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FIRST ADD TO CATERPILLAR EARNINGS

 /FIRST ADD -- NY063 -- CATERPILLAR EARNINGS/
 Dealer New Machine Inventories Outside the United States
 Dealer new machine inventories outside the United States rose slightly from first quarter levels. Inventory levels were significantly down from the second quarter last year and are now moderately below normal relative to current selling rates.
 Engine Sales Outside the United States
 Outside the United States, sales of diesel engines fell slightly from 1991 levels. Higher sales of truck engines to OEMs and improvement in market demand for marine and agricultural applications were more than offset by declines in petroleum, electric power generation, and materials handling applications. Sales of turbine engines were up significantly from last year's second-quarter levels.
 LIQUIDITY AND CAPITAL RESOURCES
 Consolidated cash used for operating activities totaled $41 million in the second quarter 1992, in contrast to $101 million of cash provided in the second quarter 1991.
 Total debt at the end of the quarter was $5.42 billion, an increase of $196 million from March 31 this year. Of the increase, $139 million related to Machinery and Engines and $57 million related to Financial Products.
 Machinery and Engines
 Cash used for operating activities totaled $53 million in the second quarter 1992, in contrast to $70 million of cash provided in the second quarter 1991. The reduction resulted primarily from a growth in receivables during the quarter.
 Cash used for capital expenditures totaled $110 million in the second quarter of this year, compared with $150 million a year ago. Thus far, capital expenditures in 1992 have totaled $211 million, with full-year capital expenditures expected to be about $550 million.
 In the second quarter of 1992 debt increased $139 million to $3.21 billion. The percent of debt to debt and stockholders' equity was 46 percent at the end of the second quarter, an increase of 2 percentage points from March 31, 1992.
 At June 30, a revolving credit agreement with a group of commercial banks was in place which provided the basis to classify $344 million of commercial paper and other bank borrowings as long term debt at June 30, compared with $225 million at March 31.
 In May, the company filed a registration statement for a $750 million medium-term note program. Of this amount, $149 million of medium-term notes were issued in the second quarter with maturities ranging from 2 to 7 years. The company expects it will issue from this registration additional medium to long-term debt during the year to finance a portion of capital expenditures and working capital requirements, and to finance the redemption, repayment, or retirement of other outstanding debt including $300 million Zero Coupon Guaranteed Notes due Aug. 11.
 The 8.60 percent sinking fund debentures due May 1, 1999, and the 8 3/4 percent sinking fund debentures due Nov. 1, 1999, totaling $93 million were redeemed June 30 as part of the company's ongoing debt management program.
 FINANCIAL PRODUCTS
 Cash provided by operating activities totaled $12 million in the second quarter 1992, compared with $26 million a year ago.
 Cash used for expenditures for equipment leased to others totaled $28 million in the second quarter of this year. In addition, second- quarter 1992 net finance receivables increased $61 million from March 31. At the end of the second quarter, finance receivables past due over 30 days were 2.8 percent, compared with 4.3 percent at the end of the second quarter 1991.
 Based on a three-year revolving credit agreement with a group of commercial banks, $340 million of commercial paper borrowings were classified as long-term debt June 30, 1992, unchanged from March 31, 1992.
 Debt increased $57 million to $2.21 billion in the second quarter 1992. During the second quarter of this year, $106 million of medium- term notes were issued. The ratio of debt to equity of Cat Financial was 6.8:1, unchanged from March 31, 1992.
 During the second quarter 1992, Cat Financial filed a registration statement for the sale of up to $800 million of medium term notes. The funds from the future sales of these notes will be used for customer and dealer financing.
 EMPLOYMENT
 At the end of the second quarter, Caterpillar's worldwide employment was 52,527 -- a decline of 3,735 from one year ago. For comparison purposes, 1991 employment statistics have been restated to reflect the employment of certain subsidiaries which are now included in Caterpillar's worldwide employment, but were not included in 1991. Hourly employment decreased 3,037 from restated second-quarter 1991 levels, while salaried and management decreased 698.
 Actions are continuing throughout the company to further reduce employment. Sizable additional employment reductions are anticipated as a result of these actions combined with employment reductions associated with the establishment of a new joint venture company for lift trucks with Mitsubishi Heavy Industries, Ltd.
 FIRST SIX MONTHS
 The company incurred a loss of $185 million or $1.83 per share of common stock in the first half. The loss was $136 million higher than the $49 million or 48 cent per share loss in the first half of 1991.
 Consolidated sales and revenues were $4.78 billion, a decline of $583 million, or 11 percent from first half 1991.
 Machinery and Engines
 The before-tax loss related to Machinery and Engines was $275 million, compared with a loss of $114 million in the first half 1991. Sales of $4.61 billion, were $582 million lower.
 The most significant factor affecting the first half loss was a 15 percent decline in physical sales volume. The drop resulted primarily from a substantial decrease in market demand outside the United States. Price realization improved by 4 percent. The principal reasons were price increases taken over the past year and a favorable geographic sales mix.
 In addition, there were several other factors adversely affecting first half results, including:
 --higher costs because of inflation, particularly for employee wages and benefits;
 --a change in sales mix, as relatively more lower margin machines and engines were sold;
 --increased depreciation; and
 --higher interest expense due to a change in mix of consolidated debt with a higher percentage of long-term debt and increased local borrowings in Brazil.
 These were partially offset by:
 --the absence of $43 million of nonrecurring charges recorded in the first half 1991 related to the consolidation of North American operations of the company's Building Construction Products Division, the write-off of surplus assets and employment redundancies outside of the United States;
 --lower costs as a result of employment reductions on all payrolls; and
 --lower currency exchange losses.
 The company's Brazilian operations were unprofitable as a result of continuing poor economic conditions in Brazil. Losses were less than the first half 1991, but continue to have a material adverse effect on consolidated results.
 Financial Products
 For the first half of 1992, Financial Products generated before tax profit of $29 million, compared with $27 million in the first half 1991. The increase was primarily due to a larger portfolio of earning assets.
 Revenues totaled $173 million, a decrease of $1 million from the first half 1991. The slight decrease in net revenues resulted from the absence of insurance revenues related to extended engine warranty programs, partially offset by revenues from increased financing activity in the United States, and expansion of leasing and financing activities into Germany. Caterpillar Financial Services financed new business of $683 million, a $59 million or 9 percent increase, compared with the first half of 1991.
 Affiliated Companies
 The company's share of affiliated companies' results was a $7 million loss, compared with a $12 million profit in the first half 1991. The decline in profitability was principally at the company's Japanese affiliate, Shin Caterpillar Mitsubishi Ltd., due to lower sales and the absence of gains on the sale of surplus assets in Japan reported last year.
 -0- 7/16/92 AA NY063
 /SECOND AND FINAL ADD TO FOLLOW/
 (CAT) CO: Caterpillar Inc. ST: Illinois IN: MAC SU: ERN


KD -- NY063A -- 9765 07/16/92 12:47 EDT
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Date:Jul 16, 1992
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