Caterpillar (CAT) Q4 2003 earnings summary

Executive summary

• FY03 sales and revenues rose 13% to $22.763B; profit increased to $1.099B from $798M, and diluted EPS reached $3.13 from $2.30.

• Q4 sales and revenues were $6.465B vs. $5.377B; profit was $349M vs. $305M and operating profit was $499M vs. $437M.

• Growth reflected stronger machinery and engine volumes, favorable currency and price realization; higher retirement-benefit costs and emissions-related expenses offset part of the gains.

Financial highlights

• FY03 Machinery and Engines sales were $21.048B vs. $18.648B; Financial Products revenues were $1.715B vs. $1.504B.

• Operating profit increased to $1.688B from $1.324B; income before taxes was $1.477B vs. $1.114B.

• Operating cash flow was $2.066B vs. $2.366B, with $720M of pension contributions contributing to the decline despite higher profit.

• Total assets were $36.465B at year-end, up from $32.747B; total debt reached $19.816B, up from $17.683B.

• Q4 diluted EPS was $0.97 vs. $0.88; quarterly profit was $349M vs. $305M.

Outlook and guidance

• FY04 sales and revenues projected to increase ~12%; Machinery and Engines volume expected to rise ~10%, with the balance from Financial Products revenues and improved price realization.

• FY04 profit per share expected to increase ~40%; higher volume and ACERT benefits were expected to be partly offset by ~$250M higher retirement benefits.

• Financial Products revenues projected to grow ~10% in FY04, primarily from higher average earning assets and new financing activity.

• Regional Machinery and Engines sales outlook: North America +~18%, EAME +~6%, Latin America +~5%, and Asia/Pacific +~7%.

• Outlook assumed no NCPs on engines built in 2004; ACERT engine price realization remained dependent on marketplace acceptance.