Caterpillar Reports First-Quarter 2016 Results

PEORIA, Illinois, April 22, 2016 /PRNewswire/ --

Sales and Revenues and Profit Excluding Restructuring Costs About As Expected

    
                                                       First Quarter
    ($ in billions except profit per share)       2015              2016
    Sales and Revenues                         $12.702            $9.461
    Profit Per Share                             $2.03             $0.46
    Profit Per Share                             $2.07             $0.67
    (Excluding Restructuring Costs)

Caterpillar Inc. (NYSE: CAT) today announced first-quarter 2016 sales and revenues of $9.5 billion, down from $12.7 billion in the first quarter of 2015.  First-quarter 2016 profit per share of $0.46 was down from a profit of $2.03 per share in the first quarter of 2015.  Excluding restructuring costs, profit per share was $0.67, compared with $2.07 per share in the first quarter of 2015.

"While first-quarter results were about as we expected, sales and profit were well below the first quarter of 2015.  Sales declined across the company with substantial reductions in construction, oil and gas, mining and rail.  While many of the industries we serve are challenged, we remain focused on what we can control: the quality of our products, our market position, safety in our facilities and continued restructuring and cost reduction.  In fact, our period costs and variable manufacturing costs in the quarter were nearly $500 million lower than the first quarter of 2015," said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman.

2016 Outlook

We have seen recent increases in commodity prices, some signs of improvement in construction equipment in China and better order activity than we expected at bauma, the world's leading trade fair for many of the industries we serve.  While we are seeing a few positive signals, other parts of our business remain challenged.  As a result, we have lowered the midpoint of the outlook for 2016 sales and revenues about 2 percent.

Sales and revenues in 2016 are expected to be in a range of $40 to $42 billion with a midpoint of $41 billion.  The previous outlook was a range of $40 to $44 billion with a midpoint of $42 billion.  The decline in the midpoint of the sales and revenues outlook range is a result of several factors that, while not individually large in the context of the outlook, collectively add up to about $1 billion.  Those factors include lower transportation sales (rail, marine and the ending of production of on-highway vocational trucks), lower mining sales and weaker price realization than previously expected.

The profit outlook at the midpoint of the sales and revenues range is now $3.00 per share, or $3.70 per share excluding restructuring costs.  The previous profit outlook was $3.50 per share, or $4.00 per share excluding restructuring costs at the midpoint of the previous sales and revenues outlook.  The expected decline in sales and revenues and an increase in expected restructuring costs are the primary reasons for the decline in the profit outlook.

Restructuring costs are now expected to be about $550 million in 2016, up $150 million from the previous outlook.  The decision to end production of on-highway vocational trucks is the primary reason for the increase in restructuring costs.

"While many of the industries we serve are challenged today, we're looking ahead and investing for the future.  We're investing substantially in R&D, driving forward on our Lean journey, continuing implementation of Across the Table with our dealers and accelerating our digital strategy," said Oberhelman.

"Our digital strategy is an exciting investment for the long term.  We're hard at work, inside Caterpillar and with our digital partners, developing the data architecture and applications that will make our products smarter and help our customers improve productivity and safety.  Our goal is to help customers be more productive, better manage their fleets and make more money with Caterpillar than they could with our competitors.  Our approximately 400,000 (and growing) connected assets mean entire fleets and job sites - from machines to tablets to drones - will eventually share data on one common technology platform in the age of smart iron.  One thing that I am certain of is that it's times like these when the Caterpillar team demonstrates the innovation and ambition to be the leader in all we do," added Oberhelman.

Highlights

Recast of 2015 Earnings for Change in Accounting Principle

As discussed in the year-end 2015 earnings release, Caterpillar has implemented a change in accounting principle for pension and OPEB costs.  Under the new accounting principle, we will recognize actuarial gains and losses as a mark-to-market gain or loss when they occur rather than amortizing them to earnings over time.  As a result of the accounting change, 2015 earnings have been recast to make results comparable on a year-over-year basis.  The accounting change added $0.68 per share to 2015 profit.  Profit per share for 2015 has been recast from $3.50 per share to $4.18 per share.  Excluding mark-to-market pension and OPEB losses and restructuring costs, profit per share for 2015 has been recast from $4.64 per share to $5.47 per share.  First-quarter 2015 profit per share has been recast from $1.81 per share to $2.03 per share.  Excluding restructuring costs first-quarter 2015 profit per share has been recast from $1.86 per share to $2.07 per share.  More information on the impact of the change in accounting principle can be found on page 14.

Notes:

About Caterpillar:
For 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent.  Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets.  With 2015 sales and revenues of $47.011 billion, Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.  The company principally operates through its three product segments - Construction Industries, Resource Industries and Energy & Transportation - and also provides financing and related services through its Financial Products segment.  For more information, visit caterpillar.com.  To connect with us on social media, visit caterpillar.com/social-media.

Forward-Looking Statements

Certain statements in this press release relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as "believe," "estimate," "will be," "will," "would," "expect," "anticipate," "plan," "project," "intend," "could," "should" or other similar words or expressions often identify forward-looking statements.  All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions.  These statements do not guarantee future performance, and we do not undertake to update our forward-looking statements.

Caterpillar's actual results may differ materially from those described or implied in our forward-looking statements based on a number of factors, including, but not limited to: (i) global and regional economic conditions and economic conditions in the industries we serve; (ii) government monetary or fiscal policies and infrastructure spending; (iii) commodity price changes, component price increases, fluctuations in demand for our products or significant shortages of component products; (iv) disruptions or volatility in global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (v) political and economic risks, commercial instability and events beyond our control in the countries in which we operate; (vi) failure to maintain our credit ratings and potential resulting increases to our cost of borrowing and adverse effects on our cost of funds, liquidity, competitive position and access to capital markets; (vii) our Financial Products segment's risks associated with the financial services industry; (viii) changes in interest rates or market liquidity conditions; (ix) an increase in delinquencies, repossessions or net losses of Cat Financial's customers; (x) new regulations or changes in financial services regulations; (xi) a failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xii) international trade policies and their impact on demand for our products and our competitive position; (xiii) our ability to develop, produce and market quality products that meet our customers' needs; (xiv) the impact of the highly competitive environment in which we operate on our sales and pricing; (xv) failure to realize all of the anticipated benefits from initiatives to increase our productivity, efficiency and cash flow and to reduce costs; (xvi) additional restructuring costs or a failure to realize anticipated savings or benefits from past or future cost reduction actions; (xvii) inventory management decisions and sourcing practices of our dealers and our OEM customers; (xviii) compliance with environmental laws and regulations; (xix) alleged or actual violations of trade or anti-corruption laws and regulations; (xx) additional tax expense or exposure; (xxi) currency fluctuations; (xxii) our or Cat Financial's compliance with financial covenants; (xxiii) increased pension plan funding obligations; (xxiv) union disputes or other employee relations issues; (xxv) significant legal proceedings, claims, lawsuits or government investigations; (xxvi) changes in accounting standards; (xxvii) failure or breach of IT security; (xxviii) adverse effects of unexpected events including natural disasters; and (xxix) other factors described in more detail under "Item 1A. Risk Factors" in our Form 10-K filed with the SEC on February 16, 2016 for the year ended December 31, 2015.

CONSOLIDATED RESULTS

Consolidated Sales and Revenues

Consolidated Sales and Revenues Comparison
First Quarter 2016 vs. First Quarter 2015

To access this chart, go to http://www.caterpillar.com/en/investors/quarterly-results.html for the downloadable version of Caterpillar 1Q 2016 earnings.

The chart above graphically illustrates reasons for the change in Consolidated Sales and Revenues between the first quarter of 2015 (at left) and the first quarter of 2016 (at right).  Items favorably impacting sales and revenues appear as upward stair steps with the corresponding dollar amounts above each bar, while items negatively impacting sales and revenues appear as downward stair steps with dollar amounts reflected in parentheses above each bar.  Caterpillar management utilizes these charts internally to visually communicate with the company's Board of Directors and employees.

Sales and Revenues

Total sales and revenues were $9.461 billion in the first quarter of 2016, compared with $12.702 billion in the first quarter of 2015, a decline of $3.241 billion, or 26 percent.  The decrease was primarily due to lower sales volume.  While sales for both new equipment and aftermarket parts declined in all segments, most of the decrease was for new equipment.  The unfavorable impact of price realization and currency also contributed to the decline.

Sales declined in all regions.  In North America, sales decreased 26 percent due to both lower end-user demand, primarily in Energy & Transportation, and the unfavorable impact of changes in dealer inventories, primarily in Construction Industries.  In EAME, sales declined 24 percent, primarily in Africa/Middle East due to weak economic conditions resulting from low oil and other commodity prices.  Asia/Pacific sales declined 23 percent, primarily due to lower end-user demand for Energy & Transportation applications and products used in mining.  Sales decreased 43 percent in Latin America, primarily due to widespread economic weakness across the region.  The most significant decreases were in Brazil and Mexico.

Sales decreased in all segments.  Energy & Transportation's sales declined 33 percent largely due to lower end-user demand for oil and gas and transportation applications.  Construction Industries' sales decreased 19 percent, primarily due to the unfavorable impact of changes in dealer inventories, lower demand from end users and unfavorable price realization.  Resource Industries' sales declined 26 percent, mostly due to continued low end-user demand.  Financial Products' segment revenues were down 7 percent, primarily due to lower average earning assets and lower average financing rates.

Consolidated Operating Profit

Consolidated Operating Profit Comparison
First Quarter 2016 vs. First Quarter 2015

To access this chart, go to http://www.caterpillar.com/en/investors/quarterly-results.html for the downloadable version of Caterpillar 1Q 2016 earnings.

The chart above graphically illustrates reasons for the change in Consolidated Operating Profit (Loss) between the first quarter of 2015 (at left) and the first quarter of 2016 (at right).  Items favorably impacting operating profit appear as upward stair steps with the corresponding dollar amounts above each bar, while items negatively impacting operating profit appear as downward stair steps with dollar amounts reflected in parentheses above each bar.  Caterpillar management utilizes these charts internally to visually communicate with the company's Board of Directors and employees.  The bar entitled Other includes consolidating adjustments and Machinery, Energy & Transportation other operating (income) expenses.

Operating profit for the first quarter of 2016 was $494 million, compared with $1.702 billion in the first quarter of 2015.  The decrease of $1.208 billion was primarily due to lower sales volume, including an unfavorable mix of products, resulting from continued weak commodity prices globally and economic weakness in developing countries.  In addition, price realization and restructuring costs were unfavorable.  These items were partially offset by favorable period costs and variable manufacturing costs.

The unfavorable price realization resulted from competitive market conditions and an unfavorable geographic mix of sales.  Variable manufacturing costs were favorable, primarily due to improved material costs.  Period costs were lower, primarily resulting from substantial restructuring and cost reduction actions and lower short-term incentive compensation expense.  The reductions impacted period manufacturing costs and selling, general and administrative expenses (SG&A).  Research and development expenses (R&D) were about flat.

Restructuring costs of $161 million in the first quarter of 2016 were primarily related to our decision to discontinue production of on-highway vocational trucks and other restructuring actions across the company.  In the first quarter of 2015, restructuring costs were $35 million.

Other Profit/Loss Items 

Global Workforce

Caterpillar worldwide, full-time employment was about 101,400 at the end of the first quarter of 2016, compared with about 113,300 at the end of the first quarter of 2015, a decrease of about 11,900 full-time employees.  The flexible workforce decreased by about 3,200 for a total decrease in the global workforce of about 15,100.  The decrease was primarily the result of restructuring programs and lower production volumes.

    
                                                     March 31
                                                                      Increase/
                                    2016              2015            (Decrease)
    Full-time employment           101,400           113,300            (11,900)
    Flexible workforce              12,900            16,100             (3,200)
    Total                          114,300           129,400            (15,100)
 
    Geographic summary of change
    U.S. workforce                                                       (8,000)
    Non-U.S. workforce                                                   (7,100)
    Total                                                               (15,100)

SEGMENT RESULTS 

Segment results for the first quarter of 2015 have been recast.  See page 14 for additional details.

    
Sales and Revenues by
Geographic Region

                       
(Millions of            %      North     %      Latin     %             %      Asia/     %
dollars)      Total  Change  America  Change  America  Change  EAME  Change  Pacific  Change

First
Quarter 2016
Construction
Industries(1) $4,043  (19)%   $ 2,058   (18)%   $ 231   (52)%   $ 847   (17)%   $ 907  (9)%
Resource
Industries(2)  1,449  (26)%       604   (23)%     268   (14)%     262   (43)%     315 (23)%
Energy &
Transport-
ation(3)       3,278  (33)%     1,566   (34)%     200   (53)%     982   (21)%     530 (40)%
All Other
Segments(4)       38  (47)%        15   (42)%       1   (75)%       9   (63)%      13 (28)%
Corporate
Items and
Eliminations     (28)             (24)             (1)             (2)             (1)
Machinery,
Energy &
Transport-
ation         $8,780  (27)%   $ 4,219   (26)%   $ 699   (43)%  $2,098   (24)%  $1,764 (23)%
 
Financial
Products
Segment        $ 743   (7)%     $ 459     2 %    $ 87   (19)%    $ 98   (10)%    $ 99 (23)%
Corporate
Items and
Eliminations     (62)             (34)            (14)             (4)            (10)
Financial
Products
Revenues       $ 681   (8)%     $ 425     - %    $ 73   (25)%    $ 94   (10)%    $ 89 (24)%
 
Consolidated
Sales and
Revenues      $9,461  (26)%   $ 4,644   (24)%   $ 772   (41)%  $2,192   (23)%  $1,853 (23)%
 
First
Quarter 2015
Construction
Industries(1) $5,014          $ 2,520           $ 480          $1,017           $ 997
Resource
Industries(2)  1,971              789             311             462             409
Energy &
Transport-
ation(3)       4,915            2,368             425           1,244             878
All Other
Segments(4)       72               26               4              24              18
Corporate
Items and
Eliminations     (11)             (16)              1               1               3
Machinery,
Energy &
Transport-
ation        $11,961          $ 5,687         $ 1,221          $2,748          $2,305
 
Financial
Products
Segment        $ 795            $ 451           $ 107           $ 109           $ 128
Corporate
Items and
Eliminations    (54)              (28)            (10)             (5)            (11)
Financial
Products
Revenues       $ 741            $ 423            $ 97           $ 104           $ 117
 
Consolidated
Sales and
Revenues     $12,702          $ 6,110         $ 1,318          $2,852          $2,422
 
1 Does not include inter-segment sales of $8 million and $23 million in first quarter 2016
  and 2015, respectively.
2 Does not include inter-segment sales of $71 million and $87 million in first quarter 2016
  and 2015, respectively.
3 Does not include inter-segment sales of $632 million and $794 million in first quarter
  2016 and 2015, respectively.
4 Does not include inter-segment sales of $92 million and $103 million in first quarter
  2016 and 2015, respectively.
 
    
 
Sales and Revenues by
Segment
 
                 First                                           First    
(Millions of   Quarter    Sales     Price                      Quarter    $        %
dollars)          2015   Volume  Realization  Currency  Other     2016  Change   Change
Construction
Industries     $ 5,014   $ (701)    $ (172)    $ (98)    $ -   $ 4,043  $ (971)   (19) %
Resource
Industries       1,971     (463)       (38)      (21)      -     1,449    (522)   (26) %
Energy &
Transportation   4,915   (1,543)       (24)      (70)      -     3,278  (1,637)   (33) %
All Other
Segments            72      (33)         -        (1)      -        38     (34)   (47) %
Corporate
Items and
Eliminations       (11)     (19)         -         2       -       (28)    (17)
 
Machinery,
Energy &
Transportation $11,961  $(2,759)    $ (234)    $(188)    $ -   $ 8,780  $(3,181)  (27) %
 
Financial
Products
Segment            795        -          -         -     (52)      743     (52)    (7) %
Corporate
Items and
Eliminations       (54)       -          -         -      (8)      (62)     (8)
Financial
Products
Revenues         $ 741      $ -        $ -       $ -   $ (60)    $ 681   $ (60)    (8) %
 
Consolidated
Sales and
Revenues      $ 12,702  $(2,759)    $ (234)   $ (188)  $ (60)  $ 9,461  $(3,241)  (26) %
 
    
 
    Operating Profit (Loss) by
    Segment
                                         First         First       $           %
    (Millions of dollars)            Quarter 2016  Quarter 2015  Change      Change

    Construction Industries              $ 440         $ 745    $ (305)      (41) %
    Resource Industries                   (96)            96      (192)     (200) %
    Energy & Transportation                410         1,024      (614)      (60) %
    All Other Segments                     (7)           (7)          -         - %
    Corporate Items and
    Eliminations                         (357)         (319)       (38)
    Machinery, Energy &
    Transportation                       $ 390       $ 1,539  $ (1,149)      (75) %
    Financial Products Segment             168           227       (59)      (26) %
    Corporate Items and
    Eliminations                           (1)             3        (4)
    Financial Products                   $ 167         $ 230     $ (63)      (27) %
    Consolidating Adjustments             (63)          (67)          4
 
    Consolidated Operating Profit
    (Loss)                               $ 494       $ 1,702  $ (1,208)      (71) %
 
    
    CONSTRUCTION INDUSTRIES
 
    (Millions of
    dollars)
    Sales Comparison

                 First Quarter  Sales      Price               First Quarter   $       %
                     2015       Volume  Realization  Currency      2016      Change  Change
    Sales
    Comparison(1)   $5,014      ($701)     ($172)     ($98)       $4,043     ($971)   (19)%
 
    Sales by Geographic
    Region
 
                   First Quarter     First Quarter        $            %
                        2016              2015          Change       Change
    North
    America             $2,058            $2,520        ($462)       (18) %
    Latin
    America                231               480         (249)       (52) %
    EAME                   847             1,017         (170)       (17) %
    Asia/Pacific           907               997          (90)        (9) %
    Total1              $4,043            $5,014        ($971)       (19) %
 
    Operating
    Profit
 
                   First Quarter     First Quarter        $            %
                        2016              2015          Change       Change
    Operating
    Profit                $440              $745        ($305)       (41) %
 
    1 Does not include inter-segment sales of $8 million and $23 million in first 
      quarter 2016 and 2015, respectively.
 

Construction Industries' sales were $4.043 billion in the first quarter of 2016, a decrease of $971 million, or 19 percent, from the first quarter of 2015.  The decrease in sales was due to lower volume, unfavorable price realization and the unfavorable impact of currency.  While sales declined for both new equipment and aftermarket parts, substantially all of the decrease was for new equipment.

Sales decreased in all regions.

Construction Industries' profit was $440 million in the first quarter of 2016, compared with $745 million in the first quarter of 2015.  The decrease in profit was primarily due to lower sales volume, including an unfavorable mix of products and unfavorable price realization resulting from competitive market conditions.  The decline was partially offset by favorable costs, primarily due to restructuring and cost reduction actions and lower material costs.

    
    RESOURCE INDUSTRIES
 
    (Millions of
    dollars)
    Sales Comparison

                First Quarter  Sales      Price              First Quarter    $       %
                    2015       Volume  Realization  Currency     2016       Change  Change
    Sales
    Comparison(1)  $1,971      ($463)     ($38)      ($21)      $1,449      ($522)  (26) %
 
    Sales by Geographic
    Region
 
                     First Quarter     First Quarter       $             %
                          2016              2015        Change        Change
    North
    America               $604              $789        ($185)       (23) %
    Latin
    America                268               311          (43)       (14) %
    EAME                   262               462         (200)       (43) %
    Asia/Pacific           315               409          (94)       (23) %
    Total1              $1,449            $1,971        ($522)       (26) %
 
    Operating Profit (Loss)
 
                     First Quarter     First Quarter       $           %
                         2016              2015         Change       Change
    Operating
    Profit
    (Loss)               ($96)               $96        ($192)      (200) %
 
    1 Does not include inter-segment sales of $71 million and $87 million in first quarter 2016
    and 2015, respectively.
 

Resource Industries' sales were $1.449 billion in the first quarter of 2016, a decrease of $522 million, or 26 percent, from the first quarter of 2015.  The decline was primarily due to lower sales volume.  Sales were lower for both new equipment and aftermarket parts.

The sales decrease was primarily due to lower end-user demand across all regions.  In addition, the sales decline in EAME was partially due to the unfavorable impact of changes in dealer inventories, as dealers lowered inventories in the first quarter of 2016, compared to increasing inventories in the first quarter of 2015.

Commodity prices improved from their recent lows, but excess supply remains.  It is not clear at this time that the current prices are either sustainable or sufficient to drive increased demand for equipment.  Mining customers continued to focus on improving productivity in existing mines and reducing their total capital expenditures, as they have for several years.  As a result, sales and new orders in Resource Industries continue to be weak.

Resource Industries incurred a loss of $96 million in the first quarter of 2016, compared with profit of $96 million in the first quarter of 2015.  The unfavorable change was due to lower sales volume and negative price realization.  This was partially offset by improved period manufacturing and SG&A expenses due to restructuring and cost reduction actions.

    
    ENERGY & TRANSPORTATION
 
    (Millions of
    dollars)
    Sales Comparison

                First Quarter   Sales     Price               First Quarter    $       %
                    2015       Volume  Realization  Currency      2016       Change  Change
    Sales                                                                       
    Comparison(1)  $4,915     ($1,543)    ($24)      ($70)       $3,278     ($1,637) (33) %
 
    Sales by Geographic
    Region
 
                     First Quarter    First Quarter      $             %
                         2016             2015         Change       Change
    North
    America             $1,566           $2,368        ($802)       (34) %
    Latin
    America                200              425         (225)       (53) %
    EAME                   982            1,244         (262)       (21) %
    Asia/Pacific           530              878         (348)       (40) %
    Total1              $3,278           $4,915      ($1,637)       (33) %
 
    Operating
    Profit
 
                     First Quarter    First Quarter       $             %
                          2016             2015        Change         Change
    Operating
    Profit                $410           $1,024        ($614)       (60) %
 
    1 Does not include inter-segment sales of $632 million and $794 million in first quarter 2016
    and 2015, respectively.
 

Energy & Transportation's sales were $3.278 billion in the first quarter of 2016, a decrease of $1.637 billion, or 33 percent, from the first quarter of 2015.  The decrease was primarily the result of lower sales volume.  Sales decreased in all applications with more than 80 percent of the decline in oil and gas and transportation.

Energy & Transportation's profit was $410 million in the first quarter of 2016, compared with $1.024 billion in the first quarter of 2015.  The decline was due to a decrease in sales volume, partially offset by lower costs primarily due to restructuring and cost reduction actions and favorable material costs.

    
    FINANCIAL PRODUCTS SEGMENT
 
    (Millions of dollars)
    Revenues by Geographic Region

                              First Quarter          First Quarter     $           %
                                   2016                   2015       Change     Change

    North America                  $459                   $451         $8         2 %
    Latin America                    87                    107        (20)      (19) %
    EAME                             98                    109        (11)      (10) %
    Asia/Pacific                     99                    128        (29)      (23) %
    Total                          $743                   $795       ($52)       (7) %
 
    Operating Profit
 
                              First Quarter          First Quarter     $           %
                                   2016                   2015       Change     Change

    Operating Profit               $168                   $227       ($59)      (26) %
 

Financial Products' revenues were $743 million in the first quarter of 2016, a decrease of $52 million, or 7 percent, from the first quarter of 2015.  The decline was primarily due to lower average earning assets and lower average financing rates.  Average earning assets were down in Asia/Pacific, Latin America and EAME, partially offset by higher average earning assets in North America.  Average financing rates decreased across all regions.

Financial Products' profit was $168 million in the first quarter of 2016, compared with $227 million in the first quarter of 2015.  The decrease was primarily due to a $17 million decrease in net yield on average earning assets reflecting geographic mix changes and currency impacts, an $11 million increase in the provision for credit losses at Cat Financial and a $10 million unfavorable impact from lower average earning assets.

At the end of the first quarter of 2016, past dues at Cat Financial were 2.78 percent, compared with 3.08 percent at the end of the first quarter of 2015 and 2.14 percent at the end of 2015.  There is some seasonality in past due percentages and it is common to see an increase in the first quarter.  Write-offs, net of recoveries, were $31 million for the first quarter of 2016, compared with $12 million for the first quarter of 2015.  The increase in write-offs, net of recoveries, was primarily driven by Caterpillar Power Finance and North American portfolios.

As of March 31, 2016, Cat Financial's allowance for credit losses totaled $340 million, or 1.21 percent of net finance receivables, compared with $392 million, or 1.38 percent of net finance receivables at March 31, 2015.  The allowance for credit losses at year-end 2015 was $338 million, or 1.22 percent of net finance receivables.

Corporate Items and Eliminations

Expense for corporate items and eliminations was $358 million in the first quarter of 2016, an increase of $42 million from the first quarter of 2015.  Corporate items and eliminations include: corporate-level expenses; restructuring costs; timing differences, as some expenses are reported in segment profit on a cash basis; retirement benefit costs other than service cost; currency differences for ME&T, as segment profit is reported using annual fixed exchange rates; cost of sales methodology differences as segments use a current cost methodology; and inter-segment eliminations.

The increase in expense from the first quarter of 2015 was primarily due to a $126 million increase in restructuring costs, partially offset by lower stock-based compensation expense and methodology differences.

2016 OUTLOOK 

We have seen recent increases in commodity prices, some signs of improvement in construction equipment in China and better order activity than we expected at bauma, the world's leading trade fair for many of the industries we serve.  While we are seeing a few positive signals, other parts of our business remain challenged.  As a result, we have lowered the midpoint of the outlook for 2016 sales and revenues about 2 percent.

Sales and revenues in 2016 are expected to be in a range of $40 to $42 billion with a midpoint of $41 billion.  The previous outlook was a range of $40 to $44 billion with a midpoint of $42 billion.  The decline in the midpoint of the sales and revenues outlook range is a result of several factors that, while not individually large in the context of the outlook, collectively add up to about $1 billion.  Those factors include lower transportation sales (rail, marine and the ending of production of on-highway vocational trucks), lower mining sales and weaker price realization than previously expected.

The profit outlook at the midpoint of the sales and revenues range is now $3.00 per share, or $3.70 per share excluding restructuring costs.  The previous profit outlook was $3.50 per share, or $4.00 per share excluding restructuring costs at the midpoint of the previous sales and revenues outlook.  The expected decline in sales and revenues and an increase in expected restructuring costs are the primary reasons for the decline in the profit outlook.

Restructuring costs are now expected to be about $550 million in 2016, up $150 million from the previous outlook.  The decision to end production of on-highway vocational trucks is the primary reason for the increase in restructuring costs.

2016 REPORTING CHANGES

We made several reporting changes effective January 1, 2016.  Our 2015 financial information has been recast to be consistent with the 2016 presentation.

Pension and OPEB Costs

Effective January 1, 2016, we changed our accounting principle for recognizing actuarial gains and losses and expected returns on assets for our pension and OPEB plans.  Gains and losses historically recognized as a component of equity and amortized to earnings in future periods will be recognized in earnings in the period in which they occur.  In addition, we changed our policy for recognizing expected returns on plan assets from a market-related value method (based on a three-year smoothing of asset returns) to a fair value method.

Under the new principle, we will immediately recognize actuarial gains and losses as a mark-to-market gain or loss through earnings upon the annual remeasurement in the fourth quarter, or on an interim basis as triggering events warrant remeasurement.

The change in accounting principle has no impact on future pension or OPEB funding or benefits paid to plan participants.

The impact of the change in accounting principle on our 2015 Results of Operations is presented on page 15.  Actuarial losses (mark-to-market adjustments) for 2015 are shown separately from the other impacts of the change, which are primarily reversals of actuarial losses that had been amortized to earnings under the prior accounting principle.

Segment Reporting

Effective January 1, 2016, we made the following changes that impacted our segment reporting.  These changes were made to reflect changes in organizational accountabilities and refinements to our internal reporting.

The impacts of both the pension and OPEB and segment reporting changes on our 2015 quarterly operating profit are presented on page 16.  The pension and OPEB change is reported in ME&T Corporate Items and had no impact on segment results.

    
    Impact of Pension and OPEB Accounting Principle Change on Consolidated Statement of
    Results of Operations
    Twelve Months Ended December 31, 2015
    (Unaudited)
    (Dollars in millions except per share data)
                                                  Effect of Accounting Change
 
                                                  2015
                                 Previously     Actuarial
                                  Reported       Losses           Other          Recast
    Sales and revenues:
        Sales of Machinery,                                                               
        Energy & Transportation   $ 44,147       $     -         $     -       $ 44,147
        Revenues of Financial                                                             
        Products                     2,864             -               -          2,864
                                                                                                   
        Total sales and revenues    47,011             -               -         47,011
 
    Operating costs:
                                                                                                   
        Cost of goods sold          33,742           122           (318)         33,546
        Selling, general and                                                              
        administrative expenses      5,199            18           (266)          4,951
        Research and development                                                          
        expenses                     2,165            39            (85)          2,119
        Interest expense of
        Financial Products             587             -               -            587
        Other operating (income)                                                          
        expenses                     2,062             -            (39)          2,023
                                                                                                   
        Total operating costs       43,755           179           (708)         43,226
 
                                                                                                   
    Operating profit                 3,256          (179)             708         3,785
 
        Interest expense
        excluding Financial
        Products                       507             -               -            507
        Other income (expense)         106             -              55            161
 
                                                                                                   
    Consolidated profit before taxes 2,855          (179)             763         3,439
 
        Provision (benefit) for
        income taxes                   742           (66)             240           916
        Profit of consolidated                                                            
        companies                    2,113          (113)             523         2,523
 
        Equity in profit (loss)
        of unconsolidated
        affiliated companies             -             -               -              -
 
    Profit of consolidated and                                                            
    affiliated companies             2,113          (113)             523         2,523
 
    Less: Profit (loss) attributable to
    noncontrolling interests            11             -               -             11
 
                                                                                          
    Profit 1                       $ 2,102        $ (113)         $   523       $ 2,512
 
    Profit per common share         $ 3.54                                       $ 4.23
 
    Profit per common share - 
    diluted 2                       $ 3.50                                       $ 4.18
 
                            1 Profit attributable to common stockholders.
                              Diluted by assumed exercise of stock-based
                              compensation awards using the treasury stock
                            2 method.
 
    
    2015 Recast Sales and Revenues by Segment
 
                                                                                     Full
    (Millions of   First           Second         Third            Fourth            Year
    dollars)      Quarter         Quarter        Quarter          Quarter            2015
    Construction
    Industries(1) $ 5,014         $ 4,803        $ 4,075          $ 3,905         $ 17,797
    Resource
    Industries(2)   1,971           2,048          1,842            1,878            7,739
    Energy &
    Transport-
    ation(3)        4,915           4,708          4,352            4,544           18,519
    All Other
    Segments(4)        72              55             39               37              203
    Corporate
    Items and
    Eliminations     (11)            (31)           (23)             (46)            (111)
    Machinery,
    Energy &
    Transport-
    ation        $ 11,961        $ 11,583       $ 10,285         $ 10,318         $ 44,147
    Financial
    Products
    Segment           795             785            752              746            3,078
    Corporate
    Items and
    Eliminations     (54)            (51)           (75)             (34)            (214)
    Financial
    Products        $ 741           $ 734          $ 677            $ 712          $ 2,864
    Consolidated
    Sales and
    Revenues     $ 12,702        $ 12,317       $ 10,962         $ 11,030         $ 47,011
 
    1 Does not
    include
    inter-segment 
    sales            $ 23            $ 26           $ 17             $ 43            $ 109
    2 Does not
    include
    inter-segment
    sales              87              75             88               82              332
    3 Does not
    include
    inter-segment
    sales             794             766            702              615            2,877
    4 Does not
    include
    inter-segment
    sales             103             100             88               99              390
 
    
    2015 Recast Operating Profit (Loss) by Segment
 
                                                                                     Full
    (Millions of    First          Second           Third           Fourth           Year
    dollars)       Quarter        Quarter          Quarter         Quarter           2015
    Construction
    Industries      $ 745           $ 588           $ 354            $ 178         $ 1,865
    Resource
    Industries         96              27            (42)             (80)               1
    Energy &
    Transport-
    ation           1,024             942             683              741           3,390
    All Other
    Segments          (7)            (18)            (11)             (39)            (75)
    Corporate
    Items and
    Eliminations    (319)           (322)           (182)          (1,088)         (1,911)
    Machinery,
    Energy &
    Transporta-
    tion          $ 1,539         $ 1,217           $ 802          $ (288)         $ 3,270
    Financial
    Products
    Segment           227             184             207              191             809
    Corporate
    Items and
    Eliminations        3             (1)            (22)             (15)            (35)
    Financial
    Products        $ 230           $ 183           $ 185            $ 176           $ 774
    Consolidating
    Adjustments      (67)            (67)            (62)             (63)           (259)
    Consolidated
    Operating
    Profit (Loss) $ 1,702         $ 1,333           $ 925          $ (175)         $ 3,785
 
    
    QUESTIONS AND ANSWERS
 
               Your 2015 profit changed from what you reported last year. Can you please
    Q1:        explain the change?
 
               Effective January 1, 2016, we changed how we account for pension and OPEB
               costs. Under the new accounting principle, we will recognize actuarial
               gains and losses as a mark-to-market gain or loss when they occur rather
               than amortizing them to earnings over time. The presentation of 2015
               results has been recast to be consistent with the new method. The change
               resulted in an increase to 2015 pre-tax profit of $584 million or $0.68 per
               share. This is an accounting principle change only and has no impact on
               future pension or OPEB funding or benefits paid to plan participants. Below
    A:         is the impact on 2015 profit per share.
    
                                      First Quarter 2015             Full Year 2015
                                  Previously                   Previously
                                   Reported           Recast    Reported           Recast
    Profit Per
    Share                              $1.81            $2.03       $3.50            $4.18
    2015 Actuarial
    Losses (MTM)                                                                     $0.19
    Restructuring
    Costs                              $0.05            $0.04       $1.14            $1.10
    Profit Per Share -
    Excluding Restructuring
    Costs and MTM                      $1.86            $2.07       $4.64            $5.47
    
        Can you update us on the progress of the restructuring actions announced on
    Q2: September 24, 2015?
 
        Since September 30, 2015, our global workforce is down approximately 8,600, which
        is a combination of restructuring actions and production volume-related actions.
        Restructuring has resulted in the elimination of approximately 5,300 positions
        since the September 24 announcement through the first quarter of 2016. We are
        delivering significant cost reduction as a result of these actions. We continue to
        contemplate facility consolidations and closures in order to right size our
        capacity needs. Since the September 24 announcement, we've announced the closure
    A:  or consolidation of about 15 facilities.
 
        What caused the price deterioration in the first quarter, especially in
    Q3: Construction Industries? What do you expect for the balance of the year?
 
        We continue to see competitive pressure that started in the last half of 2015
        driven by excess industry capacity, unfavorable currency pressure and an overall
        weak economic environment. We expect the current competitive pressure to continue
        for the remainder of the year, although it is expected most of the year-over-year
        weakness will occur in the first half of 2016, as price realization was more
    A:  negative in the second half of 2015 compared to the first half.
 
        Oil prices have improved from the beginning of 2016. How does this affect your
        thinking about shipments of reciprocating engines and turbines to this important
    Q4: end market for 2016?
 
        While oil prices have improved since the beginning of 2016, it is not clear at
        this time that the current price level is either sustainable or sufficient to
        drive increased demand for equipment. We monitor a number of factors in addition
        to oil prices that shape our outlook, including recent order rates, quotation
        activity, our current backlog, trends in retail statistics and discussions with
        our customers. Based on all of these factors, we do not see the current oil price
    A:  driving a turnaround in demand for our products in 2016.
 
    Q5: Can you discuss changes in dealer inventories in the first quarter of 2016?
 
        Dealers generally increase inventories in the first quarter in preparation for the
        spring selling season. Dealer machine and engine inventories increased about $300
        million in the first quarter of 2016, compared with an increase of about $900
    A:  million in the first quarter of 2015.
 
    Q6: Can you comment on your order backlog by segment?
 
        At the end of the first quarter of 2016, the order backlog was $13.1 billion,
        about the same in total and by segment as the end of 2015. Compared to the first
        quarter of 2015, the order backlog declined about $3.5 billion with decreases in
    A:  all segments.
 
        Can you comment on expense related to your 2016 short-term incentive compensation
    Q7: plans?
 
        Short-term incentive compensation expense is directly related to financial and
        operational performance, measured against targets set annually. First-quarter 2016
    A:  expense was about $120 million. First-quarter 2015 expense was about $215 million.
 
        For 2016, our outlook includes short-term incentive compensation expense of about
        $480 million.
 
    Q8: Can you give us an update on how Cat Financial is performing?
 
        Cat Financial's portfolio continues to perform well overall despite ongoing
        weakness in many key end markets. The first quarter of 2016 past dues were 2.78
        percent, compared with 3.08 percent in the first quarter of 2015, with current
        past dues remaining lower than historical averages for the first quarter.
        Write-offs in the first quarter of 2016 were $31 million, or 0.47 percent of the
        average retail portfolio. Although an increase from $12 million in the first
        quarter of 2015, write-offs were only slightly above historical averages for the
        first quarter. We believe customer risk exposure is well managed, with broad
        distribution of portfolio exposure across a global customer base. Cat Financial
        continues to work closely with its customers to provide financing support for new
    A:  Caterpillar product purchases and to actively monitor global portfolio health.
 
    Q9: Can you comment on your balance sheet and cash priorities?
 
        The ME&T debt-to-capital ratio was 37.7 percent, improved from 39.0 percent at the
        end of 2015. Our cash and liquidity positions remain strong with an enterprise
        cash balance of $5.886 billion as of March 31, 2016. ME&T operating cash flow for
        the first quarter of 2016 was $218 million compared with $1.042 billion in the
    A:  first quarter of 2015. The decline was primarily due to lower profit.
 
        While our long-term priorities for cash deployment are unchanged, we are very
        focused on the continuing strength of our balance sheet to maintain our credit
        rating and the dividend.
    
    GLOSSARY OF TERMS
 
             All Other Segments - Primarily includes activities such as: the business
             strategy, product management, development, and manufacturing of filters and
             fluids, undercarriage, tires and rims, ground engaging tools, fluid transfer
             products, precision seals and rubber, and sealing and connecting components
             primarily for Cat products; parts distribution; distribution services
             responsible for dealer development and administration including a wholly
             owned dealer in Japan, dealer portfolio management and ensuring the most
             efficient and effective distribution of machines, engines and parts; digital
             investments for new customer and dealer solutions that integrate data
             analytics with state-of-the art digital technologies while transforming the
          1. buying experience.
             Consolidating Adjustments - Elimination of transactions between Machinery,
          2. Energy & Transportation and Financial Products.
             Construction Industries - A segment primarily responsible for supporting
             customers using machinery in infrastructure, forestry and building
             construction applications. Responsibilities include business strategy,
             product design, product management and development, manufacturing, marketing
             and sales and product support. The product portfolio includes backhoe
             loaders, small wheel loaders, small track-type tractors, skid steer loaders,
             multi-terrain loaders, mini excavators, compact wheel loaders, telehandlers,
             select work tools, small, medium and large track excavators, wheel
             excavators, medium wheel loaders, compact track loaders, medium track-type
             tractors, track-type loaders, motor graders, pipelayers, forestry and paving
          3. products.
             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 impact on sales and operating profit for the
             Machinery, Energy & Transportation 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 (hedging) and the net effect of changes in foreign currency
             exchange rates on our foreign currency assets and liabilities for
          4. consolidated results (translation).
             Debt-to-Capital Ratio - A key measure of Machinery, Energy & Transportation's
             financial strength used by management. The metric is defined as Machinery,
             Energy & Transportation's short-term borrowings, long-term debt due within
             one year and long-term debt due after one year (debt) divided by the sum of
             Machinery, Energy & Transportation's debt and stockholders' equity. Debt also
             includes Machinery, Energy & Transportation's long-term borrowings from
          5. Financial Products.
             EAME - A geographic region including Europe, Africa, the Middle East and the
          6. Commonwealth of Independent States (CIS).
             Earning Assets - Assets consisting primarily of total finance receivables net
             of unearned income, plus equipment on operating leases, less accumulated
          7. depreciation at Cat Financial.
             Energy & Transportation - A segment primarily responsible for supporting
             customers using reciprocating engines, turbines, diesel-electric locomotives
             and related parts across industries serving power generation, industrial, oil
             and gas and transportation applications, including marine and rail-related
             businesses. Responsibilities include business strategy, product design,
             product management and development, manufacturing, marketing and sales and
             product support of turbines and turbine-related services, reciprocating
             engine powered generator sets, integrated systems used in the electric power
             generation industry, reciprocating engines and integrated systems and
             solutions for the marine and oil and gas industries; reciprocating engines
             supplied to the industrial industry as well as Cat machinery; the
             remanufacturing of Cat(R) engines and components and remanufacturing services
             for other companies; the business strategy, product design, product
             management and development, manufacturing, remanufacturing, leasing and
             service of diesel-electric locomotives and components and other rail-related
             products and services and product support of on-highway vocational trucks for
          8. North America.
             Financial Products Segment - Provides financing to customers and dealers for
             the purchase and lease of Cat and other equipment, as well as some financing
             for Caterpillar sales to dealers. Financing plans include operating and
             finance leases, installment sale contracts, working capital loans and
             wholesale financing plans. The segment also provides various forms of
             insurance to customers and dealers to help support the purchase and lease of
             our equipment. Financial Products Segment profit is determined on a pretax
          9. basis and includes other income/expense items.
             Latin America - A geographic region including Central and South American
         10. countries and Mexico.
             Lean Management - A holistic management system that uses a sequential cadence
             of principles to drive the highest quality and lowest total cost to achieve
         11. customer requirements.
             Machinery, Energy & Transportation (ME&T) - Represents the aggregate total of
             Construction Industries, Resource Industries, Energy & Transportation and All
         12. Other Segments and related corporate items and eliminations.
             Machinery, Energy & Transportation Other Operating (Income) Expenses -
             Comprised primarily of gains/losses on disposal of long-lived assets,
             gains/losses on divestitures and legal settlements and accruals.
             Restructuring costs classified as other operating expenses on the Results of
         13. Operations are presented separately on the Operating Profit Comparison.
             Pension and other postemployment benefit (OPEB) costs - Costs for the
         14. company's defined benefit pension and postretirement benefit plans.
             Period Costs - Includes period manufacturing costs, selling, general and
             administrative (SG&A) and research and development (R&D) expenses excluding
             the impact of currency. Period manufacturing costs support production but are
             defined as generally not having a direct relationship to short-term changes
             in volume. Examples include machinery and equipment repair, depreciation on
             manufacturing assets, facility support, procurement, factory scheduling,
             manufacturing planning and operations management. SG&A and R&D costs are not
             linked to the production of goods or services and include marketing, legal
             and financial services and the development of new and significant
         15. improvements in products or processes.
             Price Realization - The impact of net price changes excluding currency and
             new product introductions. Price realization includes geographic mix of
             sales, which is the impact of changes in the relative weighting of sales
         16. prices between geographic regions.
             Resource Industries - A segment primarily responsible for supporting
             customers using machinery in mining, quarry, waste, and material handling
             applications. Responsibilities include business strategy, product design,
             product management and development, manufacturing, marketing and sales and
             product support. The product portfolio includes large track-type tractors,
             large mining trucks, hard rock vehicles, longwall miners, electric rope
             shovels, draglines, hydraulic shovels, track and rotary drills, highwall
             miners, large wheel loaders, off-highway trucks, articulated trucks, wheel
             tractor scrapers, wheel dozers, landfill compactors, soil compactors,
             material handlers, continuous miners, scoops and haulers, hardrock continuous
             mining systems, select work tools, machinery components and electronics and
             control systems. Resource Industries also manages areas that provide services
             to other parts of the company, including integrated manufacturing and
         17. research and development.
             Restructuring Costs - Primarily costs for employee separation costs,
             long-lived asset impairments and contract terminations. These costs are
             included in Other Operating (Income) Expenses. Restructuring costs also
             include other exit-related costs primarily for accelerated depreciation and
             equipment relocation (primarily included in Cost of goods sold) and sales
             discounts and payments to dealers and customers related to discontinued
         18. products (included in Sales of ME&T).
             Sales Volume - With respect to sales and revenues, sales volume represents
             the impact of changes in the quantities sold for Machinery, Energy &
             Transportation as well as the incremental revenue impact of new product
             introductions, including emissions-related product updates. With respect to
             operating profit, sales volume represents the impact of changes in the
             quantities sold for Machinery, Energy & Transportation combined with product
             mix as well as the net operating profit impact of new product introductions,
             including emissions-related product updates. Product mix represents the net
             operating profit impact of changes in the relative weighting of Machinery,
         19. Energy & Transportation sales with respect to total sales.
             Variable Manufacturing Costs - Represents volume-adjusted costs excluding the
             impact of currency. 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
         20. the manufacturing process.

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.  The non-GAAP financial measures we use have no standardized meaning prescribed by U.S. GAAP and therefore are unlikely to be comparable to the calculation of similar measures for other companies.  Management does not intend these items to be considered in isolation or substituted for the related GAAP measure.      

Profit Per Share Excluding Restructuring Costs and Mark-to-Market Losses

We incurred significant restructuring costs in 2015 and expect to incur additional restructuring costs in 2016.  We believe it is important to separately quantify the profit per share impact of restructuring costs in order for our 2016 results and the 2016 outlook to be meaningful to our readers.  We have also provided 2015 profit per share excluding restructuring costs comparable to the 2016 presentation.  In addition, we believe it is important to separately quantify the per share impact of the pension and OPEB mark-to-market losses resulting from plan remeasurements for our 2015 results to be meaningful.  We have provided recast 2015 results comparable to the 2016 presentation.  Reconciliations of profit per share excluding restructuring costs and mark-to-market losses (2015 only) to the most directly comparable GAAP measure, diluted profit per share, are as follows:

    
                                     First Quarter                     2016 Outlook
                                  2015            2016          Original[1]       Current[2]
    Profit (Loss)
    per share                       $2.03          $0.46             $3.50           $3.00
    Per share
    restructuring
    costs [3]                       $0.04          $0.21             $0.50           $0.70
    Profit per
    share
    excluding
    restructuring
    costs                           $2.07          $0.67             $4.00           $3.70
 
                                  First Quarter 2015                  Full Year 2015
                               Previously                       Previously
                                Reported         Recast          Reported         Recast
    Profit (Loss) per share         $1.81          $2.03             $3.50           $4.18
    Per share mark-to-market
    losses                              -              -                 -           $0.19
    Per share restructuring
    costs [3]                       $0.05          $0.04             $1.14           $1.10
    Profit per share
    excluding restructuring
    costs and mark-to-market
    losses                          $1.86          $2.07             $4.64           $5.47
 
    1   2016 Sales and Revenues Outlook in a range of $40-44 billion (as of January
        28, 2016). Profit per share at midpoint.
    2   2016 Sales and Revenues Outlook in a range of $40-42 billion (as of April
        22, 2016). Profit per share at midpoint.
    1-2 2016 Outlook does not include any impact from mark-to-market gains or
        losses resulting from pension and OPEB plan remeasurements.
    3   At effective tax rate excluding discrete items
 

Machinery, Energy & Transportation

Caterpillar defines Machinery, Energy & Transportation as it is presented in the supplemental data as Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.  Machinery, Energy & Transportation 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 22-28 reconcile Machinery, Energy & Transportation with Financial Products on the equity basis to Caterpillar Inc. consolidated financial information.

    
    Caterpillar's latest financial results and outlook are also available via:
    Telephone:           800-228-7717 (Inside the United States and Canada)
                         858-764-9492 (Outside the United States and Canada)

      Internet:  www.caterpillar.com/en/investors.html
               www.caterpillar.com/en/investors/quarterly-results.html (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
                                                             March 31,
                                                 2016                       2015
    Sales and revenues:
                 Sales of Machinery,
                 Energy & Transportation   $   8,780                   $  11,961
                 Revenues of Financial
                 Products                        681                         741
                 Total sales and revenues      9,461                      12,702
 
    Operating costs:
                 Cost of goods sold            6,822                       8,760
                 Selling, general and
                 administrative expenses       1,088                       1,249
                 Research and development
                 expenses                        508                         524
                 Interest expense of
                 Financial Products              152                         150
                 Other operating (income)
                 expenses                        397                         317
                 Total operating costs         8,967                      11,000
 
    Operating profit                             494                       1,702
 
                 Interest expense
                 excluding Financial
                 Products                        129                         129
                 Other income (expense)            -                         194
 
    Consolidated profit before taxes             365                       1,767
 
                 Provision (benefit) for
                 income taxes                     92                         521
                 Profit of consolidated
                 companies                       273                       1,246
 
                 Equity in profit (loss)
                 of unconsolidated
                 affiliated companies            (1)                           2
 
    Profit of consolidated and
    affiliated companies                         272                       1,248
 
    Less: Profit (loss) attributable to
    noncontrolling interests                       1                           3
 
    Profit [1]                             $     271                   $   1,245
 
    Profit per common share                $    0.46                   $    2.06
 
    Profit per common share - diluted [2]  $    0.46                   $    2.03
 
    Weighted-average common shares
    outstanding (millions)
                              - Basic          582.8                       604.9
                              - Diluted[2]     587.7                       612.7
 
    Cash dividends declared per common
    share                                  $       -                   $       -
 
               1 Profit attributable to common stockholders.
                 Diluted by assumed exercise of stock-based compensation
               2 awards using the treasury stock method.
 
    
                                       Caterpillar Inc.
                    Condensed Consolidated Statement of Financial Position
                                         (Unaudited)
                                    (Millions of dollars)
                                           March 31,               December 31,
                                               2016                       2015
    Assets
                Current assets:
                       Cash and
                       short-term                                     
                       investments           $ 5,886                   $ 6,460
                       Receivables -                                  
                       trade and other         6,856                     6,695
                       Receivables -                                  
                       finance                 9,310                     8,991
                       Prepaid expenses
                       and other                                      
                       current assets          1,847                     1,662
                                                                      
                       Inventories             9,849                     9,700
                                                                      
                Total current assets          33,748                    33,508
 
                Property, plant and                                   
                equipment - net               15,935                    16,090
                Long-term receivables                                 
                - trade and other              1,159                     1,170
                Long-term receivables                                 
                - finance                     13,527                    13,651
                Investments in
                unconsolidated
                affiliated companies            246                        246
                Noncurrent deferred
                and refundable income                                 
                taxes                         2,486                      2,489
                                                                      
                Intangible assets             2,741                      2,821
                                                                      
                Goodwill                      6,710                      6,615
                                                                      
                Other assets                  1,755                      1,752
                                                                      
    Total assets                           $ 78,307                   $ 78,342
 
    Liabilities
                Current liabilities:
                       Short-term
                       borrowings:
                                --
                                Machinery,
                                Energy &
                                Transport-
                                ation       $   13                     $    9
                                --
                                Financial                            
                                Products     7,804                      6,958
                                                                      
                       Accounts payable      5,101                      5,023
                                                                      
                       Accrued expenses      3,142                      3,116
                       Accrued wages,
                       salaries and
                       employee                                       
                       benefits              1,158                      1,994
                       Customer                                       
                       advances              1,328                      1,146
                       Dividends
                       Payable                   -                        448
                       Other current                                  
                       liabilities           1,593                      1,671
                       Long-term debt
                       due within one
                       year:
                                --
                                Machinery,
                                Energy &
                                Transport-
                                ation          568                        517
                                --
                                Financial                             
                                Products     5,508                      5,360
                Total current                                         
                liabilities                 26,215                     26,242
 
                Long-term debt due
                after one year:
                                --
                                Machinery,
                                Energy &
                                Transport-                          
                                ation        8,914                      8,960
                                --
                                Financial                                     
                                Products    15,556                     16,209
                Liability for
                postemployment                                        
                benefits                     8,600                      8,843
                                                                      
                Other liabilities            3,269                      3,203
                                                                      
    Total liabilities                       62,554                     63,457
 
    Stockholders' equity
                                                                      
                Common stock                 5,247                      5,238
                                                                      
                Treasury stock             (17,595)                   (17,640)
                Profit employed in the                                
                business                    29,517                     29,246
                Accumulated other
                comprehensive income                                  
                (loss)                      (1,493)                    (2,035)
                Noncontrolling
                interests                       77                         76
                                                                      
    Total stockholders' equity              15,753                     14,885
    Total liabilities and                                             
    stockholders' equity                  $ 78,307                   $ 78,342
 


 

    
                                       Caterpillar Inc.
                        Condensed Consolidated Statement of Cash Flow
                                         (Unaudited)
                                    (Millions of dollars)

                                                     Three Months Ended
                                                          March 31,
                                             2016                          2015
    Cash flow from operating
    activities:
           Profit of consolidated
           and affiliated companies      $    272                      $  1,248
           Adjustments for non-cash
           items:
                       Depreciation
                       and
                       amortization           740                           753
                       Other                  269                           (88)
           Changes in assets and
           liabilities, net of
           acquisitions and
           divestitures:
                       Receivables -
                       trade and
                       other                   14                             6
                       Inventories            (74)                          (89)
                       Accounts
                       payable                211                           228
                       Accrued
                       expenses                33                            35
                       Accrued
                       wages,
                       salaries and
                       employee                                          
                       benefits              (852)                       (1,027)
                       Customer
                       advances               174                            25
                       Other assets
                       - net                 (145)                          365
                       Other
                       liabilities -
                       net                   (153)                         (186)
    Net cash provided by (used
    for) operating activities                 489                         1,270
    Cash flow from investing
    activities:
           Capital expenditures -
           excluding equipment
           leased to others                  (357)                         (437)
           Expenditures for
           equipment leased to
           others                            (383)                         (389)
           Proceeds from disposals
           of leased assets and
           property, plant and
           equipment                          173                           167
           Additions to finance                                    
           receivables                     (2,014)                       (2,122)
           Collections of finance
           receivables                      2,047                         2,241
           Proceeds from sale of
           finance receivables                 10                            43
           Investments and
           acquisitions (net of
           cash acquired)                     (12)                          (29)
           Proceeds from sale of
           businesses and
           investments (net of cash
           sold)                                -                           167
           Proceeds from sale of
           securities                          49                            83
           Investments in
           securities                         (62)                          (70)
           Other - net                        (23)                          (38)
    Net cash provided by (used
    for) investing activities                (572)                         (384)
    Cash flow from financing
    activities:
           Dividends paid                    (448)                         (424)
           Distribution to
           noncontrolling interests            (1)                           (7)
           Common stock issued,
           including treasury
           shares reissued                    (45)                           32
           Treasury shares
           purchased                            -                          (400)
           Excess tax benefit from
           stock-based compensation             1                            17
           Proceeds from debt
           issued (original
           maturities greater than
           three months)                    1,211                         1,529
           Payments on debt
           (original maturities
           greater than three                                      
           months)                         (1,706)                       (2,319)
           Short-term borrowings -
           net (original maturities
           three months or less)              486                           950
    Net cash provided by (used
    for) financing activities                (502)                         (622)
    Effect of exchange rate
    changes on cash                            11                           (42)
    Increase (decrease) in cash
    and short-term investments               (574)                          222
    Cash and short-term
    investments at beginning of
    period                                  6,460                         7,341
    Cash and short-term
    investments at end of period         $  5,886                      $  7,563
 
    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 March 31, 2016
                                              (Unaudited)
                                         (Millions of dollars)
                                                     Supplemental Consolidating Data
                                         Machinery,
                                          Energy &          Financial       Consolidating
                      Consolidated    Transportation[1]     Products         Adjustments
    Sales and
    revenues:
         Sales of
         Machinery,
         Energy &
         Transporta                      
         tion          $ 8,780            $ 8,780              $   -            $     -
         Revenues
         of
         Financial
         Products          681                  -                759                (78)[2]
         Total
         sales and                    
         revenues        9,461                  0                759                (78)
 
    Operating
    costs:
         Cost of                         
         goods sold      6,822              6,822                  -                  -
         Selling,
         general
         and
         administrative            
          expenses        1,088                955                139                 (6)[3]
         Research
         and
         development 
         expenses          508                508                  -                  -
         Interest
         expense of
         Financial
         Products          152                  -                155                 (3)[4]
         Other
         operating
         (income)
         expenses          397                105                298                 (6)[3]
         Total
         operating                       
         costs           8,967              8,390                592                (15)
 
    Operating
    profit                 494                390                167                (63)
 
         Interest
         expense
         excluding
         Financial
         Products          129                140                  -                (11)[4]
         Other
         income
         (expense)           -                (52)                 -                 52 [5]
 
    Consolidated
    profit before
    taxes                  365                198                167                  -
 
         Provision
         (benefit)
         for income
         taxes              92                 40                 52                  -
         Profit of
         consolidated
         companies         273                158                115                  -
 
         Equity in
         profit
         (loss) of
         unconsolidated
         affiliated
         companies          (1)                (1)                 -                  -
         Equity in
         profit of
         Financial
         Products'
         subsidiaries        -                114                  -               (114)[6]
 
    Profit of
    consolidated
    and affiliated
    companies              272                271                115               (114)
 
    Less: Profit
    (loss)
    attributable
    to
    noncontrolling
    interests                1                  -                  1                  -
 
     Profit [7]           $ 271             $  271              $ 114             $ (114)
 
               Represents Caterpillar Inc. and its subsidiaries with Financial
             1 Products accounted for on the equity basis.
               Elimination of Financial Products' revenues earned from
             2 Machinery, Energy & Transportation.
               Elimination of net expenses recorded by Machinery, Energy &
             3 Transportation paid to Financial Products.
               Elimination of interest expense recorded between Financial
             4 Products and Machinery, Energy & Transportation.
               Elimination of discount recorded by Machinery, Energy &
               Transportation on receivables sold to Financial Products and of
               interest earned between Machinery, Energy & Transportation and
             5 Financial Products.
               Elimination of Financial Products' profit due to equity method of
             6 accounting.
             7 Profit attributable to common stockholders.
 
    
                                           Caterpillar Inc.
                              Supplemental Data for Results of Operations
                               For the Three Months Ended March 31, 2015
                                              (Unaudited)
                                         (Millions of dollars)
                                                     Supplemental Consolidating Data
                                         Machinery,
                                          Energy &          Financial       Consolidating
                       Consolidated    Transportation[1]     Products         Adjustments
    Sales and
    revenues:
         Sales of
         Machinery,
         Energy &
         Transport-
         ation         $ 11,961           $ 11,961            $   -            $     -
         Revenues
         of
         Financial
         Products           741                  -              813                 (72)[2]
         Total
         sales and                       
         revenues        12,702             11,961              813                 (72)
 
    Operating
    costs:
         Cost of                         
         goods sold       8,760              8,760                -                   -
         Selling,
         general
         and
         administrative                            
          expenses         1,249              1,114              133                   2 [3]
         Research
         and
         development
         expenses           524                524                -                   -
         Interest
         expense of
         Financial
         Products           150                  -              151                  (1)[4]
         Other
         operating
         (income)
         expenses           317                 24              299                  (6)[3]
         Total
         operating                       
         costs           11,000             10,422              583                  (5)
 
    Operating                            
    profit                1,702              1,539              230                 (67)
 
         Interest
         expense
         excluding
         Financial
         Products           129                139                -                 (10)[4]
         Other
         income
         (expense)          194                138               (1)                 57 [5]
 
    Consolidated
    profit before                        
    taxes                 1,767              1,538              229                   -
 
         Provision
         (benefit)
         for income
         taxes              521                453               68                   -
         Profit of
         consolidated                              
         companies        1,246              1,085              161                   -
 
         Equity in
         profit
         (loss) of
         unconsolidated
         affiliated
         companies            2                  2                -                   -
         Equity in
         profit of
         Financial
         Products'
         subsidiaries         -                159                -                (159)[6]
 
    Profit of
    consolidated
    and affiliated                       
    companies             1,248              1,246              161                (159)
 
    Less: Profit
    (loss)
    attributable
    to
    noncontrolling
    interests                 3                  1                2                   -
 
                                         
    Profit [7]          $ 1,245            $ 1,245            $ 159              $ (159)
 
               Represents Caterpillar Inc. and its subsidiaries with Financial
             1 Products accounted for on the equity basis.
               Elimination of Financial Products' revenues earned from
             2 Machinery, Energy & Transportation.
               Elimination of net expenses recorded by Machinery, Energy &
             3 Transportation paid to Financial Products.
               Elimination of interest expense recorded between Financial
             4 Products and Machinery, Energy & Transportation.
               Elimination of discount recorded by Machinery, Energy &
               Transportation on receivables sold to Financial Products and of
               interest earned between Machinery, Energy & Transportation and
             5 Financial Products.
               Elimination of Financial Products' profit due to equity method of
             6 accounting.
             7 Profit attributable to common stockholders.
 
    
                                                   Caterpillar Inc.
                                           Supplemental Data for Cash Flow
                                      For the Three Months Ended March 31, 2016
                                                     (Unaudited)
                                                (Millions of dollars)
 
                                                       Supplemental Consolidating Data
                                                Machinery,
                                                 Energy &        Financial    Consolidating
                               Consolidated   Transportation[1]   Products     Adjustments
    Cash flow from
    operating activities:
       Profit of
       consolidated and
       affiliated companies      $   272         $   271          $   115       $ (114)[2]
       Adjustments for
       non-cash items:
                 Depreciation
                 and
                 amortization        740             525              215            -
                 Undistributed
                 profit of
                 Financial
                 Products              -            (107)               -          107[3]
                 Other               269             204               16           49[4]
       Changes in assets and
       liabilities, net of
       acquisitions and
       divestitures:
                 Receivables -
                 trade and
                 other                14              41               20          (47)[4,5]
                 Inventories        (74)             (74)               -            -
                 Accounts
                 payable             211             288                2          (79)[4]
                 Accrued
                 expenses             33              34               (1)           -
                 Accrued
                 wages,
                 salaries and
                 employee
                 benefits          (852)            (831)             (21)           -
                 Customer
                 advances            174             174                -            -
                 Other assets
                 - net             (145)            (118)              17          (44)[4]
                 Other
                 liabilities -
                 net               (153)            (189)              (8)          44 [4]
    Net cash provided by
    (used for) operating
    activities                       489             218              355          (84)
    Cash flow from
    investing activities:
       Capital expenditures
       - excluding equipment
       leased to others            (357)            (356)              (1)           -
       Expenditures for
       equipment leased to
       others                      (383)             (23)            (369)           9 [4]
       Proceeds from
       disposals of leased
       assets and property,
       plant and equipment           173              21              159           (7)[4]
       Additions to finance                                              
       receivables                (2,014)              -           (2,662)         648 [5]
       Collections of
       finance receivables         2,047               -            2,849         (802)[5]
       Net intercompany
       purchased receivables           -               -             (229)         229 [5]
       Proceeds from sale of
       finance receivables            10               -               10            -
       Net intercompany                                                       
       borrowings                      -            (927)          (1,000)       1,927 [6]
       Investments and
       acquisitions (net of
       cash acquired)               (12)             (12)               -            -
       Proceeds from sale of
       securities                     49               4               45            -
       Investments in
       securities                   (62)              (5)             (57)           -
       Other - net                  (23)             (23)              (7)           7 [8]
    Net cash provided by
    (used for) investing                                                 
    activities                     (572)          (1,321)          (1,262)       2,011
    Cash flow from
    financing activities:
       Dividends paid              (448)            (448)              (7)           7 [7]
       Distribution to
       noncontrolling
       interests                     (1)              (1)               -            -
       Common stock issued,
       including treasury
       shares reissued              (45)             (45)               7           (7)[8]
       Excess tax benefit
       from stock-based
       compensation                    1               1                -            -
       Net intercompany                                                                            
       borrowings                      -           1,000              927       (1,927)[6]
       Proceeds from debt
       issued (original
       maturities greater
       than three months)          1,211               1            1,210            -
       Payments on debt
       (original maturities
       greater than three                                                
       months)                    (1,706)             (3)          (1,703)           -
       Short-term borrowings
       - net (original
       maturities three
       months or less)               486               4              482            -
    Net cash provided by
    (used for) financing                                                                           
    activities                     (502)             509              916       (1,927)
    Effect of exchange rate
    changes on cash                   11              (2)              13            -
    Increase (decrease) in
    cash and short-term
    investments                    (574)            (596)              22            -
    Cash and short-term
    investments at
    beginning of period            6,460           5,340            1,120            -
    Cash and short-term
    investments at end of
    period                       $ 5,886         $ 4,744          $ 1,142      $     -
 
            Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted
          1 for on the equity basis.
            Elimination of Financial Products' profit after tax due to equity method of
          2 accounting.
            Elimination of non-cash adjustment for the undistributed earnings from Financial
          3 Products.
            Elimination of non-cash adjustments and changes in assets and liabilities related
          4 to consolidated reporting.
            Reclassification of Financial Products' cash flow activity from investing to
          5 operating for receivables that arose from the sale of inventory.
            Elimination of net proceeds and payments to/from Machinery, Energy &
          6 Transportation and Financial Products.
            Elimination of dividend from Financial Products to Machinery, Energy &
          7 Transportation.
            Elimination of change in investment and common stock related to Financial
          8 Products.
 
    
                                                   Caterpillar Inc.
                                            Supplemental Data for Cash Flow
                                       For the Three Months Ended March 31, 2015
                                                      (Unaudited)
                                                 (Millions of dollars)
 
                                                          Supplemental Consolidating Data
                                               Machinery,
                                                Energy &         Financial    Consolidating
                             Consolidated   Transportation[1]    Products      Adjustments
    Cash flow from
    operating activities:
       Profit of
       consolidated and
       affiliated companies      $ 1,248          $ 1,246         $   161      $ (159)[2]
       Adjustments for
       non-cash items:
                 Depreciation
                 and
                 amortization        753              530             223           -
                 Undistributed
                 profit of
                 Financial
                 Products              -              (59)              -          59 [3]
                 Other              (88)              (55)            (87)         54 [4]
       Changes in assets and
       liabilities, net of
       acquisitions and
       divestitures:
                 Receivables -
                 trade and
                 other                 6               54             (34)        (14)[4,5]
                 Inventories        (89)              (85)              -          (4)[4]
                 Accounts
                 payable             228              169              43          16 [4]
                 Accrued
                 expenses             35               26               9           -
                 Accrued
                 wages,
                 salaries and
                 employee                          
                 benefits         (1,027)          (1,009)            (18)          -
                 Customer
                 advances             25               25               -           -
                 Other assets
                 - net               365              246              36          83 [4]
                 Other
                 liabilities -
                 net               (186)              (46)            (57)        (83)[4]
    Net cash provided by
    (used for) operating
    activities                     1,270            1,042             276         (48)
    Cash flow from
    investing activities:
       Capital expenditures
       - excluding equipment
       leased to others            (437)             (435)             (2)          -
       Expenditures for
       equipment leased to
       others                      (389)              (42)           (355)          8 [4]
       Proceeds from
       disposals of leased
       assets and property,
       plant and equipment           167                6             162          (1)[4]
       Additions to finance                                              
       receivables                (2,122)               -          (2,901)        779 [5,8]
       Collections of
       finance receivables         2,241                -           2,954        (713)[5]
       Net intercompany
       purchased receivables           -                -             118        (118)[5]
       Proceeds from sale of
       finance receivables            43                -              43           -
       Net intercompany
       borrowings                      -               (8)              -           8 [6]
       Investments and
       acquisitions (net of
       cash acquired)               (29)              (29)              -           -
       Proceeds from sale of
       businesses and
       investments (net of
       cash sold)                    167              174               -          (7)[8]
       Proceeds from sale of
       securities                     83                3              80           -
       Investments in
       securities                   (70)               (4)            (66)          -
       Other - net                  (38)                4             (42)          -
    Net cash provided by
    (used for) investing
    activities                     (384)             (331)             (9)        (44)
    Cash flow from
    financing activities:
       Dividends paid              (424)             (424)           (100)        100 [7]
       Distribution to
       noncontrolling
       interests                     (7)               (7)              -           -
       Common stock issued,
       including treasury
       shares reissued                32               32               -           -
       Treasury shares
       purchased                   (400)             (400)              -           -
       Excess tax benefit
       from stock-based
       compensation                   17               17               -           -
       Net intercompany
       borrowings                      -                -               8          (8)[6]
       Proceeds from debt
       issued (original
       maturities greater
       than three months)          1,529                2           1,527           -
       Payments on debt
       (original maturities
       greater than three                                                
       months)                    (2,319)              (6)         (2,313)          -
       Short-term borrowings
       - net (original
       maturities three
       months or less)               950                -             950           -
    Net cash provided by
    (used for) financing
    activities                     (622)             (786)             72          92
    Effect of exchange rate
    changes on cash                 (42)              (24)            (18)          -
    Increase (decrease) in
    cash and short-term
    investments                      222              (99)            321           -
    Cash and short-term
    investments at
    beginning of period            7,341            6,317           1,024           -
    Cash and short-term
    investments at end of
    period                       $ 7,563          $ 6,218         $ 1,345     $     -
 
            Represents Caterpillar Inc. and its subsidiaries with Financial Products
          1 accounted for on the equity basis.
            Elimination of Financial Products' profit after tax due to equity method of
          2 accounting.
            Elimination of non-cash adjustment for the undistributed earnings from
          3 Financial Products.
            Elimination of non-cash adjustments and changes in assets and liabilities
          4 related to consolidated reporting.
            Reclassification of Financial Products' cash flow activity from investing to
          5 operating for receivables that arose from the sale of inventory.
            Elimination of net proceeds and payments to/from Machinery, Energy &
          6 Transportation and Financial Products.
            Elimination of dividend from Financial Products to Machinery, Energy &
          7 Transportation.
            Elimination of proceeds received from Financial Products related to
          8 Machinery, Energy & Transportation's sale of businesses and investments.
 

CONTACT: Rachel Potts, Caterpillar, +1-309-675-6892 (Office), +1-309-573-3444 (Mobile) or Potts_Rachel_A@cat.com

 

This is a disclosure announcement from PR Newswire.