Caterpillar (CAT) Q4 2002 earnings summary

Executive summary

• Q4 2002 sales and revenues rose to $5.377B from $5.096B; profit was $305M and diluted EPS $0.88, versus $167M and $0.48 a year earlier.

• FY 2002 sales and revenues were $20.152B, down 1% YoY; profit was $798M and diluted EPS $2.30. Excluding 2001 unusual charges, profit declined 12%.

Financial highlights

• Q4 sales growth reflected $180M of improved price realization, including favorable currency and higher volume; adjusted EPS increased 16% excluding 2001 unusual charges.

• FY price realization improved ~$300M, partly offsetting ~$680M of lower sales volume; favorable price and currency effects were outweighed by volume declines and manufacturing inefficiencies.

• Operating cash flow rose to $2.366B from $1.987B; reported operating profit was $1.319B versus $1.311B in 2001.

Outlook and guidance

• FY 2003 sales and revenues are expected to be level with 2002; profit is forecast to decline ~5% as improved operations offset most of $300M, or ~ $0.60/share, of higher retiree benefit costs.

• Financial Products revenue is expected to increase ~10%; projected regional sales: EAME +4%, Asia/Pacific +2%, North America -3%, and Latin America -10%.

• 2003 emission-standard changes are projected to have a net unfavorable pretax impact of $16M; no NCPs are expected beyond 2003, subject to testing, pricing, and volume assumptions.