10-KPeriod: FY2011

CATERPILLAR INC Annual Report, Year Ended Dec 31, 2011

Filed February 21, 2012For Securities:CAT

Summary

Caterpillar Inc.'s 2011 10-K filing highlights a strong year with significant revenue growth, driven by increased demand for construction and mining equipment. The company completed the acquisition of Bucyrus International in July 2011, significantly expanding its Resource Industries segment and product offerings in the mining sector. Caterpillar also saw growth in its Power Systems segment, partly due to the full year inclusion of Electro-Motive Diesel and the acquisition of MWM Holding GmbH, a move signaling a focus on sustainable power alternatives. The company is actively investing in capacity expansion across various regions to meet demand and is navigating complex global economic conditions and evolving environmental regulations, particularly stricter emissions standards for its products. While the company's core machinery and power systems businesses are robust, the Financial Products segment, managed by Cat Financial, continues to play a crucial role in facilitating sales. Investors should note the company's extensive dealer network and its reliance on global economic health, commodity prices, and government spending on infrastructure. The report also details various risk factors, including sensitivity to economic downturns, commodity price volatility, global political and economic instability, and the successful integration of acquisitions like Bucyrus. Management emphasizes ongoing efforts in research and development, particularly concerning emissions compliance, and operational efficiencies through initiatives like the Caterpillar Production System.

Financial Highlights

50 data points
Beta

Revenue

$60.14B

27.5% Gross Margin

Net Income

$4.93B

8.2% Net Margin

EPS (Diluted)

$7.40

Total Assets

$81.22B

Free Cash Flow

$6.96B

Financial Statements
Beta
Revenue$60.14B
Cost of Revenue$43.58B
Gross Profit$16.56B
R&D Expenses$2.30B
SG&A Expenses$5.20B
Operating Expenses$52.98B
Operating Income$7.15B
Net Income$4.93B
EPS (Basic)$7.64
EPS (Diluted)$7.40
Shares Outstanding (Basic)645.00M
Shares Outstanding (Diluted)666.10M

Key Highlights

  • 1Record 2011 sales and revenues of $60.138 billion, demonstrating strong market demand.
  • 2Acquisition of Bucyrus International in July 2011 significantly bolstering the Resource Industries segment, particularly in mining equipment.
  • 3Expansion of global production capacity through new facilities and expansions in key regions like the US, Brazil, and Asia.
  • 4Increased investment in research and development ($2.3 billion in 2011), with a focus on meeting new emissions standards.
  • 5Power Systems segment growth driven by full-year Electro-Motive Diesel contribution and the acquisition of MWM Holding GmbH for alternative fuel engines.
  • 6Order backlog grew significantly to $29.8 billion by year-end 2011, reflecting strong future demand, partly boosted by the Bucyrus acquisition.
  • 7Significant global presence with 70% of consolidated sales generated outside the United States in 2011.

Frequently Asked Questions

Caterpillar's revenue growth in 2011 was primarily driven by a significant increase in demand for its construction and mining equipment. This was further bolstered by the strategic acquisition of Bucyrus International, Inc., which substantially expanded its offerings in the mining sector.

Caterpillar is making significant investments in research and development to meet stringent new emissions standards, such as EPA Tier 4. The company believes its emissions technology provides a competitive advantage and is incorporating these compliance costs into product pricing, while also focusing on developing sustainable power alternatives.

Key risks for investors include Caterpillar's high sensitivity to global economic conditions and industry-specific downturns (especially in energy and mining), volatility in commodity prices, government monetary and fiscal policies, potential commodity or component price increases and shortages, disruptions in global financial markets affecting liquidity, and the risks associated with integrating major acquisitions like Bucyrus. Political and economic instability in operating regions and currency exchange rate fluctuations also pose risks.

Cat Financial provides retail and wholesale financing for Caterpillar products, playing a crucial role in enabling customer purchases and dealer sales. It offers various financing plans and works with Caterpillar to provide competitive financial merchandising programs, effectively supporting the sales of equipment, machinery, and engines globally.