DEERFIELD, Illinois,
January 25, 2018 /PRNewswire/ --
Improving End Markets and Continued
Focus on Operational Performance Drive Strong Quarter and Year
Fourth Quarter Full Year
($ in billions except profit per share) 2017 2016 2017 2016
Sales and Revenues $12.9 $9.6 $45.5 $38.5
Profit (Loss) Per Share ($2.18) ($2.00) $1.26 ($0.11)
Adjusted Profit Per Share $2.16 $0.83 $6.88 $3.42
PDF -
https://mma.prnewswire.com/media/633266/Caterpillar_4Q_and_full_year_2017_highlights.pdf?p=original
- Fourth-quarter sales and revenues up 35 percent
- Broad-based sales recovery gained momentum in the fourth
quarter of 2017
- Fourth-quarter 2017 results include a charge of $2.4 billion, or $3.91 per share, from U.S. tax reform
legislation
- Expect growth in many end markets in 2018
- Implementing new strategy focused on operational excellence and
profitable growth
Caterpillar Inc. (NYSE: CAT) today announced fourth-quarter and
full-year results for 2017.
Sales and revenues in the fourth quarter of 2017 were
$12.9 billion, compared with
$9.6 billion in the fourth quarter of
2016. Fourth-quarter 2017 loss was $2.18 per share, compared with a loss of
$2.00 per share in the fourth quarter
of 2016.
Full-year sales and revenues in 2017 were $45.5 billion, up about 18 percent from
$38.5 billion in 2016. Full-year
profit was $1.26 per share in 2017,
compared with a loss of $0.11 per
share in 2016.
Adjusted profit per share in the fourth quarter of
2017 was $2.16, compared with
fourth-quarter 2016 adjusted profit per share of $0.83. Adjusted profit per share in 2017 was
$6.88, compared with 2016 adjusted
profit per share of $3.42.
Adjusted profit per share excludes several large adjustments
consisting of the impact of U.S. tax reform, restructuring
costs, mark-to-market losses for remeasurement of
pension and OPEB plans, state deferred tax valuation
allowance adjustments, a gain on sale of an equity investment in
2017 and a goodwill impairment charge in 2016. A discussion of
these items is included in Q&A #1 on page 14.
Caterpillar's financial position continued to strengthen in the
fourth quarter. Machinery, Energy & Transportation
(ME&T) operating cash flow was $1.3 billion during the fourth quarter of 2017
and $5.5 billion for the full year of
2017. The ME&T debt-to-capital ratio was 36.7
percent at the end of 2017, compared to 41.0 percent at the end of
2016. The company ended 2017 with an enterprise cash balance of
$8.3 billion. In the fourth quarter
of 2017, the company made a discretionary contribution to U.S.
pension plans of $1.0 billion and a
payment for early debt retirement of $958
million.
"After four challenging years, many key markets improved in
2017, and our global team delivered strong results. We remained
focused on operational excellence and made early investments in
profitable growth initiatives as we began to implement our new
strategy," said Caterpillar CEO Jim
Umpleby.
2018 Outlook
Caterpillar is beginning 2018 with strong sales momentum
resulting from strong order rates, lean dealer inventories and an
increasing backlog. Additionally, there are positive economic
indicators across most of the world and in many of the company's
end markets. Caterpillar is preparing its factories and suppliers
to be ready for continued growth, while remaining focused on
managing with a flexible and competitive cost structure that should
enable the company to respond quickly if economic fundamentals
change.
The company expects 2018 profit per share in a range of
$7.75 to $8.75. Excluding restructuring costs of about
$400 million, adjusted profit per
share is expected in a range of $8.25
to $9.25.
"We are in the early stages of implementing our strategy for
profitable growth. In 2018, we expect to make additional
investments in the expanded offerings and services important for
Caterpillar's long-term success. We will use our Operating &
Execution Model to bias resources to areas that represent the
greatest opportunity for return on our investments," said
Umpleby.
"Our focus on operational excellence will not waver as we work
to develop a more competitive and flexible cost structure,
including implementing lean manufacturing principles. We are
positioned to capitalize on continued sales momentum or quickly
adjust should conditions change," added Umpleby.
Following is a summary of the key drivers of sales assumptions
included in the outlook:
Construction Industries - The company expects
growth in 2018 with some tempering in the latter part of the year,
largely due to anticipated seasonality of sales in China. Caterpillar expects improvement in
North American residential, non-residential and infrastructure. The
outlook does not include any impact from a potential U.S.
infrastructure bill. Europe and
Asia/Pacific are expected to
continue to grow, and the recovery that started in Africa/Middle
East and Latin America is
expected to extend into 2018.
Resource Industries - The company believes that
global economic momentum and increasing commodity prices are
restoring miners' business confidence and financial health. The
company anticipates miners' capital spend to increase as mining
businesses invest in equipment replacement cycles. Higher machine
utilization levels should support continued strong aftermarket
parts opportunities. Strong global demand is expected to be a
positive for heavy construction.
Energy & Transportation - Sales into Oil and
Gas applications are expected to increase in 2018, led by
reciprocating engines for gas compression and well servicing in
North America. The current
turbines backlog is healthy in support of the midstream pipeline
business. The company expects an increase in Transportation
primarily from recent acquisitions in rail services, while the
locomotive and marine markets are expected to remain challenged.
Power Generation sales are forecast to be slightly up after a
multi-year downturn. Sales into Industrial applications are
expected to be about flat.
Following are key points to help understand the elements of the
2018 profit outlook:
- An expected increase in sales volume is the most
significant reason for the higher profit outlook, with volume
increases forecasted across the three primary segments.
- Slightly favorable price realization is expected
to be mostly offset by material cost increases due to higher
commodity prices.
- Period costs excluding short-term incentive compensation
expense are expected to increase due to labor inflation and
targeted investments in profitable growth initiatives, including
expanded offerings and services.
- The outlook includes short-term incentive compensation expense
of about $900 million.
- Financial Products' segment profit is expected to
be lower in 2018 than in 2017, primarily due to the absence of
about $100 million of gains on sales
of securities in 2017.
- The outlook assumes a tax rate of 24 percent, including the
company's current estimate of the impact of U.S. tax reform
legislation.
- ME&T capital expenditures are expected to be about
$1.0 billion to $1.5 billion.
- No stock repurchases are assumed in the outlook.
- The outlook does not include a mark-to-market gain or loss for
remeasurement of pension and OPEB plans or changes to provisional
estimates recorded in 2017 for U.S. tax reform.
Notes:
- Glossary of terms is included on pages 17-18; first
occurrence of terms shown in bold italics.
- Information on non-GAAP financial measures is included on
page 19.
- Caterpillar will conduct a teleconference and live webcast,
with a slide presentation, beginning at 10
a.m. Central Time on Thursday, January 25, 2018, to discuss
its 2017 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 2017 sales
and revenues of $45.462 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 primary 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 speak only as of the date they are made, 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) commodity price changes, material price
increases, fluctuations in demand for our products or significant
shortages of material; (iii) government monetary or fiscal
policies; (iv) political and economic risks, commercial instability
and events beyond our control in the countries in which we operate;
(v) our ability to develop, produce and market quality products
that meet our customers' needs; (vi) the impact of the highly
competitive environment in which we operate on our sales and
pricing; (vii) information technology security threats and computer
crime; (viii) additional restructuring costs or a failure to
realize anticipated savings or benefits from past or future cost
reduction actions; (ix) failure to realize all of the anticipated
benefits from initiatives to increase our productivity, efficiency
and cash flow and to reduce costs; (x) inventory management
decisions and sourcing practices of our dealers and our OEM
customers; (xi) a failure to realize, or a delay in realizing, all
of the anticipated benefits of our acquisitions, joint ventures or
divestitures; (xii) union disputes or other employee relations
issues; (xiii) adverse effects of unexpected events including
natural disasters; (xiv) disruptions or volatility in global
financial markets limiting our sources of liquidity or the
liquidity of our customers, dealers and suppliers; (xv) 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;
(xvi) our Financial Products segment's risks associated with the
financial services industry; (xvii) changes in interest rates or
market liquidity conditions; (xviii) an increase in delinquencies,
repossessions or net losses of Cat Financial's customers; (xix)
currency fluctuations; (xx) our or Cat Financial's compliance with
financial and other restrictive covenants in debt agreements; (xxi)
increased pension plan funding obligations; (xxii) alleged or
actual violations of trade or anti-corruption laws and regulations;
(xxiii) international trade policies and their impact on demand for
our products and our competitive position; (xxiv) additional tax
expense or exposure, including the impact of U.S. tax reform; (xxv)
significant legal proceedings, claims, lawsuits or government
investigations; (xxvi) new regulations or changes in financial
services regulations; (xxvii) compliance with environmental laws
and regulations; and (xxviii) other factors described in more
detail in Caterpillar's Forms 10-Q, 10-K and other filings with the
Securities and Exchange Commission.
CONSOLIDATED RESULTS
Consolidated Sales and Revenues
Consolidated Sales and Revenues Comparison
Fourth Quarter 2017 vs. Fourth Quarter 2016
To access this chart, go to
http://www.caterpillar.com/en/investors/quarterly-results.html for
the downloadable version of Caterpillar 4Q 2017
earnings.
The chart above graphically illustrates reasons for the change
in Consolidated Sales and Revenues between the fourth quarter of
2016 (at left) and the fourth quarter of 2017 (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 $12.896
billion in the fourth quarter of 2017, an increase of
$3.322 billion, or 35 percent,
compared with $9.574 billion in the
fourth quarter of 2016. The increase was primarily due to higher
sales volume, mostly due to improved end-user demand. In addition,
favorable changes in dealer inventories contributed to increased
sales volume. The improvement in end-user demand was across all
regions and most end markets. The favorable change in dealer
inventories was primarily due to a decrease in the fourth quarter
of 2016, compared to dealer inventories that were about flat in the
fourth quarter of 2017. By segment, the largest sales volume
increase was in Construction Industries, mostly due to higher
end-user demand for construction equipment and the favorable impact
of changes in dealer inventories. Energy & Transportation's
sales volume increased due to higher demand across all
applications. Sales volume for Resource Industries increased due to
higher end-user demand for equipment and aftermarket parts.
Favorable price realization, primarily in Construction Industries
and Resource Industries, also contributed to the sales improvement.
Financial Products'revenues were about flat.
Sales increased across all regions with the largest increase in
North America. Sales improved 46
percent in North America primarily
due to higher end-user demand for both equipment and aftermarket
parts. Changes in dealer inventories were favorable as dealer
inventories decreased in the fourth quarter of 2016 and increased
slightly in the fourth quarter of 2017. EAME sales
increased 38 percent primarily due to higher end-user demand for
equipment and favorable price realization. Asia/Pacific sales increased 22
percent primarily due to higher end-user demand for construction
equipment. About half of the sales improvement in Asia/Pacific was in China resulting from increased building
construction and infrastructure investment. Sales increased 39
percent in Latin
America due to stabilizing economic conditions in
several countries in the region that resulted in improved end-user
demand from low levels, as well as favorable changes in dealer
inventories.
Consolidated Operating Profit
(Loss)
Consolidated Operating Profit Comparison
Fourth Quarter 2017 vs. Fourth Quarter 2016
To access this chart, go to
http://www.caterpillar.com/en/investors/quarterly-results.html for
the downloadable version of Caterpillar 4Q 2017
earnings.
The chart above graphically illustrates reasons for the change
in Consolidated Operating Profit (Loss) between the fourth quarter
of 2016 (at left) and the fourth quarter of 2017 (at right). Items
favorably impacting operating profitappear 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 2017 was $1.161 billion, compared with a loss of
$1.262 billion in the fourth quarter
of 2016. The increase of $2.423
billion was due to higher sales volume, a decrease in
mark-to-market losses related to pension and OPEB plans and the
absence of a goodwill impairment charge in Resource Industries in
2016. Favorable price realization, lower variable
manufacturing costs and lower restructuring costs were
mostly offset by higher period costs. Price
realization was favorable, primarily in Construction Industries and
Resource Industries.
Variable manufacturing costs were lower primarily due to the
favorable impact from cost absorption and lower warranty expense.
Cost absorption was favorable as inventory was about flat in the
fourth quarter of 2017, compared to a reduction in inventory in the
fourth quarter of 2016. Material costs were slightly unfavorable
due to increases in steel prices. Period costs were higher
primarily due to higher short-term incentive compensation expense.
Also contributing to increased period costs were targeted
investments and higher manufacturing costs to support higher
production volumes, partially offset by lower depreciation
expense.
Restructuring costs were $245
million in the fourth quarter of 2017, compared with
$395 million in the fourth quarter of
2016.
Other Profit/Loss Items
- Interest expense excluding Financial Products in the
fourth quarter of 2017 was $169
million, an increase of $49
million from the fourth quarter of 2016, primarily due to an
early debt retirement.
- Other income/expense in the fourth quarter of 2017 was
income of $119 million, compared with
income of $34 million in the fourth
quarter of 2016. The favorable change was primarily a result of
gains on the sale of securities.
- The provision for income taxes in the fourth quarter
reflects an annual effective tax rate of approximately 28 percent,
compared to approximately 36 percent for the full year of 2016,
excluding the items discussed below. The effective tax rate related
to 2017 full-year adjusted profit before tax, excluding a discrete
benefit from stock-based compensation awards, was 27 percent,
compared to 26 percent in 2016.
The provision for income taxes in the fourth quarter of 2017
also includes a charge of $2.371
billion due to the enactment of U.S. tax reform legislation
on December 22, 2017. The
provisionally estimated charge includes a $596 million write-down of net deferred tax
assets to reflect the reduction in the U.S. corporate tax rate from
35 percent to 21 percent beginning January
1, 2018, with the remainder primarily related to the cost of
a mandatory deemed repatriation of non-U.S. earnings. Three items
partially offset this charge:
- A $130 million benefit related to
the change from the third-quarter estimated annual tax rate of 32
percent to approximately 28 percent for the full year of 2017,
primarily due to a more favorable geographic mix of profits from a
tax perspective, including the impact of U.S. pension and OPEB
mark-to-market losses taxed at higher U.S. rates.
- A non-cash benefit of $111
million, net of U.S. federal tax at 35 percent, from
reductions in the valuation allowance against U.S. state deferred
tax assets due to improved profits in the
United States.
- A tax benefit of $19 million for
the settlement of stock-based compensation awards with associated
tax deductions in excess of cumulative U.S. GAAP compensation
expense.
The provision for income taxes in the fourth quarter of 2016
also included a charge of $170
million related to the change from the third quarter of 2016
estimated annual tax rate. In addition, the valuation allowance
against U.S. state deferred tax assets was increased in 2016,
resulting in a $141 million non-cash
charge, net of U.S. federal tax at 35 percent.
Global Workforce
Caterpillar worldwide, full-time employment was about 98,400 at
the end of 2017, an increase of about 3,000 full-time employees
from the end of 2016, primarily the result of higher production
volumes. The flexible workforce increased by about 7,300, also
primarily due to higher production volumes. In total, the global
workforce increased by about 10,300.
December 31
Increase/
2017 2016 (Decrease)
Full-time employment 98,400 95,400 3,000
Flexible workforce 18,300 11,000 7,300
Total 116,700 106,400 10,300
Geographic Summary
U.S. workforce 50,500 45,700 4,800
Non-U.S. workforce 66,200 60,700 5,500
Total 116,700 106,400 10,300
SEGMENT RESULTS
Sales and Revenues by Geographic Region
% North %
(Millions of dollars) Total Change America Change
Fourth Quarter 2017
Construction Industries[1] $ 5,258 47% $ 2,346 50%
Resource Industriessquared 2,205 53% 791 68%
Energy & Transportationcubed 4,706 22% 2,327 35%
All Other Segments[4] 52 63% 22 100%
Corporate Items and Eliminations (27) (27)
Machinery, Energy & Transportation $ 12,194 37% $ 5,459 46%
Financial Products Segment $ 783 6% $ 505 9%
Corporate Items and Eliminations (81) (50)
Financial Products Revenues $ 702 2% $ 455 5%
Consolidated Sales and Revenues $ 12,896 35% $ 5,914 41%
Fourth Quarter 2016
Construction Industries[1] $ 3,589 $ 1,569
Resource Industriessquared 1,443 471
Energy & Transportationcubed 3,849 1,722
All Other Segments⁴ 32 11
Corporate Items and Eliminations (28) (23)
Machinery, Energy & Transportation $ 8,885 $ 3,750
Financial Products Segment $ 742 $ 464
Corporate Items and Eliminations (53) (29)
Financial Products Revenues $ 689 $ 435
Consolidated Sales and Revenues $ 9,574 $ 4,185
[1]Does not include inter-segment sales of $37 million and $31 million in
fourth quarter 2017 and 2016, respectively.
[2]Does not include inter-segment sales of $103 million and $87 million in
fourth quarter 2017 and 2016, respectively.
[3]Does not include inter-segment sales of $934 million and $621 million in
fourth quarter 2017 and 2016, respectively.
[4]Does not include inter-segment sales of $103 million and $117 million in
fourth quarter 2017 and 2016, respectively.
Table continues below...
Sales and Revenues by Geographic Region
Latin % % Asia/ %
(Millions of dollars) America Change EAME Change Pacific Change
Fourth Quarter 2017
Construction Industries[1] $ 392 48% $ 976 56% $ 1,544 36%
Resource Industriessquared 384 74% 475 60% 555 22%
Energy & Transportationcubed 374 8% 1,286 21% 719 -%
All Other Segments[4] 1 -% 14 18% 15 (6)%
Corporate Items and Eliminations - - -
Machinery, Energy & Transportation $ 1,151 39% $ 2,751 38% $ 2,833 22%
Financial Products Segment $ 80 (4)% $ 107 8% $ 91 (5)%
Corporate Items and Eliminations (12) (6) (13)
Financial Products Revenues $ 68 (8)% $ 101 6% $ 78 (8)%
Consolidated Sales and Revenues $ 1,219 35% $ 2,852 37% $ 2,911 21%
Fourth Quarter 2016
Construction Industries[1] $ 264 $ 624 $ 1,132
Resource Industriessquared 221 297 454
Energy & Transportationcubed 347 1,063 717
All Other Segments[4] - 5 16
Corporate Items and Eliminations (2) (2) (1)
Machinery, Energy & Transportation $ 830 $ 1,987 $ 2,318
Financial Products Segment $ 83 $ 99 $ 96
Corporate Items and Eliminations (9) (4) (11)
Financial Products Revenues $ 74 $ 95 $ 85
Consolidated Sales and Revenues $ 904 $ 2,082 $ 2,403
[1]Does not include inter-segment sales of $37 million and $31 million in
fourth quarter 2017 and 2016, respectively.
[2]Does not include inter-segment sales of $103 million and $87 million in
fourth quarter 2017 and 2016, respectively.
[3]Does not include inter-segment sales of $934 million and $621 million in
fourth quarter 2017 and 2016, respectively.
[4]Does not include inter-segment sales of $103 million and $117 million in
fourth quarter 2017 and 2016, respectively.
Sales and Revenues by Segment
(Millions of dollars)
Fourth Price Fourth
Quarter Sales Reali- Quarter $ %
2016 Volume zation Currency Other 2017 Change Change
Construction
Industries $ 3,589 $ 1,502 $ 146 $ 21 $ - $ 5,258 $ 1,669 47%
Resource
Industries 1,443 669 84 9 - 2,205 762 53%
Energy &
Transportation 3,849 808 (17) 66 - 4,706 857 22%
All Other
Segments 32 20 - - - 52 20 63%
Corporate
Items and
Eliminations (28) 1 - - - (27) 1
Machinery,
Energy &
Transportation $ 8,885 $ 3,000 $ 213 $ 96 $ - $ 12,194 $ 3,309 37%
Financial
Products Segment $ 742 $ - $ - $ - $ 41 $ 783 $ 41 6%
Corporate Items
and Eliminations (53) - - - (28) (81) (28)
Financial Products
Revenues $ 689 $ - $ - $ - $ 13 $ 702 $ 13 2%
Consolidated
Sales
and Revenues $ 9,574 $ 3,000 $ 213 $ 96 $ 13 $ 12,896 $ 3,322 35%
Profit (Loss) by Segment
Fourth Fourth $ %
(Millions of dollars) Quarter 2017 Quarter 2016 Change Change
Construction Industries $ 838 $ 334 $ 504 151%
Resource Industries 209 (711) 920 n/a
Energy & Transportation 881 638 243 38%
All Other Segments (16) (34) 18 53%
Corporate Items and Eliminations (821) (1,572) 751
Machinery, Energy & Transportation $ 1,091 $ (1,345) $ 2,436 n/a
Financial Products Segment $ 233 $ 149 $ 84 56%
Corporate Items and Eliminations (77) (9) (68)
Financial Products $ 156 $ 140 $ 16 11%
Consolidating Adjustments (86) (57) (29)
Consolidated Operating Profit (Loss) $ 1,161 $ (1,262) $ 2,423 n/a
CONSTRUCTION INDUSTRIES
(Millions of dollars)
Segment Sales
Fourth Fourth
Quarter Sales Price Quarter $ %
2016 Volume Realization Currency 2017 Change Change
Sales[1] $3,589 $1,502 $146 $21 $5,258 $1,669 47%
Sales by Geographic
Region
Fourth Fourth
Quarter Quarter $ %
2017 2016 Change Change
North America $2,346 $1,569 $777 50%
Latin America 392 264 128 48%
EAME 976 624 352 56%
Asia/Pacific 1,544 1,132 412 36%
Total[1] $5,258 $3,589 $1,669 47%
Segment Profit
Fourth Fourth
Quarter Quarter $ %
2017 2016 Change Change
Segment Profit $838 $334 $504 151%
[1] Does not include inter-segment sales of $37 million and $31 million in fourth
quarter 2017 and 2016, respectively.
Construction Industries' sales were $5.258 billion in the fourth quarter of 2017,
compared with $3.589 billion in the
fourth quarter of 2016. The increase was due to higher sales volume
and favorable price realization.
- Sales volume increased primarily due to higher end-user demand
for construction equipment. In addition, there was a favorable
impact from changes in dealer inventories as inventories decreased
more in the fourth quarter of 2016 than in the fourth quarter of
2017.
- Price realization was favorable due to a weak pricing
environment in the fourth quarter of 2016 and previously
implemented price increases.
Sales increased across all regions with the largest increases in
North America and Asia/Pacific.
- In North America, the sales
increase was due to higher end-user demand for construction
equipment, mostly due to oil and gas, residential and
non-residential construction activities. The impact of favorable
changes in dealer inventories, as inventories decreased in the
fourth quarter of 2016 and were about flat in the fourth quarter of
2017, also contributed to increased sales.
- Sales in Asia/Pacific were
higher as a result of an increase in end-user demand, primarily in
China, stemming from increased
building construction and infrastructure investment.
- Sales increased in EAME primarily due to higher end-user demand
for construction equipment, reflecting improved economic conditions
across much of the region. Favorable price realization also
contributed to increased sales.
- Although construction activity remained weak in Latin America, sales were higher as end-user
demand increased from low levels due to stabilizing economic
conditions in several countries in the region.
Construction Industries' profit was $838
million in the fourth quarter of 2017, compared with
$334 million in the fourth quarter of
2016. The increase in profit was primarily due to higher sales
volume, favorable price realization and variable manufacturing
efficiencies, partially offset by unfavorable period costs and
higher material costs, primarily for steel. The increase in period
costs was due to higher short-term incentive compensation expense,
targeted investments and higher manufacturing period costs to
support increased production volumes.
RESOURCE INDUSTRIES
(Millions of dollars)
Segment Sales
Fourth Fourth
Quarter Sales Price Quarter $ %
2016 Volume Realization Currency 2017 Change Change
Sales[1] $1,443 $669 $84 $9 $2,205 $762 53%
Sales by Geographic
Region
Fourth Fourth
Quarter Quarter $ %
2017 2016 Change Change
North America $791 $471 $320 68%
Latin America 384 221 163 74%
EAME 475 297 178 60%
Asia/Pacific 555 454 101 22%
Total[1] $2,205 $1,443 $762 53%
Segment Profit
(Loss)
Fourth Fourth
Quarter Quarter $ %
2017 2016 Change Change
Segment Profit
(Loss) $209 ($711) $920 n/a
[1] Does not include inter-segment sales of $103 million and $87 million in fourth
quarter 2017 and 2016, respectively.
Resource Industries' sales were $2.205
billion in the fourth quarter of 2017, an increase of
$762 million from the fourth quarter
of 2016. The increase was primarily due to higher end-user demand
for equipment and aftermarket parts in all regions, favorable
impact of changes in dealer inventories and favorable price
realization. Dealer deliveries for new equipment increased
significantly. Positive commodity price trends in 2017 drove
improved market conditions and financial health of mining
companies. After several years of low investment, miners began to
increase capital expenditures, reflecting more confidence in their
end markets. Dealer inventories increased slightly in the fourth
quarter of 2017, compared with a slight decrease in the fourth
quarter of 2016.
Resource Industries' profit was $209
million in the fourth quarter of 2017, compared with a loss
of $711 million in the fourth quarter
of 2016. The improvement was primarily due to the absence of a
goodwill impairment charge of $595
million in the fourth quarter of 2016. Higher sales volume
and favorable price realization also contributed to increased
profit.
ENERGY & TRANSPORTATION
(Millions of dollars)
Segment Sales
Fourth Fourth
Quarter Sales Price Quarter $ %
2016 Volume Realization Currency 2017 Change Change
Sales[1] $3,849 $808 ($17) $66 $4,706 $857 22%
Sales by Geographic
Region
Fourth Fourth
Quarter Quarter $ %
2017 2016 Change Change
North America $2,327 $1,722 $605 35%
Latin America 374 347 27 8%
EAME 1,286 1,063 223 21%
Asia/Pacific 719 717 2 0%
Total[1] $4,706 $3,849 $857 22%
Segment Profit
Fourth Fourth
Quarter Quarter $ %
2017 2016 Change Change
Segment Profit $881 $638 $243 38%
[1] Does not include inter-segment sales of $934 million and $621 million in fourth quarter 2017 and 2016, respectively.
Energy & Transportation's sales were $4.706 billion in the fourth quarter of 2017,
compared with $3.849 billion in the
fourth quarter of 2016. The increase was primarily due to higher
sales volume across all applications.
- Oil and Gas - Sales increased primarily due to higher
demand for equipment used in gas compression and well servicing
applications in North
America.
- Transportation - Sales were higher in North America for rail services, driven by
increased rail traffic, and due to additional deliveries of freight
locomotives.
- Industrial - Sales were higher primarily in EAME due to
increased demand for equipment used in electric power and
agricultural end-user applications and aftermarket parts.
- Power Generation - Sales increased in EAME primarily due
to the timing of projects.
Energy & Transportation's profit was $881 million in the fourth quarter of 2017,
compared with $638 million in the
fourth quarter of 2016. The increase was primarily due to higher
sales volume, partially offset by higher period costs. The increase
in period costs was primarily due to higher short-term incentive
compensation expense, costs associated with higher production and
targeted investments.
FINANCIAL PRODUCTS SEGMENT
(Millions of dollars)
Revenues by Geographic Region
Fourth Fourth $ %
Quarter 2017 Quarter 2016 Change Change
North America $505 $464 $41 9 %
Latin America 80 83 (3) (4)%
EAME 107 99 8 8%
Asia/Pacific 91 96 (5) (5)%
Total $783 $742 $41 6%
Segment Profit
Fourth Fourth $ %
Quarter 2017 Quarter 2016 Change Change
Segment Profit $233 $149 $84 56%
Financial Products' segment revenues were $783 million in the fourth quarter of 2017, an
increase of $41 million, or 6
percent, from the fourth quarter of 2016. The increase was
primarily due to higher average financing rates in North America, higher average earning
assets in EAME and Asia/Pacific and a favorable impact from
intercompany lending activity in North
America. These favorable impacts were partially offset by
lower average financing rates in Asia/Pacific.
Financial Products' segment profit was $233 million in the fourth quarter of 2017,
compared with $149 million in the
fourth quarter of 2016. The increase was primarily due to higher
gains on sales of securities at Insurance Services and an increase
in net yield on average earning assets.
At the end of 2017, past dues at Cat Financial were 2.78
percent, compared with 2.38 percent at the end of 2016. Write-offs,
net of recoveries, were $114 million
for the full year of 2017, compared with $123 million for the full year of 2016.
As of December 31, 2017, Cat
Financial's allowance for credit losses totaled $365 million, or 1.33 percent of finance
receivables, compared with $343
million, or 1.29 percent of finance receivables at year-end
2016.
Corporate Items and Eliminations
Expense for corporate items and eliminations was $898 million in the fourth quarter of 2017, a
decrease of $683 million from the
fourth quarter of 2016. Corporate items and eliminations include:
restructuring costs; corporate-level expenses; 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 decrease in expense was primarily due to the favorable
impact of lower mark-to-market losses related to pension and OPEB
plans and lower restructuring costs, partially offset by
methodology differences and higher short-term incentive
compensation expense. Mark-to-market losses in the fourth quarter
of 2017 were $301 million, compared
to mark-to-market losses of $985
million in the fourth quarter of 2016.
QUESTIONS AND ANSWERS
Q1: Can you provide more information on the significant items impacting 2017 and 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.
- Restructuring Costs - In recent years, we have incurred
substantial restructuring costs to achieve a flexible and
competitive cost structure. During 2017, we incurred $1.256
billion of restructuring costs with about half related to the
closure of the facility in Gosselies, Belgium. During 2016, we
incurred $1.019 billion of restructuring costs.
- Mark-to-Market Losses - Effective January 1, 2016, we made a
change in accounting principle related to our pension and OPEB
plans. Under this 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 2017, the mark-to-market adjustment was a net loss of $301
million, primarily due to lower interest rates and a change in
mortality assumptions, partially offset by better than
expected returns on plan assets. For 2016, the mark-to-market
adjustment was a net loss of $985 million, primarily due to
lower interest rates.
- State Deferred Tax Valuation Allowance - Based on improved
profits in the United States, we reduced the valuation
allowance against U.S. state deferred tax assets during the
fourth quarter of 2017, resulting in a non-cash benefit of
$111 million, net of U.S. federal tax at 35 percent. During
the fourth quarter of 2016, the valuation allowance against
U.S. state deferred tax assets was increased, resulting in a
$141 million non-cash charge, net of U.S. federal tax at 35
percent.
- Goodwill Impairment Charge - During the fourth quarter of
2016, we recognized a goodwill impairment charge of $595
million related to Resource Industries. No goodwill impairment
charges were recognized during 2017.
- U.S. Tax Reform - The fourth-quarter 2017 provision for income
taxes includes a charge of $2.371 billion due to the enactment
of U.S. tax reform legislation on December 22, 2017. The
provisionally estimated charge includes a $596 million
write-down of net deferred tax assets to reflect the reduction
in the U.S. corporate tax rate from 35 percent to 21 percent,
beginning January 1, 2018, with the remainder primarily
related to the cost of a mandatory deemed repatriation of
non-U.S. earnings. Management believes this charge is a
reasonable estimate, as of January 18, 2018, that may change
as additional required information is prepared and analyzed,
interpretations and assumptions are refined, additional
guidance is issued, and due to actions we may take as a result
of the legislation.
To help improve the understanding of results for the quarter and the year, the
following tables show the impact of these items:
Fourth Quarter 2017 Fourth Quarter 2016
($ in millions except Profit Before Profit (Loss) Profit (Loss) Profit (Loss)
per share data) Taxes per Share* Before Taxes per Share*
Profit (Loss) $1,111 ($2.18) ($1,348) ($2.00)
Restructuring Costs $245 $0.31 $395 $0.45
Mark-to-Market Losses $301 $0.26 $985 $1.14
State Deferred Tax Valuation
Allowance ($0.18) $0.24
U.S. Tax Reform Impact $3.91
Goodwill Impairment Charge $595 $0.98
Adjusted Profit $1,657 $2.16 $627 $0.83
Full Year 2017 Full Year 2016
($ in millions except Profit Before Profit (Loss) Profit (Loss) Profit (Loss)
per share data) Taxes per Share* Before Taxes per Share*
Profit (Loss) $4,082 $1.26 $139 ($0.11)
Restructuring Costs $1,256 $1.68 $1,019 $1.16
Mark-to-Market Losses $301 $0.26 $985 $1.15
State Deferred Tax Valuation
Allowance ($0.18) $0.24
Gain on Sale of Equity Investment ($85) ($0.09)
U.S. Tax Reform Impact $3.95
Goodwill Impairment Charge $595 $0.98
Adjusted Profit $5,554 $6.88 $2,738 $3.42
*Per share amounts computed using fully diluted shares outstanding except for
consolidated loss per share, which was computed using basic shares outstanding
Q2: Will new U.S. GAAP accounting rules effective in 2018 have an impact on your
financial statements?
A: We will be adopting several new accounting rules in 2018, including the
following:
- Revenue Recognition - We have completed our
evaluation of the new accounting standard on revenue
recognition and do not expect the impact will be
material. We will adopt the standard using the
modified retrospective approach, with no change to
prior year financial statements.
- Equity Securities - Our investments in equity
securities, primarily held by Insurance Services,
will be measured at fair value through earnings.
Previously, the fair value adjustments for these
securities were reported in equity until the
securities were sold or an impairment was
recognized. We will adopt the standard using the
modified retrospective approach, with no change to
prior year financial statements. At December 31,
2017, the fair value of our equity securities
impacted by this accounting change was approximately
$450 million.
- Pension and OPEB Costs - Components of pension and
OPEB costs, other than service costs, will be
reclassified from operating costs to other
income/expense. This change will be made
retroactively to all periods presented. In 2017,
these costs included a net credit of approximately
$275 million related to ongoing costs and a charge
of $301 million for the year-end mark-to-market
- adjustment.
Q3: Can you discuss changes in dealer inventories during 2017?
A: Changes in dealer inventories had a positive impact on sales from the fourth
quarter of 2016 to the fourth quarter of 2017. Dealer machine and engine
inventories were about flat in the fourth quarter of 2017, compared with a
decrease of about $800 million in the fourth quarter of 2016. For the full year
of 2017, dealer inventories increased about $100 million, compared with a
decrease of about $1.6 billion for the full year of 2016.
Q4: Can you discuss changes to your order backlog by segment?
A: At the end of the fourth quarter of 2017, the order backlog was about $15.8
billion, an increase of about $400 million from the end of the third quarter of
2017. The increase was in Resource Industries, partially offset by a decline in
Energy & Transportation. Construction Industries' order backlog was about flat.
Compared with the fourth quarter of 2016, the order backlog increased about $3.7
billion. The increase was across all segments, most significantly in Resource
Industries and Construction Industries.
Q5: Can you comment on expense related to your 2017 short-term incentive compensation
plans?
A: Short-term incentive compensation expense is directly related to financial and
operational performance, measured against targets set annually. Fourth-quarter
2017 expense was about $350 million, compared to fourth-quarter 2016 expense of
about $50 million. Full-year 2017 expense was about $1.4 billion, compared to
full-year 2016 expense of about $250 million.
Q6: Full-year 2017 sales and revenues were up 18 percent, and the fourth quarter of
2017 was up 35 percent. Is this significant ramp in demand impacting availability
and how is the company responding?
A: The sharp increase in demand in 2017, which followed four years of declining
sales, led to ramp-up challenges for certain products due to supplier
constraints. During 2017, the company worked with our global suppliers to respond
to significant increases in demand. Despite improvements in material flows in the
second half of 2017, parts and components constraints remain across some
products, which could impact the company's growth potential in 2018 as we
continue to ramp up our global suppliers.
Q7: Can you comment on your balance sheet and cash priorities?
A: The ME&T debt-to-capital ratio was 36.7 percent at the end of 2017, compared with
41.0 percent at the end of 2016. The improvement was primarily due to lower debt
of $1.2 billion, which included the early debt retirement of about $900 million
due in December 2018.
Our cash and liquidity positions remain strong with an enterprise cash balance of
$8.3 billion as of year-end 2017. ME&T operating cash flow for the full year of
2017 was $5.5 billion, compared with $3.9 billion in 2016. The increase was
primarily due to higher profit offset partially by working capital impacts
including increases in inventory during 2017. During the year, ME&T capital
expenditures totaled $916 million. Funding for defined benefit pension plans was
about $1.4 billion, including a $1.0 billion discretionary U.S. contribution
completed in December 2017.
Our priorities for cash deployment have not changed. While 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 is focused on the
following priorities. Our top priority is to maintain a strong financial position
in support of a Mid-A rating. Next, we intend to fund operational requirements
and commitments. Then, we intend to fund priorities that profitably grow the
company and return capital to shareholders through dividend growth and share
repurchases.
GLOSSARY OF TERMS
1. Adjusted Profit Per Share - Profit per share
excluding restructuring costs and pension and OPEB mark-to-market
losses for 2017 and 2016. For 2017, adjusted profit per share also
excludes a gain on the sale of an equity investment in IronPlanet
recognized in the second quarter, as well as state deferred tax
valuation allowance reversal and the impact of the U.S. tax reform
in the fourth quarter. For 2016, adjusted profit per share also
excludes a goodwill impairment charge and state deferred tax
valuation allowance recognized in the fourth quarter.
2. All Other Segments - Primarily includes
activities such as: business strategy, product management and
development, and manufacturing of filters and fluids,
undercarriage, tires and rims, ground engaging tools, fluid
transfer products, precision seals, and rubber sealing and
connecting components primarily for Cat® 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.
3. Consolidating Adjustments - Elimination of
transactions between Machinery, Energy & Transportation and
Financial Products.
4. 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,
compact track loaders, multi-terrain loaders, mini excavators,
compact wheel loaders, telehandlers, select work tools, small,
medium and large track excavators, wheel excavators, medium wheel
loaders, medium track-type tractors, track-type loaders, motor
graders, pipelayers, forestry and paving products and related
parts.
5. 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 only includes the impact on sales and operating profit for
the Machinery, Energy & Transportation lines of business
excluding restructuring costs; 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).
6. 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
shareholders' equity. Debt also includes Machinery, Energy &
Transportation's long-term borrowings from Financial Products.
7. EAME - A geographic region including Europe, Africa, the Middle
East and the Commonwealth of Independent States (CIS).
8. Earning Assets - Assets consisting primarily of
total finance receivables net of unearned income, plus equipment on
operating leases, less accumulated depreciation at Cat
Financial.
9. 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.
10. Financial Products Segment - Provides financing
alternatives to customers and dealers around the world for
Caterpillar products, as well as financing for vehicles, power
generation facilities and marine vessels that, in most cases,
incorporate Caterpillar products. Financing plans include operating
and finance leases, installment sale contracts, working capital
loans and wholesale financing plans. The segment also provides
insurance and risk management products and services that help
customers and dealers manage their business risk. Insurance and
risk management products offered include physical damage insurance,
inventory protection plans, extended service coverage for machines
and engines, and dealer property and casualty insurance. The
various forms of financing, insurance and risk management products
offered to customers and dealers 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.
11. Latin America - A geographic region including
Central and South American countries and Mexico.
12. 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.
13. 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.
14. Mark-to-market (MTM) gains/losses - Represents
the net gain or loss of actual results differing from our
assumptions and the effects of changing assumptions for our defined
benefit pension and OPEB plans. 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.
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 and exit-related costs that are included in restructuring
costs (see definition below). 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 finance 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 and aggregates, 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, rotary drills,
large wheel loaders, off-highway trucks, articulated trucks, wheel
tractor scrapers, wheel dozers, landfill compactors, soil
compactors, hard rock continuous mining systems, select work tools,
machinery components, electronics and control systems and related
parts. In addition to equipment, Resource Industries also develops
and sells technology products and services 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, as well as
global procurement.
19. Restructuring Costs - Primarily costs for
employee separation, 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 accelerated depreciation, inventory write-downs,
equipment relocation and project management costs and also LIFO
inventory decrement benefits from inventory liquidations at closed
facilities (primarily included in Cost of goods sold).
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. The impact
of sales volume on segment profit includes inter-segment sales.
21. 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 the non-GAAP
financial measures used in this report. 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 as a substitute
for the related GAAP measures.
Adjusted Profit
Caterpillar believes it is important to separately quantify the
profit impact of several significant items in order for the
company's results to be meaningful to 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)
state deferred tax valuation allowance (reversal), (iv) a gain on
the sale of an equity investment, (v) U.S. tax reform impact and
(vi) goodwill impairment charges. Caterpillar does not consider
these items indicative of earnings from ongoing business activities
and believes the non-GAAP measures will provide useful perspective
on underlying business results and trends, and a means to assess
period-over-period results.
Reconciliations of adjusted profit before taxes to the most
directly comparable GAAP measure, consolidated profit (loss) before
taxes, are as follows:
Fourth Quarter Full Year
(millions of dollars) 2016 2017 2016 2017
Profit (Loss) before taxes ($1,348) $1,111 $139 $4,082
Restructuring costs $395 $245 $1,019 $1,256
Mark-to-market losses $985 $301 $985 $301
Gain on sale of equity investment - - - ($85)
Goodwill impairment $595 - $595 -
Adjusted profit before taxes $627 $1,657 $2,738 $5,554
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
2016 2017 2016 2017 2018
Profit (Loss) per
share ($2.00) ($2.18) ($0.11) $1.26 $7.75-$8.75
Per share
restructuring
costs[1] $0.45 $0.31 $1.16 $1.68 $0.50
Per share
mark-to-market
losses[2] $1.14 $0.26 $1.15 $0.26 -
Per share state
deferred tax
valuation
allowance
(reversal)[3] $0.24 ($0.18) $0.24 ($0.18) -
Per share gain on
sale of equity
investment[2] - - - ($0.09) -
Per share U.S.
tax reform impact - $3.91 - $3.95 -
Per share
goodwill
impairment[4] $0.98 - $0.98 - -
Adjusted profit
per share $0.83 $2.16 $3.42 $6.88 $8.25-$9.25
Per share amounts computed using fully diluted shares outstanding except for
consolidated loss per share, which was computed using basic shares
outstanding.
[1] At statutory tax rates. 2016 and 2017 are prior to consideration of U.S.
tax reform. Full year 2017 also includes $15 million increase to prior year
taxes related to non-U.S. restructuring costs.
[2] At statutory tax rates prior to consideration of U.S. tax reform.
[3] Net of U.S. federal tax at 35 percent.
[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 Caterpillar 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. The company also believes this
presentation will assist readers in understanding Caterpillar's
business. Pages 21-29 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:
www.caterpillar.com/en/investors.html
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,
2017 2016 2017 2016
Sales and revenues:
Sales of Machinery, Energy &
Transportation $ 12,194 $ 8,885 $ 42,676 $ 35,773
Revenues of Financial Products 702 689 2,786 2,764
Total sales and revenues 12,896 9,574 45,462 38,537
Operating costs:
Cost of goods sold 8,889 7,541 31,049 28,309
Selling, general and
administrative expenses 1,606 1,483 5,177 4,686
Research and development
expenses 579 522 1,905 1,951
Interest expense of Financial
Products 162 149 646 596
Goodwill impairment charge - 595 - 595
Other operating (income)
expenses 499 546 2,279 1,902
Total operating costs 11,735 10,836 41,056 38,039
Operating profit (loss) 1,161 (1,262) 4,406 498
Interest expense excluding
Financial Products 169 120 531 505
Other income (expense) 119 34 207 146
Consolidated profit (loss)
before taxes 1,111 (1,348) 4,082 139
Provision (benefit) for income
taxes 2,418 (180) 3,339 192
Profit (loss) of consolidated
companies (1,307) (1,168) 743 (53)
Equity in profit (loss) of
unconsolidated affiliated
companies 8 1 16 (6)
Profit (loss) of consolidated
and affiliated
companies (1,299) (1,167) 759 (59)
Less: Profit (loss) attributable to
noncontrolling interests - 4 5 8
Profit (loss) [1] $ (1,299) $ (1,171) $ 754 $ (67)
Profit (loss) per common share $ (2.18) $ (2.00) $ 1.27 $ (0.11)
Profit (loss) per common
share - diluted [2],[3] $ (2.18) $ (2.00) $ 1.26 $ (0.11)
Weighted-average common shares
outstanding (millions)
- Basic 596.4 585.8 591.8 584.3
- Diluted 2,3 596.4 585.8 599.3 584.3
Cash dividends declared per
common share $ 1.56 $ 1.54 $ 3.11 $ 3.08
1 Profit (loss) attributable to common shareholders.
Diluted by assumed exercise of stock-based compensation awards using the
2 treasury stock method.
In the three months ended December 31, 2017 and 2016 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
3 antidilutive.
Caterpillar Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
December 31, December 31,
2017 2016
Assets
Current assets:
Cash and
short-term
investments $ 8,261 $ 7,168
Receivables -
trade and other 7,436 5,981
Receivables -
finance 8,757 8,522
Prepaid
expenses and
other current
assets 1,772 1,682
Inventories 10,018 8,614
Total current assets 36,244 31,967
Property, plant and
equipment - net 14,155 15,322
Long-term receivables
- trade and other 990 1,029
Long-term receivables
- finance 13,542 13,556
Noncurrent deferred
and refundable income
taxes 1,693 2,790
Intangible assets 2,111 2,349
Goodwill 6,200 6,020
Other assets 2,027 1,671
Total assets $ 76,962 $ 74,704
Liabilities
Current liabilities:
Short-term
borrowings:
--
Machinery
Energy &
Transportation $ 1 $ 209
--
Financial
Products 4,836 7,094
Accounts
payable 6,487 4,614
Accrued
expenses 3,220 3,003
Accrued wages,
salaries and
employee
benefits 2,559 1,296
Customer
advances 1,193 1,167
Dividends
payable 466 452
Other current
liabilities 1,975 1,635
Long-term debt
due within one
year:
--
Machinery
Energy &
Transportation 6 507
--
Financial
Products 6,188 6,155
Total current
liabilities 26,931 26,132
Long-term debt due
after one year:
--
Machinery
Energy &
Transportation 7,929 8,436
--
Financial
Products 15,918 14,382
Liability for
postemployment
benefits 8,365 9,357
Other liabilities 4,053 3,184
Total liabilities 63,196 61,491
Shareholders' equity
Common stock 5,593 5,277
Treasury stock (17,005) (17,478)
Profit employed in
the business 26,301 27,377
Accumulated other
comprehensive income
(loss) (1,192) (2,039)
Noncontrolling
interests 69 76
Total shareholders' equity 13,766 13,213
Total liabilities and
shareholders' equity $ 76,962 $ 74,704
Caterpillar Inc.
Condensed Consolidated Statement of Cash Flow
(Unaudited)
(Millions of dollars)
Twelve Months Ended
December 31,
2017 2016
Cash flow from operating
activities:
Profit (loss) of
consolidated and
affiliated companies $ 759 $ (59)
Adjustments for non-cash
items:
Depreciation
and
amortization 2,877 3,034
Actuarial
(gain) loss
on pension
and
postretirement
benefits 301 985
Provision
(benefit) for
deferred
income taxes 1,213 (431)
Goodwill
impairment
charge - 595
Other 746 856
Changes in assets and
liabilities, net of
acquisitions and
divestitures:
Receivables -
trade and
other (1,151) 829
Inventories (1,295) 1,109
Accounts
payable 1,478 (200)
Accrued
expenses 175 (201)
Accrued
wages,
salaries and
employee
benefits 1,187 (708)
Customer
advances (69) (37)
Other assets
- net (192) 224
Other
liabilities -
net (327) (360)
Net cash provided by (used
for) operating activities 5,702 5,636
Cash flow from investing
activities:
Capital expenditures -
excluding equipment
leased to others (898) (1,109)
Expenditures for
equipment leased to
others (1,438) (1,819)
Proceeds from disposals
of leased assets and
property, plant and
equipment 1,164 899
Additions to finance
receivables (11,953) (9,339)
Collections of finance
receivables 12,018 9,369
Proceeds from sale of
finance receivables 127 127
Investments and
acquisitions (net of
cash acquired) (59) (191)
Proceeds from sale of
businesses and
investments (net of cash
sold) 100 -
Proceeds from sale of
securities 932 694
Investments in
securities (1,048) (391)
Other - net 61 -
Net cash provided by (used
for) investing activities (994) (1,760)
Cash flow from financing
activities:
Dividends paid (1,831) (1,799)
Common stock issued,
including treasury
shares reissued 566 (23)
Treasury shares
purchased - -
Proceeds from debt
issued (original
maturities greater than
three months) 9,063 5,115
Payments on debt
(original maturities
greater than three
months) (8,384) (6,565)
Short-term borrowings -
net (original maturities
three months or less) (3,058) 140
Other - net (9) (8)
Net cash provided by (used
for) financing activities (3,653) (3,140)
Effect of exchange rate
changes on cash 38 (28)
Increase (decrease) in cash
and short-term investments 1,093 708
Cash and short-term
investments at beginning of
period 7,168 6,460
Cash and short-term
investments at end of period $ 8,261 $ 7,168
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, 2017
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Sales and
revenues:
Sales of
Machinery,
Energy &
Transportation $ 12,194 $ 12,194 $ - $ -
Revenues of
Financial Products 702 - 804 (102) [2]
Total sales
and revenues 12,896 12,194 804 (102)
Operating costs:
Cost of goods
sold 8,889 8,890 - (1) [3]
Selling
general and
administrative
expenses 1,606 1,444 166 (4) [3]
Research
and development
expenses 579 579 - -
Interest
expense of
Financial
Products 162 - 168 (6) [4]
Other operating
(income)
expenses 499 190 314 (5) [3]
Total operating
costs 11,735 11,103 648 (16)
Operating
profit 1,161 1,091 156 (86)
Interest expense
excluding
Financial
Products 169 189 - (20) [4]
Other income
(expense) 119 (6) 59 66 [5]
Consolidated
profit before
taxes 1,111 896 215 -
Provision
(benefit)
for income
taxes 2,418 2,567 (149) -
Profit
(loss) of
consolidated
companies (1,307) (1,671) 364 -
Equity in
profit
(loss) of
unconsolidated
affiliated
companies 8 8 - -
Equity in
profit of
Financial
Products'
subsidiaries - 361 - (361) [6]
Profit (loss)
of consolidated
and affiliated
companies (1,299) (1,302) 364 (361)
Less: Profit
(loss)
attributable to
noncontrolling
interests - (3) 3 -
Profit(loss) [7] $ (1,299) $ (1,299) $ 361 $ (361)
[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.
[5] Elimination of discount recorded by Machinery, Energy & Transportation on
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 (loss) attributable to common shareholders.
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 &
Transportation $ 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 administrative
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
consolidated
companies (1,168) (1,271) 103 -
Equity in profit
(loss) of
unconsolidated
affiliated
companies 1 1 - -
Equity in profit of
Financial
Products'
subsidiaries - 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)
[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.
[5] Elimination of discount recorded by Machinery, Energy & Transportation on
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 (loss) attributable to common shareholders.
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Twelve Months Ended December 31, 2017
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation [1] Products Adjustments
Sales and
revenues:
Sales of Machinery,
Energy & Transportation $ 42,676 $ 42,676 $ - $ -
Revenues of
Financial Products 2,786 - 3,167 (381) [2]
Total sales and
revenues 45,462 42,676 3,167 (381)
Operating
costs:
Cost of goods
sold 31,049 31,050 - (1) [3]
Selling, general
and administrative
expenses 5,177 4,589 604 (16) [3]
Research and
development
expenses 1,905 1,905 - -
Interest expense
of
Financial
Products 646 - 667 (21) [4]
Other operating
(income)
expenses 2,279 1,080 1,220 (21) [3]
Total
operating costs 41,056 38,624 2,491 (59)
Operating profit 4,406 4,052 676 (322)
Interest expense
excluding
Financial
Products 531 622 - (91) [4]
Other income
(expense) 207 (116) 92 231 [5]
Consolidated
profit before taxes 4,082 3,314 768 -
Provision (benefit)
for income taxes 3,339 3,317 22 -
Profit (loss) of
consolidated
companies 743 (3) 746 -
Equity in
profit
(loss) of
unconsolidated
affiliated
companies 16 16 - -
Equity in
profit of
Financial
Products' subsidiaries - 738 - (738) [6]
Profit of consolidated
and affiliated
companies 759 751 746 (738)
Less: Profit
(loss)
attributable to
noncontrolling
interests 5 (3) 8 -
Profit [7] $ 754 $ 754 $ 738 $ (738)
[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.
[5] Elimination of discount recorded by Machinery, Energy & Transportation on
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 shareholders.
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 &
Transportation $ 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 administrative
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
consolidated companies (53) (529) 476 -
Equity in profit
(loss) of
unconsolidated
affiliated
companies (6) (6) - -
Equity in profit of
Financial
Products'
subsidiaries - 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)
[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.
[5] Elimination of discount recorded by Machinery, Energy & Transportation on
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 (loss) attributable to common shareholders.
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Twelve Months Ended December 31, 2017
(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 $ 759 $ 751 $ 746 $ (738) [2]
Adjustments for
non-cash items:
Depreciation
and
amortization 2,877 2,016 861 -
Undistributed
profit of
Financial
Products - (13) - 13 [3]
Actuarial
(gain) loss
on pension
and
postretiremen
t benefits 301 301 - -
Provision
(benefit) for
deferred
income taxes 1,213 1,500 (285) (2) [4]
Other 746 673 (179) 252 [4]
Changes in assets
and liabilities,
net of acquisitions
and divestitures:
Receivables -
trade and
other (1,151) (649) 90 (592)[4],[5]
Inventories (1,295) (1,282) - (13) [4]
Accounts
payable 1,478 1,588 (85) (25) [4]
Accrued
expenses 175 169 6 -
Accrued
wages,
salaries and
employee
benefits 1,187 1,160 27 -
Customer
advances (69) (69) - -
Other assets
- net (192) (186) 8 (14) [4]
Other
liabilities -
net (327) (500) 157 16 [4]
Net cash provided by
(used for) operating
activities 5,702 5,459 1,346 (1,103)
Cash flow from
investing activities:
Capital
expenditures -
excluding equipment
leased to others (898) (889) (10) 1 [4]
Expenditures for
equipment leased to
others (1,438) (27) (1,443) 32 [4]
Proceeds from
disposals of leased
assets and
property, plant and
equipment 1,164 192 987 (15) [4]
Additions to
finance receivables (11,953) - (13,920) 1,967 [5]
Collections of
finance receivables 12,018 - 14,357 (2,339) [5]
Net intercompany
purchased
receivables - - (732) 732 [5]
Proceeds from sale
of finance
receivables 127 - 127 -
Net intercompany
borrowings - 21 - (21) [6]
Investments and
acquisitions (net
of cash acquired) (59) (59) - -
Proceeds from sale
of businesses and
investments (net of
cash sold) 100 100 - -
Proceeds from sale
of securities 932 79 853 -
Investments in
securities (1,048) (198) (850) -
Other - net 61 21 40 -
Net cash provided by
(used for) investing
activities (994) (760) (591) 357
Cash flow from
financing activities:
Dividends paid (1,831) (1,831) (725) 725 [7]
Common stock
issued, including
treasury shares
reissued 566 566 - -
Net intercompany
borrowings - - (21) 21 [6]
Proceeds from debt
issued (original
maturities greater
than three months) 9,063 361 8,702 -
Payments on debt
(original
maturities greater
than three months) (8,384) (1,465) (6,919) -
Short-term
borrowings - net
(original
maturities three
months or less) (3,058) (204) (2,854) -
Other - net (9) (9) - -
Net cash provided by
(used for) financing
activities (3,653) (2,582) (1,817) 746
Effect of exchange
rate changes on cash 38 7 31 -
Increase (decrease) in
cash and short-term
investments 1,093 2,124 (1,031) -
Cash and short-term
investments at
beginning of period 7,168 5,257 1,911 -
Cash and short-term
investments at end of
period $ 8,261 $ 7,381 $ 880 $ -
[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.
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
postretirement 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 (360) (411) 44 7 [4]
Net cash provided by
(used for) operating
activities 5,636 3,885 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 intercompan 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]
Common stock issued,
including treasury shares
reissued (23) (23) 7 (7) [8]
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) -
Other - net (8) (8) - -
Net cash provided by
(used for) financing
activities (3,140) (2,157) (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 $ -
[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 Financial Products' dividend to Machinery, Energy &
Transportation in excess of Financial Products' profit.
[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 change in investment and common stock related to Financial
Products.
CONTACT: Corrie Scott, 224-551-4133
(Office), 808-351-3865 (Mobile) or Scott_Corrie@cat.com
This is a disclosure announcement from PR Newswire.