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 June 30, 1996
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 June 30, 1996, 192,835,444 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 Six Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
MACHINERY AND ENGINES:
Sales ................................ $4,008 $ 4,059 $ 7,690 $ 7,832
------ ------ ------ ------
Operating costs:
Cost of goods sold ................. 2,976 3,110 5,756 6,000
Selling, general and
administrative expenses .......... 409 378 795 739
Research and development expenses .. 97 98 195 184
------ ------ ------ ------
3,482 3,586 6,746 6,923
------ ------ ------ ------
Operating profit ..................... 526 473 944 909
Interest expense ..................... 49 48 98 96
------ ------ ------ ------
477 425 846 813
Other income ......................... 29 20 58 32
------ ------ ------ ------
Profit before taxes .................. 506 445 904 845
------ ------ ------ ------
FINANCIAL PRODUCTS:
Revenues ............................. 172 154 334 294
------ ------ ------ ------
Operating costs:
Selling, general and
administrative expenses .......... 62 59 125 113
Interest expense ................... 76 72 149 138
------ ------ ------ ------
138 131 274 251
------ ------ ------ ------
Operating profit ..................... 34 23 60 43
Other income ......................... 7 7 17 19
------ ------ ------ ------
Profit before taxes .................. 41 30 77 62
------ ------ ------ ------
CONSOLIDATED PROFIT BEFORE TAXES ....... 547 475 981 907
Provision for income taxes ........... 181 156 324 299
------ ------ ------ ------
Profit of consolidated companies ..... 366 319 657 608
Equity in profit of
affiliated companies (Note 5) ...... 8 4 13 15
------ ------ ------ ------
PROFIT ................................. $ 374 $ 323 $ 670 $ 623
====== ====== ====== ======
<PAGE>
PROFIT PER SHARE OF COMMON STOCK (NOTE 7):
Profit ............................... $ 1.94 $ 1.62 $ 3.46 $ 3.11
====== ====== ====== ======
Cash dividends paid per share of
common stock ......................... $ .35 $ .25 $ .70 $ .50
See accompanying notes to Consolidated Financial Statements.
<PAGE>
CATERPILLAR INC.
Statement of Financial Position *
(Dollars in millions)
CONSOLIDATED
(Caterpillar Inc.
and subsidiaries)
June 30, Dec. 31,
1996 1995
ASSETS
Current assets:
Cash and short-term investments ................. $ 633 $ 638
Receivables -- trade and other .................. 2,857 2,531
Receivables -- finance .......................... 1,832 1,754
Deferred income taxes and prepaid expenses ...... 821 803
Inventories (Note 6) ............................ 2,198 1,921
------- -------
Total current assets .............................. 8,341 7,647
Land, buildings, machinery, and equipment -- net .. 3,569 3,644
Long-term receivables -- trade and other .......... 131 126
Long-term receivables -- finance .................. 3,543 3,066
Investments in affiliated companies (Note 5) ...... 546 476
Investments in Financial Products subsidiaries .... - -
Deferred income taxes ............................. 1,163 1,127
Intangible assets ................................. 220 170
Other assets ...................................... 609 574
------- -------
TOTAL ASSETS ........................................ $18,122 $16,830
======= =======
LIABILITIES
Current liabilities:
Short-term borrowings ........................... $ 1,404 $ 1,174
Accounts payable and accrued expenses ........... 2,814 2,579
Accrued wages, salaries, and employee benefits .. 905 875
Dividends payable ............................... 77 68
Deferred and current income taxes payable ....... 214 91
Long-term debt due within one year .............. 1,484 1,262
------- -------
Total current liabilities ......................... 6,898 6,049
Long-term debt due after one year ................. 4,042 3,964
Liability for postemployment benefits ............. 3,360 3,393
Deferred income taxes ............................. 37 36
------- -------
TOTAL LIABILITIES ................................... 14,337 13,442
------- -------
<PAGE>
STOCKHOLDERS' EQUITY
Common stock of $1.00 par value:
Authorized shares: 450,000,000
Issued shares (June 30, 1996 -- 203,723,656;
Dec. 31, 1995 -- 203,723,656) at paid in amount . 891 901
Profit employed in the business ................... 3,365 2,840
Foreign currency translation adjustment ........... 177 215
Treasury stock (June 30, 1996 -- 10,888,212
shares; Dec. 31, 1995 -- 9,708,538 shares)
at cost.......................................... (648) (568)
------- -------
TOTAL STOCKHOLDERS' EQUITY .......................... 3,785 3,388
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......... $18,122 $16,830
======= =======
See accompanying notes to Consolidated Financial Statements.
* Unaudited except for Consolidated December 31, 1995 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)
June 30, Dec. 31,
1996 1995
ASSETS
Current assets:
Cash and short-term investments ................. $ 585 $ 580
Receivables -- trade and other .................. 3,199 2,910
Receivables -- finance .......................... - -
Deferred income taxes and prepaid expenses ...... 825 834
Inventories (Note 6) ............................ 2,198 1,921
------- -------
Total current assets .............................. 6,807 6,245
Land, buildings, machinery, and equipment -- net .. 3,099 3,199
Long-term receivables -- trade and other .......... 131 126
Long-term receivables -- finance .................. - -
Investments in affiliated companies (Note 5) ...... 546 476
Investments in Financial Products subsidiaries .... 702 658
Deferred income taxes ............................. 1,205 1,171
Intangible assets ................................. 220 170
Other assets ...................................... 321 330
------- -------
TOTAL ASSETS ........................................ $13,031 $12,375
======= =======
LIABILITIES
Current liabilities:
Short-term borrowings ........................... $ 12 $ 14
Accounts payable and accrued expenses ........... 2,475 2,358
Accrued wages, salaries, and employee benefits .. 902 873
Dividends payable ............................... 77 68
Deferred and current income taxes payable ....... 158 40
Long-term debt due within one year .............. 260 156
------- -------
Total current liabilities ......................... 3,884 3,509
Long-term debt due after one year ................. 1,965 2,049
Liability for postemployment benefits ............. 3,360 3,393
Deferred income taxes ............................. 37 36
------- -------
TOTAL LIABILITIES ................................... 9,246 8,987
------- -------
<PAGE>
STOCKHOLDERS' EQUITY
Common stock of $1.00 par value:
Authorized shares: 450,000,000
Issued shares (June 30, 1996 -- 203,723,656;
Dec. 31, 1995 -- 203,723,656) at paid in amount . 891 901
Profit employed in the business ................... 3,365 2,840
Foreign currency translation adjustment ........... 177 215
Treasury stock (June 30, 1996 -- 10,888,212
shares; Dec. 31, 1995 -- 9,708,538 shares)
at cost.......................................... (648) (568)
------- -------
TOTAL STOCKHOLDERS' EQUITY .......................... 3,785 3,388
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......... $13,031 $12,375
======= =======
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, 1995 amounts.
<PAGE>
CATERPILLAR INC.
Statement of Financial Position *
(Dollars in millions)
SUPPLEMENTAL CONSOLIDATING DATA
FINANCIAL PRODUCTS
June 30, Dec. 31,
1996 1995
ASSETS
Current assets:
Cash and short-term investments ................. $ 48 $ 58
Receivables -- trade and other .................. 186 132
Receivables -- finance .......................... 1,832 1,754
Deferred income taxes and prepaid expenses ...... 14 13
Inventories (Note 6) ............................ - -
------- -------
Total current assets .............................. 2,080 1,957
Land, buildings, machinery, and equipment -- net .. 470 445
Long-term receivables -- trade and other .......... - -
Long-term receivables -- finance .................. 3,543 3,066
Investments in affiliated companies (Note 5) ...... - -
Investments in Financial Products subsidiaries .... - -
Deferred income taxes ............................. 3 -
Intangible assets ................................. - -
Other assets ...................................... 288 244
------- -------
TOTAL ASSETS ........................................ $ 6,384 $ 5,712
======= =======
LIABILITIES
Current liabilities:
Short-term borrowings ........................... $ 1,392 $ 1,160
Accounts payable and accrued expenses ........... 885 776
Accrued wages, salaries, and employee benefits .. 3 2
Dividends payable ............................... - -
Deferred and current income taxes payable ....... 56 51
Long-term debt due within one year .............. 1,224 1,106
------- -------
Total current liabilities ......................... 3,560 3,095
Long-term debt due after one year ................. 2,077 1,915
Liability for postemployment benefits ............. - -
Deferred income taxes ............................. 45 44
------- -------
TOTAL LIABILITIES ................................... 5,682 5,054
------- -------
<PAGE>
STOCKHOLDERS' EQUITY
Common stock of $1.00 par value:
Authorized shares: 450,000,000
Issued shares (June 30, 1996 -- 203,723,656
Dec. 31, 1995 -- 203,723,656) at paid in amount . 333 333
Profit employed in the business ................... 367 320
Foreign currency translation adjustment ........... 2 5
Treasury stock (June 30, 1996 -- 10,888,212
shares; Dec. 31, 1995 -- 9,708,538 shares)
at cost.......................................... - -
------- -------
TOTAL STOCKHOLDERS' EQUITY .......................... 702 658
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......... $ 6,384 $ 5,712
======= =======
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, 1995 amounts.
<PAGE>
CATERPILLAR INC.
Statement of Cash Flows for Six Months Ended
(Unaudited)
(Millions of dollars)
CONSOLIDATED
(Caterpillar Inc.
and subsidiaries)
June 30, June 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit ............................................ $ 670 $ 623
Adjustments for noncash items:
Depreciation and amortization ..................... 348 348
Profit of Financial Products ...................... - -
Other ............................................. 21 17
Changes in assets and liabilities:
Receivables -- trade and other .................. (290) 117
Inventories ..................................... (277) (376)
Accounts payable and accrued expenses ........... 254 240
Other -- net .................................... 103 (81)
------- -------
Net cash provided by operating activities ........... 829 888
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -- excluding equipment
leased to others ................................ (174) (155)
Expenditures for equipment leased to others ....... (107) (82)
Proceeds from disposals of land, buildings,
machinery, and equipment ........................ 52 41
Additions to finance receivables .................. (2,739) (2,406)
Collections of finance receivables ................ 1,302 1,077
Proceeds from sale of finance receivables.......... 772 300
Net short-term loans to Financial Products......... - -
Other -- net ...................................... (251) (55)
------- -------
Net cash used for investing activities .............. (1,145) (1,280)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Dividends paid .................................... (136) (100)
Common stock issued, including treasury
shares reissued ................................. 5 -
Treasury shares purchased.......................... (103) (112)
Net short-term loans from Machinery and Engines.... - -
Proceeds from long-term debt issued ............... 302 906
Payments on long-term debt ........................ (451) (591)
Short-term borrowings -- net ...................... 703 630
------- -------
Net cash provided by financing activities ........... 320 733
------- -------
Effect of exchange rate changes on cash ............. (9) (64)
------- -------
Increase (decrease) in cash and
short-term investments ............................ (5) 277
<PAGE>
Cash and short-term investments at the
beginning of the period ........................... 638 419
------- -------
Cash and short-term investments at the
end of the period ................................. $ 633 $ 696
======= =======
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 Six Months Ended
(Unaudited)
(Millions of dollars)
SUPPLEMENTAL CONSOLIDATING DATA
MACHINERY AND ENGINES
(Caterpillar Inc. with Financial
Products on the equity basis)
June 30, June 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit ............................................ $ 670 $ 623
Adjustments for noncash items:
Depreciation and amortization ................... 290 294
Profit of Financial Products .................... (47) (37)
Other ........................................... 10 5
Changes in assets and liabilities:
Receivables -- trade and other .................. (277) 159
Inventories ..................................... (277) (376)
Accounts payable and accrued expenses ........... 138 167
Other -- net .................................... 124 (84)
------- -------
Net cash provided by operating activities ........... 631 751
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -- excluding equipment
leased to others ................................ (171) (154)
Expenditures for equipment leased to others ....... (2) (5)
Proceeds from disposals of land, buildings,
machinery, and equipment ........................ 7 7
Additions to finance receivables .................. - -
Collections of finance receivables ................ - -
Proceeds from sale of finance receivables.......... - -
Net short-term loans to Financial Products......... (27) -
Other -- net ...................................... (206) (44)
------- -------
Net cash used for investing activities .............. (399) (196)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Dividends paid .................................... (136) (100)
Common stock issued, including treasury
shares reissued ................................. 5 0
Treasury shares purchased.......................... (103) (112)
Net short-term loans from Machinery and Engines.... - -
Proceeds from long-term debt issued ............... 31 0
Payments on long-term debt ........................ (9) (22)
Short-term borrowings -- net ...................... (2) (2)
------- -------
Net cash provided by financing activities ........... (214) (236)
------- -------
Effect of exchange rate changes on cash ............. (13) (65)
------- -------
Increase (decrease) in cash and
short-term investments ............................ 5 254
<PAGE>
Cash and short-term investments at the
beginning of the period ........................... 580 395
------- -------
Cash and short-term investments at the
end of the period ................................. $ 585 $ 649
======= =======
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 Six Months Ended
(Unaudited)
(Millions of dollars)
SUPPLEMENTAL CONSOLIDATING DATA
FINANCIAL PRODUCTS
June 30, June 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit ............................................ $ 47 $ 37
Adjustments for noncash items:
Depreciation and amortization ................... 58 54
Profit of Financial Products .................... - -
Other ........................................... 14 15
Changes in assets and liabilities:
Receivables -- trade and other .................. (3) (4)
Inventories ..................................... - -
Accounts payable and accrued expenses ........... 80 11
Other -- net .................................... 2 24
------- -------
Net cash provided by operating activities ........... 198 137
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -- excluding equipment
leased to others ................................ (3) (1)
Expenditures for equipment leased to others ....... (105) (77)
Proceeds from disposals of land, buildings,
machinery, and equipment ........................ 45 34
Additions to finance receivables .................. (2,739) (2,406)
Collections of finance receivables ................ 1,302 1,077
Proceeds from sale of finance receivables.......... 772 300
Net short-term loans to Financial Products......... - -
Other -- net ...................................... (45) (41)
------- -------
Net cash used for investing activities .............. (773) (1,114)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Dividends paid .................................... - -
Common stock issued, including treasury
shares reissued ................................. - 30
Treasury shares purchased.......................... - -
Net short-term loans from Machinery and Engines.... 27 -
Proceeds from long-term debt issued ............... 271 906
Payments on long-term debt ........................ (442) (569)
Short-term borrowings -- net ...................... 705 632
------- -------
Net cash provided by financing activities ........... 561 999
------- -------
Effect of exchange rate changes on cash ............. 4 1
------- -------
Increase (decrease) in cash and
short-term investments ............................ (10) 23
<PAGE>
Cash and short-term investments at the
beginning of the period ........................... 58 24
------- -------
Cash and short-term investments at the
end of the period ................................. $ 48 $ 47
======= =======
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 six-month periods
ended June 30, 1996 and 1995, (b) the consolidated financial position at
June 30, 1996 and December 31, 1995, and (c) the consolidated statement
of cash flows for the six-month periods ended June 30, 1996 and 1995
have been made.
2. The results for the three- and six-month periods ended June 30, 1996 are
not necessarily indicative of the results for the entire year 1996.
3. The company buys and sells currencies only in amounts large enough to
cover business needs, and to protect its financial and competitive
position. The company's general approach is to manage future foreign
currency cash flows; it normally does not manage or hedge specific asset
or liability positions. In managing foreign currency, the company's
objective is to maximize consolidated aftertax U.S. dollar cash flows.
At June 30, 1996, the company had approximately $701 in contracts to buy
or sell foreign currency in the future. The carrying value and the fair
market value of such contracts were both an asset of $2.
4. 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, 1995, except
with respect to disposition of the environmental proceeding discussed
in Part II, Item 1 of this Form 10-Q.
5. Affiliated Companies
The company's investments in affiliated companies consist principally of
a 50% interest in Shin Caterpillar Mitsubishi Ltd., Japan $(404). 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 Six Months Ended
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
1996 1995 1996 1995
RESULTS OF OPERATIONS
(Unaudited)
Sales ..................... $ 913 $ 930 $1,820 $1,866
====== ====== ====== ======
Profit .................... $ 16 $ 10 $ 27 $ 32
====== ====== ====== ======
<PAGE>
Mar. 31, Sep. 30,
1996 1995
FINANCIAL POSITION
(Unaudited)
Assets:
Current assets ................................. $1,852 $1,872
Land, buildings, machinery and equipment - net.. 723 780
Other assets ................................... 266 322
------ ------
2,841 2,974
------ ------
Liabilities:
Current liabilities ............................ 1,660 1,676
Long-term debt due after one year .............. 152 215
Other liabilities .............................. 141 155
------ ------
1,953 2,046
------ ------
Ownership ........................................ $ 888 $ 928
====== ======
6. Inventories (principally "last-in, first-out" method) comprised the
following:
Jun. 30, Dec. 31,
1996 1995
(unaudited)
Raw materials and work-in-process ................ $ 859 $ 710
Finished goods ................................... 1,122 1,006
Supplies ......................................... 217 205
------ ------
$2,198 $1,921
====== ======
7. Following is a computation of profit per share:
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
(Unaudited)
I. Net profit for period:
Profit - consolidated (A) ....... $ 374 $ 323 $ 671 $ 623
====== ====== ====== =======
II. Determination of shares (millions):
Weighted average number of
common shares outstanding (B) .. 193.4 199.7 193.6 199.9
<PAGE>
Shares issuable on exercise of
stock options, net of shares
assumed to be purchased out
of proceeds at market price .... 2.1 2.4 2.1 2.4
------ ------ ------ -------
Average common shares
outstanding for fully diluted
computation (C) ................ 195.5 202.1 195.7 202.3
====== ====== ====== =======
III. Profit per share of common
stock:
Assuming no dilution (A/B) ...... $1.94 $1.62 $3.46 $3.11
Assuming full dilution (A/C) .... $1.91 $1.60 $3.43 $3.08
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND LIQUIDITY AND CAPITAL RESOURCES
A. Consolidated Results of Operations
The company announced the highest quarterly profit in its history.
Profit of $374 million surpassed the previous record profit of $323 million
set in second-quarter 1995. Profit after tax as a percent of sales and
revenues was 8.8%, the best quarterly rate in more than 20 years. Sales and
revenues were $4.18 billion, a decrease of $33 million from the same quarter a
year ago. Profit per share was a record $1.94, $.32 higher than the previous
record established in second-quarter 1995. The company continues to benefit
from improved manufacturing efficiencies achieved during 1994 and 1995.
In June 1995, the company announced a plan to repurchase up to 10% of its
outstanding common stock over the next three to five years. At the end of the
second quarter, 8.1 million shares had been repurchased under the plan. The
number of shares outstanding at June 30, 1996, was 192.8 million.
In June 1996, Caterpillar's Board of Directors announced it was
increasing the quarterly dividend from $.35 to $.40 per share payable August
20 to stockholders of record July 22. The 14% increase in the dividend
underscores the confidence Caterpillar's directors have in the company's
continuing success and marks the fourth increase in the past two years. Since
1994, the dividend per share has increased more than five-fold from $.075.
Chairman and Chief Executive Officer Donald V. Fites said, "These
financial results in a fast-changing, fiercely competitive marketplace
validate the efficiency and effectiveness of the world-class Caterpillar team.
Our focus on satisfying customers while managing our assets and the bottom
line works."
THREE MONTHS ENDED JUNE 30, 1996 VS. THREE MONTHS ENDED JUNE 30, 1995
Machinery and Engines
Profit before tax of $506 million was $61 million higher than last year's
second quarter. This record profit was achieved despite sales of Machinery and
Engines of $4.01 billion being down $51 million from second-quarter 1995. The
lower sales resulted from a 2% decrease in physical sales volume partially
offset by a 1% improvement in price realization.
The decrease in physical sales volume primarily resulted from a reduction
in dealer new machine inventories and lower engine sales to users. Machine
and engine sales were lower both inside and outside the United States. Price
realization improved primarily because of price increases taken over the past
year, the absence of certain European currency hedges in place a year ago, and
a favorable change in geographic sales mix. (The adverse impact of currency
hedges (forward contracts) that matured during second-quarter 1995 was about
$30 million. All such forward contracts had matured as of the end of 1995.)
These factors were partially offset by higher sales discounts and the
negative effect of the stronger dollar on sales in European currencies.
Margin (sales less cost of goods sold) of $1.03 billion increased $83
million from the second quarter a year ago despite the lower sales. Margin as
a percent of sales was 25.7%, compared with 23.4% during last year's second
quarter. The margin improvement resulted from the effect of the stronger
dollar as costs incurred in Japanese yen and European currencies translated
into fewer U.S. dollars, and better price realization. Also of note is that
the improvements in manufacturing efficiencies achieved during 1994 and 1995
have been maintained throughout 1996 and the return to work of employees
represented by the United Auto Workers (UAW) has been managed with essentially
no impact on results. Material costs also continue to be effectively managed
through proactive joint relationships with our suppliers resulting in
<PAGE>
essentially flat material costs from the second quarter a year ago.
Partially offsetting these favorable items were the effects of lower
sales volume and the absence of the favorable impact from a buildup of
inventory during the second-quarter 1995. When inventory increases, certain
fixed costs incurred in the current period are inventoried. These inventoried
fixed costs are then charged to cost of goods sold in later periods when
inventory decreases.
Although the stronger dollar has benefited second quarter margins, over
the longer term, a significantly stronger dollar will have an unfavorable
impact on Caterpillar. Most of the company's key competitors have their
principal manufacturing operations based in Japan or European countries. The
majority of Caterpillar's manufacturing assets are in the United States.
Consequently, with a stronger dollar, the company's costs compared with these
competitors are relatively higher. As a major net exporter from the United
States, the stronger dollar, over time, has an unfavorable impact on
Caterpillar's global competitive position.
Selling, general and administrative (SG&A) expenses were $409 million,
compared with $378 million during the second-quarter 1995. The $31 million
increase reflects higher spending levels in support of expanded operations
around the world and higher costs due to inflation.
Research and development (R&D) expenses of $97 million were essentially
the same as second quarter last year.
Operating profit of $526 million was $53 million higher than the second
quarter a year ago. Operating profit was 13.1% compared with 11.7% a year
ago.
Interest expense was essentially the same as second quarter a year ago.
Other income/expense was income of $29 million compared with income of
$20 million last year. The increase of $9 million is primarily the result of
increased interest income and a favorable change in foreign exchange gains and
losses.
Financial Products
Before-tax profit for Financial Products was a record $41 million, an $11
million improvement over last year's second quarter. The increase resulted
primarily from higher earnings from a larger portfolio of earning assets at
Caterpillar Financial Services Corporation (CFSC) and favorable insurance
reserve adjustments at Caterpillar Insurance Company Ltd. (CICL). Actuarial
valuations of CICL's insurance reserves resulted in a favorable $8 million
adjustment versus a favorable $4 million adjustment a year ago.
Second-quarter revenues of $172 million were up $18 million compared with
second-quarter 1995, primarily the result of CFSC's larger portfolio. CFSC's
retail financing business established a quarter record of $971 million, a $241
million or 33% increase compared with second-quarter 1995. The increase was
the result of financing a higher volume and increased percentage of
deliveries of Caterpillar product. CFSC's wholesale financing activity was
$799 million, a decrease of $94 million or 11% compared with second-quarter
1995. The decrease in wholesale financing was due to a lower volume of
Caterpillar dealer rental fleet financing in North America.
Selling, general and administrative expenses were $62 million, an
increase of $3 million compared with second quarter a year ago. Higher
expenses due to CFSC's larger portfolio were partially offset by the favorable
adjustment to insurance reserves at CICL. Interest expense was $4 million
higher due to increased borrowings to support the larger portfolio, partially
offset by lower borrowing rates.
Income Taxes
Tax expense of $181 million increased $25 million due to higher
before-tax profit.
<PAGE>
Affiliated Companies
The company's share of affiliated companies' results was $8 million, up
$4 million from a year ago.
CHANGE TO 1Q96 REPORTED COST OF GOODS SOLD AND SG&A
During the second quarter of 1996, an error in the classification of certain
expenses between cost of goods sold and SG&A was discovered. The error
affected only the first quarter of 1996 and did not affect profit in any way.
As a result, cost of goods sold was increased $16 million and SG&A was
decreased $16 million for the first quarter of 1996. All comparisons to the
first quarter reflect the adjusted amounts.
THREE MONTHS ENDED JUNE 30, 1996 VS. THREE MONTHS ENDED MARCH 31, 1996
Second-quarter profit of $374 million or $1.94 per share was $78 million
higher than profit of $296 million or $1.53 per share in the first quarter of
this year. The improvement reflects an increase in sales and revenues of $336
million partially offset by an increase in costs that generally occurs from
the first to the second quarter due to timing of expenses. An increase in
physical sales volume of 8% was the most significant factor contributing to
the higher profit.
Machinery and Engines
Profit before tax for Machinery and Engines was $506 million, a $108
million increase from the previous quarter. Sales of $4.01 billion increased
$326 million because of 8% higher physical sales volume and 1% improved price
realization. The increase in physical sales volume was the result of higher
engine and machine sales both inside and outside the United States. The
improvement in price realization reflects price increases and a favorable
change in geographic sales mix, partially offset by higher discounts.
Margin improved $130 million from the first quarter. As a percent of
sales, the margin rate was 25.7% compared with 24.5% last quarter. The margin
rate improvement resulted from the favorable impact of higher sales, better
price realization, improved manufacturing efficiencies, and the impact of the
stronger dollar on costs. Partially offsetting these favorable items was the
absence of the favorable impact from a buildup of inventory during the first
quarter.
Selling, general and administrative expenses were $409 million, up $23
million from first quarter. The increase was primarily the result of timing
of expenses, as the first quarter is generally a lower cost quarter for these
types of expenses. Volume-related parts distribution expenses also
contributed to the increase.
Research and development expenses of $97 million were about the same as
the first quarter.
Operating profit of $526 million increased $108 million. As a percent of
sales, operating profit was 13.1%, up 1.7 percentage points from the first
quarter.
Interest expense of $49 million was the same as the first quarter.
Other income/expense was income of $29 million and also the same as the
first quarter.
Financial Products
Financial Products' before-tax profit was $41 million, an increase of $5
million from first quarter. Revenues were up $10 million, primarily the
result of CFSC's larger portfolio. Selling, general and administrative
expenses were down due to the $8 million favorable insurance reserve
adjustment at CICL, mostly offset by increased CFSC expenses related to the
<PAGE>
larger portfolio.
Income Taxes
Tax expense of $181 million increased $38 million due to higher
before-tax profit.
SIX MONTHS ENDED JUNE 30, 1996 VS. SIX MONTHS ENDED JUNE 30, 1995
Profit for the six months ended June 30, 1996 was $670 million or $3.46
per share of common stock, an improvement of $47 million over profit of $623
million or $3.11 per share for the first six months of 1995. Sales and
revenues of $8.02 billion were $102 million lower than last year.
Machinery and Engines
Sales were $7.69 billion, a decrease of $142 million from the same period
last year. Profit before tax was $904 million, an improvement of $59 million.
The primary reason for the increase in profit was improved price realization.
The decrease in physical sales volume resulted from lower machine and
engine sales both inside and outside the United States. Price realization
improved primarily because of price increases taken over the past year and the
absence of certain European currency hedges in place a year ago. (The adverse
impact of currency hedges (forward contracts) that matured during the first
six months of 1995 was about $60 million. All such forward contracts had
matured as of the end of 1995). These favorable factors were partially offset
by the negative effect of the stronger dollar on sales in European currencies
and the Japanese yen, and higher sales discounts.
Margin (sales less cost of goods sold) increased $102 million primarily
because of the better price realization and the effect of the stronger dollar
as costs incurred in Japanese yen and European currencies translated into
fewer U.S. dollars. Material costs also continue to be effectively managed
through proactive joint relationships with our suppliers resulting in lower
material costs when compared to a year ago. The improvements in manufacturing
efficiencies achieved during 1994 and 1995 have been maintained throughout
1996 and the return to work of employees represented by the United Auto
Workers (UAW) union has been managed with essentially no impact on results.
These favorable items were partially offset by the effects of lower sales
volume and the unfavorable impact of a lower buildup of inventory during the
first six months of 1996 as compared to a year ago. When inventory increases,
certain fixed costs incurred in the current period are inventoried. These
inventoried fixed costs are then charged to cost of goods sold in later
periods when inventory decreases.
Although the stronger dollar has benefited the first six months margins,
over the longer term, a significantly stronger dollar will have an unfavorable
impact on Caterpillar. Most of the company's key competitors have their
principal manufacturing operations based in Japan or European countries. The
majority of Caterpillar's manufacturing assets are in the United States.
Consequently, with a stronger dollar, the company's costs compared with these
competitors are relatively higher. As a major net exporter from the United
States, the stronger dollar, over time, has an unfavorable impact on
Caterpillar's global competitive position.
Selling, general and administrative expenses were $795 million, compared
with $739 million during the first six months of 1995. The $56 million
increase reflects higher spending levels in support of expanded operations
around the world and higher costs due to inflation.
Research and development (R&D) expenses were up $11 million from the
first six months of 1995. The increase primarily reflects continuing high
levels of activity for new product introductions.
Operating profit of $944 million was $35 million higher than the first
<PAGE>
six months of 1995. Operating profit as a percent of sales was 12.3% compared
with 11.6% a year ago.
Interest expense of $98 million was $2 million higher than a year ago.
Other income/expense was income of $58 million compared with income of
$32 million last year. The increase of $26 million is primarily the result of
a favorable change in foreign exchange gains and losses, and higher interest
income.
Financial Products
Before-tax profit for Financial Products was $77 million, an increase of
$15 million from the first six months of 1995. The increase resulted
primarily from higher earnings from a larger portfolio of earning assets at
CFSC; and favorable portfolio transactions at CICL.
Revenues were up $40 million, primarily the result of CFSC's larger
portfolio. Selling, general and administrative expenses were up $12 million,
also due to CFSC's larger portfolio. Interest expense was up $11 million due
to increased borrowings to support the larger portfolio, partially offset by
lower borrowing rates. Other income/expense was income of $17 million, a
decrease of $2 million from a year ago. The first six months of 1995 included
an $11 million favorable mark-to-market adjustment for CFSC's written interest
rate caps. Partially offsetting this was $8 million in gains recognized in
1996 on the sale of securities in CICL's investment portfolio.
Income Taxes
Tax expense was $324 million, $25 million higher than a year ago. The
increase reflects higher before-tax profit. Both periods reflect a 33%
estimated annual tax rate.
Affiliated Companies
The company's share of affiliated companies' results was $13 million,
down $2 million from a year ago.
SALES
Following are summaries of second-quarter company sales and dealer
deliveries compared with the same quarter in 1995.
Company Sales Inside the United States
Caterpillar sales inside the United States were $2.02 billion, a $26
million or 1% decrease from the same quarter a year ago. Company sales of
both machines and engines were down as a result of lower volume. The lower
volume, in turn, reflects greater dealer machine inventory reduction this year
than last and lower diesel engine sales. Price realization was unchanged.
Sales inside the United States during the second quarter were 50% of
total sales, the same as second quarter last year.
U.S. Dealer Machine Sales to End-Users
Sales were unchanged from year-earlier levels as higher industry demand
for construction equipment offset a reduced share of industry sales. Industry
demand, reflecting stronger overall economic activity, was higher despite
several years of excellent sales.
Sales to end-users (including rental purchase options) increased for the
construction sector in total due to the strength of housing.
- Highway-related sales were unchanged from year-earlier levels.
Government spending on highway construction and repair was unchanged.
- Sales to the commercial, industrial and government building sector were
down -- in line with lower levels of construction spending in these
areas.
- Housing-related sales were up reflecting a considerably higher level of
<PAGE>
housing starts in the second quarter.
Sales declined for all commodity applications except metal mining and
agriculture.
- Sand and quarry mining-related sales were down despite slightly higher
mine production.
- Sales to the coal mining sector were down reflecting lower mine
production.
- Metal mining-related sales were up despite lower mine production and
weaker metal prices.
- Sales to the agricultural sector were up reflecting the introduction of
new models and a strong industry.
- Forestry-related sales were below year-earlier levels reflecting lower
lumber and pulp prices. Lumber production was higher but pulp
production was lower.
Sales to industrial applications were higher while sales to landfills
were lower.
Deliveries to U.S. Dealer Rental Fleets
Deliveries to U.S. dealers for their dedicated rental fleets were
unchanged from second-quarter 1995. U.S. dealer dedicated rental inventories
rose from first-quarter levels and remained above year-earlier levels.
U.S. Dealer New Machine Inventories
U.S. dealer new machine inventories were down from the end of the first
quarter and below year-earlier levels. This level of inventory is slightly
below normal relative to current selling rates.
Company Engine Sales Inside the United States
Sales of diesel engines were below year-earlier levels primarily as a
result of weaker industry demand for truck engines from Original Equipment
Manufacturers (OEMs). Total sales to users and OEMs also were down with
declines in truck and industrial applications more than offsetting gains in
power generation, marine and petroleum applications.
Sales of turbine engines remained near last year's levels as gains in
industrial power generation offset declines in oil and gas applications.
Company Sales Outside the United States
Caterpillar sales outside the United States were $1.99 billion, a $25
million or 1% decrease from second-quarter 1995. Price realization improved,
but not enough to offset lower volume resulting primarily from lower diesel
engine sales. Company sales of machines also declined since dealers did not
repeat last year's second quarter inventory expansion.
Sales outside the United States represented 50% of worldwide sales,
unchanged from second quarter last year.
Dealer Machine Sales to End-Users Outside the United States
Dealer sales outside the United States were virtually unchanged from
second-quarter 1995. Higher sales in Africa and Middle East, Asia, China and
Japan offset declines elsewhere.
- Europe: Sales for the region were lower due to the continued weakness
in Germany. Excluding Germany, Western European sales were up with
gains registered in most countries including France and the United
Kingdom. Higher sales continue to be realized in Central Europe.
- Asia (excluding China and Japan): Sales were higher as excellent
economic growth and strong infrastructure spending continue. Sales
were up in all major countries with a particularly good gain in
Malaysia.
- Africa and the Middle East: Demand continues to improve in response to
<PAGE>
good commodity prices, exports and economic growth. Turkey, South
Africa and Saudi Arabia registered the largest gains.
- Canada: Sales were down due to both a lower percentage of industry
sales and a weaker industry. Sales were off in most applications but
gains were made in coal and metal mining and agriculture.
- Latin America: Sales were below year-earlier levels in response to
last year's severe recessions in Mexico and Argentina and this year's
slower economic growth in Brazil, Colombia and Peru.
- Australia: Sales were lower than a year ago due to a large decline in
metal mining. Gains were registered in coal mining as well as highway
and housing construction.
- China: Sales were higher reflecting excellent economic growth and
infrastructure investment.
- Japan: Sales of imported product were up and economic recovery is
underway. The industry, however, remains relatively weak.
- Commonwealth of Independent States (CIS): Sales were below year-ago
levels.
Dealer New Machine Inventories Outside the United States
Dealer new machine inventories outside the United States were virtually
unchanged from the end of the first quarter. Dealer inventories were up from
the second quarter last year and are normal relative to current selling rates.
Company Engine Sales Outside the United States
Sales of diesel engines were below year-earlier levels due primarily to a
decline in truck engine demand from Canadian OEMs. Total sales to users and
OEMs also were lower with declines in Canada and Europe more than offsetting
gains in Asia. By application, lower sales in truck, petroleum and marine
more than offset gains in power generation.
Sales of turbine engines were higher with increases in oil and gas
applications as well as industrial power generation.
PLANT CLOSING AND CONSOLIDATION COSTS
At June 30, 1996 the reserve for plant closing and consolidation costs
was $263 million. Of this balance, $170 million related to anticipated costs
associated with the closure of the Component Products Division's
York, Pennsylvania, facility. 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 is currently
in the early stages of closing the plant.
Also in the reserve for plant closing and consolidation costs at
June 30, 1996, was $69 million for write-downs of buildings, machinery and
equipment at previously closed facilities. The remainder of the reserve
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.
EMPLOYMENT
At the end of the second quarter, Caterpillar's worldwide employment was
55,002, compared with 54,499 one year ago. Hourly employment decreased 368 to
32,040; salaried and management employment increased 871 to 22,962. The
increased employment is largely the result of acquisitions, partially offset
by attrition.
<PAGE>
ECONOMIC AND INDUSTRY OUTLOOK
World economic growth is now expected to exceed 1995 levels due primarily
to improved prospects for the United States. The U.S. economy has been
stronger than anticipated and is now forecast to match or exceed last year's
growth rate of 2%. As a result of this better than expected demand in the
United States, worldwide industry machine sales are projected to remain near
last year's levels despite weaker than anticipated demand in Europe.
Worldwide demand for engines, however, is still forecast to decline from last
year's record levels.
The U.S. economy has proven surprisingly resilient to the tight monetary
and fiscal policies of the last two years. Second-quarter growth appears to
have been very good although slower growth is still expected for the second
half due to higher long-term interest rates and rising consumer debt levels.
Gross Domestic Product (GDP) is now forecast to grow 2.0% - 2.5% for the year,
despite a growing chance the Federal Reserve will raise interest rates to slow
the economy.
Related to this revised outlook, U.S. housing starts are forecast to
match or exceed last year's levels. Growth in nonresidential construction and
mining is still expected to slow but may be stronger than earlier anticipated.
U.S. industry demand for machines is forecast to be just slightly below 1995
levels - an improvement over our earlier forecast. U.S. industry demand for
engines is still expected to decline but less than previously projected.
Similar economic growth is forecast for Canada where both the machine and
engine industries are still forecast to decline.
In Western Europe, interest rate reductions over the past 18 months are
expected to stimulate economic growth in the second half. Encouraging signs
of increased activity are already evident in Germany and the U.K. For the
region as a whole, however, GDP growth is still expected to be only 2.0% which
is below last year's rate of 2.6%. Even with better activity in the second
half, industry demand is now projected to decline slightly from 1995 levels.
In contrast, good economic growth continues in Central Europe.
Economic recovery is underway in Japan where a surprisingly strong first
quarter points to GDP growth near 3% for the year. Industry demand, however,
is still expected to lag the economic recovery and show little improvement in
1996. The economic outlook for Australia also has improved with GDP expected
to grow 3%, matching 1995's levels. Construction activity is still expected
to decline for the year but mining should remain strong.
Better economic growth is still forecast for the developing countries in
1996 leading to higher industry demand. Continued strong growth in the
developing countries of Asia should lead to another year of higher industry
sales. Higher sales are also forecast for the Africa/Middle East region where
good export demand, economic restructuring, and last year's high commodity
prices should combine for another year of good economic growth.
In Latin America, recoveries are underway in both Mexico and Argentina,
but the 1995 Mexican recession was so severe that industry demand there is
unlikely to improve before next year. Elsewhere, economic growth has slowed
more than expected leading to weaker demand. Consequently, industry demand is
now projected to decline for the region as a whole. The severe, six-year
decline in the CIS is forecast to end but political instability is likely to
remain even with President Yeltsin's reelection. Some growth is still
anticipated for 1996.
COMPANY OUTLOOK
As reported in June, stronger than anticipated sales in the United States
should more than offset weaker than projected sales in Europe and Latin
America. Consolidated sales and profit are now expected to be above 1995
levels.
The information included in the Outlook section is forward looking and
<PAGE>
involves risks and uncertainties that could significantly impact expected
results. A discussion of these risks and uncertainties is contained in a Form
8-K filed with the Securities & Exchange Commission on July 16, 1996.
B. Liquidity & Capital Resources
Consolidated operating cash flows totaled $829 million through the second
quarter of 1996, compared with $888 million for the first six months of 1995.
Total debt at the end of the first six months was $6.93 billion, an
increase of $530 million from year end 1995. Over this period, debt related
to Machinery & Engines increased $18 million, to $2.24 billion, while debt
related to Financial Products increased $512 million to $4.69 billion.
Machinery and Engines
Operating cash flows totaled $631 million through the second quarter of
1996, compared with $751 million through the second quarter of 1995. The cash
flow decrease is primarily the result of increased receivables.
Capital expenditures, excluding equipment leased to others, totaled $171
million through the second quarter compared with $154 million a year ago. The
percent of debt to debt plus stockholders equity improved to 37% at June 30,
1996, from 40% at December 31, 1995.
Financial Products
Operating cash flows totaled $198 million through the second quarter of
1996, compared with $137 million through the second quarter of 1995. Cash
used to purchase equipment leased to others totaled $105 million through the
second quarter of 1996. In addition, year-to-date 1996 net cash used for
finance receivables was $665 million, compared with $1,029 million through the
second quarter of 1995.
Financial Products' debt was $4.69 billion at June 30, 1996, an increase
of $512 million from December 31, 1995. At the end of the second quarter,
finance receivables past due over 30 days were 2.5%, compared with 2.2% at the
end of the same period one year ago. The ratio of debt to equity of Cat
Financial was 8.2:1 at June 30, 1996, compared with 7.7:1 at December 31,
1995.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As reported in previous filings with the Securities & Exchange
Commission, 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 alleged, in seven counts, that the company had violated certain
provisions of the Illinois Environmental Protection Act and Board regulations
with respect to a particular property in East Peoria, Illinois. In a decision
dated August 1, 1996, the Board concluded that no fines or other penalties
should be assessed against the company.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
27 Financial Data Schedule
(b) Two reports on Form 8-K, dated June 3 and June 12, 1996, were filed
during the quarter ending June 30, 1996, pursuant to Item 5 of those forms.
An additional Form 8-K was filed on July 16, 1996 pursuant to Item 5. No
financial statements were filed as part of those reports.
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: August 9, 1996 By: /s/ D. R. Oberhelman
D. R. Oberhelman, Vice President
and Chief Financial Officer
Date: August 9, 1996 By: /s/ R. R. Atterbury III
R. R. Atterbury III, Secretary
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
27 Financial Data Schedule
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM FINANCIAL STATEMENTS FOR THE PERIOD
ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUNE-30-1996
<CASH> 109
<SECURITIES> 524
<RECEIVABLES> 2,857 <F1>
<ALLOWANCES> 0 <F1><F2>
<INVENTORY> 2,198
<CURRENT-ASSETS> 8,341
<PP&E> 8,499
<DEPRECIATION> 4,930
<TOTAL-ASSETS> 18,122
<CURRENT-LIABILITIES> 6,989
<BONDS> 4,042
0<F2>
0<F2>
<COMMON> 204
<OTHER-SE> 3,581
<TOTAL-LIABILITY-AND-EQUITY> 18,122
<SALES> 7,690
<TOTAL-REVENUES> 8,024
<CGS> 5,756
<TOTAL-COSTS> 7,020
<OTHER-EXPENSES> (75)
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 98
<INCOME-PRETAX> 981
<INCOME-TAX> 324
<INCOME-CONTINUING> 670
<DISCONTINUED> 0<F2>
<EXTRAORDINARY> 0<F2>
<CHANGES> 0<F2>
<NET-INCOME> 670
<EPS-PRIMARY> 3.46
<EPS-DILUTED> 3.43
<FN>
<F1> Notes and accounts receivable - trade are reported net of allowances
for doubtful accounts in the Statement of Financial Position.
<F2> Amounts inapplicable or not disclosed as a separate line on the
Statement of Financial Position or Results of Operations are reported as 0
herein.
</FN>
</TABLE>
