FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _______________
Commission File No. 1-768
CATERPILLAR INC.
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
37-0602744
(I.R.S. Employer Identification No.)
100 NE Adams Street, Peoria, Illinois
(Address of principal executive offices)
61629
(Zip Code)
(309) 675-1000
(Registrant's telephone number, including area code)
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 _____.
At September 30, 1994, 202,628,481 shares of common stock of the Registrant
were outstanding.
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CATERPILLAR INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
Statement of Consolidated Results of Operations
(Unaudited)
(Millions of dollars except per share data)
Three Months Ended Nine Months Ended
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
1994 1993 1994 1993
MACHINERY AND ENGINES:
Sales ................................ $3,390 $ 2,750 $10,063 $ 8,168
------ ------ ------ ------
Operating costs:
Cost of goods sold ................. 2,674 2,224 7,887 6,694
Selling, general and
administrative expenses .......... 332 306 974 903
Research and development expenses .. 69 78 229 229
------ ------ ------ ------
3,075 2,608 9,090 7,826
------ ------ ------ ------
Operating profit ..................... 315 142 973 342
Interest expense ..................... 49 66 150 207
------ ------ ------ ------
266 76 823 135
Net interest income on U.S. tax
settlement ........................ - 251 - 251
Other income ......................... 23 31 36 73
------ ------ ------ ------
Profit before taxes .................. 289 358 859 459
------ ------ ------ ------
FINANCIAL PRODUCTS:
Revenues ............................. 119 95 337 279
------ ------ ------ ------
Operating costs:
Selling, general and
administrative expenses .......... 46 41 136 116
Interest expense ................... 54 44 151 128
------ ------ ------ ------
100 85 287 244
------ ------ ------ ------
Operating profit ..................... 19 10 50 35
Other income (expense) ............... 4 8 (2) 16
------ ------ ------ ------
<PAGE>
Profit before taxes .................. 23 18 48 51
------ ------ ------ ------
CONSOLIDATED PROFIT BEFORE TAXES ....... 312 376 907 510
Provision (credit) for income taxes .. 75 (54) 254 (22)
------ ------ ------ ------
Profit of consolidated companies ..... 237 430 653 532
Equity in profit (loss) of
affiliated companies (Note 9) ...... 7 2 23 1
------ ------ ------ ------
PROFIT ................................. $ 244 $ 432 $ 676 $ 533
====== ====== ====== ======
PROFIT PER SHARE OF COMMON STOCK (NOTE 11):
Profit ............................... $ 1.20 $ 2.13 $ 3.32 $ 2.64
====== ====== ====== ======
Cash dividends paid per share of
common stock ......................... $ .15 $ .08 $ .30 $ .28
See accompanying notes to Consolidated Financial Statements.
<PAGE>
CATERPILLAR INC.
Statement of Financial Position *
(Dollars in millions)
CONSOLIDATED
(Caterpillar Inc.
and subsidiaries)
Sep. 30, Dec. 31,
1994 1993
ASSETS
Current assets:
Cash and short-term investments ................. $ 333 $ 83
Receivables -- trade and other .................. 3,009 2,637
Receivables -- finance .......................... 1,167 988
Deferred income taxes and prepaid expenses ...... 817 838
Inventories (Notes 5 and 10) .................... 1,731 1,525
------- -------
Total current assets .............................. 7,057 6,071
Land, buildings, machinery, and equipment -- net .. 3,697 3,827
Long-term receivables -- trade and other .......... 140 132
Long-term receivables -- finance .................. 2,534 2,152
Investments in affiliated companies (Note 9) ...... 441 395
Investments in Financial Products subsidiaries .... - -
Deferred income taxes ............................. 1,358 1,321
Intangible assets ................................. 353 353
Other assets ...................................... 333 556
------- -------
TOTAL ASSETS ........................................ $15,913 $14,807
======= =======
LIABILITIES
Current liabilities:
Short-term borrowings ........................... $ 953 $ 822
Accounts payable and accrued expenses ........... 2,504 2,055
Accrued wages, salaries, and employee benefits .. 973 957
Dividends payable ............................... - 15
Deferred and current income taxes payable ....... 190 111
Long-term debt due within one year .............. 835 711
------- -------
Total current liabilities ......................... 5,455 4,671
Long-term debt due after one year ................. 3,892 3,895
Liability for postemployment benefits ............. 3,739 4,018
Deferred income taxes ............................. 28 24
------- -------
TOTAL LIABILITIES ................................... 13,114 12,608
------- -------
<PAGE>
STOCKHOLDERS' EQUITY
Common stock of $1.00 par value:
Authorized shares: 450,000,000
Outstanding shares (Sep. 30, 1994 -- 202,628,481
[after deducting 1,095,175 treasury shares];
Dec. 31, 1993 -- 203,723,656 at paid-in amount
(Note 11)...................................... 867 835
Profit employed in the business ................... 1,763 1,234
Minimum pension liability adjustment............... (40) (40)
Foreign currency translation adjustment ........... 209 170
------- -------
TOTAL STOCKHOLDERS' EQUITY .......................... 2,799 2,199
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......... $15,913 $14,807
======= =======
See accompanying notes to Consolidated Financial Statements.
* Unaudited except for Consolidated December 31, 1993 amounts.
<PAGE>
CATERPILLAR INC.
Statement of Financial Position *
(Dollars in millions)
SUPPLEMENTAL CONSOLIDATING DATA
MACHINERY AND ENGINES
(Caterpillar Inc. with Financial
Products on the equity basis)
Sep. 30, Dec. 31,
1994 1993
ASSETS
Current assets:
Cash and short-term investments ................. $ 305 $ 62
Receivables -- trade and other .................. 2,942 2,612
Receivables -- finance .......................... - -
Deferred income taxes and prepaid expenses ...... 817 869
Inventories (Notes 5 and 10) .................... 1,731 1,525
------- -------
Total current assets .............................. 5,795 5,068
Land, buildings, machinery, and equipment -- net .. 3,288 3,456
Long-term receivables -- trade and other .......... 140 132
Long-term receivables -- finance .................. - -
Investments in affiliated companies (Note 9) ...... 441 395
Investments in Financial Products subsidiaries .... 521 457
Deferred income taxes ............................. 1,358 1,334
Intangible assets ................................. 353 353
Other assets ...................................... 142 398
------- -------
TOTAL ASSETS ........................................ $12,038 $11,593
======= =======
LIABILITIES
Current liabilities:
Short-term borrowings ........................... $ 45 $ 139
Accounts payable and accrued expenses ........... 2,279 1,925
Accrued wages, salaries, and employee benefits .. 971 955
Dividends payable ............................... - 15
Deferred and current income taxes payable ....... 134 71
Long-term debt due within one year .............. 109 218
------- -------
Total current liabilities ......................... 3,538 3,323
Long-term debt due after one year ................. 1,935 2,030
Liability for postemployment benefits ............. 3,739 4,018
Deferred income taxes ............................. 27 23
------- -------
TOTAL LIABILITIES ................................... 9,239 9,394
------- -------
<PAGE>
STOCKHOLDERS' EQUITY
Common stock of $1.00 par value:
Authorized shares: 450,000,000
Outstanding shares (Sep. 30, 1994 -- 202,628,481
[after deducting 1,095,175 treasury shares];
Dec. 31, 1993 -- 203,723,656 at paid-in amount
(Note 11)...................................... 867 835
Profit employed in the business ................... 1,763 1,234
Minimum pension liability adjustment .............. (40) (40)
Foreign currency translation adjustment ........... 209 170
------- -------
TOTAL STOCKHOLDERS' EQUITY .......................... 2,799 2,199
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......... $12,038 $11,593
======= =======
The supplemental consolidating data is presented for the purpose of
additional analysis and to provide required supplemental disclosure
of information about the Financial Products subsidiaries.
See accompanying notes to Consolidated Financial Statements.
* Unaudited except for Consolidated December 31, 1993 amounts.
<PAGE>
CATERPILLAR INC.
Statement of Financial Position *
(Dollars in millions)
SUPPLEMENTAL CONSOLIDATING DATA
FINANCIAL PRODUCTS
Sep. 30, Dec. 31,
1994 1993
ASSETS
Current assets:
Cash and short-term investments ................. $ 28 $ 21
Receivables -- trade and other .................. 77 63
Receivables -- finance .......................... 1,167 988
Deferred income taxes and prepaid expenses ...... 3 2
Inventories (Notes 5 and 10) .................... - -
------- -------
Total current assets .............................. 1,275 1,074
Land, buildings, machinery, and equipment -- net .. 409 371
Long-term receivables -- trade and other .......... - -
Long-term receivables -- finance .................. 2,534 2,152
Investments in affiliated companies (Note 9) ...... - -
Investments in Financial Products subsidiaries .... - -
Deferred income taxes ............................. - -
Intangible assets ................................. - -
Other assets ...................................... 191 158
------- -------
TOTAL ASSETS ........................................ $ 4,409 $ 3,755
======= =======
LIABILITIES
Current liabilities:
Short-term borrowings ........................... $ 908 $ 683
Accounts payable and accrued expenses ........... 238 201
Accrued wages, salaries, and employee benefits .. 2 2
Dividends payable ............................... - -
Deferred and current income taxes payable ....... 56 40
Long-term debt due within one year .............. 726 493
------- -------
Total current liabilities ......................... 1,930 1,419
Long-term debt due after one year ................. 1,957 1,865
Liability for postemployment benefits ............. - -
Deferred income taxes ............................. 1 14
------- -------
TOTAL LIABILITIES ................................... 3,888 3,298
------- -------
<PAGE>
STOCKHOLDERS' EQUITY
Common stock of $1.00 par value:
Authorized shares: 450,000,000
Outstanding shares (Sep. 30, 1994 -- 202,628,481
[after deducting 1,095,175 treasury shares];
Dec. 31, 1993 -- 203,723,656 at paid-in amount
(Note 11)....................................... 283 258
Profit employed in the business ................... 238 206
Minimum pension liability adjustment............... - -
Foreign currency translation adjustment ........... 0 (7)
------- -------
TOTAL STOCKHOLDERS' EQUITY .......................... 521 457
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......... $ 4,409 $ 3,755
======= =======
The supplemental consolidating data is presented for the purpose of
additional analysis and to provide required supplemental disclosure
of information about the Financial Products subsidiaries.
See accompanying notes to Consolidated Financial Statements.
* Unaudited except for Consolidated December 31, 1993 amounts.
<PAGE>
CATERPILLAR INC.
Statement of Cash Flows for Nine Months Ended
(Unaudited)
(Millions of dollars)
CONSOLIDATED
(Caterpillar Inc.
and subsidiaries)
Sep. 30, Sep. 30,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit ............................................ $ 676 $ 533
Adjustments for noncash items:
Depreciation and amortization ..................... 509 503
Profit of Financial Products ...................... - -
Other ............................................. 75 (112)
Changes in assets and liabilities:
Receivables -- trade and other .................. (353) (766)
Inventories ..................................... (206) 163
Accounts payable and accrued expenses ........... 404 228
Other -- net .................................... 66 95
------- -------
Net cash provided by operating activities ........... 1,171 644
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -- excluding equipment
leased to others ................................ (285) (251)
Expenditures for equipment leased to others ....... (128) (135)
Proceeds from disposals of land, buildings,
machinery, and equipment ........................ 76 71
Additions to finance receivables .................. (2,048) (1,366)
Collections of finance receivables ................ 1,254 967
Proceeds from sale of finance receivables.......... 241 -
Other -- net ...................................... (49) (58)
------- -------
Net cash used for investing activities .............. (939) (772)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Dividends paid .................................... (61) (45)
Common stock issued, including treasury
shares reissued ................................. 12 27
Treasury shares purchased.......................... (116) -
Proceeds from long-term debt issued ............... 707 838
Payments on long-term debt ........................ (601) (468)
Short-term borrowings -- net ...................... 74 (232)
------- -------
Net cash provided by financing activities ........... 15 120
------- -------
Effect of exchange rate changes on cash ............. 3 (25)
------- -------
<PAGE>
Increase (decrease) in cash and
short-term investments ............................ 250 (33)
Cash and short-term investments at the
beginning of the period ........................... 83 119
------- -------
Cash and short-term investments at the
end of the period ................................. $ 333 $ 86
======= =======
All short-term investments, which consist primarily of highly liquid
investments with original maturities of three months or less, are considered
to be cash equivalents.
See accompanying notes to Consolidated Financial Statements.
<PAGE>
CATERPILLAR INC.
Statement of Cash Flows for Nine Months Ended
(Unaudited)
(Millions of dollars)
SUPPLEMENTAL CONSOLIDATING DATA
MACHINERY AND ENGINES
(Caterpillar Inc. with Financial
Products on the equity basis)
Sep. 30, Sep. 30,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit ............................................ $ 676 $ 533
Adjustments for noncash items:
Depreciation and amortization ................... 441 454
Profit of Financial Products .................... (32) (32)
Other ........................................... 58 (151)
Changes in assets and liabilities:
Receivables -- trade and other .................. (311) (727)
Inventories ..................................... (206) 163
Accounts payable and accrued expenses ........... 320 190
Other -- net .................................... 81 104
------- -------
Net cash provided by operating activities ........... 1,027 534
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -- excluding equipment
leased to others ................................ (284) (250)
Expenditures for equipment leased to others ....... (4) (9)
Proceeds from disposals of land, buildings,
machinery, and equipment ........................ 12 43
Additions to finance receivables .................. - -
Collections of finance receivables ................ - -
Proceeds from sale of finance receivables.......... - -
Other -- net ...................................... (46) (59)
------- -------
Net cash used for investing activities .............. (322) (275)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Dividends paid .................................... (61) (45)
Common stock issued, including treasury
shares reissued ................................. 12 27
Treasury shares purchased.......................... (116) -
Proceeds from long-term debt issued ............... - 201
Payments on long-term debt ........................ (215) (114)
Short-term borrowings -- net ...................... (84) (369)
------- -------
Net cash used for financing activities .............. (464) (300)
------- -------
<PAGE>
Effect of exchange rate changes on cash ............. 2 (10)
------- -------
Increase (decrease) in cash and
short-term investments ............................ 243 (51)
Cash and short-term investments at the
beginning of the period ........................... 62 104
------- -------
Cash and short-term investments at the
end of the period ................................. $ 305 $ 53
======= =======
The supplemental consolidating data is presented for the purpose of
additional analysis and to provide supplemental disclosure of
information about the Financial Products subsidiaries.
See accompanying notes to Consolidated Financial Statements.
<PAGE>
CATERPILLAR INC.
Statement of Cash Flows for Nine Months Ended
(Unaudited)
(Millions of dollars)
SUPPLEMENTAL CONSOLIDATING DATA
FINANCIAL PRODUCTS
Sep. 30, Sep. 30,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit ............................................ $ 32 $ 32
Adjustments for noncash items:
Depreciation and amortization ................... 68 49
Profit of Financial Products .................... - -
Other ........................................... 17 30
Changes in assets and liabilities:
Receivables -- trade and other .................. (14) 18
Inventories ..................................... - -
Accounts payable and accrued expenses ........... 26 (43)
Other -- net .................................... 15 25
------- -------
Net cash provided by operating activities ........... 144 111
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -- excluding equipment
leased to others ................................ (1) (1)
Expenditures for equipment leased to others ....... (124) (126)
Proceeds from disposals of land, buildings,
machinery, and equipment ........................ 64 28
Additions to finance receivables .................. (2,048) (1,366)
Collections of finance receivables ................ 1,254 967
Proceeds from sale of finance receivables.......... 241 -
Other -- net ...................................... (28) -
------- -------
Net cash used for investing activities .............. (642) (498)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Dividends paid .................................... - -
Common stock issued, including treasury
shares reissued ................................. 25 -
Treasury shares purchased.......................... - -
Proceeds from long-term debt issued ............... 707 637
Payments on long-term debt ........................ (386) (354)
Short-term borrowings -- net ...................... 158 137
------- -------
Net cash provided by financing activities ........... 504 420
------- -------
Effect of exchange rate changes on cash ............. 1 (15)
------- -------
<PAGE>
Increase (decrease) in cash and
short-term investments ............................ 7 18
Cash and short-term investments at the
beginning of the period ........................... 21 15
------- -------
Cash and short-term investments at the
end of the period ................................. $ 28 $ 33
======= =======
The supplemental consolidating data is presented for the purpose of
additional analysis and to provide supplemental disclosure of
information about the Financial Products subsidiaries.
See accompanying notes to Consolidated Financial Statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions except per share data)
1. In the opinion of management, all adjustments, consisting only of normal
recurring adjustments necessary for a fair presentation of (a) the
consolidated results of operations for the three- and nine-month periods
ended September 30, 1994 and 1993, (b) the consolidated financial
position at September 30, 1994 and December 31, 1993, and (c) the
consolidated statement of cash flows for the nine-month periods ended
September 30, 1994 and 1993 have been made.
2. The results for the three- and nine-month periods ended September 30,
1994 are not necessarily indicative of the results for the entire year
1994.
3. When inflationary effects are material, the company removes certain
components of foreign currency exchange gains and losses arising from
operations in Brazil's highly inflationary economy from "Other income"
on the Statement of Consolidated Results of Operations and includes these
amounts on the operating statement lines where the related inflationary
effects are reported. Consequently, exchange gains and losses on local
currency denominated debt and cash deposits, where the interest rates
reflect the rate of inflation, are offset against interest expense or
interest income, respectively. Similarly, exchange gains on local
currency liabilities subject to monetary correction are offset against
the related expense.
4. The company enters into contracts to buy and sell foreign currencies in
the future only to protect the U.S. dollar value of certain currency
positions and future foreign currency transactions. The company does
not engage in speculation. At September 30, 1994, the company had
approximately $984 in contracts to buy or sell foreign currency in the
future. The carrying value of such contracts was $0 and the fair market
value was a liability of $95.
5. In the first quarter of 1994, the company changed its method of computing
LIFO ("last-in, first-out") inventories from a single pool approach to a
multiple pool approach for substantially all of its inventories. The
company believes that the multiple pool method results in a better
matching of revenues and expenses. The cumulative effect of the change
on prior years was not determinable. This change is not expected to have
a material effect on 1994 or subsequent years' results of operations or
financial position.
<PAGE>
6. In May 1993, the Financial Accounting Standards Board issued
FAS No. 114 - Accounting by Creditors for Impairment of a Loan, which
was amended by FAS No. 118 in October 1994. These new standards require
that impaired loans within the scope of the statements be measured on the
present value of expected future cash flows discounted at the loan's
effective interest rate, or, as a practical expedient, at the loans'
observable market price or the fair value of the collateral if the loan
is collateral dependent. The company is required to adopt these
standards in 1995. The company believes that it is already in
compliance with these standards, except for a footnote disclosure that
will be added to the 1994 year-end financial statements. These standards
will not have a material effect on the company's financial position or
results of operations.
7. The company has reviewed the status of its environmental and legal
contingencies and believes there are no material changes from that
disclosed in Form 10-K for the year ended December 31, 1993, except
for the change in the legal matter discussed below.
In the first quarter of 1994, a charge of $17 million was recorded
related to the probable settlement of two related class action complaints
filed against the company and certain of its officers and directors in
1990. The complaints were consolidated in 1991 and alleged, among other
things, violations of certain provisions of the federal securities laws.
The decision to settle in no way acknowledges any wrongdoing on the part
of the company, its officers or directors, but was deemed to be the most
cost-effective resolution. The company believes a substantial portion
of the cost of the settlement will ultimately be reimbursed under the
company's insurance coverage, although no recovery has been recorded.
8. Third-quarter 1993 results included a tax credit of $144 million related
to a settlement with the U.S. Internal Revenue Service covering tax years
1979 through 1987. Net interest income of $251 million associated with
the refund was also recorded, upon which tax expenses of $95 million was
provided. In addition, third-quarter 1993 results included a tax credit
of $36 million for the revaluations of net U.S. deferred tax assets to
reflect a change in the U.S. corporate income tax rate from 34% to 35%.
<PAGE>
9. Affiliated Companies
The company's investments in affiliated companies consist principally of
a 50% interest in Shin Caterpillar Mitsubishi Ltd., Japan $(414). The
other 50% owner of this company is Mitsubishi Heavy Industries, Ltd.,
Japan.
Combined financial information of the affiliated companies, as
translated to U.S. dollars, was as follows:
Three Months Ended Nine Months Ended
Jun. 30, Jun. 30, Jun. 30, Jun. 30,
1994 1993 1994 1993
RESULTS OF OPERATIONS
(Unaudited)
Sales ..................... $ 832 $ 722 $2,430 $2,204
====== ====== ====== ======
Profit (loss) ............. $ 12 $ 3 $ 37 $ (4)
====== ====== ====== ======
Jun. 30, Sep. 30,
1994 1993
FINANCIAL POSITION
(Unaudited)
Assets:
Current assets ................................. $1,874 $1,691
Land, buildings, machinery and equipment - net.. 785 750
Other assets ................................... 303 310
------ ------
2,962 2,751
------ ------
Liabilities:
Current liabilities ............................ 1,632 1,441
Long-term debt due after one year .............. 345 449
Other liabilities .............................. 129 90
------ ------
2,106 1,980
------ ------
Ownership ........................................ $ 856 $ 771
====== ======
<PAGE>
10. Inventories (principally "last-in, first-out" method) comprised the
following:
Sep. 30, Dec. 31,
1994 1993
(unaudited)
Raw materials and work-in-process ................ $ 672 $ 545
Finished goods ................................... 878 812
Supplies ......................................... 181 168
------ ------
$1,731 $1,525
====== ======
11. Following is a computation of profit per share:
Three Months Ended Nine Months Ended
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
1994 1993 1994 1993
(Unaudited)
I. Net profit for period:
Profit - consolidated (A) ....... $ 244 $ 432 $ 676 $ 533
====== ====== ====== =======
II. Determination of shares (millions):
Weighted average number of
common shares outstanding (B) .. 203.0 203.0 203.5 202.4
Shares issuable on exercise of
stock options, net of shares
assumed to be purchased out
of proceeds at market price .... 2.2 1.8 2.1 1.8
------ ------ ------ -------
Average common shares
outstanding for fully diluted
computation (C) ................ 205.2 204.8 205.6 204.1
====== ====== ====== =======
III. Profit per share of common
stock:
Assuming no dilution (A/B) ...... $1.20 $2.13 $3.32 $2.64
Assuming full dilution (A/C) .... $1.19 $2.11 $3.29 $2.61
A two-for-one stock split in the form of a 100% stock dividend was
effective August 9, 1994. All per share information shown herein
reflects the split.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND LIQUIDITY AND CAPITAL RESOURCES
A. Consolidated Results of Operations
THREE MONTHS ENDED SEPTEMBER 30, 1994 VS. THREE MONTHS ENDED SEPTEMBER 30,
1993
The company reported the third consecutive quarter of record profit.
Profit of $244 million and profit per share of $1.20 were records after
excluding $336 million of nonrecurring tax-related items from third quarter
1993. Excluding these nonrecurring items, third-quarter 1994 profit improved
$148 million or 72 cents per share from the year ago level. Sales and
revenues of $3.51 billion were a record for a third quarter and the second
highest for any quarter ever. A 19% increase in physical sales volume was the
most significant factor contributing to the higher profit.
Since June 21, 1994, the United Auto Workers (UAW) union has been on
strike at eight of the U.S. facilities whose hourly employees are represented
by the UAW. The strike had virtually no impact on third-quarter sales or
profit. Sales were higher than expected at the time of the issuance of our
second-quarter report as production and shipment schedules were quickly ramped
up to meet customer needs. (See Labor Update and Outlook sections for
additional information.)
The work effort and level of cooperation and teamwork in meeting customer
requirements and maintaining Caterpillar's traditional product quality have
been exceptional. Customer acceptance of Caterpillar products continues to
grow as demonstrated by an increasing share of the global market, which is at
an all-time high.
A two-for-one stock split in the form of a 100% stock dividend was
effective August 9, 1994, as previously announced. All per share information
shown herein reflects the split.
Machinery and Engines
Sales of Machinery and Engines were $3.39 billion, $640 million higher
than third-quarter 1993. The improved sales reflect a 19% increase in
physical sales volume and a 4% increase in price realization. Profit before
tax was $289 million, an increase of $182 million from profit of $107 million
a year ago (excluding net interest income of $251 million on the nonrecurring
U.S. tax settlement). The higher physical sales volume was the primary reason
for the improvement in profit.
Sales volume increased significantly both inside and outside the United
States, a result of improved worldwide demand. Price realization improved
because of price increases taken over the past year and from the impact of
stronger European currencies as sales translated into more U.S. dollars.
Margin (sales less cost of goods sold) was up $190 million principally
because of higher sales. As a percent of sales, the margin rate of 21.1% was
2.0 percentage points higher than third quarter 1993. The improvement
resulted from higher sales volume and improved price realization. The
improvement was partially offset by proportionately higher increases in sales
of lower margin products, by the impact on costs from stronger European
currencies as European costs translated into more U.S. dollars, and by the
<PAGE>
absence of $15 million of LIFO (last-in, first-out) inventory decrement
benefits recorded in the third quarter of 1993.
The favorable impact on margin resulting from the absence of labor costs
for UAW-represented employees on strike was largely offset by strike-related
costs. These include costs for temporary and contract personnel, overtime,
other incremental expenses related to the strike and the inclusion of labor
costs in cost of goods sold for employees working in manufacturing operations
that are normally included in selling, general and administrative (SG&A) or
research and development (R&D) expense.
Selling, general and administrative expenses of $332 million were $26
million higher than the same quarter last year as a result of increases in
volume-related parts distribution costs, incentive pay expense (related to
the higher profit) and inflation on costs. The increase was partially offset
by the assigning of labor costs for SG&A employees working in manufacturing
areas to cost of goods sold.
Research and development expenses were $69 million, compared with $78
million in the third quarter of 1993. The decline was due to the assigning
of labor costs for R&D employees working in manufacturing functions to cost of
goods sold. This decline was partially offset by increased activity for new
product introductions.
Interest expense declined $17 million for the quarter as average debt
outstanding decreased $892 million compared with third quarter 1993.
Other income/expense was income of $23 million, down $8 million from
income of $31 million a year ago. The decrease reflects the absence of a gain
on the sale of a closed facility at the company's Brazilian subsidiary,
partially offset by a favorable change in foreign exchange gains and losses.
Results of Brazilian operations continued to be profitable and were
significantly better than a year ago; they had no material effect on
third-quarter results for either 1993 or 1994.
Financial Products
Financial Products' profit before tax was $23 million. This represents a
$5 million increase from the same quarter last year and resulted from a
favorable adjustment to insurance reserves at Caterpillar Insurance Company,
Ltd. and a larger portfolio of earning assets at Caterpillar Financial
Services Corporation.
Revenues were $119 million, compared with $95 million a year ago. The
increase reflects Cat Financial's larger portfolio. Cat Financial financed
new retail business of $496 million, a $9 million increase compared with the
third quarter of 1993.
Selling, general and administrative expenses increased $5 million, a
result of higher depreciation of equipment on operating leases and other
volume-related expenses at Cat Financial. Partially offsetting the increase
was a favorable adjustment of $3 million to insurance reserves at Caterpillar
Insurance Company, Ltd. Interest expense was $10 million higher as borrowings
increased to support the larger portfolio.
Income Taxes
The provision for income taxes was $75 million, compared with a credit of
$54 million last year. Third-quarter 1993 results included a tax credit of
$144 million related to a settlement with the U.S. Internal Revenue Service
covering tax years 1979 through 1987. Net interest income of $251 million
<PAGE>
associated with the refund was also recorded, upon which tax expense of $95
million was provided. In addition, third-quarter 1993 results included a tax
credit of $36 million for the revaluation of net U.S. deferred tax assets to
reflect a change in the U.S. corporate income tax rate from 34% to 35%.
Excluding these items, third-quarter 1993 tax expense was $31 million,
resulting from use of a 24% estimated effective annual tax rate.
Third-quarter 1994 tax expense reflects an estimated effective annual tax
rate of 28% and a favorable adjustment of $12 million to recognize the impact
of a tax rate change from 30%, which had been used for the first six months of
the year.
Affiliated Companies
The company's share of affiliated companies' results improved $5 million
from the same quarter last year primarily because of higher sales and
cost-cutting measures at the company's 50%-owned affiliate, Shin Caterpillar
Mitsubishi Ltd. (SCM) in Japan.
THREE MONTHS ENDED SEPTEMBER 30, 1994 VS THREE MONTHS ENDED JUNE 30, 1994
Third-quarter profit of $244 million or $1.20 per share was $4 million
higher than profit of $240 million or $1.18 per share in the second quarter of
this year. Although there was a decline in sales volume, profit improved as a
result of a change in the estimated effective annual tax rate.
Machinery and Engines
Before-tax profit for Machinery and Engines was $289 million, compared
with $320 million for the second quarter. Sales of $3.39 billion were $102
million lower primarily because of traditional vacation shutdowns at various
manufacturing locations during the quarter and was the most significant reason
for the lower profit.
Margin declined $46 million, primarily a result of lower sales. Margin
as a percent of sales was slightly lower than last quarter primarily because
of lower sales volume and higher incentive pay expense. The favorable impact
on margin resulting from the absence of labor costs for UAW-represented
employees on strike was largely offset by strike-related costs. These include
costs for temporary and contract personnel, overtime, other incremental
expenses related to the strike and the inclusion of labor costs in cost of
goods sold for employees working in manufacturing areas that are normally
included in selling, general and administrative or research and development
expense.
Selling, general and administrative expenses were $332 million, compared
with $329 million in the second quarter of this year. The increase was
primarily due to higher incentive pay expense and volume-related parts
distribution expenses, which more than offset assignment of labor costs from
SG&A to cost of goods sold for employees supporting manufacturing operations.
Research and development expense decreased $15 million, a result of
assignment of labor costs to cost of goods sold for employees working in
manufacturing areas.
Interest expense of $49 million and other income/expense of $23 million
of income were both about the same as the second quarter.
<PAGE>
Financial Products
Before-tax profit for Financial Products was $23 million, up $9 million
from the prior quarter. The primary reasons for the increase were a favorable
change in mark to market adjustments for written interest rate caps, a
favorable adjustment to insurance reserves at Caterpillar Insurance Company,
Ltd. and a larger portfolio of earning assets at Caterpillar Financial
Services Corporation.
Income Taxes
Tax expense of $75 million was $25 million lower than the second quarter.
The decline reflects the lower profit before tax and a change in the
estimated effective annual tax rate from 30% to 28%, as well as a favorable
adjustment of $12 million to recognize the impact of the tax rate change.
Affiliated Companies
The company's share of affiliated companies' results was $7 million, up
$1 million from last quarter. An increase in sales and continued cost-cutting
measures at SCM more than offset the absence of $2 million of favorable
non-recurring items recorded in the second quarter.
NINE MONTHS ENDED SEPTEMBER 30, 1994 VS. NINE MONTHS ENDED SEPTEMBER 30, 1993
Profit for the nine months ended September 30, 1994 was $676 million or
$3.32 per share of common stock. Profit for the first nine months of 1993
included nonrecurring tax-related items of $336 million. Excluding these
items from 1993, profit for the first nine months of 1994 was an improvement
of $479 million or $2.34 per share over the same period a year ago. Sales and
revenues of $10.40 billion were $1.95 billion higher than last year and were
the primary reason for the improvement.
Machinery and Engines
Sales were $10.06 billion, an increase of $1.90 billion from the same
period last year. Before-tax profit was $859 million, an improvement of $651
million (excluding net interest income of $251 million on the nonrecurring
U.S. tax settlement). The primary reason for the increase in profit was
higher sales -- a 20% improvement in physical sales volume and a 3%
improvement in price realization.
Margin of $2.18 billion improved $702 million from the first nine months
of 1993, primarily a result of higher sales. As a percent of sales, margin
was 21.6%, an increase of 3.6 percentage points from last year. The increase
was primarily because of higher sales volume and improved price realization,
partially offset by proportionately higher increases in sales of lower margin
products, higher incentive pay expense and the absence of $15 million of LIFO
decrement benefits recorded in the first nine months of 1993.
The favorable impact on margin resulting from the absence of labor costs
for UAW-represented employees on strike was largely offset by strike-related
costs. These include costs for temporary and contract personnel, overtime,
other incremental expenses related to the strike and the inclusion of labor
costs in cost of goods sold for employees working in manufacturing operations
that are normally included in SG&A or R&D expense.
<PAGE>
Selling, general and administrative expenses were $71 million higher than
the same period a year ago, primarily a result of increases in volume-related
parts distribution costs and incentive pay expense. The increase was
partially offset by the assigning of labor costs for SG&A employees working in
manufacturing areas to cost of goods sold. All other costs were about the
same despite inflation.
Research and development expenses were $229 million, the same as the
first nine months of 1993 as increased activity for new product introductions
was offset by reclassification of labor costs to cost of goods sold for
employees working in manufacturing areas.
Interest expense was $56 million lower because of lower debt. Average
debt during the period was $873 million lower than during the first nine
months of 1993.
Other income/expense was income of $36 million, a decline of $37 million
from a year ago. The decrease resulted from reclassification of income from
the company's Voluntary Employees' Beneficiary Association (VEBA) trusts from
other income to a reduction of employee benefit expense. VEBA income included
in operating profit was $18 million in the first nine months of 1994. VEBA
income included in other income/expense in the first nine months of 1993 was
$23 million. In addition, the decline reflects the $17 million charge for the
probable settlement of two class action complaints and the absence of a gain
on the sale of a closed facility at the company's Brazilian subsidiary,
partially offset by a favorable change in foreign exchange gains and losses.
Results of Brazilian operations were significantly better than a year ago
and had no material effect on year-to-date 1994 results.
Financial Products
Before-tax profit for Financial Products was $48 million, down $3 million
from the first nine months of 1993. The decrease was a result of a $14
million unrealized mark to market charge for interest rate caps and swaptions
written by Caterpillar Financial Services Corporation, largely offset by
increased profit from Cat Financial's larger portfolio of earnings assets.
Revenues were $337 million, compared with $279 million in the first nine
months of 1993, reflecting Cat Financial's larger portfolio.
Selling, general, and administrative expenses increased $20 million from
a year ago. The increase was a result of depreciation of equipment on
operating leases and other volume-related expenses at Cat Financial. Interest
expense was $151 million for the first nine months, up $23 million. The
increase was due to higher borrowings to support Cat Financial's larger
portfolio, partially offset by lower borrowing rates.
Other income/expense was expense of $2 million, down from income of $16
million a year ago. The change resulted primarily from a $14 million
unrealized mark to market charge for interest rate caps and swaptions written
by Cat Financial.
Income Taxes
Tax expense was $239 million. Tax expense for the first nine months of
1993 included $85 million of favorable non-recurring items related to a tax
settlement with the U.S. Internal Revenue Service and restatement of net
deferred tax assets as a result of a change in the U.S. corporate tax rate.
Excluding these items, tax expense for the first nine months of last year was
$63 million. The increase of $176 million was a result of higher before-tax
<PAGE>
profit and using an estimated effective annual tax rate of 28%, compared with
24% for the first nine months of 1993.
Affiliated Companies
The company's share of affiliated companies' results was profit of $23
million, a $22 million improvement from a year ago. The improvement was
primarily the result of a gain from the sale of surplus land, higher sales and
cost-cutting measures at Shin Caterpillar Mitsubishi Ltd.
SALES
Following are summaries of third-quarter company and dealer sales
compared with the same quarter in 1993.
Company Sales Inside the United States
Caterpillar sales inside the United States were $1.74 billion, a $354
million or 26% increase from the same quarter a year ago. The improvement was
due primarily to stronger industry demand for machines and engines. Company
sales also benefited from an increased share of industry sales, less seasonal
dealer inventory reduction and higher price realization.
Sales inside the United States were 51% of total sales, compared with 50%
during third quarter 1993.
U.S. Dealer Machine Sales to End-Users
Sales were up considerably from a year ago, with a significant increase
in construction sector market applications more than offsetting a slight
decline in commodity sector applications.
Sales in all construction sectors increased significantly with the
exception of highways, which were up moderately:
- Commercial, industrial and government building sector sales were higher
as construction spending continues to increase in the commercial and
industrial sectors. Governmental building construction has fallen
below year-ago levels.
- Sales to the housing sector remained strong in response to moderately
higher levels of housing starts. Starts, however, remain below the
peak levels reached in the fourth quarter of last year.
- Highway sales were above year-earlier levels as a result of higher
spending on highway construction and repair.
Sales declined slightly in the commodity sectors although good increases
were registered in three of the six market applications:
- Sand and quarry mining sector sales were significantly higher,
reflecting stronger mining activity in response to greater levels of
construction.
- Sales for coal mining applications declined considerably despite higher
mine production and higher prices.
- Metal mining-related sales were much higher than year-earlier levels.
Mine production was up slightly but metals prices were significantly
higher.
- Sales to the forestry sector declined significantly in response to
lower forestry production.
- Agricultural-related sales were unchanged from a year earlier despite a
<PAGE>
generally improved farm economy.
- Sales to the petroleum sector were higher despite a downward trend in
pipeline activity. Oil prices, however, were slightly higher.
Dealer machine sales were significantly above year-earlier levels in
industrial applications (primarily the manufacture and sale of building
materials), reflecting the ongoing improvement in the construction industry.
Sales were about the same into solid waste applications.
U.S. Dealer New Machine Inventories
U.S. dealer new machine inventories were down moderately from the end of
the second quarter but remained about normal relative to current selling
rates. Compared with the close of the third quarter last year, dealer
inventories were significantly higher.
Company Engine Sales Inside the United States
Sales of diesel engines were significantly higher than the same quarter
last year primarily due to higher demand for on-highway truck engines from
Original Equipment Manufacturers (OEMs). Higher levels of freight-handling
activity and relatively low interest rates have pushed OEM-related diesel
engine sales to an all-time high. Sales of turbine engines were moderately
higher.
Company Sales Outside the United States
Caterpillar sales outside the United States were $1.65 billion, a $286
million or 21% increase from third quarter 1993. The improvement was
primarily due to higher machine sales to dealers, the result of higher
industry demand, an increased share of industry sales and higher price
realization.
Sales outside the United States represented 49% of worldwide sales,
compared with 50% during the third quarter last year.
Dealer Machine Sales to End-Users Outside the United States
Dealer sales outside the United States were up considerably from the
third quarter of 1993, a result of moderate industry growth and an increased
share of industry sales. Sales were higher in all regions except the Middle
East and China.
Sales in the industrialized regions were considerably above year-earlier
levels due to strong gains in Canada and Europe:
- Europe: Sales were much higher, reflecting the economic recoveries
under way in nearly all European countries. Sales were significantly
above year-earlier levels in more than half the countries including the
United Kingdom, France, Spain and Scandinavia. Sales were unchanged in
Germany and Italy.
- Canada: End-user demand rose significantly as the industry responded
to good economic growth. Strong gains were registered in all
construction sectors as well as industrial applications, forestry and
coal mining.
- Australia: Sales were unchanged from a year ago despite continued good
economic growth.
- Japan's sales of both imported and domestically-made product are now
above year-ago levels.
End-user demand in the developing regions rose moderately as increases in
<PAGE>
most regions more than offset the few areas of decline:
- Asia (excluding China): Sales were moderately higher as excellent
economic growth continues. Gains were concentrated in the construction
sectors.
- Latin America (excluding Brazil): End-user demand rose significantly
for the region as a whole and for Chile, Mexico and Argentina in
particular.
- Africa and the Middle East: Sales were considerably lower for the
region with a large decline in Turkey. Demand in South Africa,
however, continued to improve.
- Brazil: The successful introduction of a new currency on July 1 of
this year and the initial success of the latest anti-inflation plan
increased public confidence in the future and contributed to much
higher sales.
- Commonwealth of Independent States (CIS): Pipeline sales posted
another good gain.
- China: Delays in major infrastructure projects resulted in lower
sales.
Dealer New Machine Inventories Outside the United States
Dealer new machine inventories outside the United States were virtually
unchanged from the second quarter and remained moderately below normal
relative to current selling rates. Compared with the close of the third
quarter last year, dealer inventories were essentially unchanged.
Company Engine Sales Outside the United States
Sales of diesel engines rose slightly due to higher end-user demand for
engines into power generation and material handling applications as well as
higher OEM demand for truck engines in Mexico and Canada. Sales of turbine
engines were down moderately.
PLANT CLOSING AND CONSOLIDATION COSTS
At September 30, 1994 the reserve for plant closing and consolidation
costs was $333 million. $177 million of this balance related to costs
associated with the probable closure of the Component Products Division's
York, Pennsylvania, facility. Significant costs related to the York portion
of the reserve are employee severance benefits (pension, medical and
supplemental unemployment benefits), rearrangement and start-up costs related
to the relocation of production, and write-down of buildings, machinery and
equipment.
The probable closing of the York facility was announced in December 1991.
The company determined that unless significant cost reductions were made, the
unit would be closed. The company has notified the United Auto Workers union
(UAW), which represents approximately 1,200 of the 1,500 active employees of
the York facility, of its willingness to negotiate a labor agreement that
would allow the unit to remain open. The UAW is currently on strike at eight
U.S. facilities, including York, and no contract has been signed. Unless a
satisfactory contract is reached, the company currently plans to close the
plant in the 1996 time frame.
Also included in the reserve for plant closing and consolidation costs at
September 30, 1994, was $119 million for write-downs of buildings, machinery
<PAGE>
and equipment at previously closed facilities. The write-downs establish a
new cost basis for assets that have been permanently impaired. The remainder
of the reserve at September 30, 1994, related to severance benefits provided
to former employees at previously closed facilities. The reserve for such
benefits is amortized as the benefits are provided. Currently amortization
periods are through 2003.
ACCOUNTING STANDARDS
In May 1993, the Financial Accounting Standards Board issued
FAS No. 114 - Accounting by Creditors for Impairment of a Loan, which
was amended by FAS No. 118 in October 1994. These new standards require
that impaired loans within the scope of the statements be measured on the
present value of expected future cash flows discounted at the loan's
effective interest rate, or, as a practical expedient, at the loans'
observable market price or the fair value of the collateral if the loan
is collateral dependent. The company is required to adopt these standards
in 1995. The company believes that it is already in compliance with these
standards, except for a footnote disclosure that will be added to the 1994
year-end financial statements. These standards will not have a material
effect on the company's financial position or results of operations.
EMPLOYMENT
At the end of the third quarter, Caterpillar's worldwide employment,
including UAW members on strike, was 53,894, compared with 50,444 one year
ago. Hourly employment increased 3,229 to 31,983, while salaried and
management employment increased 221 to 21,911.
LABOR UPDATE
Since June 21, 1994, the United Auto Workers union has been on strike at
eight of the company's U.S. facilities whose employees are represented by the
UAW. The continuation of this strike throughout the third quarter had
virtually no impact on third-quarter results as plans designed to maintain
production and shipment levels to meet the needs of customers were effectively
implemented. Actions the company has taken to meet customer needs include:
- Encouraging striking workers to return to work. As of September 30,
approximately 4,000 UAW-represented employees exercised their legal
right to return to work. This number is about 1,000 higher than at the
end of the second quarter.
- Assigning approximately 6,000 salaried and management employees to
factory operations. This number is decreasing as salaried and
management employees return to their normal assignments.
- Utilizing temporary and contract personnel, as well as retirees.
- Continuing the hiring of new, full-time hourly employees.
- Resourcing production to non-UAW facilities and suppliers.
At September 30, 1994, employees on strike represented about 17% of
Caterpillar's total work force of 53,894.
The work effort and level of cooperation and teamwork in meeting customer
requirements and maintaining Caterpillar's traditional product quality have
<PAGE>
been exceptional. Customer acceptance of Caterpillar products continues to
grow as demonstrated by an increasing share of the global market, which is at
an all-time high. Caterpillar wants its employees back working on their
regular jobs, but is prepared to continue meeting customer demand
indefinitely, with or without resolution of the strike.
OUTLOOK
Economic conditions in 1994 have continued to improve with the United
States, Canada, Europe, Australia and Brazil performing somewhat better than
anticipated at the end of the second quarter. Moderate growth is still
anticipated for the year in the developing regions except Asia, where strong
growth continues. In Japan selected signs of recovery are finally emerging.
Worldwide, industry demand in 1994 is increasing in response to improving
market conditions and is now likely to be better than previously forecast in
nearly all regions. Exceptions are Asia, where moderate growth is still
expected, and Africa and the Middle East, where the decline will be greater
than anticipated.
Company sales expectations for 1994 have also improved since the end of
the second quarter. In addition to better industry growth, company sales will
benefit from a higher than forecasted share of industry sales. Company sales
in the fourth quarter are expected to be in about the same range as the third
quarter.
In 1995, world economic growth is forecast to improve as accelerating
growth in Europe, Japan, Latin America, Africa and the Middle East should more
than offset moderating growth in the United States. Good growth is expected
to continue in Canada and Australia with strong growth forecast to continue in
Asia.
In an improving global economic environment, industry demand is likely to
increase moderately in all regions outside the United States. Higher interest
rates and a slower pace of replacement demand are likely to result in a U.S.
industry near 1994 levels. If a decline in the United States does occur, it
should be more than offset by growth in the rest of the world. In total, our
current expectations call for higher company sales in 1995.
B. Liquidity & Capital Resources
Consolidated operating cash flows totaled $478 million in the third
quarter of 1994, compared with $332 million in the third quarter of 1993.
Total debt at the end of the quarter was $5.68 billion, an increase of
$141 million from June 30 this year. Over this period, debt related to
Machinery & Engines decreased $80 million, to $2.09 billion, while debt
related to Financial Products increased $221 million, to $3.59 billion.
Machinery and Engines
Operating cash flows totaled $422 million in the third quarter of 1994,
compared with $275 million in the third quarter of 1993. The cash flow
increase is primarily the result of increased profitability.
Capital expenditures, excluding equipment leased to others, totaled $114
million in the third quarter compared with $104 million a year ago. The
percent of debt to debt plus stockholders equity improved to 43% at September
30, 1994, from 46% at June 30, 1994.
<PAGE>
Financial Products
Operating cash flows totaled $56 million in the third quarter of 1994,
compared with $58 million in the third quarter of 1993. Cash used to purchase
equipment leased to others totaled $47 million in the third quarter of 1994.
In addition, third-quarter 1994 net cash used for finance receivables was $225
million, compared with $123 million during the third quarter of 1993.
Financial Products' debt was $3.59 billion at September 30, 1994, an
increase of $221 million from June 30, 1994. At the end of the third quarter,
finance receivables past due over 30 days were 2.4%, compared with 2.3% at the
end of the same period one year ago. The ratio of debt to equity of Cat
Financial was 7.5:1 at September 30, 1994, compared with 7.3:1 at June 30,
1994.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On September 6, 1994, the International Union, United Automobile,
Aerospace and Agricultural Implement Workers of America ("UAW"), UAW Local
974, and Citizens for a Better Environment filed a complaint against the
Company with the Illinois Pollution Control Board ("Board"). The complaint
generally alleges, in seven counts, that the Company has violated certain
provisions of the Illinois Environmental Protection Act and Board regulations
with respect to a particular property in East Peoria, Illinois. The complaint
further alleges that the maximum penalties for the alleged violations total
$199 million. The Company believes the claims are without merit and will
vigorously contest them.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
12 Statement Setting Forth Computations
of Ratio of Profit to Fixed Charges.
(The ratios of profit to fixed charges
for the three-, and nine-month periods
ended September 30, 1994 were 3.7 and
3.7, respectively, and for the three-
and nine-month period ended September 30,
1993, were 4.0 and 2.3, respectively.
27 Financial Data Schedule
(b) There have been no reports on Form 8-K filed during the quarter
ending September 30, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CATERPILLAR INC.
Date: November , 1994 By: /s/ J. W. Owens
J. W. Owens, Vice President
and Principal Financial Officer
Date: November , 1994 By: /s/ R. R. Atterbury III
R. R. Atterbury III, Secretary
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
12 Statement Setting Forth Computations
of Ratios of Profit to Fixed Charges
27 Financial Data Schedule
EXHIBIT NUMBER 12
STATEMENT SETTING FORTH COMPUTATIONS OF RATIOS
OF PROFIT TO FIXED CHARGES
Caterpillar Inc., Consolidated Subsidiary Companies,
and 50%-owned Affiliated Companies
(Unaudited)
(Dollars in millions)
Three Months Ended Nine Months Ended
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
1994 1993 1994 1993
Profit for period .............. $ 244 $ 432 $ 676 $ 533
Add:
Provision (credit) for
income taxes .............. 83 (51) 282 (20)
------ ------ ------ ------
Profit before taxes ............ $ 327 $ 381 $ 958 $ 513
------ ------ ------ ------
Fixed charges:
Interest and other costs
related to borrowed
funds(1) .................. $ 108 $ 116 $ 316 $ 353
Rentals at computed
interest factors(2) ....... 13 13 38 39
------ ------ ------ ------
Total fixed charges ............ $ 121 $ 129 $ 354 $ 392
------ ------ ------ ------
Profit before provision
for income taxes and
fixed charges ............... $ 448 $ 510 $1,312 $ 905
====== ====== ====== ======
Ratio of profit to
fixed charges ............... 3.7 4.0 3.7 2.3
====== ====== ====== ======
(1)Interest expense as reported in the Consolidated Results of Operations
plus the Company's proportionate share of 50%-owned affiliated companies'
interest expense.
(2)Amounts represent those portions of rent expense that are reasonable
approximations of interest costs.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS
FOR THE QUARTER ENDED SEPTEMBER 30, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 84
<SECURITIES> 249
<RECEIVABLES> 3,009
<ALLOWANCES> 0
<INVENTORY> 1,731
<CURRENT-ASSETS> 7,057
<PP&E> 8,236
<DEPRECIATION> 4,539
<TOTAL-ASSETS> 15,913
<CURRENT-LIABILITIES> 5,455
<BONDS> 3,892
<COMMON> 203
0
0
<OTHER-SE> 2,596
<TOTAL-LIABILITY-AND-EQUITY> 15,913
<SALES> 10,063
<TOTAL-REVENUES> 337
<CGS> 7,887
<TOTAL-COSTS> 9,377
<OTHER-EXPENSES> (34)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 150
<INCOME-PRETAX> 907
<INCOME-TAX> 254
<INCOME-CONTINUING> 676
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 676
<EPS-PRIMARY> 3.32
<EPS-DILUTED> 3.29
</TABLE>
