10-QPeriod: Q3 FY2002

CATERPILLAR INC Quarterly Report for Q3 Ended Sep 30, 2002

Filed November 13, 2002For Securities:CAT

Summary

Caterpillar Inc. (CAT) reported third-quarter 2002 sales and revenues of $5.08 billion and a profit of $213 million, or $0.61 per share. This represents a slight increase in sales and revenues compared to the prior year's third quarter, with profit also showing a modest improvement, primarily driven by lower income taxes. However, profit before tax declined due to lower volumes, particularly in large reciprocating engines and coal mining equipment, which more than offset improved pricing. The company maintained its full-year outlook, expecting sales to be slightly down and profit to be approximately 15% lower than 2001, excluding nonrecurring charges. Management highlighted a strong focus on cost reduction and improved cash flow, including lower capital expenditures and a reduction in employment levels, while continuing to invest in new technologies like ACERT. Despite navigating an extended business cycle downturn and ongoing economic uncertainty, Caterpillar demonstrated resilience in maintaining profitability.

Key Highlights

  • 1Third-quarter 2002 sales and revenues were $5.08 billion, a slight increase of $19 million year-over-year.
  • 2Third-quarter profit was $213 million ($0.61 per share), up $8 million from the prior year, driven primarily by lower income taxes.
  • 3Profit before tax decreased by $12 million due to lower sales volume, especially in large reciprocating engines and coal mining equipment, partially offset by improved price realization.
  • 4Full-year sales are expected to be down slightly, and profit down approximately 15% from 2001 (excluding nonrecurring charges).
  • 5Sales in Asia/Pacific, particularly China, showed strong growth, along with increased sales in Europe, Africa, and the Middle East, which helped offset declines in North America and Latin America.
  • 6The company continues to focus on cost reduction, improved cash flow, and strategic investments in new technologies such as ACERT.
  • 7Dealer new machine inventories were lower worldwide compared to the prior year, indicating a healthier inventory management situation.

Frequently Asked Questions

In the third quarter of 2002, Caterpillar reported sales and revenues of $5.08 billion, a slight increase from $5.06 billion in the same period of 2001. Profit for the quarter was $213 million ($0.61 per share), up from $205 million ($0.59 per share) in the prior year. The increase in profit was primarily attributable to lower income taxes, although profit before tax saw a decrease due to lower sales volumes.

Caterpillar maintained its full-year outlook, expecting sales and revenues to be down slightly compared to 2001. Full-year profit is projected to be down approximately 15% from 2001, excluding nonrecurring charges recorded in 2001. The company acknowledged that near-term political and economic uncertainties could impact fourth-quarter results.

The decrease in profit before tax by $12 million was mainly due to lower sales volumes, particularly in the large reciprocating engines and coal mining equipment segments. These decreases were partially offset by the favorable impact of improved price realization across other product lines and regions.

The Financial Products segment (Caterpillar Financial Services Corporation) saw revenues increase by 2% to $426 million in the third quarter of 2002, driven by portfolio growth. However, before-tax profit for the segment decreased by $16 million due to lower gains on the securitization of receivables, which more than offset the positive impact of portfolio growth and generally lower interest rates.