GLOSSARY OF TERMS 1. Consolidating Adjustments -- Eliminations of
transactions between Machinery and Engines and Financial Products.
2. Core Operating Costs -- Machinery and Engines variable
manufacturing cost change adjusted for volume and change in period
costs. Excludes the impact of currency and stock-based
compensation. 3. Currency -- With respect to sales and revenues,
currency represents the translation impact on sales resulting from
changes in foreign currency exchange rates versus the U.S. dollar.
With respect to operating profit, currency represents the net
translation impact on sales and operating costs resulting from
changes in foreign currency exchange rates versus the U.S. dollar.
Currency includes the impacts on sales and operating profit for the
Machinery and Engines lines of business only; currency impacts on
Financial Products revenues and operating profit are included in
the Financial Products portions of the respective analyses. With
respect to other income/expense, currency represents the effects of
forward and option contracts entered into by the company to reduce
the risk of fluctuations in exchange rates and the net effect of
changes in foreign currency exchange rates on our foreign currency
assets and liabilities for consolidated results. 4. EAME --
Geographic region including Europe, Africa, the Middle East and the
Commonwealth of Independent States (CIS). 5. Earning Assets --
These assets consist primarily of total finance receivables net of
unearned income, plus equipment on operating leases, less
accumulated depreciation at Cat Financial. 6. Engines -- A
principal line of business including the design, manufacture,
marketing and sales of engines for Caterpillar machinery; electric
power generation systems; on-highway vehicles and locomotives;
marine, petroleum, construction, industrial, agricultural and other
applications; and related parts. Reciprocating engines meet power
needs ranging from 5 to 21,500 horsepower (4 to over 16 000
kilowatts). Turbines range from 1,600 to 20,500 horsepower (1 200
to 15 000 kilowatts). 7. Financial Products -- A principal line of
business consisting primarily of Caterpillar Financial Services
Corporation (Cat Financial), Caterpillar Insurance Holdings, Inc.
(Cat Insurance), Caterpillar Power Ventures Corporation (Cat Power
Ventures) and their respective subsidiaries. Cat Financial provides
a wide range of financing alternatives to customers and dealers for
Caterpillar machinery and engines, Solar gas turbines as well as
other equipment and marine vessels. Cat Financial also extends
loans to customers and dealers. Cat Insurance provides various
forms of insurance to customers and dealers to help support the
purchase and lease of our equipment. Cat Power Ventures is an
investor in independent power projects using Caterpillar power
generation equipment and services. 8. Latin America -- Geographic
region including Central and South American countries and Mexico.
9. Machinery -- A principal line of business which includes the
design, manufacture, marketing and sales of construction, mining
and forestry machinery-track and wheel tractors, track and wheel
loaders, pipelayers, motor graders, wheel tractor-scrapers, track
and wheel excavators, backhoe loaders, log skidders, log loaders,
off-highway trucks, articulated trucks, paving products,
telehandlers, skid steer loaders and related parts. Also includes
logistics services for other companies and rail-related products
and services. 10. Machinery and Engines (M&E) -- Due to the
highly integrated nature of operations, it represents the aggregate
total of the Machinery and Engines lines of business and includes
primarily our manufacturing, marketing and parts distribution
operations. 11. Managed Distribution -- The process to provide a
fair and equitable allocation of available machine and engine
production positions to worldwide dealers on models where demand
exceeds factory supply. 12. Manufacturing Costs -- Manufacturing
costs represent the volume-adjusted change for variable costs and
the absolute dollar change for period manufacturing costs. Variable
manufacturing costs are defined as having a direct relationship
with the volume of production. This includes material costs, direct
labor and other costs that vary directly with production volume
such as freight, power to operate machines and supplies that are
consumed in the manufacturing process. Period manufacturing costs
support production but are defined as generally not having a direct
relationship to short-term changes in volume. Examples include
machine and equipment repair, depreciation on manufacturing assets,
facility support, procurement, factory scheduling, manufacturing
planning and operations management. Excludes the impact of currency
and stock-based compensation. 13. M&E Other Operating Expenses
-- Comprised primarily of gains (losses) on disposal of long-lived
assets, long-lived asset impairment charges and impairment of
goodwill. 14. Period Costs -- Comprised of Machinery and Engines
period manufacturing costs, SG&A expense and R&D expense.
Excludes the impact of currency and stock-based compensation. 15.
Price Realization -- The impact of net price changes excluding
currency and new product introductions. Includes the impact of
changes in the relative weighting of sales between geographic
regions. 16. Sales Volume -- With respect to sales and revenues,
sales volume represents the impact of changes in the quantities
sold for machines, engines and parts as well as the incremental
revenue impact of new product introductions. With respect to
operating profit, sales volume represents the impact of changes in
the quantities sold for machines, engines and parts combined with
product mix -- the net operating profit impact of changes in the
relative weighting of machines, engines and parts sales with
respect to total sales. 17. Stock-Based Compensation -- As required
by Statement of Financial Accounting Standards 123R, we began
expensing stock-based compensation awards in 2006. Compensation
cost is based on the fair value of the award on the date of grant.
Our awards consist of stock options and stock-settled stock
appreciation rights (SARs). 18. 6 Sigma -- On a technical level, 6
Sigma represents a measure of variation that achieves 3.4 defects
per million opportunities. At Caterpillar, 6 Sigma represents a
much broader cultural philosophy to drive continuous improvement
throughout the value chain. It is a fact-based, data-driven
methodology that we are using to improve processes, enhance
quality, cut costs, grow our business and deliver greater value to
our customers through Black Belt-led project teams. At Caterpillar,
6 Sigma goes beyond mere process improvement-it has become the way
we work as teams to process business information, solve problems
and manage our business successfully. NON-GAAP FINANCIAL MEASURES
The following definition is provided for "non-GAAP financial
measures" in connection with Regulation G issued by the Securities
and Exchange Commission. This non-GAAP financial measure has no
standardized meaning prescribed by U.S. GAAP and therefore is
unlikely to be comparable to the calculation of similar measures
for other companies. Management does not intend this item to be
considered in isolation or as a substitute for the related GAAP
measure. Machinery and Engines Caterpillar defines Machinery and
Engines as it is presented in the supplemental data as Caterpillar
Inc. and its subsidiaries with Financial Products accounted for on
the equity basis. Machinery and Engines information relates to the
design, manufacture and marketing of our products. Financial
Products information relates to the financing to customers and
dealers for the purchase and lease of Caterpillar and other
equipment. The nature of these businesses is different, especially
with regard to the financial position and cash flow items.
Caterpillar management utilizes this presentation internally to
highlight these differences. We also believe this presentation will
assist readers in understanding our business. Pages 35-40 reconcile
Machinery and Engines with Financial Products on the equity basis
to Caterpillar Inc. Consolidated financial information. The
information included in the Outlook section is forward-looking and
involves risks and uncertainties that could significantly affect
expected results. A discussion of these risks and uncertainties is
contained in Form 8-K filed with the Securities & Exchange
Commission (SEC) on January 26, 2007. This filing is available on
our website at http://www.cat.com/sec_filings . Caterpillar's
latest financial results and current outlook are also available
via: Telephone: (800) 228-7717 (Inside the United States and
Canada) (858) 244-2080 (Outside the United States and Canada)
Internet: http://www.cat.com/investor http://www.cat.com/irwebcast
(live broadcast/replays of quarterly conference call) Caterpillar
Inc. Condensed Consolidated Statement of Results of Operations
(Unaudited) (Dollars in millions except per share data) Three
Months Ended Twelve Months Ended December 31, December 31, 2006
2005 2006 2005 Sales and revenues: Sales of Machinery and Engines
$10,328 $9,041 $38,869 $34,006 Revenues of Financial Products 675
622 2,648 2,333 Total sales and revenues 11,003 9,663 41,517 36,339
Operating costs: Cost of goods sold 7,971 6,906 29,549 26,558
Selling, general and administrative expenses 1,016 882 3,706 3,190
Research and development expenses 368 290 1,347 1,084 Interest
expense of Financial Products 269 217 1,023 768 Other operating
expenses 233 301 971 955 Total operating costs 9,857 8,596 36,596
32,555 Operating profit 1,146 1,067 4,921 3,784 Interest expense
excluding Financial Products 68 62 274 260 Other income (expense)
49 99 214 377 Consolidated profit before taxes 1,127 1,104 4,861
3,901 Provision for income taxes 252 270 1,405 1,120 Profit of
consolidated companies 875 834 3,456 2,781 Equity in profit (loss)
of unconsolidated affiliated companies 7 12 81 73 Profit $882 $846
$3,537 $2,854 Profit per common share $1.36 $1.26 $5.37 $4.21
Profit per common share - diluted (1) $1.32 $1.20 $5.17 $4.04
Weighted average common shares outstanding (millions) - Basic 647.6
673.6 658.7 678.4 - Diluted (1) 669.5 705.4 683.8 705.8 Cash
dividends declared per common share $.60 $.50 $1.15 $.96 (1)
Diluted by assumed exercise of stock options and SARs, using the
treasury stock method. Caterpillar Inc. Condensed Consolidated
Statement of Financial Position (Unaudited) (Millions of dollars)
Assets Dec. 31, Dec. 31, Current assets: 2006 2005 Cash and
short-term investments $530 $1,108 Receivables - trade and other
8,168 7,526 Receivables - finance 6,809 6,442 Deferred and
refundable income taxes 733 255 Prepaid expenses and other current
assets 507 2,146 Inventories 6,351 5,224 Total current assets
23,098 22,701 Property, plant and equipment - net 8,851 7,988
Long-term receivables - trade and other 860 1,037 Long-term
receivables - finance 11,590 10,301 Investments in unconsolidated
affiliated companies 562 565 Deferred income taxes 1,949 857
Intangible assets 387 424 Goodwill 1,904 1,451 Other assets 1,742
1,745 Total assets $50,943 $47,069 Liabilities Current liabilities:
Short-term borrowings: -- Machinery and Engines $165 $871 --
Financial Products 4,990 4,698 Accounts payable 4,149 3,412 Accrued
expenses 2,923 2,617 Accrued wages, salaries and employee benefits
938 1,601 Customer advances 921 454 Dividends payable 194 168
Deferred and current income taxes payable 575 528 Long-term debt
due within one year: -- Machinery and Engines 418 340 -- Financial
Products 4,043 4,159 Total current liabilities 19,316 18,848
Long-term debt due after one year: -- Machinery and Engines 3,694
2,717 -- Financial Products 13,986 12,960 Liability for
postemployment benefits 5,879 3,161 Deferred income taxes and other
liabilities 1,209 951 Total liabilities 44,084 38,637 Stockholders'
equity Common stock 2,465 1,859 Treasury stock (7,352) (4,637)
Profit employed in the business 14,593 11,808 Accumulated other
comprehensive income (2,847) (598) Total stockholders' equity 6,859
8,432 Total liabilities and stockholders' equity $50,943 $47,069
Certain amounts for prior periods have been reclassified to conform
to the current period financial statement presentation. Caterpillar
Inc. Condensed Consolidated Statement of Cash Flow (Unaudited)
(Millions of dollars) Twelve Months Ended December 31, Cash flow
from operating activities: 2006 2005 Profit $3,537 $2,854
Adjustments for non-cash items: Depreciation and amortization 1,602
1,477 Other 157 (20) Changes in assets and liabilities: Receivables
- trade and other (89) (908) Inventories (827) (568) Accounts
payable and accrued expenses 734 532 Other assets - net (235) (866)
Other liabilities - net 944 612 Net cash provided by (used for)
operating activities 5,823 3,113 Cash flow from investing
activities: Capital expenditures - excluding equipment leased to
others (1,593) (1,201) Expenditures for equipment leased to others
(1,082) (1,214) Proceeds from disposals of property, plant and
equipment 572 637 Additions to finance receivables (10,586)
(10,334) Collections of finance receivables 8,094 7,057 Proceeds
from the sale of finance receivables 1,107 900 Investments and
acquisitions (net of cash acquired) (513) (13) Proceeds from
release of security deposit - 530 Proceeds from sale of
available-for-sale securities 539 257 Investments in
available-for-sale securities (681) (338) Other - net 323 194 Net
cash provided by (used for) investing activities (3,820) (3,525)
Cash flow from financing activities: Dividends paid (726) (618)
Common stock issued, including treasury shares reissued 414 482
Treasury shares purchased (3,208) (1,684) Excess tax benefit from
stock-based compensation 169 - Proceeds from debt issued (original
maturities greater than three months) 11,269 14,574 Payments on
debt (original maturities greater than three months) (10,375)
(11,620) Short-term borrowings (original maturities three months or
less) - net (136) 19 Net cash provided by (used for) financing
activities (2,593) 1,153 Effect of exchange rate changes on cash 12
(78) Increase (decrease) in cash and short-term investments (578)
663 Cash and short-term investments at beginning of period 1,108
445 Cash and short-term investments at end of period $530 $1,108
All short-term investments, which consist primarily of highly
liquid investments with original maturities of three months or
less, are considered to be cash equivalents. Caterpillar Inc.
Supplemental Data for Results of Operations For The Three Months
Ended December 31, 2006 (Unaudited) (Millions of dollars)
Supplemental Consolidating Data Machinery Financial Consolidating
Consolidated and Engines(1) Products Adjustments Sales and
revenues: Sales of Machinery and Engines $10,328 $10,328 $- $-
Revenues of Financial Products 675 - 799 (124)(2) Total sales and
revenues 11,003 10,328 799 (124) Operating costs: Cost of goods
sold 7,971 7,971 - - Selling, general and administrative expenses
1,016 916 120 (20)(3) Research and development expenses 368 368 - -
Interest expense of Financial Products 269 - 272 (3)(4) Other
operating expenses 233 (8) 235 6 (3) Total operating costs 9,857
9,247 627 (17) Operating profit 1,146 1,081 172 (107) Interest
expense excluding Financial Products 68 71 - (3)(4) Other income
(expense) 49 (62) 7 104 (5) Consolidated profit before taxes 1,127
948 179 - Provision for income taxes 252 196 56 - Profit of
consolidated companies 875 752 123 - Equity in profit (loss) of
unconsolidated affiliated companies 7 7 - - Equity in profit of
Financial Products' subsidiaries - 123 - (123)(6) Profit $882 $882
$123 $(123) (1) Represents Caterpillar Inc. and its subsidiaries
with Financial Products accounted for on the equity basis. (2)
Elimination of Financial Products' revenues earned from Machinery
and Engines. (3) Elimination of net expenses recorded by Machinery
and Engines paid to Financial Products. (4) Elimination of interest
expense recorded between Financial Products and Machinery and
Engines. (5) Elimination of discount recorded by Machinery and
Engines on receivables sold to Financial Products and of interest
earned between Machinery and Engines and Financial Products. (6)
Elimination of Financial Products' profit due to equity method of
accounting. Caterpillar Inc. Supplemental Data for Results of
Operations For The Three Months Ended December 31, 2005 (Unaudited)
(Millions of dollars) Supplemental Consolidating Data Machinery
Financial Consolidating Consolidated and Engines(1) Products
Adjustments Sales and revenues: Sales of Machinery and Engines
$9,041 $9,041 $- $- Revenues of Financial Products 622 - 715
(93)(2) Total sales and revenues 9,663 9,041 715 (93) Operating
costs: Cost of goods sold 6,906 6,906 - - Selling, general and
administrative expenses 882 773 118 (9)(3) Research and development
expenses 290 290 - - Interest expense of Financial Products 217 -
221 (4)(4) Other operating expenses 301 70 234 (3)(3) Total
operating costs 8,596 8,039 573 (16) Operating profit 1,067 1,002
142 (77) Interest expense excluding Financial Products 62 64 -
(2)(4) Other income (expense) 99 9 15 75 (5) Consolidated profit
before taxes 1,104 947 157 - Provision for income taxes 270 222 48
- Profit of consolidated companies 834 725 109 - Equity in profit
(loss) of unconsolidated affiliated companies 12 10 2 - Equity in
profit of Financial Products' subsidiaries - 111 - (111)(6) Profit
$846 $846 $111 $(111) (1) Represents Caterpillar Inc. and its
subsidiaries with Financial Products accounted for on the equity
basis. (2) Elimination of Financial Products' revenues earned from
Machinery and Engines. (3) Elimination of net expenses recorded by
Machinery and Engines paid to Financial Products. (4) Elimination
of interest expense recorded between Financial Products and
Machinery and Engines. (5) Elimination of discount recorded by
Machinery and Engines on receivables sold to Financial Products and
of interest earned between Machinery and Engines and Financial
Products. (6) Elimination of Financial Products' profit due to
equity method of accounting. Caterpillar Inc. Supplemental Data for
Results of Operations For The Twelve Months Ended December 31, 2006
(Unaudited) (Millions of dollars) Supplemental Consolidating Data
Machinery Financial Consolidating Consolidated and Engines(1)
Products Adjustments Sales and revenues: Sales of Machinery and
Engines $38,869 $38,869 $- $- Revenues of Financial Products 2,648
- 3,114 (466)(2) Total sales and revenues 41,517 38,869 3,114 (466)
Operating costs: Cost of goods sold 29,549 29,549 - - Selling,
general and administrative expenses 3,706 3,294 446 (34)(3)
Research and development expenses 1,347 1,347 - - Interest expense
of Financial Products 1,023 - 1,033 (10)(4) Other operating
expenses 971 22 965 (16)(3) Total operating costs 36,596 34,212
2,444 (60) Operating profit 4,921 4,657 670 (406) Interest expense
excluding Financial Products 274 285 - (11)(4) Other income
(expense) 214 (256) 75 395 (5) Consolidated profit before taxes
4,861 4,116 745 - Provision for income taxes 1,405 1,158 247 -
Profit of consolidated companies 3,456 2,958 498 - Equity in profit
(loss) of unconsolidated affiliated companies 81 79 2 - Equity in
profit of Financial Products' subsidiaries - 500 - (500)(6) Profit
$3,537 $3,537 $500 $(500) (1) Represents Caterpillar Inc. and its
subsidiaries with Financial Products accounted for on the equity
basis. (2) Elimination of Financial Products' revenues earned from
Machinery and Engines. (3) Elimination of net expenses recorded by
Machinery and Engines paid to Financial Products. (4) Elimination
of interest expense recorded between Financial Products and
Machinery and Engines. (5) Elimination of discount recorded by
Machinery and Engines on receivables sold to Financial Products and
of interest earned between Machinery and Engines and Financial
Products. (6) Elimination of Financial Products' profit due to
equity method of accounting. Caterpillar Inc. Supplemental Data for
Results of Operations For The Twelve Months Ended December 31, 2005
(Unaudited) (Millions of dollars) Supplemental Consolidating Data
Machinery Financial Consolidating Consolidated and Engines(1)
Products Adjustments Sales and revenues: Sales of Machinery and
Engines $34,006 $34,006 $- $- Revenues of Financial Products 2,333
- 2,650 (317)(2) Total sales and revenues 36,339 34,006 2,650 (317)
Operating costs: Cost of goods sold 26,558 26,558 - - Selling,
general and administrative expenses 3,190 2,786 446 (42)(3)
Research and development expenses 1,084 1,084 - - Interest expense
of Financial Products 768 - 786 (18)(4) Other operating expenses
955 76 887 (8)(3) Total operating costs 32,555 30,504 2,119 (68)
Operating profit 3,784 3,502 531 (249) Interest expense excluding
Financial Products 260 266 - (6)(4) Other income (expense) 377 85
49 243 (5) Consolidated profit before taxes 3,901 3,321 580 -
Provision for income taxes 1,120 926 194 - Profit of consolidated
companies 2,781 2,395 386 - Equity in profit (loss) of
unconsolidated affiliated companies 73 64 9 - Equity in profit of
Financial Products' subsidiaries - 395 - (395)(6) Profit $2,854
$2,854 $395 $(395) (1) Represents Caterpillar Inc. and its
subsidiaries with Financial Products accounted for on the equity
basis. (2) Elimination of Financial Products' revenues earned from
Machinery and Engines. (3) Elimination of net expenses recorded by
Machinery and Engines paid to Financial Products. (4) Elimination
of interest expense recorded between Financial Products and
Machinery and Engines. (5) Elimination of discount recorded by
Machinery and Engines on receivables sold to Financial Products and
of interest earned between Machinery and Engines and Financial
Products. (6) Elimination of Financial Products' profit due to
equity method of accounting. Caterpillar Inc. Supplemental Data for
Cash Flow For The Twelve Months Ended December 31, 2006 (Unaudited)
(Millions of dollars) Supplemental Consolidating Data Machinery
Financial Consolidating Consolidated and Engines(1) Products
Adjustments Cash flow from operating activities: Profit $3,537
$3,537 $500 $(500)(2) Adjustments for non-cash items: Depreciation
and amortization 1,602 943 659 - Undistributed profit of Financial
Products - (128) - 128 (3) Other 157 140 (330) 347 (4) Changes in
assets and liabilities: Receivables - trade and other (89) (292) 6
197 (4/5) Inventories (827) (827) - - Accounts payable and accrued
expenses 734 507 249 (22)(4) Other assets - net (235) (178) (44)
(13)(4) Other liabilities - net 944 911 30 3 (4) Net cash provided
by (used for) operating activities 5,823 4,613 1,070 140 Cash flow
from investing activities: Capital expenditures - excluding
equipment leased to others (1,593) (1,580) (41) 28 (4) Expenditures
for equipment leased to others (1,082) - (1,111) 29 (4) Proceeds
from disposals of property, plant and equipment 572 29 581 (38)(4)
Additions to finance receivables (10,586) - (35,625) 25,039 (5)
Collections of finance receivables 8,094 - 32,670 (24,576)(5)
Proceeds from the sale of finance receivables 1,107 - 2,110
(1,003)(5) Net intercompany borrowings - 123 (2) (121)(6)
Investments and acquisitions (net of cash acquired) (513) (513) - -
Proceeds from sale of available-for-sale securities 539 26 513 -
Investments in available-for-sale securities (681) (35) (646) -
Other - net 323 33 294 (4)(7) Net cash provided by (used for)
investing activities (3,820) (1,917) (1,257) (646) Cash flow from
financing activities: Dividends paid (726) (726) (372) 372 (8)
Common stock issued, including treasury shares reissued 414 414
(13) 13 (7) Treasury shares purchased (3,208) (3,208) - - Excess
tax benefit from stock-based compensation 169 169 - - Net
intercompany borrowings - 2 (123) 121 (6) Proceeds from debt issued
(original maturities greater than three months) 11,269 1,445 9,824
- Payments on debt (original maturities greater than three months)
(10,375) (839) (9,536) - Short-term borrowings (original maturities
three months or less)- net (136) (593) 457 - Net cash provided by
(used for) financing activities (2,593) (3,336) 237 506 Effect of
exchange rate changes on cash 12 8 4 - Increase (decrease) in cash
and short-term investments (578) (632) 54 - Cash and short-term
investments at beginning of period 1,108 951 157 - Cash and
short-term investments at end of period $530 $319 $211 $- (1)
Represents Caterpillar Inc. and its subsidiaries with Financial
Products accounted for on the equity basis. (2) Elimination of
Financial Products' profit after tax due to equity method of
accounting. (3) Non-cash adjustment for the undistributed earnings
from Financial Products. (4) Elimination of non-cash adjustments
and changes in assets and liabilities related to consolidated
reporting. (5) Reclassification of Cat Financial's cash flow
activity from investing to operating for receivables that arose
from the sale of inventory. (6) Net proceeds and payments to/from
Machinery and Engines and Financial Products. (7) Change in
investment and common stock related to Financial Products. (8)
Elimination of dividend from Financial Products to Machinery and
Engines. Caterpillar Inc. Supplemental Data for Cash Flow For The
Twelve Months Ended December 31, 2005 (Unaudited) (Millions of
dollars) Supplemental Consolidating Data Machinery Financial
Consolidating Consolidated and Engines(1) Products Adjustments Cash
flow from operating activities: Profit $2,854 $2,854 $395 $(395)(2)
Adjustments for non-cash items: Depreciation and amortization 1,477
835 642 - Undistributed profit of Financial Products - (373) - 373
(3) Other (20) 7 (205) 178 (4) Changes in assets and liabilities:
Receivables - trade and other (908) (39) 7 (876)(4/5) Inventories
(568) (568) - - Accounts payable and accrued expenses 532 353 238
(59)(4) Other assets - net (866) (854) (34) 22 (4) Other
liabilities - net 612 595 34 (17)(4) Net cash provided by (used
for) operating activities 3,113 2,810 1,077 (774) Cash flow from
investing activities: Capital expenditures - excluding equipment
leased to others (1,201) (1,162) (39) - Expenditures for equipment
leased to others (1,214) - (1,265) 51 (4) Proceeds from disposals
of property, plant and equipment 637 45 592 - Additions to finance
receivables (10,334) - (33,961) 23,627 (5) Collections of finance
receivables 7,057 - 29,449 (22,392)(5) Proceeds from the sale of
finance receivables 900 - 1,430 (530)(5) Net intercompany
borrowings - 111 - (111)(6) Investments and acquisitions (net of
cash acquired) (13) (13) - - Proceeds from release of security
deposit 530 530 - - Proceeds from sale of available-for-sale
securities 257 15 242 - Investments in available-for-sale
securities (338) (20) (318) - Other - net 194 10 197 (13)(8) Net
cash provided by (used for) investing activities (3,525) (484)
(3,673) 632 Cash flow from financing activities: Dividends paid
(618) (618) (22) 22 (9) Common stock issued, including treasury
shares reissued 482 482 (14) 14 (8) Treasury shares purchased
(1,684) (1,684) - - Net intercompany borrowings - - (111) 111 (6)
Proceeds from debt issued (original maturities greater than three
months) 14,574 574 14,000 - Payments on debt (original maturities
greater than three months) (11,620) (654) (10,966) - Short-term
borrowings (original maturities three months or less) - net 19 317
(298) - Net cash provided by (used for) financing activities 1,153
(1,583) 2,589 147 Effect of exchange rate changes on cash (78) (62)
(11) (5)(7) Increase (decrease) in cash and short-term investments
663 681 (18) - Cash and short-term investments at beginning of
period 445 270 175 - Cash and short-term investments at end of
period $1,108 $951 $157 $- (1) Represents Caterpillar Inc. and its
subsidiaries with Financial Products accounted for on the equity
basis. (2) Elimination of Financial Products' profit after tax due
to equity method of accounting. (3) Non-cash adjustment for the
undistributed earnings from Financial Products. (4) Elimination of
non-cash adjustments and changes in assets and liabilities related
to consolidated reporting. (5) Reclassification of Cat Financial's
cash flow activity from investing to operating for receivables that
arose from the sale of inventory. (6) Net proceeds and payments
to/from Machinery and Engines and Financial Products. (7)
Elimination of the effect of exchange on intercompany balances. (8)
Change in investment and common stock related to Financial
Products. (9) Elimination of dividends from Financial Products to
Machinery and Engines. DATASOURCE: Caterpillar Inc. Web site:
http://www.cat.com/
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