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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
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Commission File Number: 1-768
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CATERPILLAR INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of incorporation)
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37-0602744
(IRS Employer I.D. No.) |
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100 NE Adams Street, Peoria, Illinois
(Address of principal executive offices)
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61629
(Zip Code) |
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Registrant's telephone number, including area code:
(309) 675-1000
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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ].
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
Yes [ X ] No [ ]
At June 30, 2003, 345,048,253 shares of common stock of the Registrant were outstanding.
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SUMMARY OF RESULTS
On July 17, 2003, Caterpillar Inc. (NYSE: CAT) reported second-quarter 2003 sales and revenues of $5.93 billion and profit of $399 million or $1.15 per share. Through the first half of the year, sales and revenues were $10.75 billion and profit was $528 million or $1.52 per share.
Sales and revenues were a record $5.93 billion, up 12 percent compared to $5.29 billion in the second quarter 2002. The increase was primarily due to a favorable currency impact of $221 million (due mainly to the stronger euro and Australian dollar), higher machinery and engine volume of $213 million and improved revenue yield of $107 million. In addition, Financial Products' revenues for the second quarter increased $55 million or about 15 percent compared to the second quarter 2002.
"Even though many economic indicators have not improved from a year ago, our sales this quarter are encouraging although sales mix remains challenging," said Chairman and CEO Glen Barton. "We are seeing signs that a replacement cycle has begun in our machinery business after a long waiting period. Certainly we saw evidence of this trend in sales to our dealers' rental operations, which jumped this quarter from a year ago, as dealers updated their rental fleets."
Profit of $399 million or $1.15 per share increased 99 percent compared to $200 million or 58 cents per share in the second quarter 2002 due to $107 million improved revenue yield, $138 million lower core operating costs and $44 million favorable net currency impact. Partially offsetting these favorable items was $69 million of higher retiree pension, healthcare and related benefit costs and the $22 million net unfavorable impact of changes in emissions standards. We also experienced unfavorable sales mix, which more than offset the favorable profit impact of additional machinery and engine sales volume, resulting in a net unfavorable profit impact of $10 million.
"These strong results demonstrate the real and sustainable benefits of 6 Sigma projects company-wide," said Barton. "We are redesigning processes with 6 Sigma and driving efficiencies throughout the company. Overall, the 6 Sigma benefits are accruing faster than we expected."
"Political and economic uncertainty continued in the second quarter, but we made significant progress by focusing on areas we could control. We held the gains on revenue yield, controlled costs and continued to produce quality products our customers value," Barton concluded.
OUTLOOK
"We now expect 2003 sales and revenues to be up about 10 percent. Full-year profit per share is expected to be in the range of $2.75 to $2.90," Barton said.
Caterpillar Inc.
Consolidated Statement of Results of Operations
(Unaudited)
(Dollars in millions except per share data)
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Three Months Ended |
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June 30,
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2003
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2002
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Sales and revenues: |
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|
|
|
|
|
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Sales of Machinery and Engines |
$ |
5,501 |
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$ |
4,915 |
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Revenues of Financial Products |
|
431 |
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|
376 |
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|
|
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Total sales and revenues |
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5,932 |
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5,291 |
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Operating costs: |
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Cost of goods sold |
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4,329 |
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3,974 |
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Selling, general and administrative expenses |
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604 |
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|
502 |
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Research and development expenses |
|
169 |
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|
186 |
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Interest expense of Financial Products |
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118 |
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|
135 |
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Other operating expenses |
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126 |
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101 |
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Total operating costs |
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5,346 |
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4,898 |
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Operating profit |
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586 |
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|
393 |
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Interest expense excluding Financial Products |
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65 |
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|
71 |
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Other income (expense) |
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33 |
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(27) |
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Consolidated profit before taxes |
|
554 |
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|
295 |
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Provision for income taxes |
|
155 |
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|
89 |
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Profit of consolidated companies |
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399 |
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|
206 |
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Equity in profit (loss) of unconsolidated affiliated companies
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- |
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(6) |
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Profit |
$ |
399 |
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$ |
200 |
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Profit per common share |
$ |
1.16 |
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$ |
0.58 |
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Profit per common share - diluted 1 |
$ |
1.15 |
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$ |
0.58 |
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Weighted average common shares (millions) |
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- Basic |
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344.7 |
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344.0 |
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- Diluted 1 |
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348.4 |
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348.2 |
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Cash dividends paid per common share |
$ |
0.35 |
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$ |
0.35 |
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1
Diluted by assumed exercise of stock options, using the treasury stock method. |
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See accompanying notes to Consolidated Financial Statements.
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Caterpillar Inc.
Consolidated Statement of Results of Operations
(Unaudited)
(Dollars in millions except per share data)
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Six Months Ended |
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June 30,
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2003
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2002
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Sales and revenues: |
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Sales of Machinery and Engines |
$ |
9,925 |
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$ |
8,959 |
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Revenues of Financial Products |
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828 |
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|
741 |
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|
|
|
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Total sales and revenues |
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10,753 |
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9,700 |
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Operating costs: |
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|
|
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Cost of goods sold |
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7,959 |
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7,281 |
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Selling, general and administrative expenses |
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1,174 |
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|
1,049 |
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Research and development expenses |
|
321 |
|
|
357 |
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Interest expense of Financial Products |
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238 |
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|
258 |
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Other operating expenses |
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248 |
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|
192 |
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|
|
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Total operating costs |
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9,940 |
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9,137 |
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Operating profit |
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813 |
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|
563 |
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Interest expense excluding Financial Products |
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131 |
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|
140 |
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Other income (expense) |
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46 |
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(7) |
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Consolidated profit before taxes |
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728 |
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|
416 |
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Provision for income taxes |
|
204 |
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125 |
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Profit of consolidated companies |
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524 |
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291 |
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Equity in profit (loss) of unconsolidated affiliated companies
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4 |
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(11) |
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Profit |
$ |
528 |
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$ |
280 |
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Profit per common share |
$ |
1.53 |
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$ |
0.81 |
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Profit per common share - diluted 1 |
$ |
1.52 |
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$ |
0.81 |
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Weighted average common shares (millions) |
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- Basic |
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344.5 |
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343.8 |
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- Diluted 1 |
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347.3 |
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348.0 |
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Cash dividends paid per common share |
$ |
0.70 |
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$ |
0.70 |
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1 Diluted by assumed exercise of stock options, using the treasury stock method. |
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See accompanying notes to Consolidated Financial Statements.
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Caterpillar Inc.
Consolidated Statement of Changes in Stockholders' Equity
For the Six Months Ended
(Unaudited)
(Millions of dollars)
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June 30, |
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June 30, |
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2003
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2002
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Common stock: |
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|
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|
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Balance at beginning of period |
$ |
1,034 |
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|
|
$ |
1,043 |
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Common shares issued from treasury stock
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(4) |
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(17) |
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|
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|
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|
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Balance at end of period |
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1,030 |
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|
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1,026 |
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| |
|
|
|
|
|
|
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Treasury stock: |
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|
|
|
|
|
|
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|
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Balance at beginning of period |
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(2,669) |
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(2,696) |
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Shares issued: 06/30/03 - 793,186; 06/30/02 - 776,758 |
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24 |
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23 |
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Balance at end of period |
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(2,645) |
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(2,673) |
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Profit employed in the business: |
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|
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Balance at beginning of period |
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7,849 |
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|
|
|
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7,533 |
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Profit |
|
528 |
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$ |
528 |
|
|
280 |
|
$ |
280 |
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Dividends declared |
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(241) |
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(240) |
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| |
|
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|
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Balance at end of period |
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8,136 |
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|
|
|
|
7,573 |
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|
|
|
|
|
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Accumulated other comprehensive income: |
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|
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Foreign currency translation adjustment: |
|
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|
|
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| |
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Balance at beginning of period |
|
86 |
|
|
|
|
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(17) |
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|
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| |
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Aggregate adjustment for period |
|
124 |
|
|
124 |
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|
54 |
|
|
54 |
|
|
|
|
|
|
|
|
|
| |
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Balance at end of period |
|
210 |
|
|
|
|
|
37 |
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| |
|
|
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Minimum pension liability adjustment - consolidated companies: |
|
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|
|
|
|
|
|
|
|
|
| |
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Balance at beginning of period
(net of tax of: 06/30/03-$383; 06/30/02-$82) |
|
(771) |
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|
|
|
|
(161) |
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| |
|
Aggregate adjustment for period |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
| |
|
Balance at end of period
(net of tax of: 06/30/03-$383; 06/30/02-$82) |
|
(771) |
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|
|
|
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(161) |
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| |
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Minimum pension liability adjustment - unconsolidated companies: |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Balance at beginning of period |
|
(37) |
|
|
|
|
|
(41) |
|
|
|
| |
|
Aggregate adjustment for period |
|
(1) |
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|
(1) |
|
|
4 |
|
|
4 |
|
|
|
|
|
|
|
|
|
| |
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Balance at end of period |
|
(38) |
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|
|
|
|
(37) |
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| |
|
|
|
|
|
|
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Derivative financial instruments: |
|
|
|
|
|
|
|
|
|
|
|
| |
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Balance at beginning of period
(net of tax of: 06/30/03-$5; 06/30/02-$17) |
|
11 |
|
|
|
|
|
(26) |
|
|
|
| |
|
Gains/(losses) deferred during period
(net of tax of: 06/30/03-$10; 06/30/02-$2) |
|
(19) |
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|
(19) |
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3 |
|
|
3 |
| |
|
(Gains)/losses reclassified to earnings
(net of tax of: 06/30/03-$10; 06/30/02-$14) |
|
20 |
|
|
20 |
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|
27 |
|
|
27 |
| |
|
|
|
|
|
|
|
|
| |
|
Balance at end of period
(net of tax of: 06/30/03-$15; 06/30/02-$1) |
|
12 |
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
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Available-for-sale securities: |
|
|
|
|
|
|
|
|
|
|
|
| |
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Balance at beginning of period
(net of tax of: 06/30/03-$17; 06/30/02-$13) |
|
(31) |
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|
|
|
|
(24) |
|
|
|
| |
|
Gains/(losses) deferred during period
(net of tax of: 06/30/03-$6; 06/30/02-$6) |
|
11 |
|
|
11 |
|
|
(12) |
|
|
(12) |
| |
|
(Gains)/losses reclassified to earnings
(net of tax of 06/30/03-$9; 06/30/02-$14) |
|
16 |
|
|
16 |
|
|
25 |
|
|
25 |
|
|
|
|
|
|
|
|
|
| |
|
Balance at end of period
(net of tax of: 06/30/03-$2; 06/30/02-$5) |
|
(4) |
|
|
|
|
|
(11) |
|
|
|
| |
|
|
|
|
|
|
|
|
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Total accumulated other comprehensive income |
|
(591) |
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|
|
|
|
(168) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Comprehensive income |
|
|
|
$ |
679 |
|
|
|
|
$ |
381 |
| |
|
|
|
|
|
|
|
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Stockholders' equity at end of period |
$ |
5,930 |
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|
|
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$ |
5,758 |
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See accompanying notes to Consolidated Financial Statements.
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Caterpillar Inc .
Consolidated Statement of Financial Position
(Unaudited)
(Millions of dollars)
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|
|
June 30, |
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December 31, |
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|
|
2003
|
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2002
|
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Assets |
|
|
|
|
|
|
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Current Assets: |
|
|
|
|
|
|
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Cash and short-term investments |
|
$ |
309 |
|
$ |
309 |
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Receivables - trade and other |
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|
3,250 |
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|
2,838 |
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Receivables - finance |
|
|
6,927 |
|
|
6,748 |
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Deferred and refundable income taxes |
|
|
693 |
|
|
642 |
|
|
|
Prepaid expenses |
|
|
1,361 |
|
|
1,328 |
|
|
|
Inventories |
|
|
2,949 |
|
|
2,763 |
|
|
|
|
|
|
|
|
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Total current assets |
|
|
15,489 |
|
|
14,628 |
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Property, plant and equipment - net |
|
|
7,034 |
|
|
7,046 |
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Long-term receivables - trade and other |
|
|
72 |
|
|
66 |
|
|
Long-term receivables - finance |
|
|
6,918 |
|
|
6,714 |
|
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Investments in unconsolidated affiliated companies |
|
|
784 |
|
|
747 |
|
|
Deferred income taxes |
|