DJ Caterpillar Inc.: Exhibit 99.1 to Form 8-K Earnings Release dated 30 July 2018
Dow Jones received a payment from EQS/DGAP to publish this press release.
Caterpillar Inc.
Caterpillar Inc.: Exhibit 99.1 to Form 8-K Earnings Release dated 30 July 2018
01-Aug-2018 / 17:24 CET/CEST
Dissemination of a French Regulatory News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Exhibit 99.1
Caterpillar Inc.
2Q 2018 Earnings Release
July 30, 2018
FOR IMMEDIATE RELEASE
Caterpillar Reports Second-Quarter 2018 Results
Record Second-Quarter Profit Per Share; Raised Full-Year Outlook on Continued Strength in End
Markets
($ in billions except profit per share)
Second 2018 Quarter
2017
Sales and Revenues $14.0 $11.3
Profit Per Share $2.82 $1.35
Adjusted Profit Per Share $2.97 $1.49
DEERFIELD, Ill. - Caterpillar Inc. (NYSE: CAT) today announced second-quarter 2018 sales and
revenues of $14.0 billion, compared with $11.3 billion in the second quarter of 2017, a 24
percent increase. Second-quarter 2018 profit per share of $2.82 was a second-quarter record.
Profit per share was $1.35 in the second quarter of 2017. Adjusted profit per share in the
second quarter of 2018 was $2.97, compared with second-quarter 2017 adjusted profit per share
of $1.49.
During the second quarter of 2018, Machinery, Energy & Transportation (ME&T) operating cash
flow was $2.1 billion, and the company repurchased $750 million of Caterpillar common stock. In
June 2018, the board of directors approved an increase to the quarterly dividend of 10 percent
to $0.86 per share. The second quarter of 2018 ended with an enterprise cash balance of $8.7
billion.
"Caterpillar delivered record second-quarter profit per share," said Caterpillar CEO Jim
Umpleby. "Our team is doing a great job executing our strategy for profitable growth, focusing
on operational excellence, expanded offerings and services."
2018 Outlook
The company is raising its 2018 profit per share outlook to a range of $10.50 to $11.50.
Excluding restructuring costs of about $400 million, the company expects adjusted profit per
share to be in a range of $11.00 to $12.00. The prior profit per share outlook range was $9.75
to $10.75, and the adjusted profit per share outlook range was $10.25 to $11.25.
"Based on outstanding results in the first half of the year and continued strength in many of
our end markets, Caterpillar is again raising our profit outlook for 2018. We remain focused on
operational excellence, cost discipline and investing for long-term profitable growth," said
Umpleby.
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Sales and revenues - Most end markets continue to improve, order rates are healthy and the
backlog remained solid in the quarter. For certain applications, particularly in oil and gas
and mining, the company is seeing strong demand and taking orders for delivery well into 2019.
Operating profit - The company is raising the outlook range primarily due to the continued
strength in many end markets. Recently imposed tariffs are expected to impact material costs in
the second half of the year by approximately $100 million to $200 million, and the company
expects supply chain challenges to continue to pressure freight costs. However, the company
intends to largely offset these impacts through announced mid-year price increases and using
the Operating & Execution Model to further drive operational excellence and structural cost
discipline.
The outlook does not include a mark-to-market gain or loss for remeasurement of pension and
other postemployment benefit (OPEB) plans, changes to provisional estimates recorded in 2017
for U.S. tax reform, or any impact from future geopolitical risks, including increased trade
restrictions above those currently in place.
Share Repurchase; Authorization for New $10 Billion Share Repurchase Program
In January 2014, the board of directors authorized the repurchase of $10.0 billion of
Caterpillar common stock. The current program expires at the end of this year. Under this
authorization, the company repurchased $1.25 billion in common stock in the first half of 2018,
of which $750 million was repurchased in the second quarter. As of June 30, 2018, $4.2 billion
remained on the current authorization. The company currently expects share repurchases during
the second half of 2018 to be in a similar range as the first half, but the amount could vary
depending upon market conditions and investing priorities. Aligned with the cash deployment
strategy, the company plans to be in the market for share repurchases on a fairly consistent
basis.
In July 2018, the board of directors authorized the repurchase of up to $10.0 billion of
Caterpillar common stock effective January 1, 2019, with no expiration date.
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Notes:
? Glossary of terms is included on pages 14-15; first occurrence of terms shown in bold
italics.
? Information on non-GAAP financial measures is included on page 16.
? Caterpillar will conduct a teleconference and live webcast, with a slide presentation,
beginning at 10 a.m. Central Time on Monday, July 30, 2018, to discuss its 2018 second-quarter
financial results. The accompanying slides will be available before the webcast on the
Caterpillar website at http://www.caterpillar.com/investors/events-and-presentations. [1]
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
[2]. To connect with us on social media, visit caterpillar.com/social-media. [3]
Caterpillar contact: Corrie Scott, 224-551-4133 (Office), 808-351-3865 (Mobile) or [4] Scott
Corrie@cat.com
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) international trade policies and their impact on demand for
our products and our competitive position, including the imposition of new tariffs or changes
in existing tariff rates; (vi) our ability to develop, produce and market quality products that
meet our customers' needs; (vii) the impact of the highly competitive environment in which we
operate on our sales and pricing; (viii) information technology security threats and computer
crime; (ix) additional restructuring costs or a failure to realize anticipated savings or
benefits from past or future cost reduction actions; (x) failure to realize all of the
anticipated benefits from initiatives to increase our productivity, efficiency and cash flow
and to reduce costs; (xi) inventory management decisions and sourcing practices of our dealers
and our OEM customers; (xii) a failure to realize, or a delay in realizing, all of the
anticipated benefits of our acquisitions, joint ventures or divestitures; (xiii) union disputes
or other employee relations issues; (xiv) adverse effects of unexpected events including
natural disasters; (xv) disruptions or volatility in global financial markets limiting our
sources of liquidity or the liquidity of our customers, dealers and suppliers; (xvi) 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; (xvii) our Financial Products segment's risks associated with the financial services
industry; (xviii) changes in interest rates or market liquidity conditions; (xix) an increase
in delinquencies, repossessions or net losses of Cat Financial's customers; (xx) currency
fluctuations; (xxi) our or Cat Financial's compliance with financial and other restrictive
covenants in debt agreements; (xxii) increased pension plan funding obligations; (xxiii)
alleged or actual violations of trade or anti-corruption laws and regulations; (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
(MORE TO FOLLOW) Dow Jones Newswires
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DJ Caterpillar Inc.: Exhibit 99.1 to Form 8-K -2-
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.
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CONSOLIDATED RESULTS
Consolidated Sales and Revenues
The chart above graphically illustrates reasons for the change in Consolidated Sales and
Revenues between the second quarter of 2017 (at left) and the second quarter of 2018 (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.
Total sales and revenues were $14.011 billion in the second quarter of 2018, an increase of
$2.680 billion, or 24 percent, compared with $11.331 billion in the second quarter of 2017. The
increase was primarily due to higher sales volume driven by improved demand across the three
primary segments, with the largest increase in Construction Industries. Sales were also higher
due to currency impacts, primarily from a stronger euro and Chinese yuan.
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Sales and Revenues by Geographic Region
(Millions of North Latin EAME Asia/Pacific External Inter-Segment Total
dollars) America America Sales Sales and
Second Quarter and Revenues
2018 Revenues
$ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg
Construction $ 18% $ 8% $ 21% $ 43% $ 24% 35 21% $ 24%
Industries 2,73 392 1,1 1,835 6,13 6,17
9 71 7 2
Resource 804 31% 394 32% 569 44% 664 47% 2,43 38% 95 23% 2,52 38%
Industries 1 6
Energy & 2,58 30% 287 (8%) 1,1 7% 692 22% 4,71 20% 1,010 22% 5,72 20%
Transportation 2 53 4 4
All Other 17 70% 1 -% 4 (64%) 19 73% 41 24% 83 (21%) 124 (10%)
Segments
Corporate (40) (3) - (1) (44) (1,223) (1,2
Items and 67)
Eliminations
Machinery,
Energy &
Transportation $ 25% $1,0 10% $ 18% $ 39% $13, 25% $ - -% $13, 25%
6,10 71 2,8 3,209 279 279
2 97
Financial $ 6% $ 71 (10%) $ -% $ 120 32% $ 7% $ - -% $ 7%
Products 537 101 829 829
Segment
Corporate (57) (11) (7) (22) (97) - (97)
Items and
Eliminations
Financial $ 6% $ 60 (6%) $ (2%) $ 98 26% $ 6% $ - -% $ 6%
Products 480 94 732 732
Revenues
Consolidated
Sales and
Revenues $ 23% $1,1 9% $ 18% $ 38% $14, 24% $ - -% $14, 24%
6,58 31 2,9 3,307 011 011
2 91
Second Quarter
2017
Construction $ $ $ $ $ $ 29 $
Industries 2,31 364 964 1,284 4,93 4,95
8 0 9
Resource 612 299 396 452 1,75 77 1,83
Industries 9 6
Energy & 1,98 312 1,0 568 3,94 827 4,76
Transportation 2 79 1 8
All Other 10 1 11 11 33 105 138
Segments
Corporate (22) - (2) - (24) (1,038) (1,0
Items and 62)
Eliminations
Machinery,
Energy &
Transportation $ $ $ $ $10, $ - $10,
4,90 976 2,4 2,315 639 639
0 48
Financial $ $ 79 $ $ 91 $ $ - $
Products 505 101 776 776
Segment
Corporate (51) (15) (5) (13) (84) - (84)
Items and
Eliminations
Financial $ $ 64 $ $ 78 $ $ - $
Products 454 96 692 692
Revenues
Consolidated
Sales and
Revenues $ $1,0 $ $ $11, $ - $11,
5,35 40 2,5 2,393 331 331
4 44
Sales and Revenues by Segment
Second Sales Price Inter- Second $ %
Segment
/
(Millions of Quarter Volume Realization Currency Other Quarter Change Change
dollars) 2017 2018
Construction $ 4,959 $ $ (68) $ 149 $ 6 $ 6,172 $ 24%
Industries 1,126 1,213
Resource 1,836 565 94 13 18 2,526 690 38%
Industries
Energy & 4,768 641 64 68 183 5,724 956 20%
Transportati
on
All Other 138 6 - 2 (22) 124 (14) (10%)
Segments
Corporate (1,062) (21) 1 - (185) (1,267) (205)
Items and
Eliminations
Machinery, $ $ $ 91 $ 232 $ - $ 13,279 $ 25%
Energy & 10,639 2,317 2,640
Transportati
on
Financial $ 776 $ - $ - $ - $ 53 $ 829 $ 53 7%
Products
Segment
Corporate (84) - - - (13) (97) (13)
Items and
Eliminations
Financial $ 692 $ - $ - $ - $ 40 $ 732 $ 40 6%
Products
Revenues
Consolidated $ $ $ 91 $ 232 $ 40 $ $ 24%
Sales and 11,331 2,317 14,011 2,680
Revenues
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Consolidated Operating Profit
The chart above graphically illustrates reasons for the change in Consolidated Operating Profit
between the second quarter of 2017 (at left) and the second quarter of 2018 (at right). Items
favorably impacting operating profit appear as upward stair steps with the corresponding dollar
amounts above each bar, while items negatively impacting operating profit appear as downward
stair steps with dollar amounts reflected in parentheses above each bar. Caterpillar management
utilizes these charts internally to visually communicate with the company's board of directors
and employees. The bar entitled Other includes consolidating adjustments and Machinery, Energy
& Transportation other operating (income) expenses.
Operating profit for the second quarter of 2018 was $2.167 billion, compared to $1.184 billion
in the second quarter of 2017. The increase of $983 million was mostly due to higher sales
volume. Favorable price realization was partially offset by higher manufacturing costs.
Manufacturing costs were higher due to increased freight and material costs, partially offset
by lower warranty expense. Freight costs were unfavorable primarily due to supply chain
inefficiencies as the industry responds to strong global demand. Material costs were higher
primarily due to increases in steel prices.
Lower operating profit from Financial Products and slightly higher selling, general and
administrative (SG&A) and research and development (R&D) expenses were partially offset by a
decrease in restructuring costs.
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Profit by Segment
Second Quarter Second Quarter $ %
(Millions of 2018 2017 Change Change
dollars)
Construction $ 1,154 $ 900 $ 254 28%
Industries
Resource 411 99 312 315%
Industries
Energy & 1,012 694 318 46%
Transportatio
n
All Other 23 (19) 42
Segments
Corporate (466) (589) 123
Items and
Eliminations
Machinery, $ 2,134 $ 1,085 $ 97%
Energy & 1,049
Transportatio
n
Financial $ 134 $ 191 $ (57) (30%)
Products
Segment
Corporate (5) (5) -
Items and
Eliminations
Financial $ 129 $ 186 $ (57) (31%)
Products
Consolidating (96) (87) (9)
Adjustments
Consolidated $ 2,167 $ 1,184 $ 983 83%
Operating
Profit
Other Profit/Loss Items
Other income/expense in the second quarter of 2018 was income of $121 million, compared with
(MORE TO FOLLOW) Dow Jones Newswires
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DJ Caterpillar Inc.: Exhibit 99.1 to Form 8-K -3-
income of $96 million in the second quarter of 2017. The favorable change was primarily a
result of lower currency translation and hedging net losses, the impact from pension and OPEB
plans and other miscellaneous items, mostly offset by the absence of a pretax gain of $85
million on the sale of Caterpillar's equity investment in IronPlanet in the second quarter of
2017.
The provision for income taxes in the second quarter of 2018 reflected an estimated annual tax
rate of 24 percent, compared to 32 percent for the second quarter of 2017, excluding the
discrete items discussed in the following paragraph. The decrease was primarily due to the
reduction in the U.S. corporate tax rate beginning January 1, 2018, along with other changes in
the geographic mix of profits from a tax perspective.
The provision for income taxes in the second quarter of 2018 also included a $25 million
benefit for the release of a valuation allowance against the deferred tax assets of a non-U.S.
subsidiary. In addition, a discrete tax benefit of $9 million was recorded in the second
quarter of 2018, compared to $10 million in the second quarter of 2017, for the settlement of
stock-based compensation awards with associated tax deductions in excess of cumulative U.S.
GAAP compensation expense.
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Global Workforce
Caterpillar worldwide, full-time employment was about 101,600 at the end of the second quarter
of 2018. The increase of about 6,800 full-time employees from the end of the second quarter of
2017 was primarily due to an increase in production employment to support higher volumes. The
flexible workforce increased by about 3,300, also primarily due to higher production volumes.
In total, the global workforce increased by about 10,100 from the end of the second quarter of
2017.
June 30
2018 2017 Increase
Full-time employment 101,600 94,800 6,800
Flexible workforce 19,700 16,400 3,300
Total 121,300 111,200 10,100
Geographic summary
U.S. workforce 52,900 48,500 4,400
Non-U.S. workforce 68,400 62,700 5,700
Total 121,300 111,200 10,100
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CONSTRUCTION INDUSTRIES
(Millions of dollars)
Segment Sales
Second Price Second $ %
Quarter 2017 Sales Volume Realization Currency Inter-Segment Quarter 2018 Change Change
Total Sales $4,959 $1,126 ($68) $149 $6
$6,172
$1,213 24%
Sales by Geographic Region Second $
Quarter 2017
%
Change
Second Change
Quarter
2018
North America $2,739 $2,318 $421 18%
Latin America 392 364 28 8%
EAME 1,171 964 207 21%
Asia/Pacific 1,835 1,284 551 43%
External Sales $6,137 $4,930 $1,207 24%
Inter-segment 35 29 6 21%
Total Sales $6,172 $4,959 $1,213 24%
Segment Profit
Second Second %
Quarter 2018 Quarter 2017 Change Change
Segment Profit $1,154 $900 $254 28%
Segment Profit Margin 18.7% 18.1% 0.6 pts
Construction Industries' total sales were $6.172 billion in the second quarter of 2018,
compared with $4.959 billion in the second quarter of 2017. The increase was mostly due to
higher sales volume for construction equipment. Sales were also higher due to currency impacts,
primarily from a stronger Chinese yuan and euro, partially offset by unfavorable price
realization.
Sales increased in all regions.
In North America, the sales increase was mostly due to higher demand for construction
equipment, primarily due to oil and gas, including pipelines, and non-residential construction
activities. The sales increase was partially offset by unfavorable price realization.
Although construction activities remained weak in Latin America, sales were slightly higher in
the region.
Sales increased in EAME primarily due to higher demand and the favorable impact of currency,
mostly from a stronger euro. Higher demand was driven by increased construction activities
across several countries in the region.
Sales in Asia/Pacific were higher across the region, with most of the improved demand in China
stemming from increased building construction and infrastructure investment. The favorable
impact of a stronger Chinese yuan also contributed to increased sales.
Construction Industries' profit was $1.154 billion in the second quarter of 2018, compared with
$900 million in the second quarter of 2017. The increase in profit was a result of higher sales
volume, partially offset by unfavorable price realization, higher material and freight costs,
and increased SG&A/R&D expenses.
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RESOURCE INDUSTRIES
(Millions of dollars)
Segment Sales
Second Price Second $ %
Quarter 2017 Sales Volume Realization Currency Inter-Segment Quarter 2018 Change Change
Total Sales $1,836 $565 $94 $13 $18 $2,526 $690 38%
Sales by Geographic Region
Second Second Quarter 2017 $ %
Quarter 2018 Change
Change
North America $804 $612 $192 31%
Latin America 394 299 95 32%
EAME 569 396 173 44%
Asia/Pacific 664 452 212 47%
External Sales $2,431 $1,759 $672 38%
Inter-segment 95 77 18 23%
Total Sales $2,526 $1,836 $690 38%
Segment Profit
Second Second %
Quarter 2018 Quarter 2017 Change Change
Segment Profit $411 $99 $312 315%
Segment Profit Margin 16.3% 5.4% 10.9 pts
Resource Industries' total sales were $2.526 billion in the second quarter of 2018, an increase
of $690 million from the second quarter of 2017. The increase was primarily due to higher
demand for equipment across all regions. Commodity prices remained strong in the second quarter
of 2018, and the company saw mining customers invest in current fleets and mine expansions,
resulting in higher equipment sales. However, we believe mining customers have not yet
commenced full-scale fleet replacements. Increased mine production and higher machine
utilization resulted in improved aftermarket parts sales. In addition, global economic growth
contributed to stronger sales for heavy construction equipment. Favorable price realization
also contributed to increased sales.
Resource Industries' profit was $411 million in the second quarter of 2018, compared with $99
million in the second quarter of 2017. The improvement was mostly due to higher sales volume
and favorable price realization. Manufacturing costs were favorable primarily due to lower
warranty expense, partially offset by higher freight costs. The favorable warranty was mostly
driven by the absence of a customer warranty program that occurred in the second quarter of
2017.
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ENERGY & TRANSPORTATION
(Millions of dollars)
Segment Sales
Second Price Second $ %
Quarter 2017 Sales Volume Realization Currency Inter-Segment Quarter 2018 Change Change
Total Sales $4,768 $641 $64 $68 $183 $5,724 $956 20%
Sales by Application
Second Second Quarter 2017 $ %
Quarter 2018 Change
Change
Oil and Gas $1,467 $1,053 $414 39%
Power Generation 992 877 115 13%
Industrial 969 884 85 10%
Transportation 1,286 1,127 159 14%
External Sales $4,714 $3,941 $773 20%
Inter-segment 1,010 827 183 22%
Total Sales $5,724 $4,768 $956 20%
Segment Profit
Second Second %
Quarter 2018 Quarter 2017 Change Change
Segment Profit $1,012 $694 $318 46%
Segment Profit Margin 17.7% 14.6% 3.1 pts
Energy & Transportation's total sales were $5.724 billion in the second quarter of 2018,
compared with $4.768 billion in the second quarter of 2017. The increase was primarily due to
higher sales volume across all applications. Favorable currency impacts, mostly from a stronger
euro, and favorable price realization also contributed to the increase in sales.
Oil and Gas - Sales increased due to higher demand in North America for gas compression, well
servicing and production applications. Higher energy prices and growth in U.S. onshore oil and
gas drove increased sales for reciprocating engines and related aftermarket parts. Sales in
North America were also positively impacted by the timing of turbine project deliveries.
Power Generation - Sales improved mostly due to higher demand in EAME, primarily from growth in
the gas power generation market and favorable currency impacts.
Industrial - Sales were higher in North America and Asia/Pacific due to favorable economic
conditions.
Transportation - Sales were higher for rail services, driven primarily by acquisitions in
Asia/Pacific and EAME, and increased rail traffic in North America. Marine sales were higher in
EAME primarily due to activity in the cruise sector and favorable currency.
Energy & Transportation's profit was $1.012 billion in the second quarter of 2018, compared
with $694 million in the second quarter of 2017. The improvement was due to higher sales
volume, favorable price realization and lower short-term incentive compensation expense. This
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DJ Caterpillar Inc.: Exhibit 99.1 to Form 8-K -4-
was partially offset by higher freight costs and increased spending for targeted investments.
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FINANCIAL PRODUCTS SEGMENT
(Millions of dollars)
Revenues by Geographic Region
Second Second Quarter 2017 $ %
Quarter 2018 Change
Change
North America $537 $505 $32 6%
Latin America 71 79 (8) (10%)
EAME 101 101 - -%
Asia/Pacific 120 91 29 32%
Total $829 $776 $53 7%
Segment Profit
Second Second %
Quarter 2018 Quarter 2017 Change Change
Segment Profit $134 $191 ($57) (30%)
Financial Products' segment revenues were $829 million in the second quarter of 2018, an
increase of $53 million, or 7 percent, from the second quarter of 2017. The increase was
primarily due to higher average financing rates in North America and higher average earning
assets in Asia/Pacific and North America, partially offset by lower intercompany lending
activity in North America and lower average earning assets in Latin America.
Financial Products' segment profit was $134 million in the second quarter of 2018, compared
with $191 million in the second quarter of 2017. The decrease was primarily due to an increase
in the provision for credit losses at Cat Financial, partially offset by an increase in net
yield on average earning assets and a favorable impact from higher average earning assets.
At the end of the second quarter of 2018, past dues at Cat Financial were 3.16 percent,
compared with 2.71 percent at the end of the second quarter of 2017. Write-offs, net of
recoveries, in the second quarter of 2018 were $80 million, compared with $26 million in the
second quarter of 2017. The increase in write-offs, net of recoveries, was primarily driven by
a small number of customers in the Cat Power Finance portfolio and recent collection experience
in the Latin America portfolio.
As of June 30, 2018, Cat Financial's allowance for credit losses totaled $416 million, or 1.48
percent of finance receivables, compared with $403 million, or 1.45 percent of finance
receivables at March 31, 2018. The allowance for credit losses at year-end 2017 was $365
million, or 1.33 percent of finance receivables.
Corporate Items and Eliminations
Expense for corporate items and eliminations was $471 million in the second quarter of 2018, a
decrease of $123 million from the second quarter of 2017. Corporate items and eliminations
include: restructuring costs; corporate-level expenses; timing differences, as some expenses
are reported in segment profit on a cash basis; 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 lower restructuring costs and cost of sales
methodology differences. Restructuring costs were $114 million in the second quarter of 2018,
compared to $169 million in the second quarter of 2017.
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QUESTIONS AND ANSWERS
Q1: Can you discuss changes in dealer inventories during the second quarter of 2018?
A: Dealer machine and engine inventories increased about $100 million in the second quarter of
2018, compared to a decrease of about $300 million in the second quarter of 2017. During the
first six months of 2018, dealer machine and engine inventories increased about $1.3 billion,
compared to a decrease of about $100 million in the first six months of 2017.
Q2: Can you discuss changes to your order backlog by segment?
A: At the end of the second quarter of 2018, the order backlog was $17.7 billion, about flat
with the first quarter of 2018. Energy & Transportation's order backlog increased, while
Construction Industries' order backlog decreased. It is not uncommon for the construction order
backlog to decline during the second-quarter selling season. Resource Industries' order backlog
was about flat as increased order rates were about offset by increased production and sales.
Compared with the second quarter of 2017, the order backlog increased about $2.9 billion with
increases across the three primary segments.
Q3: Can you comment on expense related to your 2018 short-term incentive compensation plans and
the impact on the 2018 outlook?
A: Short-term incentive compensation expense is directly related to financial and operational
performance, measured against targets set annually. Second-quarter 2018 expense was about $360
million, compared to second-quarter 2017 expense of about $415 million.
For the full year of 2018, across the current outlook range, short-term incentive compensation
expense is expected to be about $1.4 billion, nearly the same as 2017.
Q4: Can you give us an update on the quality of Cat Financial's asset portfolio? How are
write-offs and past dues performing?
A: Cat Financial's core asset portfolio continues to perform well overall. Write-offs, net of
recoveries, were $80 million for the second quarter of 2018, primarily driven by a small number
of customers in the Cat Power Finance portfolio and recent collection experience in the Latin
America portfolio.
At the end of the second quarter of 2018, past dues at Cat Financial were 3.16 percent, mostly
impacted by higher delinquencies in the Cat Power Finance and Latin America portfolios. This is
below the second-quarter 10-year historical average past dues of 3.52 percent.
Q5: First-half 2018 sales and revenues were up 27 percent. Is this significant ramp in demand
impacting availability?
A: The sharp increase in demand has led to supply chain challenges. Although the company
continues to see improvements in material flows, constraints remain for some parts and
components that are impacting lead times and availability.
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14
GLOSSARY OF TERMS
1. Adjusted Profit Per Share - Profit per share excluding restructuring costs for 2018 and
2017. For 2017, adjusted profit per share also excludes a gain on the sale of an equity
investment in IronPlanet recognized in the second quarter.
2. All Other Segments - Primarily includes activities such as: business strategy, product
management and development, manufacturing of filters and fluids, undercarriage, ground engaging
tools, fluid transfer products, precision seals, rubber sealing and connecting components
primarily for Cat(R) products; parts distribution; integrated logistics solutions, 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 asphalt pavers, backhoe
loaders, compactors, cold planers, compact track and multi-terrain loaders, mini, small, medium
and large track excavators, forestry excavators, feller bunchers, harvesters, knuckleboom
loaders, motor graders, pipelayers, road reclaimers, site prep tractors, skidders, skid steer
loaders, telehandlers, small and medium track-type tractors, track-type loaders, utility
vehicles, wheel excavators, compact, small and medium wheel loaders and related parts and work
tools.
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. EAME - A geographic region including Europe, Africa, the Middle East and the Commonwealth of
Independent States (CIS).
7. Earning Assets - Assets consisting primarily of total finance receivables net of unearned
income, plus equipment on operating leases, less accumulated depreciation at Cat Financial.
8. Energy & Transportation - A segment primarily responsible for supporting customers using
reciprocating engines, turbines, diesel-electric locomotives and related parts across
industries serving Oil and Gas, Power Generation, Industrial 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 turbine machinery and integrated systems and solutions and turbine-related
services, reciprocating engine-powered generator sets, integrated systems used in the electric
(MORE TO FOLLOW) Dow Jones Newswires
August 01, 2018 11:25 ET (15:25 GMT)
DJ Caterpillar Inc.: Exhibit 99.1 to Form 8-K -5-
power generation industry, reciprocating engines and integrated systems and solutions for the
marine and oil and gas industries; reciprocating engines supplied to the industrial industry as
well as Cat machinery; the remanufacturing of Cat engines and components and remanufacturing
services for other companies; the business strategy, product design, product management and
development, manufacturing, remanufacturing, leasing and service of diesel-electric locomotives
and components and other rail-related products and services and product support of on-highway
vocational trucks for North America.
9. Financial Products Segment - Provides financing 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. The segment also earns revenues
from Machinery, Energy & Transportation, but the related costs are not allocated to operating
segments. Financial Products segment profit is determined on a pretax basis and includes other
income/expense items.
10. Latin America - A geographic region including Central and South American countries and
Mexico.
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15
11. Machinery, Energy & Transportation (ME&T) - Represents the aggregate total of Construction
Industries, Resource Industries, Energy & Transportation, All Other Segments and related
corporate items and eliminations.
11. 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.
12. Manufacturing Costs - Manufacturing costs exclude the impacts of currency and restructuring
costs (see definition below) and represent the volume-adjusted change for variable costs and
the absolute dollar change for period manufacturing costs. Variable manufacturing costs are
defined as having a direct relationship with the volume of production. This includes material
costs, direct labor and other costs that vary directly with production volume such as freight,
power to operate machines and supplies that are consumed in the manufacturing process. Period
manufacturing costs support production but are defined as generally not having a direct
relationship to short-term changes in volume. Examples include machinery and equipment repair,
depreciation on manufacturing assets, facility support, procurement, factory scheduling,
manufacturing planning and operations management.
13. Pension and Other Postemployment Benefit (OPEB) - The company's defined-benefit pension and
postretirement benefit plans.
14. 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.
15. 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.
16. Restructuring Costs - Primarily costs for employee separation, long-lived asset impairments
and contract terminations. These costs are included in Other operating (income) expenses except
for defined-benefit plan curtailment losses and special termination benefits, which are
included in Other income (expense). Restructuring costs also include other exit-related costs
primarily for accelerated depreciation, inventory write-downs, equipment relocation and project
management costs and LIFO inventory decrement benefits from inventory liquidations at closed
facilities, primarily included in Cost of goods sold.
17. 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 sales 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.
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16
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 Per Share
The company believes it is important to separately quantify the profit impact of two special
items in order for the company's results to be meaningful to readers. These items consist of
restructuring costs, which are incurred in the current year to generate longer-term benefits,
and a gain on sale of an equity investment in the second quarter of 2017. The company does not
consider these items indicative of earnings from ongoing business activities and believes the
non-GAAP measure provides investors with useful perspective on underlying business results and
trends and aids with assessing the company's period-over-period results.
Reconciliations of adjusted profit per share to the most directly comparable GAAP measure,
diluted profit per share, are as follows:
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 20-25 reconcile Machinery, Energy & Transportation
with Financial Products on the equity basis to Caterpillar Inc. consolidated financial
information.
Caterpillar's latest financial results and outlook are also available via:
Telephone: 800-228-7717 (Inside the United States and Canada)
858-764-9492 (Outside the United States and Canada)
Internet:
http://www.caterpillar.com/en/investors.html [5]
http://www.caterpillar.com/en/investors/quarterly-results.html [6] (live broadcast/replays of
quarterly conference call) Caterpillar contact: Corrie Scott, 224-551-4133 (Office),
808-351-3865 (Mobile) or [4] Scott Corrie@cat.com
(more)
17
Caterpillar Inc.
Condensed Consolidated Statement of Results of Operations
(Unaudited)
(Dollars in millions except per share data)
Sales and Three Months Ended June Six Months Ended
revenues: 30, June 30,
2018 2017 2018 2017
Sales of $ 13,279 $ 10,639 $ 25,429 $ 19,769
Machinery, Energy
& Transportation
Revenues of 732 692 1,441 1,384
Financial
Products
Total sales and 14,011 11,331 26,870 21,153
revenues
Operating costs:
Cost of goods 9,422 7,816 17,988 14,617
sold
Selling, general 1,440 1,304 2,716 2,365
and
administrative
expenses
Research and 462 458 905 883
development
expenses
Interest expense 182 162 348 321
of Financial
Products
Other operating 338 407 638 1,403
(income) expenses
(MORE TO FOLLOW) Dow Jones Newswires
August 01, 2018 11:25 ET (15:25 GMT)
DJ Caterpillar Inc.: Exhibit 99.1 to Form 8-K -6-
Total operating 11,844 10,147 22,595 19,589
costs
Operating profit 2,167 1,184 4,275 1,564
Interest expense 102 121 203 244
excluding
Financial
Products
Other income 121 96 248 128
(expense)
Consolidated 2,186 1,159 4,320 1,448
profit before
taxes
Provision 490 361 962 451
(benefit) for
income taxes
Profit of 1,696 798 3,358 997
consolidated
companies
Equity in profit 9 5 14 -
(loss) of
unconsolidated
affiliated
companies
Profit of 1,705 803 3,372 997
consolidated and
affiliated
companies
Less: Profit (2) 1 - 3
(loss)
attributable to
noncontrolling
interests
Profit 1 $ 1,707 $ 802 $ 3,372 $ 994
Profit per common $ 2.86 $ 1.36 $ 5.65 $ 1.69
share
Profit per common $ 2.82 $ 1.35 $ 5.56 $ 1.67
share - diluted 2
Weighted-average
common shares
outstanding
(millions)
- Basic 596.2 590.2 597.0 588.8
- Diluted 2 604.2 595.4 606.1 594.4
Cash dividends $ 1.64 $ 1.55 $ 1.64 $ 1.55
declared per
common share
1 Profit attributable to common shareholders.
2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock
method.
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18
Caterpillar Inc.
Condensed Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
Assets June 30, December 31,
Current assets: 2018 2017
Cash and short-term
investments
Receivables - trade and
other
Receivables - finance
Prepaid expenses and
other current assets
Inventories
Total current assets
$ 8,654 7,991 $ 8,261 7,436 8,757
8,906 1,835 1,772 10,018
11,255
38,641 36,244
Property, plant and 13,752 14,155
equipment - net
Long-term receivables - 1,084 990
trade and other
Long-term receivables - 13,318 13,542
finance
Noncurrent deferred and 1,626 1,693
refundable income taxes
Intangible assets 2,039 2,111
Goodwill 6,249 6,200
Other assets 2,278 2,027
Total assets $ 78,987 $ 76,962
Liabilities
Current liabilities:
Short-term borrowings:
Machinery, Energy & $ 35 $ 1
Transportation
Financial Products 6,185 4,836
Accounts payable 6,831 6,487
Accrued expenses 3,450 3,220
Accrued wages, salaries 1,789 2,559
and employee benefits
Customer advances 1,378 1,426
Dividends payable 511 466
Other current liabilities 1,871 1,742
Long-term debt due within
one year:
Machinery, Energy & 9 6
Transportation
Financial Products 6,241 6,188
Total current liabilities 28,300 26,931
Long-term debt due after
one year:
Machinery, Energy & 7,982 7,929
Transportation
Financial Products 15,717 15,918
Liability for 8,092 8,365
postemployment benefits
Other liabilities 3,954 4,053
Total liabilities 64,045 63,196
Shareholders' equity
Common stock 5,746 5,593
Treasury stock (18,028) (17,005)
Profit employed in the 28,657 26,301
business
Accumulated other (1,496) (1,192)
comprehensive income
(loss)
Noncontrolling interests 63 69
Total shareholders' 14,942 13,766
equity
Total liabilities and $ 78,987 $ 76,962
shareholders' equity
(more)
19
Caterpillar Inc.
Condensed Consolidated Statement of Cash Flow
(Unaudited)
(Millions of dollars)
Cash flow from operating Six Months Ended
activities: June 30,
2018 2017
Profit of consolidated and $ 3,372 $ 997
affiliated companies
Adjustments for non-cash items:
Depreciation and amortization 1,367 1,430
Other 446 490
Changes in assets and
liabilities, net of acquisitions
and divestitures:
Receivables - trade and other (703) (442)
Inventories (1,208) (688)
Accounts payable 545 1,113
Accrued expenses (31) 251
Accrued wages, salaries and (768) 641
employee benefits
Customer advances (54) 374
Other assets - net 174 (280)
Other liabilities - net (57) 38
Net cash provided by (used for) 3,083 3,924
operating activities
Cash flow from investing
activities:
Capital expenditures - excluding (645) (371)
equipment leased to others
Expenditures for equipment leased (883) (753)
to others
Proceeds from disposals of leased 539 563
assets and property, plant and
equipment
Additions to finance receivables (6,143) (5,264)
Collections of finance 5,405 5,508
receivables
Proceeds from sale of finance 124 83
receivables
Investments and acquisitions (net (348) (21)
of cash acquired)
Proceeds from sale of businesses 12 91
and investments (net of cash
sold)
Proceeds from sale of securities 168 187
Investments in securities (318) (207)
Other - net 21 25
Net cash provided by (used for) (2,068) (159)
investing activities
Cash flow from financing
activities:
Dividends paid (933) (906)
Common stock issued, including 256 83
treasury shares reissued
Common shares repurchased (1,250) -
Proceeds from debt issued 4,307 4,868
(original maturities greater than
three months)
Payments on debt (original (4,436) (4,228)
maturities greater than three
months)
Short-term borrowings - net 1,487 (505)
(original maturities three months
or less)
Other - net (4) (6)
Net cash provided by (used for) (573) (694)
financing activities
Effect of exchange rate changes (68) 13
on cash
Increase (decrease) in cash and 374 3,084
short-term investments and
restricted cash
Cash and short-term investments 8,320 7,199
and restricted cash at beginning
of period
Cash and short-term investments $ 8,694 $ 10,283
and restricted cash at end of
period
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20
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 30, 2018
(Unaudited)
(Millions of dollars)
Sales and Consolidated Supplemental Consolidating Data
revenues:
Sales of
Machinery,
Energy &
Transportati
on
Machinery, Financial Consolidating
Energy & Products Adjustments
Transportation
1
$ 13,279 $ 13,279 $ - $ -
Revenues of 732 - 849 (117) 2
Financial
Products
Total sales 14,011 13,279 849 (117)
and revenues
Operating
costs:
Cost of 9,422 9,422 - -
goods sold
Selling, 1,440 1,223 223 3
general and
administrati
ve expenses
(6)
Research and 462 462 - -
development
expenses
Interest 182 - 191 4
expense of
Financial
Products
(9)
Other 338 38 306 (6) 3
operating
(income)
expenses
Total 11,844 11,145 720 (21)
operating
costs
Operating 2,167 2,134 129 (96)
profit
Interest 102 111 - (9) 4
expense
excluding
Financial
Products
Other income 121 27 7 87 5
(expense)
Consolidated 2,186 2,050 136 -
profit
before taxes
Provision 490 457 33 -
(benefit)
for income
taxes
Profit of 1,696 1,593 103 -
consolidated
companies
(MORE TO FOLLOW) Dow Jones Newswires
August 01, 2018 11:25 ET (15:25 GMT)
DJ Caterpillar Inc.: Exhibit 99.1 to Form 8-K -7-
Equity in 9 9 - -
profit
(loss) of
unconsolidat
ed
affiliated
companies
Equity in - 98 - (98) 6
profit of
Financial
Products'
subsidiaries
Profit of 1,705 1,700 103 (98)
consolidated
and
affiliated
companies
Less: Profit (2) (7) 5 -
(loss)
attributable
to
noncontrolli
ng interests
Profit 7 $ 1,707 $ 1,707 $ 98 $ (98)
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.
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21
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended June 30, 2017
(Unaudited)
(Millions of dollars)
Sales and Consolidated Supplemental Consolidating Data
revenues:
Sales of
Machinery,
Energy &
Transportati
on
Machinery, Financial Consolidating
Energy & Products Adjustments
Transportation
1
$ 10,639 $ 10,639 $ - $ -
Revenues of 692 - 793 (101) 2
Financial
Products
Total sales 11,331 10,639 793 (101)
and revenues
Operating
costs:
Cost of 7,816 7,816 - -
goods sold
Selling, 1,304 1,169 139 3
general and
administrati
ve expenses
(4)
Research and 458 458 - -
development
expenses
Interest 162 - 167 4
expense of
Financial
Products
(5)
Other 407 111 301 (5) 3
operating
(income)
expenses
Total 10,147 9,554 607 (14)
operating
costs
Operating 1,184 1,085 186 (87)
profit
Interest 121 146 - (25) 4
expense
excluding
Financial
Products
Other income 96 32 2 62 5
(expense)
Consolidated 1,159 971 188 -
profit
before taxes
Provision 361 303 58 -
(benefit)
for income
taxes
Profit of 798 668 130 -
consolidated
companies
Equity in 5 5 - -
profit
(loss) of
unconsolidat
ed
affiliated
companies
Equity in - 129 - (129) 6
profit of
Financial
Products'
subsidiaries
Profit of 803 802 130 (129)
consolidated
and
affiliated
companies
Less: Profit 1 - 1 -
(loss)
attributable
to
noncontrolli
ng interests
Profit 7 $ 802 $ 802 $ 129 $ (129)
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.
(more)
22
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Six Months Ended June 30, 2018
(Unaudited)
(Millions of dollars)
Sales and Consolidated Supplemental Consolidating Data
revenues:
Machinery, Financial Consolidating
Energy & Products Adjustments
Transportation
1
Sales of $ 25,429 $ 25,429 $ - $ -
Machinery,
Energy &
Transportati
on
Revenues of 1,441 - 1,660 (219) 2
Financial
Products
Total sales 26,870 25,429 1,660 (219)
and revenues
Operating
costs:
Cost of 17,988 17,988 - -
goods sold
Selling, 2,716 2,310 412 3
general and
administrati
ve expenses
(6)
Research and 905 905 - -
development
expenses
Interest 348 - 364 4
expense of
Financial
Products
(16)
Other 638 37 616 (15) 3
operating
(income)
expenses
Total 22,595 21,240 1,392 (37)
operating
costs
Operating 4,275 4,189 268 (182)
profit
Interest 203 223 - (20) 4
expense
excluding
Financial
Products
Other income 248 81 5 162 5
(expense)
Consolidated 4,320 4,047 273 -
profit
before taxes
Provision 962 898 64 -
(benefit)
for income
taxes
Profit of 3,358 3,149 209 -
consolidated
companies
Equity in 14 14 - -
profit
(loss) of
unconsolidat
ed
affiliated
companies
Equity in - 200 - (200) 6
profit of
Financial
Products'
subsidiaries
Profit of 3,372 3,363 209 (200)
consolidated
and
affiliated
companies
Less: Profit - (9) 9 -
(loss)
attributable
to
noncontrolli
ng interests
Profit 7 $ 3,372 $ 3,372 $ 200 $ (200)
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.
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23
Caterpillar Inc.
Supplemental Data for Results of Operations
For the Six Months Ended June 30, 2017
(Unaudited)
(Millions of dollars)
Sales and Consolidated Supplemental Consolidating Data
revenues:
Sales of
Machinery,
Energy &
Transportati
on
Machinery, Financial Consolidating
Energy & Products Adjustments
Transportation
1
$ 19,769 $ 19,769 $ - $ -
Revenues of 1,384 - 1,570 (186) 2
Financial
Products
Total sales 21,153 19,769 1,570 (186)
and revenues
Operating
costs:
Cost of 14,617 14,617 - -
goods sold
Selling, 2,365 2,109 265 3
general and
administrati
ve expenses
(9)
Research and 883 883 - -
development
expenses
Interest 321 - 330 4
expense of
Financial
Products
(9)
Other 1,403 810 603 (1) 3
operating
(income)
expenses
Total 19,589 18,419 1,198 (28)
operating
costs
Operating 1,564 1,350 372 (158)
profit
Interest 244 290 - (46) 4
expense
excluding
Financial
Products
Other income 128 16 - 5
(expense)
112
(MORE TO FOLLOW) Dow Jones Newswires
August 01, 2018 11:25 ET (15:25 GMT)
Consolidated 1,448 1,076 372 -
profit
before taxes
Provision 451 337 114 -
(benefit)
for income
taxes
Profit of 997 739 258 -
consolidated
companies
Equity in - - - -
profit
(loss) of
unconsolidat
ed
affiliated
companies
Equity in - 255 - (255) 6
profit of
Financial
Products'
subsidiaries
Profit of 997 994 258 (255)
consolidated
and
affiliated
companies
Less: Profit 3 - 3 -
(loss)
attributable
to
noncontrolli
ng interests
Profit 7 $ 994 $ 994 $ 255 $ (255)
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.
(more)
24
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Six Months Ended June 30, 2018
(Unaudited)
(Millions of dollars)
Cash flow Consolidated Supplemental Consolidating Data
from
operating
activities:
Machinery, Financial Consolidating
Energy & Products Adjustments
Transportation
1
Profit of $ 3,372 $ 3,363 $ 209 $ (200) 2
consolidated
and
affiliated
companies
Adjustments
for non-cash
items:
Depreciation 1,367 933 434 -
and
amortization
Undistributed - (200) - 200 3
profit of
Financial
Products
Other 446 197 61 188 4
Changes in
assets and
liabilities,
net of
acquisitions
and
divestitures:
Receivables - (703) 136 (74) (765) 4
trade and ,
other 5
Inventories (1,208) (1,186) - (22) 4
Accounts 545 570 (56) 31 4
payable
Accrued (31) (40) 9 -
expenses
Accrued (768) (745) (23) -
wages,
salaries and
employee
benefits
Customer (54) (54) - -
advances
Other assets 174 176 (10) 8 4
- net
Other (57) (118) 69 (8) 4
liabilities -
net
Net cash 3,083 3,032 619 (568)
provided by
(used for)
operating
activities
Cash flow
from
investing
activities:
Capital (645) (550) (95) -
expenditures
- excluding
equipment
leased to
others
Expenditures (883) (4) (919) 40 4
for equipment
leased to
others
Proceeds from 4
disposals of
leased assets
and property,
plant and
equipment 539 93 461 (15)
Additions to (6,143) - (6,823) 680 5
finance ,
receivables 7
Collections 5,405 - 6,144 (739) 5
of finance
receivables
Net - - (608) 608 5
intercompany
purchased
receivables
Proceeds from 124 - 124 -
sale of
finance
receivables
Net - 112 - (112) 6
intercompany
borrowings
Investments (348) (348) - -
and
acquisitions
(net of cash
acquired)
Proceeds from 12 18 - (6) 7
sale of
businesses
and
investments
(net of cash
sold)
Proceeds from 168 10 158 -
sale of
securities
Investments (318) (19) (299) -
in securities
Other - net 21 24 (4) 1 8
Net cash (2,068) (664) (1,861) 457
provided by
(used for)
investing
activities
Cash flow
from
financing
activities:
Dividends (933) (933) - -
paid
Common stock 256 256 1 (1) 8
issued,
including
treasury
shares
reissued
Common shares (1,250) (1,250) - -
repurchased
Net - - (112) 112 6
intercompany
borrowings
Proceeds from 4,307 - 4,307 -
debt issued
(original
maturities
greater than
three months)
Payments on (4,436) (3) (4,433) -
debt
(original
maturities
greater than
three months)
Short-term 1,487 34 1,453 -
borrowings -
net (original
maturities
three months
or less)
Other - net (4) (1) - -
Net cash (573) (1,900) 1,216 111
provided by
(used for)
financing
activities
Effect of (68) (61) (7) -
exchange rate
changes on
cash
Increase 374 407 (33) -
(decrease) in
cash and
short-term
investments
and
restricted
cash
Cash and 8,320 7,416 904 -
short-term
investments
and
restricted
cash at
beginning of
period
Cash and $ 8,694 $ 7,823 $ 871 $ -
short-term
investments
and
restricted
cash at end
of period
1 Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the
equity basis.
2 Elimination of Financial Products' profit after tax due to equity method of accounting.
3 Elimination of non-cash adjustment for the undistributed earnings from Financial Products.
4 Elimination of non-cash adjustments and changes in assets and liabilities related to
consolidated reporting.
5 Reclassification of Financial Products' cash flow activity from investing to operating for
receivables that arose from the sale of inventory.
6 Elimination of net proceeds and payments to/from Machinery, Energy & Transportation and
Financial Products.
7 Elimination of proceeds received from Financial Products related to Machinery, Energy &
Transportation's sale of businesses and investments.
8 Elimination of change in investment and common stock related to Financial Products.
(more)
25
Caterpillar Inc.
Supplemental Data for Cash Flow
For the Six Months Ended June 30, 2017
(Unaudited)
(Millions of dollars)
Cash flow Consolidated Supplemental Consolidating Data
from
operating
activities:
Machinery, Financial Consolidating
Energy & Products Adjustments
Transportation
1
Profit of $ 997 $ 994 $ 258 $ (255) 2
consolidated
and
affiliated
companies
Adjustments
for non-cash
items:
Depreciation 1,430 998 432 -
and
amortization
Undistributed - (255) - 255 3
profit of
Financial
Products
Other 490 453 (84) 121 4
Changes in
assets and
liabilities,
net of
acquisitions
and
divestitures:
Receivables - (442) (54) 63 (451) 4,
trade and
other
Inventories (688) (688) - -
Accounts 1,113 1,145 (52) 20 4
payable
Accrued 251 234 17 -
expenses
Accrued 641 634 7 -
wages,
salaries and
employee
benefits
Customer 374 374 - -
advances
Other assets (280) (152) (48) (80) 4
- net
Other 38 (130) 88 80 4
liabilities -
net
Net cash 3,924 3,553 681 (310)
provided by
(used for)
operating
activities
Cash flow
from
investing
activities:
Capital (371) (367) (4) -
expenditures
- excluding
equipment
leased to
others
Expenditures (753) (12) (749) 8 4
for equipment
leased to
others
Proceeds from 4
disposals of
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August 01, 2018 11:25 ET (15:25 GMT)
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