1st Quarter Results
Caterpillar Inc
16 April 2002
Letter to RNS
Please find Caterpillar's financial results press release for the period
indicated. Copies of the release are available to the public at the following
address:
Cazenove & Co.
12 Tokenhouse Yard
London EC2R 7AN
ENGLAND
Please note that quarterly and year-to-date results (except for December 31
consolidated) are not audited by an independent accounting firm. December 31
consolidated data has been audited by an independent accounting firm.
Letter from Caterpillar Inc
Caterpillar achieves profit of 23 cents per share:
reaffirms sales and revenues, profit forecast for full year
PEORIA, Ill. - - Caterpillar Inc. (NYSE: CAT) today reported first-quarter 2002
sales and revenues of $4.41 billion and profit of $80 million or 23 cents per
share.
'These results are in line with our expectations for a slower first half of the
year and demonstrate our ability to perform well, even when many of the major
industries we serve continue to be depressed,' said Caterpillar Chairman and CEO
Glen Barton. 'The diversity of our products and services allowed us to achieve
solid profitability despite a significant drop in sales to the electric power
generation and coal mining sectors.'
Sales and revenues of $4.41 billion compared with $4.81 billion in the first
quarter of 2001. Sales for the quarter were higher in Asia/Pacific and Latin
America, partially offsetting declines in North America and Europe, Africa and
the Middle East. North American truck and bus engine sales rebounded
substantially from low levels, helping offset declines in mining, general
construction and electric power generation. Caterpillar's Financial Products
Division continued its strong performance.
Profit was $80 million or 23 cents per share compared with $162 million or 47
cents per share in the first quarter 2001. Company profit declined primarily
because of lower sales of larger machines and engines and related manufacturing
inefficiencies.
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'We remain confident that sales and revenues will be about the same as last
year, aided by improving global business conditions in the second half of the
year,' Barton said. 'We expect profit to be up slightly for the full year,
reflecting continued efforts to aggressively improve our cost structure, aided
by the global success of 6 Sigma projects. In addition, the diversity of our
products and services, our worldwide presence, and low dealer inventory levels
put us in an excellent position to perform well once the economic recovery takes
hold.'
For more than 75 years, Caterpillar has been building the world's infrastructure
and, in partnership with our independent dealers, is driving positive and
sustainable change on every continent. Caterpillar is the world's largest maker
of construction and mining equipment, diesel and natural gas engines and
industrial gas turbines. The company is a technology leader in construction,
transportation, mining, forestry, energy, logistics, financing and electric
power generation. More information is available at http://www.CAT.com/.
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DETAILED ANALYSIS
FIRST-QUARTER 2002 COMPARED WITH FIRST-QUARTER 2001
First-quarter 2002 sales and revenues were $4.41 billion with profit of $80
million or 23 cents per share. This compares with sales and revenues of $4.81
billion and profit of $162 million or 47 cents per share in the first quarter
2001.
MACHINERY AND ENGINES
Sales
North Latin Asia/
(Millions of dollars) Total America EAME* America Pacific
First-Quarter 2002
Machinery $2,671 $1,479 $663 $219 $310
Engines ** 1,373 614 418 146 195
$4,044 $2,093 $1,081 $365 $505
First-Quarter 2001
Machinery $2,961 $1,673 $823 $191 $274
Engines ** 1,500 844 391 116 149
$4,461 $2,517 $1,214 $307 $423
* Europe, Africa & Middle East and Commonwealth of Independent States
** Does not include internal engine transfers of $309 million and $310 million
in first-quarter 2002 and first-quarter 2001, respectively. Internal engine
transfers are valued at prices comparable to those for unrelated parties.
Machinery sales were $2.67 billion, a decrease of $290 million or 10 percent
from first-quarter 2001. Physical sales volume decreased 11 percent from a year
ago as sales gains in Asia/Pacific and Latin America were more than offset by
lower sales in North America and EAME. Sales in Asia/Pacific and Latin America
were higher compared to first-quarter 2001 due to the impact of changes in
dealer inventory. Sales decreased in North America and EAME due to lower dealer
sales to most industry sectors, especially larger machines into mining, and a
slower pace of seasonal inventory growth by dealers compared to one year ago.
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Engine sales were $1.37 billion, a decline of $127 million or 8 percent from
first-quarter 2001. Physical sales volume declined 7 percent. Higher sales in
EAME, Latin America and Asia/Pacific were more than offset by lower sales in
North America, as dealers reduced inventory reflecting lower industry demand in
electric power generation.
Operating Profit/(Loss)
(Millions of dollars) First-Quarter First-Quarter
2002 2001
Machinery $121 $215
Engines (14) 63
$107 $278
Caterpillar operations are highly integrated; therefore, the company uses a
number of allocations to determine lines of business operating profit.
Machinery operating profit decreased $94 million, or 44 percent from first-
quarter 2001 primarily due to the lower physical sales volume of larger machines
and related manufacturing inefficiencies.
Engine operating profit decreased $77 million from first quarter 2001 primarily
due to the lower physical volume of large reciprocating engines and related
manufacturing inefficiencies, as well as lower price realization due to
competitive pressures in North America.
Interest expense was $9 million lower than a year ago.
Other income/expense was expense of $7 million compared to expense of $48
million last year. The favorable change was mostly due to lower cost of
financing trade receivables and lower foreign exchange losses in the first-
quarter 2002.
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FINANCIAL PRODUCTS
Revenues for the first quarter were $402 million, down $3 million or 1 percent
compared with first-quarter 2001. The favorable impact of the continued
portfolio growth at Caterpillar Financial Services Corporation (Cat Financial)
and an increase in extended service contract premiums at Caterpillar Insurance
Holdings Inc. (Cat Insurance) were more than offset by the impact of generally
lower interest rates on Cat Financial revenues.
Before tax profit was $90 million, up $7 million or 8 percent from the first
quarter a year ago. The increase in profit was due to a better spread on the
portfolio at Cat Financial and higher underwriting income at Cat Insurance. The
increases were partially offset by a higher provision for credit losses at Cat
Financial.
INCOME TAXES
First-quarter tax expense reflects an estimated annual tax rate of 30 percent
for 2002 and 32 percent for 2001.
UNCONSOLIDATED AFFILIATED COMPANIES
The company's share of unconsolidated affiliated companies' results decreased $7
million from first quarter a year ago, primarily due to losses at Caterpillar
Claas America.
OUTLOOK
We expect full-year 2002 sales and revenues to be about flat with 2001. Full-
year profit is projected to be up slightly in 2002, excluding nonrecurring
charges recorded in 2001 for the sale of the Challenger agricultural tractor
line, plant closing and consolidations and costs for planned employment
reductions. (Complete outlook begins on page 9).
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SUPPLEMENTAL INFORMATION
Dealer Machine Sales to End Users and Deliveries to Dealer Rental Operations
Worldwide dealer machine sales (including both sales to end users and deliveries
to dealer rental operations) in the first-quarter 2002 were lower than a year
ago. Sales declined in North America, EAME and Latin America. Sales in
Asia/Pacific remained near year-earlier levels.
In North America, higher sales to the waste sector and unchanged sales to the
industrial and forestry sectors were more than offset by declines into general
construction, heavy construction, quarry & aggregates, agriculture and mining.
Sales declined in EAME due to lower demand from the mining, general
construction, agriculture, waste, forestry and industrial sectors. Sales into
quarry & aggregates and heavy construction were flat.
In Asia/Pacific, higher sales into heavy construction, general construction,
waste, industrial and agriculture offset lower sales into mining, quarry &
aggregates and forestry.
In Latin America, sales increases to the forestry and industrial sectors were
more than offset by lower sales into mining, general construction, heavy
construction, agriculture, quarry & aggregates and waste.
Dealer Inventories of New Machines
Worldwide dealer new machine inventories at the end of the first quarter were
lower than a year ago. Declines in North America and EAME more than offset
increases in Latin America, while inventories in Asia/Pacific were flat.
Inventories compared to current selling rates were lower than year-earlier
levels in North America. EAME and Latin America and remained at the same level
as last year in Asia/Pacific.
Engine Sales to End Users and OEMs
Worldwide engine sales to end users and OEMS were flat compared to the first
quarter of 2001. Sales increases in Asia/Pacific and Latin America were offset
by declines in North America and EAME.
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In North America, increased demand for engines used in marine and on-highway
applications was more than offset by weaker demand from the industrial,
petroleum and electric power applications.
In EAME, demand for engines used in petroleum applications rose sharply in the
first quarter of 2002 but overall sales declined as demand for engines used in
industrial, marine and electric power applications weakened compared to first
quarter 2001.
In Asia/Pacific, increases in petroleum applications more than offset reduced
demand in other engine applications.
Robust sales gains occurred in Latin America as Caterpillar dealers shipped
heavily into Brazil to help meet electric power shortages caused by
hydroelectric production shortfalls; in addition, engine demand from petroleum
more than doubled from first quarter last year.
EMPLOYMENT
At the end of first-quarter 2002, Caterpillar's worldwide employment was 71,843
compared with 69,388 one year ago. Acquisitions have added 1,825 since first-
quarter 2001.
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CONDENSED CASH FLOW
Net free cash flow (profit after tax adjusted for depreciation, changes in
working capital and other noncash items, capital expenditures, and dividends)
for Machinery and Engines was negative $335 million through the first quarter of
2002, a decrease of $197 million from 2001. This decrease was primarily due to
lower profit after tax and an increase in working capital.
For the Three Months Ended Machinery &
Consolidated Engines Financial Products
(Millions of dollars)
Mar. 31, Mar. 31, Mar. 31, Mar, 31, Mar. 31, Mar. 31,
2002 2001 2002 2001 2002 2001
Profit after tax $80 $162 $80 $162 $58 $54
Depreciation and amortization 296 289 201 215 95 74
Change in working capital;
and Other (273) (135) (374) (242) 40 72
Capital expenditures excluding
equipment leased to others (152) (156) (145) (152) (7) (4)
Expenditures for equipment
leased to others, net of
disposals (111) (86) 23 (4) (134) (82)
Dividends paid (120) (117) (120) (117) - (5)
Net Free Cash Flow (280) (43) (335) (138) 52 109
Other significant cash flow
items:
Treasury shares purchased - (19) - (19) - -
Net (increase) decrease in
long-term finance receivables (135) (623) - - (135) (623)
Net increase (decrease) in debt 619 1,019 242 123 377 896
Investments and acquisitions -
(net of cash acquired) (262) (378) (15) (95) (247) (283)
Other (40) (43) 23 59 (60) (116)
Change in cash and short-term
Investments $(98) $(87) $(85) $(70) $(13) $(17)
* Represents Caterpillar Inc. and its subsidiaries with Financial Products
accounted for on the equity basis.
Note: 'Change in working capital; and Other' excludes changes in cash, debt and
dividends payable. Also, due to the acquisition and consolidation of new
companies, certain amounts have been removed from 'Change in working capital;
and Other' and 'Capital expenditures excluding equipment leased to others' and
included in 'Investments and acquisitions' or 'Other'.
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OUTLOOK
Summary
World economic growth prospects showed clear signs of improvement in the first
quarter of 2002. Spending and production increased at good rates in North
America as a recovery began in the United States, In addition, a range of
European leading indicators are beginning to signal an economic recovery in
Europe in the second half of 2002. As a result, we continue to anticipate
improving global business conditions in the second half of the year, led
initially by a recovery in North America and followed by a recovery in Europe.
However, even with this growth scenario, most industrial markets are building
from very low levels of capacity utilization. As a result, corporate profits --
and related capital equipment outlays -- are not expected to see meaningful
growth until the second half of 2002.
In this economic environment, worldwide industry opportunity is expected to be
about flat in 2002. Company sales and revenues are also projected to be about
flat. Despite weakness in the first quarter, full-year profit is projected to be
up slightly in 2002, excluding the nonrecurring charges recorded in 2001. The
anticipated profit improvement reflects the company's continuing actions to
reduce costs and improve efficiencies.
North America
In the United States, a solid recovery in the first quarter was supported by
continued good rates of consumer spending (non-autos), strong demand for
housing, further growth in government spending and a pick-up in industrial
production driven by substantially reduced rates of inventory liquidation.
The Canadian economy will benefit from the U.S. recovery, and, similar to the
U.S., consumer spending and housing demand will receive a boost from modest tax
reductions.
While the U.S. economy benefited from a strong recovery in early 2002, equipment
spending in many major industries is not expected to grow materially until the
second half of 2002. Full-year industry sales of construction and industrial
machines are projected to be about flat. Improvement over the course of the year
is expected in general construction and industrial equipment. With the mild
winter, however, coal prices and production have come under downward pressure,
and sales to coal mining are expected to be down.
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Full-year industry engine sales are expected to be flat to up slightly. Slightly
higher sales are expected in most engine sectors to be offset by weaker sales to
petroleum applications. As a result, company sales of machines and engines in
North America are expected to be about flat.
EAME
In EAME, good improvements in leading indicators in early 2002 also point to a
recovery in the second half of 2002. But this is not expected to be strong
enough economic growth to lead to material improvement in the industries
Caterpillar serves until 2003, As a result, company sales in the EAME region are
projected to be about flat.
Asia/Pacific
In Asia/Pacific, business conditions are gradually improving in developing Asia
in response to the U.S. recovery. As a result, equipment spending is moving up
from relatively depressed levels. Japan continues to be a drag on the regional
recovery, and industry sales are projected to be down. Economic growth in China
is expected to remain strong, leading to moderately higher industry sales, and
sales in Australia and India are also expected to be up moderately. Overall
company sales in the region are expected to be flat to up slightly.
Latin America
In Latin America, business conditions in Mexico are expected to improve in
conjunction with the U.S. recovery. In addition, Brazil's economy is showing
signs of improvement and industrial production moved up early in 2002. Latin
American countries are expected to seek additional engines to provide more
stable electric power supplies. Political and economic uncertainty continues in
both Venezuela and Argentina but any associated negative shocks to machine and
engine industry demand is expected to be confined to those countries. Company
sales in the region are expected to be up slightly.
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The information included in the Outlook section is forward looking and involves
risks and uncertainties that could significantly affect expected results. A
discussion of these risks and uncertainties is contained in Form 8-K filed with
the Securities & Exchange Commission (SEC) on April 16, 2002. That filing is
available from the SEC website at http://www.sec.gov/cgi-bin/srch-edgar.
Caterpillar's latest financial results and current outlook are also available
via:
Telephone:
(800) 228-7717 (Inside the United States and Canada)
(858) 244-2080 (Outside the United States and Canada)
Internet:
http://www.CAT.com/investor
http://www.CAT.com/irwebcast (live broadcast/replays of quarterly conference
call)
Caterpillar contact:
Marsha Hausser
Caterpillar Inc.
(309)675-1841
hausser_marsha_m@CAT.com
Note: Information contained on our website is not incorporated by reference
into this release. Financial Pages Follow
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CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
(UNAUDITED)
(Dollars in millions except per share data)
Supplemental Consolidating Data
Machinery &
Consolidated Engines * Financial Products
Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31,
2002 2001 2002 2001 2002 2001
Sales and revenues;
Sales of Machinery & Engines $4,044 $4,461 $4,044 $4,461 $ - $ -
Revenues of Financial Products 365 349 - - 402 405
Total sales and revenues 4,409 4,810 4,044 4,461 402 405
Operating costs:
Cost of goods sold 3,205 3,462 3,205 3,462 - -
Selling, general, and
administrative expenses 649 621 561 554 108 77
Research and development expenses 171 167 171 167 - -
Interest expense of Financial Products 123 182 - - 127 193
Other operating expenses 91 69 - - 91 69
Total operating costs 4,239 4,501 3,937 4,183 326 339
Operating Profit 170 309 107 278 76 66
Interest expense excluding Financial
Products 69 78 69 78 - -
Other income (expense) 20 4 (7) (48) 14 17
Consolidated profit before taxes 121 235 31 152 90 83
Provision for income taxes 36 75 2 45 34 30
Profit of consolidated companies 85 160 29 107 56 53
Equity in profit of
unconsolidated affiliates (5) 2 (7) 1 2 1
Equity in profit of Financial
Products subsidiaries - - 58 54 - -
Profit $ 80 $ 162 $80 $162 $58 $54
EPS of common stock $0.23 $0.47
EPS of common stock
- assuming dilution $0.23 $0.47
Weighted average shares
outstanding (thousands)
Basic 343,592 343,315
Assuming dilution 347,737 346,635
* Represents Caterpillar Inc. and its subsidiaries with financial Product
accounted for on the equity basis. Transactions between Machinery and Engines
and Financial Products have been eliminated to arrive at the Consolidated data.
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CONDENSED FINANCIAL POSITION*
(Millions of dollars)
Consolidated
(Caterpillar Inc. and Subsidiaries)
Mar. 31, Dec. 31, Mar. 31,
2002 2001 2001
Assets
Current assets:
Cash and short-term investments $ 302 $ 400 $ 247
Receivables - trade and other 2,619 2,592 $2,517
Receivables - finance 6,074 5,849 5,928
Deferred and refundable income taxes 439 423 305
Prepaid expenses 1,235 1,211 1,039
Inventories 3,214 2,925 2,964
Total current assets 13,883 13,400 13,000
Property, plant, and equipment - net 6,622 6,603 5,993
Long-term receivables - trade and other 61 55 75
Long-term receivables - finance 6,260 6,267 6,028
Investments in unconsolidated affiliated
companies 750 787 875
Deferred income taxes 899 938 927
Intangible assets 286 274 62
Goodwill 1,397 1,397 1,420
Other assets 989 936 845
Total Assets $31,147 $30,657 $29,225
Liabilities
Current liabilities:
Short-term borrowings:
- Machinery & Engines $ 353 $ 219 $ 633
- Financial Products 1,669 1,961 1,091
Accounts payable 2,182 2,123 2,234
Accrued expenses 1,366 1,419 1,099
Accrued wages, salaries, and employee benefits 1,258 1,292 1,200
Dividends payable - 120 -
Deferred and current income taxes payable 6 11 9
Long-term debt due within one year:
- Machinery & Engines 265 73 264
- Financial Products 2,946 3,058 2,706
Total current liabilities 10,045 10,276 9,236
Long-term debt due after one year:
- Machinery & Engines 3,403 3,492 2,824
- Financial Products 8,531 7,799 8,518
Liability for post-employment benefits 3,120 3,103 2,515
Deferred income taxes and other liabilities 375 376 457
Total Liabilities
Stockholders' Equity
Common stock 1,036 1,043 1,051
Profit employed in the business 7,613 7,533 7,367
Accumulated other comprehensive income (294) (269) (54)
Treasury stock (2,682) (2,696) (2,689)
Total Stockholders' Equity 5,673 5,611 5,675
Total Liabilities and Stockholders' Equity $31,147 $30,657 $29,225
* Unaudited except for Consolidated December 31, 2001 amounts.
Certain amounts for prior periods have been reclassified to conform with current
financial statement presentation.
Caterpillar Public Release
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