Caterpillar Inc. — 2012 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2012. The filing is an annual report, not a standalone fourth-quarter report. Caterpillar manufactures construction and mining equipment, engines, turbines and locomotives, and provides related financing and services.
Financial and operating performance
- Sales and revenues: $65.875 billion for 2012. The supplied filing text does not provide a comparable prior-year consolidated revenue figure.
- Profit, margins and cash flow: The supplied text does not provide clear consolidated values for net income, operating profit, margins or cash flow; those statements are incorporated by reference from Exhibit 13, which is not included here.
- Debt and liquidity: The supplied text does not provide clear debt balances, cash balances or liquidity ratios. It notes access to committed credit facilities and capital markets, and identifies funding access as a risk.
- Order backlog: $19.6 billion at year-end 2012, down from $29.8 billion in 2011 and up from $18.7 billion in 2010. Approximately $4.4 billion of the 2012 backlog was not expected to be filled in 2013.
- Research and development: $2.466 billion in 2012, or 3.7% of sales and revenues, compared with $2.297 billion (3.8%) in 2011 and $1.905 billion (4.5%) in 2010.
- Unusual item: Caterpillar recorded a $580 million goodwill impairment in 2012 related to its Siwei acquisition.
- International exposure: Sales outside the United States represented 69% of 2012 consolidated sales and revenues, versus 70% in 2011.
Material changes versus 2011
- Construction machinery sales declined slightly: stronger North American sales were more than offset by lower sales in other regions. Dealer inventory reductions in the second half reflected softer end-user demand.
- Resource Industries sales increased, partly reflecting expanded mining capacity and the inclusion of Bucyrus, acquired in 2011. However, weaker growth and lower commodity prices led to mining order reductions, delays and cancellations, and the backlog fell most sharply in this segment.
- Power Systems sales increased globally, including a full year of MWM sales; growth in petroleum and rail was partly offset by lower industrial and electric power-generation sales excluding MWM.
- The company completed its acquisition of ERA Mining Machinery, including Siwei, and continued integrating Bucyrus and transferring its distribution business to independent dealers.
- Caterpillar slowed some capacity investments and reduced production at certain facilities in response to weaker demand.
Outlook, risks and contingencies
- Management expected research and development expense to decrease about 6% in 2013. The supplied text does not provide a clear consolidated 2013 sales or earnings forecast.
- Management cited long-term support for mining demand from urbanization and infrastructure development, while describing near-term global economic uncertainty and softer mining demand.
- Key risks include cyclical demand, commodity-price changes, dealer inventory decisions, competition and pricing, input costs and supply disruptions, foreign-exchange movements, and access to financing. Cat Financial also faces credit-loss, funding, interest-rate and regulatory risks.
- Environmental remediation accruals were described as not material. The company said unresolved legal matters were not expected to have a material adverse effect, while noting some loss ranges could not be estimated because information was insufficient.
- Management concluded disclosure controls and internal control over financial reporting were effective as of year-end. Siwei was excluded from the 2012 internal-control assessment following its acquisition.
Important facts for investors to verify
- Review Exhibit 13 for audited revenue comparisons, earnings, margins, cash flow, balance-sheet debt and liquidity, and segment results; those details are not present in the supplied text.
- Assess the causes and potential consequences of the $580 million Siwei goodwill impairment and the status of post-acquisition integration and controls.
- Track order backlog, mining customer cancellations and delays, and dealer inventory levels as indicators of future production and sales.
- Confirm the scope and terms of debt and credit facilities, covenant compliance, and Cat Financial’s funding and credit-loss exposure.
- Compare the stated 2013 R&D outlook and demand commentary with subsequent reported results and guidance.