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/FIRST ADD -- NY047 -- CATERPILLAR INC./

 /FIRST ADD -- NY047 -- CATERPILLAR INC./
 Financial Products
 Revenues of $91 million were $6 million above third-quarter 1991, resulting primarily from a larger portfolio of earning assets. Before-tax profit was $14 million, compared with $12 million in the third quarter of 1991.
 Profit improved despite a loss resulting from discontinuing a casualty insurance program for dealers.
 Caterpillar Financial Services Corporation financed new business of $421 million, a $117 million increase, compared with $304 million in third quarter 1991.
 Income Taxes
 In the second quarter of 1992, the company discontinued the use of an estimated annual effective tax rate. During the third quarter, taxes based on income continued to reflect taxes calculated utilizing applicable statutory tax rates applied to year-to-date results of individual legal entities and appropriate tax credits.
 Affiliated Companies
 The company's share of affiliated companies' earnings was a $3 million loss, compared with a $4 million profit in the third quarter of 1991. The decline in profitability was principally at the company's 50 percent-owned affiliate, Shin Caterpillar Mitsubishi Ltd. in Japan. The deterioration in profit was primarily because of lower sales and an unfavorable change in sales mix.
 Caterpillar Sales Inside the United States
 Caterpillar sales inside the United States were $1.18 billion, a $136 million or 13 percent increase from the same quarter last year.
 Although end-user demand for both machines and engines rose, most of the improvement in company sales was due to dealer inventory changes. Even though dealer inventories are considerably below year-earlier levels, company sales benefitted from a smaller reduction in machine inventories during the quarter than occurred during the third quarter of last year.
 U.S. Dealer Machine Sales
 Dealer deliveries to end-users in the third quarter were up slightly from the same quarter a year ago. Deliveries were up in most applications, although some industry segments continue to suffer from very sluggish economic growth.
 Within construction sectors:
 -- Sales to housing construction continued to improve significantly from year-earlier levels as housing starts increased with mortgage rates at 20-year lows.
 -- Sales to commercial, industrial, and government building remained above year-earlier levels in spite of lower private nonresidential construction spending and continued high vacancy rates in office and commercial buildings in many areas.
 -- Highway repair and construction sales exceeded last year's third quarter levels as deliveries responded to a 14 percent increase in highway construction spending stimulated by last year's highway bill.
 -- Sales to other construction (e.g., dams, public utilities) were below year-earlier levels although the trend is improving.
 Within commodity-related applications:
 -- Sales to industrial applications and sand and quarry mining now are above year-earlier levels. The increase in sales to industrial applications follows the general improvement in the economy while the improvement in mining deliveries is primarily a response to the increase in highway construction.
 -- Forest product sales were unchanged from year-earlier depressed levels in spite of the increase in housing starts.
 -- Sales to metal mining were up sharply in the third quarter principally reflecting higher production.
 -- Sales to coal mining continued above year-earlier levels although production and prices remain below last year's levels.
 -- Petroleum sales were significantly below year-earlier levels in response to depressed drilling activity.
 -- Sales to solid waste disposal applications also were significantly below 1991 levels.
 U.S. Dealer New Machine Inventories
 U.S. dealer machine inventories at the end of the third quarter were slightly lower than at the end of the second quarter. Inventories were down considerably from year-earlier levels and are slightly below normal relative to current selling rates.
 Engine Sales Inside the United States
 Company sales of diesel engines rose in the third quarter compared with last year due to higher demand for truck engines from Original Equipment Manufacturers (OEMs) and for electrical power generation applications. This more than offset declines in marine, petroleum and agricultural applications. Sales of turbine engines were down moderately from 1991 levels.
 Caterpillar Sales Outside the United States
 Caterpillar sales outside the United States were $1.41 billion, $177 million or 14 percent above the third quarter of 1991. These sales represented 55 percent of total company sales, compared with 54 percent in the third quarter of 1991.
 Company sales to dealers rose although end-user demand for machines fell. The increase in company sales was due principally to an increase in dealer inventories in the third quarter of this year compared with a decrease in 1991. This still leaves dealer inventories substantially below year-earlier levels and below normal relative to current selling rates. Higher shipments of turbine engines and higher end-user demand for diesel engines also contributed to improved company sales.
 Dealer Machine Sales Outside the United States
 Weak business conditions continue to prevail in most industrialized countries due to the impact of high interest rates. Where recoveries have begun, growth has been too subdued to stimulate much growth in our industry. These conditions produced lower dealer sales in most industrialized countries in the third quarter:
 -- Europe: Recessions and near-recessionary conditions continue to cause decline in equipment demand throughout most of Europe. Significant declines occurred in the U.K. and Spain while reconstruction continued to boost sales in Germany.
 -- Canada: Although interest rates have fallen to 20-year lows, business profitability and confidence remain depressed. Demand is flat or lower in all sectors except metal mining, highway construction and public utilities.
 -- Japan: The recession is more severe than the government anticipated and lower interest rates have yet to stimulate a recovery. Sales are down significantly in most sectors.
 -- Australia: End-user demand was unchanged from year-earlier levels and a slow recovery appears to be under way. End-user demand in the developing regions was mixed with increases in some regions more than offset by reductions elsewhere:
 -- Africa and Middle East: Sales declined in this region. Sizable declines occurred in United Arab Emirates and Israel.
 -- Latin America (excluding Brazil): Sales were unchanged from third quarter 1991 levels. Sales to Mexico declined from year-earlier levels due to weaker growth and a tighter monetary policy, while sales were up significantly in a number of countries including Venezuela and Peru.
 -- Brazil: Sales declined significantly as economic and political uncertainty increased due to President Collor's impeachment proceedings.
 -- Far East: End-user demand continued to decline as a result of tight monetary policies designed to lower inflation. Significant declines occurred in Malaysia and South Korea while a sizable increase occurred in Hong Kong. Logging in particular has suffered from the economic slowdown.
 -- Commonwealth of Independent States (C.I.S.) and East Europe: Sales were up considerably in the third quarter over last year's levels, but are still relatively insignificant.
 -0- 10/22/92
 /END FIRST ADD -- SECOND ADD TO FOLLOW/
 (CAT) CO: Caterpillar Inc. ST: Illinois IN: MAC SU: ERN


TS -- NY047A -- 3704 10/22/92 14:14 EDT
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Date:Oct 22, 1992
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