit (Loss) Profit Before Profit
share data) Taxes per Share* Taxes per Share*
Profit (Loss) $139 ($0.11) $3,439 $4.18
Restructuring
Costs $1,019 $1.16 $898 $0.98
Mark-to-Market
Losses $985 $1.15 $179 $0.19
Goodwill
Impairment Charge $595 $0.98
Deferred State Tax
Valuation Allowance $0.24
Adjusted Profit $2,738 $3.42 $4,516 $5.35
*Per share amounts computed using fully diluted shares outstanding except for
consolidated loss per share, which was computed using basic shares
outstanding
Q2: Can you comment on your 2017 outlook for restructuring costs? Does it include
impacts from contemplated actions at Caterpillar manufacturing facilities in
Gosselies, Belgium, and Aurora, Illinois?
A: In 2017, we expect to incur about $500 million of restructuring costs primarily
related to ongoing manufacturing facility consolidations to lower our cost
structure in response to weak economic conditions. Most of the actions have been
announced and are being implemented.
On September 24, 2015, Caterpillar announced a significant restructuring and cost
reduction initiative, with actions expected through 2018. The largest action
among those included in the initiative was related to our European manufacturing
footprint. On September 2, 2016, Caterpillar announced that it is contemplating
to allocate the volumes produced at the Gosselies, Belgium, facility to other
manufacturing facilities. If the intention is confirmed, it would result in a
collective layoff of about 2,000 employees and the closure of the Gosselies site.
We are currently engaged in the information and consultation process with
Gosselies employee representatives.
Additionally, on January 4, 2017, Caterpillar announced that it is contemplating
the potential closure of the Aurora, Illinois, manufacturing facility. If this
plan is confirmed, Caterpillar would move machine production from the Aurora
facility to other U.S. manufacturing facilities.
No estimate of potential restructuring costs for Gosselies or Aurora has been
included in our outlook for 2017 restructuring costs as the outcome of these
contemplated actions is not yet known and no decisions have been made.
Q3:
Can you discuss changes in dealer inventories during 2016 and expectations for
2017?
A:
Dealer machine and engine inventories decreased about $800 million in the fourth
quarter of 2016, compared with a decrease of about $1.0 billion in the fourth
quarter of 2015. For the full year of 2016, dealer machine and engine inventories
decreased about $1.6 billion, compared with a decrease of about $1.0 billion for
the full year of 2015.
The level of dealer inventories at the end of 2017 will depend on dealer
expectations for business in 2018. Our outlook range reflects an expectation that
dealers will not reduce inventories in 2017 as much as they did in 2016.
Q4: Can you discuss the decline in Caterpillar inventory in the fourth quarter of
2016?
A:
Caterpillar inventory declined about $900 million during the fourth quarter of
2016. A fourth-quarter decrease is not unusual, as some of our businesses ship
long lead-time capital goods in the fourth quarter. For the full year of 2016,
Caterpillar inventory declined about $1.1 billion.
Q5: Can you discuss changes to your order backlog by segment?
A:
At the end of 2016, the order backlog was about $12.1 billion. This represents
about a $500 million increase from the end of the third quarter of 2016. The
increase was in both Construction Industries and Resource Industries, more
significantly in Construction Industries. A decline in Energy & Transportation
partially offset the increase.
Compared with year-end 2015, the order backlog declined about $900 million. The
decrease was in Energy & Transportation and Construction Industries, partially
offset by an increase in Resource Industries.
Q6:
Can you comment on expense related to your 2016 short-term incentive compensation
plans? What are plans for 2017?
A:
Short-term incentive compensation expense is directly related to financial and
operational performance measured against targets set annually. Fourth-quarter
2016 expense was about $50 million and full-year 2016 expense was about $250
million. Fourth-quarter 2015 expense was about $45 million and full-year 2015
expense was about $585 million.
For 2017, our outlook includes short-term incentive compensation of about $750
million.
Q7: Can you give us an update on how Cat Financial is performing?
A:
Cat Financial's portfolio continues to perform well overall despite ongoing
weakness in many key end markets. Fourth-quarter 2016 past dues were 2.38
percent, compared with 2.14 percent in the fourth quarter of 2015, with current
past dues remaining lower than historical averages. Write-offs in the fourth
quarter of 2016 were $30 million, or 0.45 percent of the average retail
portfolio, compared with $36 million, or 0.55 percent of the average retail
portfolio in the fourth quarter of 2015, and slightly below historical averages
for the fourth quarter.
Q8: Can you comment on your balance sheet and cash priorities?
A:
The ME&T debt-to-capital ratio was 41.0 percent at the end of 2016, compared with
39.0 percent at the end of 2015. Our cash and liquidity positions remain strong
with an enterprise cash balance of $7.168 billion as of year-end 2016. ME&T
operating cash flow for the full year of 2016 was $3.857 billion, compared with
$5.175 billion in 2015. The decline was primarily due to impacts from lower
profit. During the year, ME&T capital expenditures totaled $1.206 billion, and
funding for defined benefit pension plans was about $150 million.
Although our short-term priorities for the use of cash may vary from time to time
as business needs and conditions dictate, our long-term cash deployment strategy
remains unchanged: 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.
GLOSSARY OF TERMS
1. All Other Segments - Primarily includes activities such as: the business strategy,
product management, development, and manufacturing of filters and fluids,
undercarriage, tires and rims, ground engaging tools, fluid transfer products,
precision seals and rubber, and sealing and connecting components primarily for
Cat(R) products; 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; digital investments for new customer and dealer
solutions that integrate data analytics with state-of-the art digital technologies
while transforming the buying experience.
2. Consolidating Adjustments - Elimination of transactions between Machinery, Energy
& Transportation and Financial Products.
3. Construction Industries - A segment primarily responsible for supporting customers
using machinery in infrastructure, forestry 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,
pipelayers, forestry and paving products.
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 management. 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 long-term 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 - 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 and
development, manufacturing, marketing and 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 remanufacturing of Cat engines and components and
remanufacturing services for other companies; the business strategy, product
design, product management and development, manufacturing, remanufacturing,
leasing and service of diesel-electric locomotives and components and other
rail-related products and services and product support of on-highway vocational
trucks for North America.
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 - A geographic region including Central and South American countries
and Mexico.
11. 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.
12. Machinery, Energy & Transportation Other Operating (Income) Expenses - Comprised
primarily of gains/losses on disposal of long-lived assets, gains/losses on
divestitures and legal settlements and accruals. Restructuring costs classified as
other operating expenses on the Results of Operations are presented separately on
the Operating Profit Comparison.
13. Mark-to-market gains and losses - For our defined benefit pension and OPEB plans,
represents the net gain or loss of actual results differing from our assumptions
and the effects of changing assumptions. These gains and losses are immediately
recognized through earnings upon the annual remeasurement in the fourth quarter,
or on an interim basis as triggering events warrant remeasurement.
14. Operating Profit Pull Through - A key metric used by management to measure the
rate of operating profit change relative to the change in sales and revenues. The
metric is defined as the change in operating profit divided by the change in sales
and revenues. Excludes restructuring costs, mark-to-market gains or losses
resulting from pension and OPEB plan remeasurements and goodwill impairment
charges.
15. Pension and other postemployment benefit (OPEB) - The company's defined benefit
pension and postretirement benefit plans.
16. Period Costs - Includes period manufacturing costs, ME&T selling, general and
administrative (SG&A) and research and development (R&D) expenses excluding the
impact of currency, exit-related costs that are included in restructuring costs
(see definition below) and mark-to-market gains or losses (see definition above).
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. SG&A and R&D costs are not linked to the production of goods or
services and include marketing, legal and financial services and the development
of new and significant improvements in products or processes.
17. Price Realization - The impact of net price changes excluding currency and new
product introductions. Price realization includes geographic mix of sales, which
is the impact of changes in the relative weighting of sales prices between
geographic regions.
18. Resource Industries - A segment primarily responsible for supporting customers
using machinery in mining, quarry, waste, and material handling 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,
track and rotary drills, highwall miners, large wheel loaders, off-highway trucks,
articulated trucks, wheel tractor scrapers, wheel dozers, landfill compactors,
soil compactors, material handlers, continuous miners, scoops and haulers,
hardrock continuous mining systems, select work tools, machinery components and
electronics and control systems. In addition to equipment, Resource Industries
also develops and sells technology to provide customers fleet management,
equipment management analytics and autonomous machine capabilities. Resource
Industries also manages areas that provide services to other parts of the company,
including integrated manufacturing and research and development.
19. Restructuring Costs - Primarily costs for employee separation costs, long-lived
asset impairments and contract terminations. These costs are included in Other
Operating (Income) Expenses. Restructuring costs also include other exit-related
costs primarily for inventory write-downs, accelerated depreciation and equipment
relocation (primarily included in Cost of goods sold) and sales discounts and
payments to dealers and customers related to discontinued products (included in
Sales of ME&T).
20. 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.
21. Surface Mining & Technology - A goodwill reporting unit included in Resource
Industries. Its product portfolio includes large mining trucks, electric rope
shovels, draglines, hydraulic shovels and related parts. In addition to equipment,
Surface Mining & Technology also develops and sells technology products and
services to provide customer fleet management, equipment management analytics and
autonomous machine capabilities.
22. Variable Manufacturing Costs - Represents volume-adjusted costs excluding the
impact of currency and restructuring costs (see definition above). 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.
NON-GAAP FINANCIAL MEASURES
The following definitions are provided for "non-GAAP financial
measures" in connection with Regulation G issued by the Securities
and Exchange Commission. These non-GAAP financial measures have no
standardized meaning prescribed by U.S. GAAP and therefore are
unlikely to be comparable to the calculation of similar measures
for other companies. Management does not intend these items to be
considered in isolation or substituted for the related GAAP
measure.
Adjusted Profit
We believe it is important to separately quantify the profit
impact of several special items in order for our results to be
meaningful to our readers. These items consist of (i) restructuring
costs, which are incurred in the current year to generate longer
term benefits, (ii) pension and OPEB mark-to-market losses
resulting from plan remeasurements, (iii) goodwill impairment
charges and (iv) state deferred tax valuation allowances. We do not
consider these items indicative of earnings from ongoing business
activities and believe the non-GAAP measure will provide useful
perspective on underlying business results and trends, and a means
to assess our period-over-period results.
Reconciliations of adjusted profit before taxes to the most
directly comparable GAAP measure, consolidated profit before taxes,
are as follows:
Fourth Quarter Full Year
(millions of dollars) 2015 2016 2015 2016
Profit (Loss) before taxes ($247) ($1,348) $3,439 $139
Restructuring costs $679 $395 $898 $1,019
Mark-to-market losses $214 $985 $179 $985
Goodwill impairment - $595 - $595
Adjusted profit before taxes $646 $627 $4,516 $2,738
Reconciliations of adjusted profit per share to the most
directly comparable GAAP measure, diluted profit per share, are as
follows:
Fourth Quarter Full Year Outlook
2015 2016 2015 2016 2016[1] 2017[2]
Profit
(Loss) per
share ($0.16) ($2.00) $4.18 ($0.11) $2.35 $2.30
Per share
restructuring
costs[3] $0.76 $0.45 $0.98 $1.16 $0.90 $0.60
Per share
mark-to-market
losses[3] $0.23 $1.14 $0.19 $1.15 - -
Per share
goodwill
impairment[4] - $0.98 - $0.98 - -
Per share
state
deferred tax
valuation
allowance - $0.24 - $0.24 - -
Adjusted
profit per
share $0.83 $0.83 $5.35 $3.42 $3.25 $2.90
Per share amounts computed using fully diluted shares outstanding
except for consolidated loss per share, which was computed using
basic shares outstanding
[1]2016 outlook as of October 25, 2016. Sales and Revenues
Outlook of about $39 billion.
[2]2017 Sales and Revenues Outlook in a range of $36 billion to
$39 billion. Profit per share at midpoint.
[1]-[2 ]Outlook profit per share does not include any impact from
mark-to-market gains or losses resulting from pension and OPEB
plan remeasurements.
[3]At statutory tax rates.
[4]Includes a $17 million tax benefit.
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 23-31
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 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,
2016 2015 2016 2015
Sales and revenues:
Sales of Machinery,
Energy & Transportation $ 8,885 $ 10,318 $ 35,773 $ 44,147
Revenues of Financial
Products 689 712 2,764 2,864
Total sales and revenues 9,574 11,030 38,537 47,011
Operating costs:
Cost of goods sold 7,541 8,240 28,309 33,546
Selling, general and
administrative expenses 1,483 1,255 4,686 4,951
Research and development
expenses 522 572 1,951 2,119
Interest expense of Financial
Products 149 147 596 587
Goodwill impairment charge 595 - 595 -
Other operating (income)
expenses 546 991 1,902 2,023
Total operating costs 10,836 11,205 38,039 43,22
Operating profit (loss) (1,262) (175) 498 3,785
Interest expense excluding
Financial Products 120 126 505 507
Other income (expense) 34 54 146 161
Consolidated profit (loss)
before taxes (1,348) (247) 139 3,439
Provision (benefit) for income
taxes (180) (158) 192 916
Profit (loss) of consolidated
companies (1,168) (89) (53) 2,523
Equity in profit (loss) of
unconsolidated affiliated
companies 1 (1) (6) -
Profit (loss) of consolidated and
affiliated companies (1,167) (90) (59) 2,523
Less: Profit (loss) attributable to
noncontrolling interests 4 4 8 11
Profit (loss) [1] $(1,171) $ (94) $ (67) $ 2,512
Profit (loss) per common share $ (2.00) $ (0.16) $ (0.11) $ 4.23
Profit (loss) per common
share - diluted [2],[3] $ (2.00) $ (0.16) $ (0.11) $ 4.18
Weighted-average common shares
outstanding (millions)
- Basic 585.8 582.3 584.3 594.3
- Diluted [2],[3] 585.8 582.3 584.3 601.3
Cash dividends declared per
common share $ 1.54 $ 1.54 $ 3.08 $ 3.01
[1] Profit (loss) attributable to common stockholders.
[2] Diluted by assumed exercise of stock-based compensation awards using the treasury stock
method.
[3] In the three months ended December 31, 2016 and 2015 and in the twelve months ended
December 31, 2016, the assumed exercise of stock-based compensation awards was not
considered because the impact would be antidilutive.
Caterpillar Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
December 31, December 31,
2016 2015
Assets
Current assets:
Cash and short-term
investments $ 7,168 $ 6,460
Receivables - trade
and other 5,981 6,695
Receivables -
finance 8,522 8,991
Prepaid expenses
and other current
assets 1,682 1,662
Inventories 8,614 9,700
Total current assets 31,967 33,508
Property, plant and
equipment - net 15,322 16,090
Long-term receivables -
trade and other 1,029 1,170
Long-term receivables -
finance 13,556 13,651
Noncurrent deferred and
refundable income taxes 2,790 2,489
Intangible assets 2,349 2,821
Goodwill 6,020 6,615
Other assets 1,671 1,998
Total assets $ 74,704 $ 78,342
Liabilities
Current liabilities:
Short-term
borrowings:
--
Machinery,
Energy &
Transportati
on $ 209 $ 9
-- Financial
Products 7,094 6,958
Accounts payable 4,614 5,023
Accrued expenses 3,003 3,116
Accrued wages,
salaries and
employee benefits 1,296 1,994
Customer advances 1,167 1,146
Dividends payable 452 448
Other current
liabilities 1,635 1,671
Long-term debt due
within one year:
--
Machinery,
Energy &
Transportati
on 507 517
-- Financial
Products 6,155 5,360
Total current
liabilities 26,132 26,242
Long-term debt due after
one year:
--
Machinery,
Energy &
Transportati
on 8,436 8,960
-- Financial
Products 14,382 16,209
Liability for
postemployment benefits 9,357 8,843
Other liabilities 3,184 3,203
Total liabilities 61,491 63,457
Stockholders' equity
Common stock 5,277 5,238
Treasury stock (17,478) (17,640)
Profit employed in the
business 27,377 29,246
Accumulated other
comprehensive income
(loss) (2,039) (2,035)
Noncontrolling interests 76 76
Total stockholders' equity 13,213 14,885
Total liabilities and
stockholders' equity $ 74,704 $ 78,342
Caterpillar Inc.
Condensed Consolidated Statement of Cash Flow
(Unaudited)
(Millions of dollars)
Twelve Months Ended
December 31,
2016 2015
Cash flow from operating
activities:
Profit (loss) of
consolidated and
affiliated companies $ (59) $ 2,523
Adjustments for non-cash
items:
Depreciation
and
amortization 3,034 3,046
Actuarial
(gain) loss on
pension and
postretirement
benefits 985 179
Provision
(benefit) for
deferred
income taxes (431) (307)
Goodwill
impairment
charge 595 -
Other 856 453
Changes in assets and
liabilities, net of
acquisitions and
divestitures:
Receivables -
trade and
other 829 764
Inventories 1,109 2,274
Accounts
payable (200) (1,165)
Accrued
expenses (201) (199)
Accrued wages,
salaries and
employee
benefits (708) (389)
Customer
advances (37) (501)
Other assets -
net 224 143
Other
liabilities -
net (388) (146)
Net cash provided by (used
for) operating activities 5,608 6,675
Cash flow from investing
activities:
Capital expenditures -
excluding equipment
leased to others (1,109) (1,388)
Expenditures for
equipment leased to
others (1,819) (1,873)
Proceeds from disposals
of leased assets and
property, plant and
equipment 899 760
Additions to finance
receivables (9,339) (9,929)
Collections of finance
receivables 9,369 9,247
Proceeds from sale of
finance receivables 127 136
Investments and
acquisitions (net of
cash acquired) (191) (400)
Proceeds from sale of
businesses and
investments (net of cash
sold) - 178
Proceeds from sale of
securities 694 351
Investments in
securities (391) (485)
Other - net - (114)
Net cash provided by (used
for) investing activities (1,760) (3,517)
Cash flow from financing
activities:
Dividends paid (1,799) (1,757)
Distribution to
noncontrolling interests (8) (7)
Common stock issued,
including treasury
shares reissued (23) 33
Treasury shares
purchased - (2,025)
Excess tax benefit from
stock-based compensation 28 24
Proceeds from debt
issued (original
maturities greater than
three months) 5,115 5,132
Payments on debt
(original maturities
greater than three
months) (6,565) (8,292)
Short-term borrowings -
net (original maturities
three months or less) 140 3,022
Net cash provided by (used
for) financing activities (3,112) (3,870)
Effect of exchange rate
changes on cash (28) (169)
Increase (decrease) in cash
and short-term investments 708 (881)
Cash and short-term
investments at beginning of
period 6,460 7,341
Cash and short-term
investments at end of period $ 7,168 $ 6,460
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, 2016
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Sales and
revenues:
Sales of
Machinery,
Energy &
Transporta
tion $ 8,885 $ 8,885 $ - $ -
Revenues
of
Financial
Products 689 - 760 (71)[2]
Total
sales and
revenues 9,574 8,885 760 (71)
Operating
costs:
Cost of
goods sold 7,541 7,542 - (1) [3]
Selling,
general
and
administra
tive
expenses 1,483 1,335 149 (1) [3]
Research
and
development
expenses 522 522 - -
Interest
expense of
Financial
Products 149 - 153 (4) [4]
Goodwill
impairment
charge 595 595 - -
Other
operating
(income)
expenses 546 236 318 (8) [3]
Total
operating
costs 10,836 10,230 620 (14)
Operating
profit (loss) (1,262) (1,345) 140 (57)
Interest
expense
excluding
Financial
Products 120 131 - (11) [4]
Other
income
(expense) 34 (17) 5 46 [5]
Consolidated
profit (loss)
before taxes (1,348) (1,493) 145 -
Provision
(benefit)
for income
taxes (180) (222) 42 -
Profit
(loss) of
consolidat
ed
companies (1,168) (1,271) 103 -
Equity in
profit
(loss) of
unconsolid
ated
affiliated
companies 1 1 - -
Equity in
profit of
Financial
Products'
subsidiari
es - 101 - (101) [6]
Profit (loss)
of
consolidated
and affiliated
companies (1,167) (1,169) 103 (101)
Less: Profit
(loss)
attributable
to
noncontrolling
interests 4 2 2 -
Profit (loss)
[7] $ (1,171) $ (1,171) $ 101 $ (101)
Represents Caterpillar Inc. and its subsidiaries with Financial
[1] Products accounted for on the equity basis.
Elimination of Financial Products' revenues earned from Machinery,
[2] Energy & Transportation.
Elimination of net expenses recorded by Machinery, Energy &
[3] Transportation paid to Financial Products.
Elimination of interest expense recorded between Financial Products and
[4] Machinery, Energy & Transportation.
Elimination of discount recorded by Machinery, Energy & Transportation
on receivables sold to Financial Products and of interest earned
[5] between Machinery, Energy & Transportation and Financial Products.
Elimination of Financial Products' profit due to equity method of
[6] accounting.
[7] Profit (loss) attributable to common stockholders.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended December 31, 2015
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Sales and
revenues:
Sales of
Machinery,
Energy &
Transporta
tion $ 10,318 $ 10,318 $ - $ -
Revenues
of
Financial
Products 712 - 789 (77) [2]
Total
sales and
revenues 11,030 10,318 789 (77)
Operating
costs:
Cost of
goods sold 8,240 8,242 - (2) [3]
Selling,
general
and
administra
tive
expenses 1,255 1,120 144 (9) [3]
Research
and
development
expenses 572 572 - -
Interest
expense of
Financial
Products 147 - 148 (1) [4]
Other
operating
(income)
expenses 991 672 321 (2) [3]
Total
operating
costs 11,205 10,606 613 (14)
Operating
profit (loss) (175) (288) 176 (63)
Interest
expense
excluding
Financial
Products 126 137 - (11) [4]
Other
income
(expense) 54 (24) 26 52 [5]
Consolidated
profit (loss)
before taxes (247) (449) 202 -
Provision
(benefit)
for income
taxes (158) (199) 41 -
Profit
(loss) of
consolidat
ed
companies (89) (250) 161 -
Equity in
profit
(loss) of
unconsolid
ated
affiliated
companies (1) (1) - -
Equity in
profit of
Financial
Products'
subsidiari
es - 162 - (162) [6]
Profit (loss)
of
consolidated
and affiliated
companies (90) (89) 161 (162)
Less: Profit
(loss)
attributable
to
noncontrolling
interests 4 5 (1) -
Profit (loss)
[7] $ (94) $ (94) $ 162 $ (162)
Represents Caterpillar Inc. and its subsidiaries with Financial
[1] Products accounted for on the equity basis.
Elimination of Financial Products' revenues earned from Machinery,
[2] Energy & Transportation.
Elimination of net expenses recorded by Machinery, Energy &
[3] Transportation paid to Financial Products.
Elimination of interest expense recorded between Financial Products and
[4] Machinery, Energy & Transportation.
Elimination of discount recorded by Machinery, Energy & Transportation
on receivables sold to Financial Products and of interest earned
[5] between Machinery, Energy & Transportation and Financial Products.
Elimination of Financial Products' profit due to equity method of
[6] accounting.
[7] Profit (loss) attributable to common stockholders.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Twelve Months Ended December 31, 2016
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Sales and
revenues:
Sales of
Machinery,
Energy &
Transporta
tion $ 35,773 $ 35,773 $ - $ -
Revenues
of
Financial
Products 2,764 - 3,065 (301) [2]
Total
sales and
revenues 38,537 35,773 3,065 (301)
Operating
costs:
Cost of
goods sold 28,309 28,311 - (2) [3]
Selling,
general
and
administra
tive
expenses 4,686 4,129 573 (16) [3]
Research
and
development
expenses 1,951 1,951 - -
Interest
expense of
Financial
Products 596 - 611 (15) [4]
Goodwill
impairment
charge 595 595 - -
Other
operating
(income)
expenses 1,902 698 1,232 (28) [3]
Total
operating
costs 38,039 35,684 2,416 (61)
Operating
profit 498 89 649 (240)
Interest
expense
excluding
Financial
Products 505 553 - (48) [4]
Other
income
(expense) 146 (89) 43 192 [5]
Consolidated
profit (loss)
before taxes 139 (553) 692 -
Provision
(benefit)
for income
taxes 192 (24) 216 -
Profit
(loss) of
consolidat
ed
companies (53) (529) 476 -
Equity in
profit
(loss) of
unconsolid
ated
affiliated
companies (6) (6) - -
Equity in
profit of
Financial
Products'
subsidiari
es - 470 - (470) [6]
Profit (loss)
of
consolidated
and affiliated
companies (59) (65) 476 (470)
Less: Profit
(loss)
attributable
to
noncontrolling
interests 8 2 6 -
Profit (loss)
[7] $ (67) $ (67) $ 470 $ (470)
Represents Caterpillar Inc. and its subsidiaries with Financial
[1] Products accounted for on the equity basis.
Elimination of Financial Products' revenues earned from Machinery,
[2] Energy & Transportation.
Elimination of net expenses recorded by Machinery, Energy &
[3] Transportation paid to Financial Products.
Elimination of interest expense recorded between Financial Products
[4] and Machinery, Energy & Transportation.
Elimination of discount recorded by Machinery, Energy & Transportation
on receivables sold to Financial Products and of interest earned
[5] between Machinery, Energy & Transportation and Financial Products.
Elimination of Financial Products' profit due to equity method of
[6] accounting.
[7] Profit (loss) attributable to common stockholders.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Twelve Months Ended December 31, 2015
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Sales and
revenues:
Sales of
Machinery,
Energy &
Transporta
tion $ 44,147 $ 44,147 $ - $ -
Revenues
of
Financial
Products 2,864 - 3,179 (315) [2]
Total
sales and
revenues 47,011 44,147 3,179 (315)
Operating
costs:
Cost of
goods sold 33,546 33,548 - (2) [3]
Selling,
general
and
administra
tive
expenses 4,951 4,389 588 (26) [3]
Research
and
development
expenses 2,119 2,119 - -
Interest
expense of
Financial
Products 587 - 593 (6) [4]
Other
operating
(income)
expenses 2,023 821 1,224 (22) [3]
Total
operating
costs 43,226 40,877 2,405 (56)
Operating
profit 3,785 3,270 774 (259)
Interest
expense
excluding
Financial
Products 507 550 - (43) [4]
Other
income
(expense) 161 (103) 48 216 [5]
Consolidated
profit before
taxes 3,439 2,617 822 -
Provision
(benefit)
for income
taxes 916 686 230 -
Profit of
consolidat
ed
companies 2,523 1,931 592 -
Equity in
profit
(loss) of
unconsolid
ated
affiliated
companies - - - -
Equity in
profit of
Financial
Products'
subsidiari
es - 591 - (591) [6]
Profit of
consolidated
and affiliated
companies 2,523 2,522 592 (591)
Less: Profit
(loss)
attributable
to
noncontrolling
interests 11 10 1 -
Profit [7] $ 2,512 $ 2,512 $ 591 $ (591)
Represents Caterpillar Inc. and its subsidiaries with Financial
[1] Products accounted for on the equity basis.
Elimination of Financial Products' revenues earned from Machinery,
[2] Energy & Transportation.
Elimination of net expenses recorded by Machinery, Energy &
[3] Transportation paid to Financial Products.
Elimination of interest expense recorded between Financial Products
[4] and Machinery, Energy & Transportation.
Elimination of discount recorded by Machinery, Energy &
Transportation on receivables sold to Financial Products and of
interest earned between Machinery, Energy & Transportation and
[5] Financial Products.
Elimination of Financial Products' profit due to equity method of
[6] accounting.
[7] Profit attributable to common stockholders.
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Twelve Months Ended December 31, 2016
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Cash flow from
operating
activities:
Profit (loss) of
consolidated and
affiliated
companies $ (59) $ (65) $ 476 $ (470) [2]
Adjustments for
non-cash items:
Depreciation
and
amortization 3,034 2,144 890 -
Actuarial
(gain) loss
on pension
and
postretireme
nt benefits 985 985 - -
Provision
(benefit)
for deferred
income taxes (431) (533) 111 (9) [4]
Goodwill
impairment
charge 595 595 - -
Other 856 687 (36) 205 [4]
Financial
Products'
dividend in
excess of profit - 162 - (162) [3]
Changes in
assets and
liabilities, net
of acquisitions
and
divestitures:
Receivables
- trade and
other 829 171 (34) 692 [4],[5]
Inventories 1,109 1,113 - (4) [4]
Accounts
payable (200) (168) 31 (63) [4]
Accrued
expenses (201) (142) (59) -
Accrued
wages,
salaries and
employee
benefits (708) (693) (15) -
Customer
advances (37) (37) - -
Other assets
- net 224 77 145 2 [4]
Other
liabilities
- net (388) (439) 44 7 [4]
Net cash provided
by (used for)
operating
activities 5,608 3,857 1,553 198
Cash flow from
investing
activities:
Capital
expenditures -
excluding
equipment leased
to others (1,109) (1,099) (11) 1 [4]
Expenditures for
equipment leased
to others (1,819) (107) (1,760) 48 [4]
Proceeds from
disposals of
leased assets
and property,
plant and
equipment 899 125 805 (31) [4]
Additions to
finance
receivables (9,339) - (11,862) 2,523 [5]
Collections of
finance
receivables 9,369 - 12,341 (2,972) [5]
Net intercompany
purchased
receivables - - 399 (399) [5]
Proceeds from
sale of finance
receivables 127 - 127 -
Net intercompany
borrowings - (542) 1 541 [6]
Investments and
acquisitions
(net of cash
acquired) (191) (191) - -
Proceeds from
sale of
securities 694 30 664 -
Investments in
securities (391) (24) (367) -
Other - net - 31 (38) 7 [8]
Net cash provided
by (used for)
investing
activities (1,760) (1,777) 299 (282)
Cash flow from
financing
activities:
Dividends paid (1,799) (1,799) (632) 632 [7]
Distribution to
noncontrolling
interests (8) (8) - -
Common stock
issued,
including
treasury shares
reissued (23) (23) 7 (7) [8]
Excess tax
benefit from
stock-based
compensation 28 28 - -
Net intercompany
borrowings - (1) 542 (541) [6]
Proceeds from
debt issued
(original
maturities
greater than
three months) 5,115 6 5,109 -
Payments on debt
(original
maturities
greater than
three months) (6,565) (533) (6,032) -
Short-term
borrowings - net
(original
maturities three
months or less) 140 201 (61) -
Net cash provided
by (used for)
financing
activities (3,112) (2,129) (1,067) 84
Effect of exchange
rate changes on
cash (28) (34) 6 -
Increase (decrease)
in cash and
short-term
investments 708 (83) 791 -
Cash and short-term
investments at
beginning of period 6,460 5,340 1,120 -
Cash and short-term
investments at end
of period $ 7,168 $ 5,257 $ 1,911 $ -
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for
[1] on the equity basis.
[2] Elimination of Financial Products' profit after tax due to equity method of accounting.
Elimination of Financial Products' dividend to Machinery, Energy & Transportation in
[3] excess of Financial Products' profit.
Elimination of non-cash adjustments and changes in assets and liabilities related to
[4] consolidated reporting.
Reclassification of Financial Products' cash flow activity from investing to operating
[5] for receivables that arose from the sale of inventory.
Elimination of net proceeds and payments to/from Machinery, Energy & Transportation and
[6] Financial Products.
[7] Elimination of dividend from Financial Products to Machinery, Energy & Transportation.
[8] 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, 2015
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Cash flow from
operating activities:
Profit of
consolidated and
affiliated companies $ 2,523 $ 2,522 $ 592 $ (591) [2]
Adjustments for
non-cash items:
Depreciation
and
amortization 3,046 2,164 882 -
Actuarial
(gain) loss
on pension
and
postretireme
nt benefits 179 179 - -
Provision
(benefit)
for deferred
income taxes (307) (425) 118 -
Other 453 343 (138) 248 [4]
Financial Products'
dividend in excess
of profit - 9 - (9) [3]
Changes in assets
and liabilities, net
of acquisitions and
divestitures:
Receivables
- trade and
other 764 461 (85) 388 [4],[5]
Inventories 2,274 2,280 - (6) [4]
Accounts
payable (1,165) (1,343) 95 83 [4]
Accrued
expenses (199) (223) 11 13 [4]
Accrued
wages,
salaries and
employee
benefits (389) (390) 1 -
Customer
advances (501) (501) - -
Other assets
- net 143 192 (55) 6 [4]
Other
liabilities
- net (146) (93) (34) (19) [4]
Net cash provided by
(used for) operating
activities 6,675 5,175 1,387 113
Cash flow from
investing activities:
Capital expenditures
- excluding
equipment leased to
others (1,388) (1,373) (16) 1 [4]
Expenditures for
equipment leased to
others (1,873) (257) (1,643) 27 [4]
Proceeds from
disposals of leased
assets and property,
plant and equipment 760 114 655 (9) [4]
Additions to finance
receivables (9,929) - (12,928) 2,999 [5],[8]
Collections of
finance receivables 9,247 - 12,227 (2,980) [5]
Net intercompany
purchased
receivables - - 745 (745) [5]
Proceeds from sale
of finance
receivables 136 - 136 -
Net intercompany
borrowings - - 1 (1) [6]
Investments and
acquisitions (net of
cash acquired) (400) (400) - -
Proceeds from sale
of businesses and
investments (net of
cash sold) 178 184 - (6) [8]
Proceeds from sale
of securities 351 25 326 -
Investments in
securities (485) (27) (458) -
Other - net (114) (49) (65) -
Net cash provided by
(used for) investing
activities (3,517) (1,783) (1,020) (714)
Cash flow from
financing activities:
Dividends paid (1,757) (1,757) (600) 600 [7]
Distribution to
noncontrolling
interests (7) (7) - -
Common stock issued,
including treasury
shares reissued 33 33 - -
Treasury shares
purchased (2,025) (2,025) - -
Excess tax benefit
from stock-based
compensation 24 24 - -
Net intercompany
borrowings - (1) - 1 [6]
Proceeds from debt
issued (original
maturities greater
than three months) 5,132 3 5,129 -
Payments on debt
(original maturities
greater than three
months) (8,292) (517) (7,775) -
Short-term
borrowings - net
(original maturities
three months or
less) 3,022 4 3,018 -
Net cash provided by
(used for) financing
activities (3,870) (4,243) (228) 601
Effect of exchange
rate changes on cash (169) (126) (43) -
Increase (decrease) in
cash and short-term
investments (881) (977) 96 -
Cash and short-term
investments at
beginning of period 7,341 6,317 1,024 -
Cash and short-term
investments at end of
period $ 6,460 $ 5,340 $ 1,120 $ -
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted
[1] for on the equity basis.
Elimination of Financial Products' profit after tax due to equity method of
[2] accounting.
Elimination of Financial Products' dividend to Machinery, Energy & Transportation in
[3] excess of Financial Products' profit.
Elimination of non-cash adjustments and changes in assets and liabilities related to
[4] consolidated reporting.
Reclassification of Financial Products' cash flow activity from investing to
[5] operating for receivables that arose from the sale of inventory.
Elimination of net proceeds and payments to/from Machinery, Energy & Transportation
[6] and Financial Products.
Elimination of dividend from Financial Products to Machinery, Energy &
[7] Transportation.
Elimination of proceeds received from Financial Products related to Machinery,
[8] Energy & Transportation's sale of businesses and investments.
CONTACT: Rachel Potts, +1-309-675-6892 (Office),
+1-309-573-3444 (Mobile) or Potts_Rachel_A@cat.com
This is a disclosure announcement from PR Newswire.