Caterpillar 2009 Annual Report Download

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How We Win
2009 Year In Review
1
How We Win
CHAIRMAN’S MESSAGE
SIGNIFICANT OPPORTUNITY
QUALITY PRODUCTS
FINANCIAL STRENGTH
INVALUABLE PARTNERS
DEDICATED TEAM
SUSTAINABLE DEVELOPMENT
CUSTOMER FOCUS

Table of contents

  • Page 1
    How We Win 2009 Year In Review CHAIRMAN'S MESSAGE DEDICATED TEAM How We Win FINANCIAL STRENGTH SIGNIFICANT OPPORTUNITY SUSTAINABLE DEVELOPMENT INVALUABLE PARTNERS QUALITY PRODUCTS CUSTOMER FOCUS 1

  • Page 2
    ... in both good and challenging times. Despite a 37-percent decrease in sales and revenues, we delivered a profit, improved our balance sheet, upheld our mid-A credit rating, maintained the dividend and contributed to employee pension plans. James W. Owens Chairman & CEO, Caterpillar Inc. This...

  • Page 3
    ... dealers manage their inventories down and preserve their balance sheet strength. Late in 2009, as we began preparation for the upturn, we met directly with key suppliers to assess their ability to ramp up production in 2010. We were able to provide financing to our customers through Cat Financial...

  • Page 4
    ...better year with sales and revenues expected to be up 10 to 25 percent from 2009. But we are cautious as the recovery is still in its early stage. It's fragile and it's pacing differently around the world. North America, Europe and Japan are still weak. But our strong global footprint and ability to...

  • Page 5
    How We Win 2009 Year In Review Dedicated Team HOW WE WIN WINNING STAT: 93,000+ dedicated employees 5

  • Page 6
    ...- Cameron Balzat, Australia "We work together! We understand each and everyone's interests, goals and opinions as we move forward through challenging times. Our CPS strategy led us in 2009 and it will continue to prove that Caterpillar can sustain being number one in earth moving equipment!" - Tim...

  • Page 7
    ...of a disastrous situation is important." - Venkatachalam Swaminathan, Chennai, India " With innovation like the 'E' line [D7E] there is no limit to what this company can do. The D7E is our future. With the Tier 4 emissions regulations coming up, this tractor will be huge." " The results would not...

  • Page 8
    ... We Win 2009 Year In Review Financial Strength HOW WE WIN WINNING STAT: MID- Caterpillar is committed to maintaining a mid-A credit rating A Planning Pays Off From the best of times to the toughest of times, Caterpillar's strong financial foundation has been fundamental to capitalizing on...

  • Page 9
    ...- an important priority for stockholders, the ultimate owners of the business. Finally, Caterpillar held a mid-A credit rating and preserved access to capital markets. These results were a remarkable accomplishment given that sales and revenues experienced the largest annual decrease since the 1940s...

  • Page 10
    ... is playing a major role in supporting this construction surge. Caterpillar and PLM offer a full suite of products and services for pipeline construction - including specially configured hydraulic excavators, track-type tractors, motor graders and pipelayers - to meet the diverse needs of customers...

  • Page 11
    ... construction methods. Caterpillar has a strong commitment to China. Today, eight manufacturing facilities are in place, a number we expect to increase as our in-country business grows in coming years. We also expect to grow our logistics and parts facilities and research and development centers...

  • Page 12
    ... to increase as much as 40 percent by 2030, innovative solutions to develop energy potential from non-traditional sources are essential. Caterpillar's ability to provide customers with sustainable, highly efficient energy solutions that convert biogas into useful energy is a compelling competitive...

  • Page 13
    ... solutions more fully and make decisions on a more timely basis. Today, one can walk into the Mossville facility to find suppliers actively participating in design reviews, analyzing value-added engineering or conducting product tests. "As a strategic partner, we gain an early understanding...

  • Page 14
    ... working together, Caterpillar and its dealers proved that strength in numbers works. The "Sales Blitz" program counted more than 6,500 customer visits in 20 countries that generated more than $2 million of rental, used and new equipment revenues during 2009. Whether concentrated in one location for...

  • Page 15
    ... when team members truly "live" the CPS Guiding Principles and incorporate them into their daily work lives. Meet Carlos Campioni, an industrial support analyst at our manufacturing facility in Piracicaba, Brazil, who lives CPS. Carlos has been a catalyst for dramatic process improvements through...

  • Page 16
    ... likely has product to fit the specs for any given job. In 2009, a Cat® paver finisher, asphalt compactor and compact wheel loader were at work in front of the Eiffel Tower to help reconstruct a busy intersection where time and space were at a premium. Time constraints also were in play for the...

  • Page 17
    ... in mind, a committed team from the Marketing and Product Support Center of Excellence (M&PS COE) and distribution services divisions quickly recognized that Caterpillar customers could use some help to weather the latest recession. This team utilized the slow down in new equipment sales to craft an...

  • Page 18
    ... for upgrades to their dozer ï¬,eet with additional rented and purchased units. "The Caterpillar Customer Stimulus initiative was very creative and instrumental in helping us support PBS Coals," said Jay W. Cleveland, Jr., President and CEO of Cleveland Brothers. "The plan we designed with PBS Coals...

  • Page 19
    ... rates, liquidity, access to capital and government spending on infrastructure development; (v) commodity price increases and/or limited availability of raw materials and component products, including steel; (vi) compliance costs associated with environmental laws and regulations; (vii) Caterpillar...

  • Page 20
    ... competitive marketplaces. With 2009 sales and revenues of $32.4 billion, we are one of the world's largest manufacturers of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. Our business portfolio also includes Caterpillar Financial Services, Caterpillar...

  • Page 21
    ... 6 Sigma principles, Caterpillar people demonstrate a passion for innovation and customer service. Our diverse workforce speaks over 100 languages and is bound by a common goal: making the world better tomorrow because of the work we are doing today. Sales and Revenues by Employee 2009 $326 2008...

  • Page 22
    How We Win 2009 Year In Review Employees North America WHO WE ARE 2007 2008 2009 50,901 54,284 43,999 Latin America 2007 2008 2009 13,930 14,403 10,776 EAME 2007 2008 2009 26,168 26,983 22,790 Asia Pacific 2007 2008 2009 10,334 17,217 16,248 22

  • Page 23
    ....1% 50,545 49.9% 59,378 52.6% 53,509 47.4% 50,562 53.9% 43,251 46.1% 2007 Total 2008 Total 2009 Total 101,333 112,887 93,813 Employees by Region 2005 North America EAME Latin America Asia Pacific Total 43,933 23,137 11,688 6,358 85,116 2006 49,018 24,845 13,231 7,499...

  • Page 24
    ... 2009 Year In Review Cat Dealers WHO WE ARE Our vast dealer network helps Caterpillar and our customers win around the world. Cat ® dealers share our passion, enhance our competitive edge and ensure that our customers receive maximum business value from our products and services. Most Cat dealers...

  • Page 25
    How We Win 2009 Year In Review Cat Dealers Cat Dealers In North America Latin America EAME Asia Pacific North America Cat Dealer Employees Cat Dealers Cat Dealer Net Worth* *dollars in millions WHO WE ARE Latin America Cat Dealer Employees Cat Dealers Cat Dealer Net Worth* *dollars in millions ...

  • Page 26
    ... PLC. Mr. Blount has been a director of the company since 1995. JOHN R. BRAZIL , 64, former President of Trinity University (San Antonio, Texas). Dr. Brazil has been a director of the company since 1998. DANIEL M. DICKINSON, 48, Managing Partner of Thayer | Hidden Creek (private equity investment...

  • Page 27
    ... of Caterpillar. Other current directorships: Alcoa Inc. and International Business Machines Corporation. Mr. Owens has been a director of the company since 2004. CHARLES D. POWELL , 68, Chairman of Capital Generation Partners (asset and investment management), LVMH Services Limited (luxury goods...

  • Page 28
    ... positions including United States Trade Representative (member of the President's cabinet), Deputy United States Trade Representative and President and CEO of the University System of Maryland Foundation. Other current directorships: FedEx Corporation and The Boeing Company. Other directorships...

  • Page 29
    ... Distribution Services Division, Americas Operations Division, Mining Division, Quarry & Specialty Industries Division and the Marketing & Product Support Center of Excellence. DOUGLAS R. OBERHELMAN* Doug Oberhelman has responsibility for the company's human services and sustainable development...

  • Page 30
    ...We Win 2009 Year In Review Officers WHO WE ARE EDWARD J. RAPP Ed Rapp has responsibility for the Financial Products Division, Building Construction Products Division, Legal Services Division, Global Finance & Strategic Services Division and Global Information Services Division. GERARD R. VITTECOQ...

  • Page 31
    How We Win 2009 Year In Review Officers Other Officers JAMES B. BUDA General Counsel & Secretary DAVID B. BURRITT Chief Financial Officer JOHN S. HELLER Chief Information Officer BRADLEY M. HALVERSON Controller KEVIN E. COLGAN Treasurer EDWARD J. SCOTT Chief Audit Officer CHRISTOPHER C. SPEARS...

  • Page 32
    ... ® engines and gas turbines provide the horsepower to move goods and commodities across the globe, while Cat ® generators deliver power wherever it's needed. Our manufacturing excellence is supplemented by world-class service businesses providing logistics, financial products and remanufacturing...

  • Page 33
    ...and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, off-highway trucks, articulated trucks, paving products and skid steer loaders. We are also a leader in logistics services and in the design, manufacture and remanufacture...

  • Page 34
    ...We Win 2009 Year In Review Businesses: Machinery Highlights (continued) WHAT WE DO Launched the new B Series knuckleboom log loader that features an enhanced engine and hydraulic power system, which improves fuel economy and gives the operator more control to match the loader's power output to job...

  • Page 35
    ... oil rigs, hospitals, schools, factories, airports and office buildings. Our remanufacturing services permit customers to make their operations more efficient and sustainable. Caterpillar is also a world leader in designing, manufacturing and servicing industrial gas turbine power system solutions...

  • Page 36
    ... units, used for gas compression applications, utilize an in-engine solution to consistently meet requirements limiting NOx emissions to ultra-low levels. Shipped the 5,000th marine engine from the Caterpillar Marine Center of Excellence (MCOE). The Center, located near Greenville, South Carolina...

  • Page 37
    ... of financing alternatives to customers and dealers, all managed to sensible underwriting standards and backed by assets we know - Cat ® equipment. Cat Financial has more than 40 offices and subsidiaries located throughout the Americas, Asia, Australia and Europe. Highlights Remained solidly pro...

  • Page 38
    How We Win 2009 Year In Review Businesses: Financial Products Highlights (continued) WHAT WE DO Maintained access to the term debt and commercial paper markets, and renewed or increased revolving credit agreements with key banks. Earned the Leadership in Energy and Environmental Design for ...

  • Page 39
    ..., logistics, service, R&D and related facilities along with our dealer locations total more than 500 locations worldwide, ensuring that we remain geographically close to our global customer base. North America 2009 Sales & Revenues (in millions) Machinery $6,993 Engines $3,652 Financial Products...

  • Page 40
    ... We Win 2009 Year In Review Worldwide Locations WHAT WE DO Latin America 2009 Sales & Revenues (in millions) Machinery $2,555 Engines $1,080 Financial Products $ 268 Employees Cat Dealers 10,776 31 All Dealer Main FG Wilson - MaK - Perkins - Solar Manufacturing Office Facilities Parts Progress...

  • Page 41
    ... power. Our products include: Articulated Trucks Backhoe Loaders Compactors Engines Forest Machines Generator Sets Hydraulic Excavators Material Handlers Motor Graders Off-Highway Trucks Paving Equipment Pipelayers Scrapers Skid Steer Loaders Track Loaders Track-Type Tractors Turbines Underground...

  • Page 42
    ...gas and integrated power systems for emergency, standby, prime and continuous power generation needs. Hydraulic Excavators Excavate and load material in a variety of applications, including mining, road and pipeline construction. Material Handlers Designed to move and process heavy materials using...

  • Page 43
    How We Win 2009 Year In Review Products Paving Equipment Lays asphalt for roads and highways with paving widths of up to 10 feet. WHAT WE DO Pipelayers Uses a winch and boom to put heavy pipe where it is needed - a pipeline industry standard for decades. Scrapers Large earthmovers that collect ...

  • Page 44
    ... Articulated trucks and load-haul-dump loaders that are engineered to meet the specialized demands of underground mining applications and enable high production volumes and lower costs per ton. WHAT WE DO Wheel Dozers Combines the dozing capabilities of track-type tractors with the mobility...

  • Page 45
    .../OEM Landscaping Marine Mining Oil & Gas Paving Pipeline Power Generation Quarry & Aggregate Railroad Road Construction Underground Utilities Waste Services Demolition and Scrap From demolition and site preparation to scrap recycling and material handling, Cat ® machines and work tool solutions...

  • Page 46
    ..., long life and low operating cost. Landscaping Caterpillar offers a full line of compact construction equipment, including skid steer loaders, compact track loaders, mini hydraulic excavators and compact wheel loaders. Our wide range of versatile machines and Cat work tool attachments meets the...

  • Page 47
    ... material tracking. Cat mining equipment helps customers increase productivity, efficiency and safety. Oil & Gas Caterpillar provides high-technology products for drilling, well servicing, pumping and production. With a global customer focus and market leadership in gas compression, drilling, and...

  • Page 48
    ... wheel loaders to excavators, Caterpillar has a machine to meet all the challenges of the quarry and aggregates industry. Our aggregates product line includes large wheel loaders, front shovels, mass excavators, trucks, excavators, articulated trucks, mid-sized wheel loaders and engines-generator...

  • Page 49
    ... located throughout the Americas, Asia, Australia and Europe. Insurance Caterpillar provides insurance to Cat dealers and customers around the world with the products and services they need to protect their new and used equipment. Our staff of risk management and insurance experts develops...

  • Page 50
    ... We Win 2009 Year In Review Services Logistics WHAT WE DO Caterpillar Logistics Services provides integrated world-class supply chain solutions that deliver a competitive advantage and impact corporate performance. With more than 105 offices worldwide, Cat Logistics serves Caterpillar and more...

  • Page 51
    ... their turbine-driven equipment through expert field services, certified parts service, training programs, machinery management services and equipment refurbishment and restoration. Training Caterpillar helps a wide variety of customers improve efficiencies, enhance jobsite safety and cut costs...

  • Page 52
    ...and related equipment to customers and Cat dealers. Cat Financial has more than 40 offices and subsidiaries located throughout the Americas, Asia, Australia and Europe. Cat Logistics The Cat Logistics brand provides integrated world-class supply chain solutions and services to Caterpillar and more...

  • Page 53
    ... as a supplier to Caterpillar. Progress Rail Services With more than 100 facilities in the United States, Canada and Mexico, Progress Rail Services is one of the largest providers of outsourced maintenance and repair services to the railroad industry in North America. Its customers include all...

  • Page 54
    ... Caterpillar's future. In the long run, companies that survive are those that make the hard decisions in the toughest of times in order to protect the long-term viability of the enterprise. 2009 was a challenging year for our dealers and customers, for our employees and for our suppliers. As 2010...

  • Page 55
    How We Win 2009 Year In Review HOW WE PERFORMED $100.00 $120.72 $130.24 $156.92 $ 99.19 Caterpillar Inc. S&P 500 S&P 500 Machinery 2004 2005 2006 2007 2008 2009 *Cumulative stockholder return assuming an investment of $100 on December 31, 2004, and reinvestment of dividends issued thereafter....

  • Page 56
    ... Depreciation and amortization Research and development expenses As a percent of sales and revenues Wages, salaries and employee benefits Average number of employees DECEMBER 31, Total assets: 4, 6 Long-term debt due after one year: Consolidated Machinery and Engines Financial Products Total debt...

  • Page 57
    ...We Win 2009 Year In Review HOW WE PERFORMED Sales and Revenues - Machinery Machinery $2,856 Financial Products 2009 2008 $18,148 $31,804 $11,392 Engines 2007 $28,359 $18,148 Machinery 2006 $26,062 2009 Total 2005 (dollars in millions) $22,931 $32,396 Sales and Revenues - Engines Engines...

  • Page 58
    ... are highly integrated; therefore, the company uses a number of allocations to determine lines of business operating profit Operating Profit - Financial Products Financial Products $1,464 2009 2008 $381 $579 $381 Machinery(1) Engines(1) Financial Products 2009 Total* 2007 2006 $531 (dollars...

  • Page 59
    ... We Win 2009 Year In Review HOW WE PERFORMED Profit Per Share 2009 2008 $1.43 $5.66 2007 2006 $4.04 $5.37 $5.17 2005 Annual Dividends Declared Per Share 2009 2008 $1.38 $1.68 $1.62 2007 2006 $0.96 $1.15 2005 Closing Stock Price (on the final trading date for each year) 2009 2008 $44...

  • Page 60
    ... in millions) $1,347 2005 2009 New Machinery Distribution to End Users (Dealer Sales) (2009 dealer reported worldwide distribution of Cat machinery by major end use) Waste 3% Quarry & Aggregates 7% Paving & Compaction 4% 3% Forestry 18% General Construction Mining 28% Industrial 4% 33% Heavy...

  • Page 61
    ... 2009 New Engine Distribution to End Users (Dealer Sales) (2009 dealer reported and internally estimated worldwide distribution of Cat engines) Truck 4% 32% Electric Power Generation Petroleum 39% Marine 14% 10% Industrial 2009 Corporate Philanthropy The mission of the Caterpillar Foundation...