form10k_2008.htm
UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington,
D.C. 20549
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FORM 10-K
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(Mark One)
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[X]
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ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December
31, 2008
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OR
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[ ]
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from
__________ to __________.
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Commission File No.
1-768
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CATERPILLAR
INC.
(Exact name of Registrant as
specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation)
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37-0602744
(IRS Employer I.D.
No.)
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100 NE Adams Street, Peoria,
Illinois
(Address of principal executive
offices)
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61629
(Zip Code)
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Registrant's telephone number,
including area code: (309)
675-1000
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Securities registered pursuant to
Section 12(b) of the Act:
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Title of each
class
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Name of each
exchange
on
which registered
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Common Stock ($1.00 par
value)(1)
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Chicago Stock
Exchange
New York Stock
Exchange
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Preferred Stock Purchase
Rights
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Chicago Stock
Exchange
New York Stock
Exchange
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9 3/8% Debentures due August 15,
2011
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New York Stock
Exchange
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9 3/8% Debentures due March 15,
2021
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New York Stock
Exchange
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8% Debentures due February 15,
2023
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New York Stock
Exchange
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5.3% Debentures due September 15,
2035
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New York Stock
Exchange
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(1) |
In addition to the exchanges in
the United States, Caterpillar common stock is also listed on stock
exchanges in Belgium, France, Germany, Great Britain and
Switzerland.
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Securities registered pursuant to
Section 12(g) of the
Act: None
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Indicate by check mark whether the
Registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes [ ü ] No
[ ]
Indicate by check mark if the Registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.
Yes
[ ] No [ ü ]
Indicate by check mark whether the
Registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days. Yes [ü] No
[ ]
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.
[ ü ]
Indicate by check mark whether the
Registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer or a smaller reporting company. See definitions of "large
accelerated filer,” “accelerated filer” and “smaller reporting company" in Rule
12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ü ] Accelerated filer
[
] Non-accelerated filer
[
] Smaller Reporting
Company [ ]
Indicate by check mark whether the
Registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).
Yes
[ ] No [ ü ]
As of June 30, 2008, there were
608,716,182 shares of common stock of the Registrant outstanding, and the
aggregate market value of the voting stock held by non-affiliates of the
Registrant (assuming only for purposes of this computation that directors and
executive officers may be affiliates) was approximately $44.5 billion.
As
of December 31, 2008, there
were 601,526,641 shares of common stock of the Registrant outstanding, and the
aggregate market value of the voting stock held by non-affiliates of the
Registrant (assuming only for purposes of the computation that directors and
executive officers may be affiliates) was approximately $26.6
billion.
Documents Incorporated by
Reference
Portions
of the documents listed below have been incorporated by reference into the
indicated parts of this Form 10-K, as specified in the responses to the item
numbers involved.
Part III
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2009 Annual Meeting Proxy
Statement (Proxy Statement) expected to be filed with the Securities and
Exchange Commission (SEC) on April 20, 2009 but not later than June 30,
2009 (within 120 days after the end of the calendar
year).
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Parts I, II,
IV
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General and Financial Information
for 2008 containing the information required by SEC Rule 14a-3 for an
annual report to security holders filed as Exhibit 13 to this Form 10-K
(Exhibit 13).
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TABLE
OF CONTENTS
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Page
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Part I
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Business
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1
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Risk Factors
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12
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Unresolved Staff Comments as of
December 31, 2008
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20
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Executive Officers of the
Registrant as of December 31, 2008
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20
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Properties
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20
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Legal
Proceedings
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23
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Submission of Matters to a Vote of
Security Holders
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23
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Part II
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Market for Registrant's Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
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23
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Selected Financial
Data
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24
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Management's Discussion and
Analysis of Financial
Condition and Results of
Operations
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25
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Quantitative and Qualitative
Disclosures About Market Risk
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25
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Financial Statements and
Supplementary Data
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25
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Changes in and Disagreements With
Accountants on Accounting and Financial Disclosure
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25
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Controls and
Procedures
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25
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Other
Information
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26
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Part III
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Directors, Executive Officers and
Corporate Governance
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26
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Executive
Compensation
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27
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Security Ownership of Certain
Beneficial Owners and Management
and Related Stockholder
Matters
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27
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Certain Relationships and Related
Transactions, and Director Independence
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27
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Principal Accountant Fees and
Services
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27
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Part IV
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Exhibits and Financial Statement
Schedules
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28
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The company was originally organized as
Caterpillar Tractor Co. in 1925 in the State of California. In 1986,
the company reorganized as Caterpillar Inc. in the State of
Delaware. As used herein, the term "Caterpillar," "we," "us," "our,"
or "the company" refers to Caterpillar Inc. and its subsidiaries unless
designated or identified otherwise.
Principal
Lines of Business / Nature of Operations
We operate in three
principal lines of business:
1.
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Machinery— A principal line of business
which includes the design, manufacture, marketing and sales of
construction, mining and forestry machinery—track and wheel tractors,
track and wheel loaders, pipelayers, motor graders, wheel
tractor-scrapers, track and wheel excavators, backhoe loaders, log
skidders, log loaders, off-highway trucks, articulated trucks, paving
products, skid steer loaders and related parts. Also includes logistics
services for other companies and the design, manufacture, remanufacture,
maintenance and services of rail-related products.
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2.
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Engines— A principal line of business
including the design, manufacture, marketing and sales of engines for
Caterpillar machinery; electric power generation systems; on-highway
vehicles and locomotives; marine, petroleum, construction, industrial,
agricultural and other applications; and related parts. Also
includes remanufacturing of Caterpillar engines and a variety of
Caterpillar machine and engine components and remanufacturing services for
other companies. Reciprocating engines meet power needs ranging
from 10 to 21,700 horsepower (8 to over 16 000
kilowatts). Turbines range from 1,600 to 30,000 horsepower (1
200 to 22 000 kilowatts).
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3.
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Financial
Products— A principal line of
business consisting primarily of Caterpillar Financial Services
Corporation (Cat Financial), Caterpillar Insurance Holdings, Inc. (Cat
Insurance), Caterpillar Power Ventures Corporation (Cat Power Ventures)
and their respective subsidiaries. Cat Financial provides a
wide range of financing alternatives to customers and dealers for
Caterpillar machinery and engines, Solar gas turbines as well as other
equipment and marine vessels. Cat Financial also extends loans
to customers and dealers. Cat Insurance provides various forms
of insurance to customers and dealers to help support the purchase and
lease of our equipment. Cat Power Ventures is an investor in
independent power projects using Caterpillar power generation equipment
and services.
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Due to financial information required by
Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information, we have also divided our business into
nine reportable segments for financial reporting
purposes. Information about our reportable segments, including
geographic information, appears in Note 24 – “Segment information” of Exhibit 13.
Other information about our operations
in 2008 and our outlook for 2009, including risks associated with foreign
operations, is incorporated by reference from "Management's
Discussion and Analysis of Financial Condition and
Results of Operations" of Exhibit 13.
Company
Strengths
Caterpillar is the leader in
construction and mining equipment, and diesel and natural gas engines and
industrial gas turbines in our size range. The company is also a leading
services provider through Cat Financial, Caterpillar Logistics Services Inc.,
Caterpillar Remanufacturing Services and Progress Rail Services Corporation
(Progress Rail). Annual sales and revenues were $ 51.324 billion in
2008, making Caterpillar the largest manufacturer in its
industry. Caterpillar is also a leading U.S.
exporter. Through direct sales of certain products and a global
network of independent dealers, Caterpillar builds long-term relationships with
customers around the world. For more than 80 years, the Caterpillar
name has been associated with the highest level of quality products and
services. More information is available at www.CAT.com.
Competitive
Environment
Caterpillar
products and product support services are sold worldwide into a variety of
highly competitive markets. In all markets, we compete on the basis
of product performance, customer service, quality and price. From
time to time, the intensity of competition results in price discounting in a
particular industry or region. Such price discounting puts pressure
on margins and can negatively impact operating profit.
Outside of the
United States, certain competitors enjoy competitive advantages inherent to
operating in their home countries or regions.
The competitive environment for
Caterpillar’s machinery business consists of some global competitors and many
regional and specialized local competitors. Examples of global
competitors include, but are not limited to, Komatsu Ltd., Volvo Construction
Equipment (part of the Volvo Group AB), CNH Global N.V., Hitachi Construction
Machinery Co., Terex Corporation, J.C. Bamford Ltd. and Doosan Infracore Co.,
Ltd. Each of these companies have varying numbers of product lines
that compete with Caterpillar products and each have varying degrees of regional
focus. John Deere Construction and Forestry Division (part of Deere
& Co.), for example, has numerous product lines that compete with
Caterpillar primarily in North America and Latin America. Others,
like JCB, offer a limited range of products that compete globally against
Caterpillar.
Global industry demand increased in the
first three quarters of 2008 compared to the same period in 2007 due to gains in
developing economies and commodity sectors. Demand in the developed
economies declined during this period. The financial crisis worsened
after mid September, leading to a worldwide recession and collapses in most
commodity prices. During fourth quarter 2008, industry demand in all
regions dropped below fourth quarter 2007 levels.
Caterpillar's logistics business
provides integrated supply chain services for Caterpillar and over 55 other
companies worldwide. It competes with global, regional and local
competitors, including companies such as DHL International, GmbH and United
Parcel Service, Inc. The unit has grown rapidly since its inception
in 1987.
Since its acquisition by Caterpillar in
June 2006, wholly owned subsidiary Progress Rail has continued its position in
North America as a leading provider of a broad range of
products. Based in Albertville, Alabama, Progress Rail is a leading
provider of remanufactured locomotive, railcar and track products and services
to the North American railroad industry. The company also has one of
the most extensive rail service and supply networks in North
America. Expansion into the railroad aftermarket business is
a good fit with our strategic direction and leverages Caterpillar’s
global remanufacturing capabilities.
Caterpillar operates in a very
competitive engine/turbine manufacturing and packaging environment. The company
designs, manufactures, markets and sells diesel, heavy fuel and natural gas
reciprocating engines for Caterpillar machinery, electric power generation
systems, on-highway vehicles and locomotives, marine, petroleum, construction,
industrial, agricultural and other applications. In addition,
Caterpillar provides industrial turbines and turbine related services for oil
and gas and power generation applications.
The competitive environment for
reciprocating engines in marine, petroleum, construction, industrial,
agriculture and electric power generation systems along with turbines consists
of a few global competitors who compete in a variety of markets that Caterpillar
serves, and a larger set of companies who compete in a limited size range and/or
application. Principal global competitors include, but are not limited to,
Cummins Inc., MTU Friedrichshafen and MTU Detroit Diesel (both are a Tognum
Group Company) and Wartsila Corp. Other competitors, such as John Deere Power
Systems, Siemens AG Power Generation, GE Energy, MAN Diesel SE, Mitsubishi Heavy
Industries Ltd., and Volvo Penta (part of AB Volvo Group) compete in certain
markets in which Caterpillar competes. An additional set of competitors,
including Generac Power Systems, Inc., Kohler Co., Kawasaki Heavy Industries,
Ltd., Rolls-Royce Group plc and others, are packagers who source engines and/or
other components from domestic and international suppliers and market products
regionally and internationally through a variety of distribution
channels.
Page 2
In North America, Caterpillar competes
for sales of on-highway diesel engines with, among others, Cummins Inc.,
Detroit Diesel Corp. and Mercedes-Benz (both part of Daimler AG),
Navistar International Corp. and AB Volvo Group. Outside North
America, Caterpillar competes for sales of on-highway diesel engines with, among
others, Mitsubishi Fuso Truck
& Bus Corp. (both part of Daimler AG), DAF Trucks N.V., Dongfeng Motor
Corporation, Fiat PowerTrain Technologies S.p.A., MAN AG and Scania
AB. Some of these competitors are truck and/or bus manufacturers with
proprietary diesel engines who also offer engines from independent manufacturers
such as Caterpillar. As previously announced, Caterpillar will
not provide Environmental Protection Agency (EPA) 2010 compliant engines to
truck and other on-highway original equipment manufacturers (OEMs).
Additionally, by mid-2009 Caterpillar will supply a very limited number of EPA
2007 compliant engines to truck and other on-highway OEMs.
Since the introduction of its four
engine models with ACERT® Technology beginning in 2003, Caterpillar has
continued to focus investment and resources on leveraging ACERT Technology into
non-road markets, as well as into more of its engine platforms. The building
blocks for ACERT Technology are flexible and scaleable and are being applied as
needed based on engine platform and application. From October 2004
through year-end 2008, Caterpillar has shipped over 65,000 Caterpillar machines
powered by engines with ACERT Technology. A line of ACERT industrial,
electric power and marine engines has been released to further leverage the
technology throughout Caterpillar’s businesses and engine
platforms.
We believe ACERT
provides Caterpillar a valuable foundation now and in the future to meet
emissions and performance requirements, and we plan to continue investing in
developing and leveraging ACERT Technology systems and components.
Caterpillar’s remanufacturing business
provides services for a variety of products and services to Caterpillar and
other external clients. The remanufacturing business competes on a
regional basis with similarly sized or smaller companies. The company
launched the remanufacturing business in the 1970s with engines/turbines and is
now one of the world’s largest remanufacturers, processing more than two million
units annually and recycling more than 140 million pounds of remanufactured
products each year. The business continues to grow at rates
well above that of the global economy as a whole.
Previously, Caterpillar announced it
would comply with Tier 4 requirements for its non-road engines and has invested
significant R&D expenditures on projects to ensure compliance,
which also includes the use of certain allowances and credits provided under the
Tier 4 regulations.
Our financial
products business is primarily conducted by Cat Financial. Cat Financial,
incorporated in Delaware, is a wholly owned finance subsidiary of
Caterpillar. Cat Financial's primary business is to provide retail
and wholesale financing alternatives for Caterpillar products to customers
around the world. Such retail financing is primarily comprised of
financing of Caterpillar equipment, machinery and engines. In
addition, Cat Financial also provides financing for vehicles, power generation
facilities and marine vessels that, in most cases, incorporate Caterpillar
products. In addition to retail
financing, Cat Financial provides wholesale financing to Caterpillar
dealers and purchases short-term dealer receivables from
Caterpillar. The
various financing plans offered by Cat Financial are designed to increase the
opportunity for sales of Caterpillar products and generate financing income for
Cat Financial. A significant portion of Cat Financial's activities is
conducted in North America. However, Cat Financial has additional
offices and subsidiaries in Asia, Australia, Europe and Latin
America.
For over 25 years,
Cat Financial has been providing financing in the various markets in which it
participates, contributing to its knowledge of asset values, industry trends and
customer needs.
In certain
instances, Cat Financial's operations are subject to supervision and regulation
by state, federal and various foreign governmental authorities, and may be
subject to various laws and judicial and administrative decisions imposing
various requirements and restrictions which, among other things, (i) regulate
credit granting activities and the administration of loans, (ii) establish
maximum interest rates, finance charges and other charges, (iii) require
disclosures to customers, (iv) govern secured transactions, (v) set collection,
foreclosure, repossession and other trade practices and (vi) regulate the use
and reporting of information related to a borrower's credit
experience.
Cat Financial's
retail leases and installment sale contracts (totaling 60 percent*)
include:
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Tax leases
that are classified as either operating or finance leases for financial
accounting purposes, depending on the characteristics of the
lease. For tax purposes, Cat Financial is considered the owner
of the equipment (17 percent*).
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Finance
(non-tax) leases where the lessee for tax purposes is considered the owner
of the equipment during the term of the lease, and the agreement either
requires or allows the customer to purchase the equipment for a fixed
price at the end of the term (21
percent*).
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Installment
sale contracts, which are equipment loans that enable customers to
purchase equipment with a down payment or trade-in and structured payments
over time (21 percent*).
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Governmental
lease-purchase plans in the United States that offer low interest rates
and flexible terms to qualified non-federal government agencies (1
percent*).
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Retail notes
receivables (27 percent*) include:
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Loans that
allow customers and dealers to use their Caterpillar equipment as
collateral to obtain financing.
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Wholesale notes
receivables, finance leases and installment sale contracts (totaling 13
percent*) include:
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Inventory/rental
programs which provide assistance to dealers by financing new Caterpillar
inventory and rental fleets (5
percent*).
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Short-term
dealer receivables that Cat Financial purchases from Caterpillar and
subsidiaries at a discount (8
percent*).
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The retail
financing business is highly competitive, with financing for users of
Caterpillar equipment available through a variety of sources, principally
commercial banks and finance and leasing companies. Cat Financial's competitors
include Wells Fargo Equipment Finance Inc.; General Electric Capital Corporation
and various local banks and finance companies. In addition, many of
our manufacturing competitors, such as Volvo Financial Services, Komatsu
Financial L.P. and John Deere Credit Corporation, use below-market interest rate
programs (subsidized by the manufacturer) to assist machine
sales. Caterpillar and Cat Financial work together to provide a broad
array of financial merchandising programs around the world to meet these
competitive offers.
Cat Financial's financial results are
largely dependent upon the ability of Caterpillar dealers to sell equipment and
customers' willingness to enter into financing or leasing
agreements. It is also affected by, among other things, the
availability of funds from its financing sources, general economic conditions
such as inflation and market interest rates and its cost of funds relative to
its competitors.
Cat Financial has a "match funding"
policy that addresses interest rate risk by aligning the interest rate profile
(fixed rate or floating rate) of its debt portfolio with the interest rate
profile of its receivables portfolio (loans and leases with customers and
dealers) within predetermined ranges on an ongoing basis. In
connection with that policy, Cat Financial issues debt with a similar interest
rate profile to its receivables, and also uses interest rate swap agreements to
manage its interest rate risk exposure to interest rate changes and in some
cases to lower its cost of borrowed funds. For more information regarding match
funding, please see Note 3 – “Derivative financial instruments and risk
management” of Exhibit 13. Also see the Risk to Financial Services
Line of Business for general risk associated with our financial products
business on pages 17 and 18 of this Form 10-K.
In managing foreign currency risk for
Cat Financial's operations, the objective is to minimize earnings volatility
resulting from conversion and the remeasurement of net foreign currency balance
sheet positions. This policy allows the use of foreign currency
forward and option contracts to address the risk of currency mismatch between
the receivable and debt portfolios. None of these foreign currency
forward and option contracts are designated as a hedge.
__________
*Indicates the
percentage of Cat Financial's total portfolio at December 31,
2008. We define total portfolio as total finance receivables (net of
unearned income and allowance for credit losses) plus equipment on operating
leases, less accumulated depreciation. For more information on the above and Cat
Financial's concentration of credit risk, please refer to Note 8 – “Finance
receivables” of Exhibit 13.
Cat Financial
provides financing only when acceptable criteria are met. Credit
decisions are based on, among other factors, the customer's credit history,
financial strength and equipment application. Cat Financial typically
maintains a security interest in retail-financed equipment and requires physical
damage insurance coverage on financed equipment. Cat Financial
finances a significant portion of Caterpillar dealers' sales and inventory of
Caterpillar equipment throughout the world. Cat Financial's
competitive position is improved by marketing programs offered in conjunction
with Caterpillar and/or Caterpillar dealers. Under these programs, Caterpillar,
or the dealer, subsidizes an amount at the outset of the transaction, which Cat
Financial then recognizes as revenue over the term of the
financing. Transaction processing time and supporting technologies
continue to drive Cat Financial in its efforts to respond quickly to customers
and improve internal processing efficiencies. We believe Cat
Financial's web-based Cat FinancExpressSM
transaction processing and information tool currently available in the United
States, France, Canada and Australia provides Cat Financial a competitive
advantage in those areas. Cat FinancExpressSM is an
on-line tool that provides finance quotes, credit decisions and the ability to
print the appropriate financial documents for end-user signature, all in a
reasonably short time frame.
Caterpillar Insurance Company, a wholly
owned subsidiary of Cat Insurance, is a U.S. insurance company domiciled in
Missouri and primarily regulated by the Missouri Department of
Insurance. Caterpillar Insurance Company is licensed to conduct
property and casualty insurance business in 49 states and the District of
Columbia, and as such, is regulated in those jurisdictions as
well. The State of Missouri acts as the lead regulatory authority and
monitors Caterpillar Insurance Company’s financial status to ensure that it is
in compliance with minimum solvency requirements, as well as other financial
ratios prescribed by the National Association of Insurance
Commissioners.
Caterpillar Life Insurance Company, a
wholly owned subsidiary of Caterpillar, is a U.S. insurance company domiciled in
Missouri and primarily regulated by the Missouri Department of
Insurance. Caterpillar Life Insurance Company is licensed to conduct
life and accident and health insurance business in 26 states and the District of
Columbia, and as such, is regulated in those jurisdictions as well. The State of
Missouri acts as the lead regulatory authority and it monitors the financial
status to ensure that it is in compliance with minimum solvency requirements, as
well as other financial ratios prescribed by the National Association of
Insurance Commissioners. Caterpillar Life Insurance Company also
provides stop loss insurance protection to a Missouri Voluntary Employees'
Beneficiary Association (VEBA) trust used to fund medical claims of salaried
retirees of Caterpillar under the VEBA.
Caterpillar
Insurance Co. Ltd., a wholly owned subsidiary of Cat Insurance, is a captive
insurance company domiciled in Bermuda and regulated by the Bermuda Monetary
Authority. Caterpillar
Insurance Co. Ltd. is a Class 2 insurer (as defined by the Bermuda Insurance
Amendment Act of 1995), which primarily insures affiliates and, as such, the
Bermuda Monetary Authority requires an Annual Financial Filing for purposes of
monitoring compliance with solvency requirements.
Caterpillar Product Services
Corporation, a wholly owned subsidiary of Caterpillar, is a warranty company
domiciled in Missouri. It conducts a machine extended service
contract program in Italy, France and Germany by providing machine extended
warranty reimbursement protection to dealers in those
countries.
Caterpillar Insurance Services
Corporation, a wholly owned subsidiary of Cat Insurance, is a Tennessee
insurance brokerage company licensed in all 50 states and the District of
Columbia. It provides brokerage services for all property and
casualty and life and health lines of business.
Caterpillar’s insurance group provides
protection for claims under the following programs:
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Contractual
Liability Insurance to Caterpillar, Caterpillar dealers and Original
Equipment Manufacturers (OEMs) for extended service contracts (parts and
labor) offered by third party dealers and
OEMs.
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Cargo
insurance for the worldwide cargo risks of Caterpillar
products.
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Contractors'
Equipment Physical Damage Insurance for equipment manufactured by
Caterpillar or OEMs, which is leased, rented or sold by third party
dealers to customers.
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General
liability, employer's liability, auto liability and property insurance for
Caterpillar.
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Retiree
Medical Stop Loss Insurance for medical claims under the
VEBA.
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Brokerage
services for property and casualty and life and health
business.
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Cat Power Ventures,
a wholly owned subsidiary of
Caterpillar, primarily invested equity and took ownership interests in power
generation projects throughout the world that utilized Caterpillar power
generation equipment. In some cases, these projects also utilized construction
and operations and maintenance services that are provided by other Caterpillar
subsidiaries. In December 2005, Cat Power Ventures decided that it would no
longer invest equity in power generation projects. As a result, Cat
Power Ventures has not made any new equity investments in power generation
projects and has sold a majority of its project investment portfolio, including
divesting its investment interests in Poland and the Dominican Republic in 2008.
It continues to hold an equity interest in a project in Tunisia.
Business
Developments in 2008
Economic
and Market Conditions
Our business,
results of operations and financial condition are materially affected by the
conditions in the global economy. The global economic crisis and the volatility
in the credit and capital markets, which began in 2007, had a significant impact
on our 2008 profitability. Overall, the company realized record 2008 sales and
revenues of $51.324 billion, with strong sales and revenues and profit per share
for the first three quarters of the year. However, due to the deteriorating
global economic conditions and the volatility of financial markets, our fourth
quarter profit per share of $1.08 was significantly depressed, down 28 percent
from the fourth quarter of 2007. While sales and revenues of about $12.923
billion increased $779 million from the fourth quarter of 2007, our fourth
quarter profit of $661 million decreased by $314 million from 2007 fourth
quarter profit. This was due to the significantly higher manufacturing
costs driven by higher material and freight costs, along with manufacturing
inefficiencies, as costs did not drop in line with a sharp decline in production
volume. Also, we experienced a significant decrease in the
profitability of our financial products business as a result of the turbulence
in the financial markets.
As we move forward
in 2009, the global economic conditions and key commodity prices have continued
to decline significantly, the financial markets remain under stress and our
expectations for 2009 have deteriorated. We are projecting 2009
sales and revenues to be in a range of plus or minus 10 percent from $40
billion, down 25 percent from 2008 sales. At $40 billion in sales and revenues
in 2009, the company expects to achieve profit of about $2.00 per share or $2.50
per share excluding redundancy costs. We have been rapidly executing our
“trough” plans and implementing actions throughout the company to deal with a
very challenging global business environment and to reduce costs. Some of the
“trough” plans and actions include:
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Significant reductions in total
compensation for executives / senior
managers.
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Voluntary and involuntary employee
separations and layoffs.
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Hiring freezes and suspension of
salary increases for most support and management
employees.
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Reduction in indirect expenses of
about 15 percent.
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Significant reduction in capital
expenditures.
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Sharp declines in overtime
work.
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Several facilities have shortened
workweeks, and others
will or have implemented full and partial plant
shutdowns.
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Shifting more resources to short-
and medium-term material cost
reduction.
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Shifting more resources to
inventory reduction
projects.
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While we expect the
full year of 2009 to be very challenging, profit in the first half, and
particularly the first quarter will be under severe pressure. In fact, a
first quarter loss is possible.
As a result of the
impact of the global economic downturn on our business, many of the expansion
plans announced in 2008, some of which are discussed below under Growth
Initiatives, are under review and will be implemented based on our spending
priorities.
Financial
Results and Stockholder Value
Full year 2008 results marked the sixth consecutive year of
record sales for Caterpillar, including sales and revenues of $51.324
billion and profit of
$3.557 billion, or $5.66 per share. In October 2008, Caterpillar
marked the milestone achievement of 300 consecutive quarters of paying dividends
to stockholders. We also reduced the number of shares outstanding by
repurchasing 27.3 million shares in 2008 at a cost of $1.879 billion in support of
our Board-authorized $7.5 billion stock repurchase programs approved in February
2007 and to be completed by 2011. As of December 31, 2008, the
company had 601,526,641 shares of stock outstanding. On January 26,
2009, the company announced that it would temporarily suspend its stock
repurchase program.
Sustainability
In 2008, the
company continued its efforts in sustainable development and commitment to make
sustainable development a "strategic area of improvement" in our enterprise
strategy. The company was selected as a member of the Dow Jones
Sustainability World Index (DJSI World) for the eighth consecutive year and has
retained the leadership position in the Industrial Engineering sector for the
third year. DJSI uses a best-in-class approach designed to identify
best practices across the economic, social and environmental dimensions of
corporate sustainability.
Caterpillar
Production System (CPS)
We continued our
internal focus on global deployment of CPS with 6
Sigma. Implementation of CPS is fundamental to reaching our 2010
goals to significantly improve product availability and increase
inventory turns. We achieved our target assessment score for year-end
2008 and early-hour product quality as well as safety improved
dramatically.
Growth Initiatives
In 2008, the company made progress
toward its goal of
continuing expansion of our business in China and other emerging markets and to
move toward achieving
market leadership. In support of our overall enterprise strategy and
Vision 2020, Caterpillar
took the following actions during 2008.
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In January
2008, Caterpillar completed the final steps in the acquisition of the
remaining 60 percent equity interest in Shandong Machinery Co. Ltd. (SEM),
a leading wheel loader manufacturer in China. The company also
announced a multi-million dollar expansion to increase the capacity of
SEM, demonstrating its commitment to support its growing customer base in
the Chinese construction equipment industry. The investment
will allow Caterpillar to meet growing demand and provide a broader
product portfolio to wheel loader customers. We are currently
planning to expand SEM's production capacity and have purchased
land for this purpose. The construction is expected to
begin in 2009.
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In April
2008, Caterpillar expanded its Global Mining business through the
acquisition of Lovat Inc. (Lovat), a leading global manufacturer of tunnel
boring machines used in the construction of metro, railway, road, sewer,
water main, penstock, mine access, high voltage cable and
telecommunications tunnels.
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In June 2008,
as part of its strategic plan to increase its manufacturing footprint in
the rapidly growing Asia-Pacific region, Caterpillar announced a
four-year, $200 million investment to increase manufacturing capacity in
India, by significantly increasing production for off-highway trucks made
at its facility near Chennai, expanding engine production at its facility
in Hosur and increasing India production capability for backhoe
loaders. The additional investment demonstrates Caterpillar's
commitment to customers in India and the importance of such emerging
markets as we build our proven global business model across the
Asia-Pacific region, an area that is critical to Caterpillar's 2010 and
Vision 2020 goals.
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Caterpillar
also reached an agreement to acquire all of the capital stock of MGE
Equipamentos & Serviços Ferroviários Ltda. (MGE), a manufacturer and
reconditioner of traction motors, main and auxiliary generators, control
equipment and auxiliary components for locomotives and transit cars based
in Diadema and Hortolandia in Sao Paulo State, Brazil. In
addition, MGE maintains, modernizes and rebuilds transit cars and
locomotives. The acquisition of MGE represents an important
step in the international growth strategy of Caterpillar's Progress Rail
Services Division (Progress Rail) and an important part of Caterpillar's
Vision 2020 strategy.
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Caterpillar
also announced the acquisition of certain assets of Gremada Industries,
Inc. (Gremada), a leader in the processes of remanufacturing and
reclaiming metal parts and components used in transmissions, torque
converters and final drives. Gremada provides service support
for off-highway equipment used in the mining and petroleum industries, and
it has extensive experience providing remanufacturing expertise for
equipment used for petroleum drilling applications. Gremada
will become part of Caterpillar's Remanufacturing Division, enhancing
product and service offerings and increasing strategic focus for
remanufacturing in the mining and petroleum industries, supporting
Caterpillar’s continued service businesses growth
strategy.
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In August
2008, Caterpillar announced plans to further expand its global business
model in China by adding to its
China-based research and development (R&D) operations to increase the
technical support for products serving markets in China and the rest of
the Asia Pacific Region. The city of Wuxi in Jiangsu province was
announced as the location for a multi-functional research and development
center serving Caterpillar's ventures in China and the rest of the Asia
Pacific Region. This additional R&D effort is part of
Caterpillar's strategy to support the expanded manufacturing footprint
being implemented in China and the growing market demand in emerging
markets. The center will be built in multiple phases with the first phase
to be complete at the end of 2009.
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Also in
August, Shin Caterpillar Mitsubishi Ltd. (SCM) completed the first phase
of a share redemption plan whereby SCM redeemed one-half of Mitsubishi
Heavy Industries Ltd.’s shares in SCM. This resulted in Caterpillar owning
67 percent of the renamed entity, Caterpillar Japan Ltd. (Cat
Japan).
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In September 2008, Caterpillar
announced it would open a new remanufacturing facility in Singapore, as
part of its strategic plan to increase remanufacturing operations and
better support the mining market in Asia. The new facility will serve as
the regional source for remanufactured major components, including mining
truck engines, transmissions, final drives and torque converters and
expand Caterpillar's current remanufacturing operations in the
Asia-Pacific region. The facility is anticipated to be fully
operational by mid-2010.
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Also in September, Caterpillar
expanded on implementation of its long-planned strategy to include core
machine assembly operations in its existing component production facility
in Tosno, Russia. Caterpillar has manufactured components in Tosno since
2000, exporting those components from Russia to other Caterpillar machine
factories in Europe. The hydraulic excavators assembled in Tosno in 2008
are the first core machines Caterpillar has produced in Russia. The
Tosno-built machines will be sold to customers in the rapidly expanding
Russian market.
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In October
2008, Caterpillar and Trimble Navigation Limited, the leading innovator in
developing technology for mobile and work applications, announced the
creation of a new joint venture company and a new distribution
agreement. The new company, VirtualSite Solutions, will
integrate the deep expertise of both parent companies in the areas of
product design and software development to transform the way contractors
manage their businesses. The joint venture will create information rich
worksites allowing customers to more efficiently and safely manage their
equipment fleets, reduce operating costs and improve productivity in the
area of fuel consumption, maintenance, worksite productivity and fleet
logistics.
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Other
2008 Developments
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In June 2008,
Caterpillar announced a multi-year $1 billion capacity expansion that will
position key factories in Illinois and other areas to compete for the long
term. The investments will allow Caterpillar to meet continued demand and
bolster its global leadership for machines used primarily in mining and
large infrastructure applications. In support of this capacity expansion,
the company will invest more than $1 billion from 2008 through 2010 in
five existing facilities in Illinois (East Peoria, Joliet, Decatur, Aurora
and Mossville).
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In October
2008, to strengthen its world-class product and service offerings,
Caterpillar announced a realignment of its machine product and marketing
organizations to sharpen customer focus, position the company to achieve
its 2010 and Vision 2020 goals and build deep expertise in product
development.
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The realigned
structure created five end-to-end Machine Business Divisions: Mining, Quarry
& Waste (subsequently renamed Quarry & Specialty Industries),
Excavation, Earthmoving and Building Construction Products that incorporate
design, manufacturing, marketing, sales and product support for the entire value
chain. This new structure will increase accountability and drive global growth
as well as profitability.
The alignment also
introduced three new regional Distribution Services Divisions within
Caterpillar, replacing the company’s existing marketing arms. They will have
responsibility for Caterpillar’s total portfolio of business with each dealer,
the dealer relationship, dealer development and ensuring the most efficient and
effective distribution of Caterpillar machines, engines and parts.
The new structure
also expanded and reorganized Caterpillar’s Motion & Power Control Division
into two new divisions. The new Advanced Systems Division will focus
on designing and manufacturing critical components and integrated
systems—hydraulic, transmission and lower powertrain—while working even more
closely with worldwide suppliers to provide these solutions both internally and
externally to original equipment manufacturers (OEMs). The new Core
Components Division will bring together the engineering and supply base for
hoses and tubes, filters and common components like tires, bearings, fasteners
and seals. Along with undercarriage and ground engaging tools, this new division
will bring better business focus to these widely used components.
Business
Combinations
Information related to acquisitions and
alliances appears in Note 25 – “Business Combinations” of Exhibit 13.
Raw
Materials and Component Products
We source our raw materials and
manufactured components from leading suppliers both domestically and
internationally. These purchases include unformed materials, rough and finished
parts. Unformed materials would be a variety of steel products which
are then cut or formed to shape and machined in our facilities. Rough parts
would be various sized steel and iron castings and forgings which are machined
to final specification levels inside our facilities. Finished parts are ready to
assemble components which are made to either Caterpillar specifications or to
the supplier developed specifications. We machine and assemble some
of the components used in our machines, engines and power generation units and
to support our after-market Dealer parts sales. We also purchase various goods
and services used in production, logistics, offices and product development
processes. We maintain global strategic sourcing models to meet our
global facilities' production needs while building long term supplier
relationships and leveraging enterprise spend. We expect our
suppliers to maintain, at all times, industry-leading levels of quality and
delivery of raw materials and component products supplied for our machine and
engine products. We use a variety of agreements with suppliers to
protect our intellectual property and processes to monitor and mitigate risks of
the supply base causing a business disruption. The risks monitored
include supplier financial viability, business continuity, quality and
delivery.
Order
Backlog
Much of our backlog is in large engines,
gas turbines and in mining products. The dollar amount of backlog believed to be
firm was approximately $14.7 billion at December 31, 2008, and $17.8 billion at
December 31, 2007. Of the total backlog, approximately $2.2 billion
at December 31, 2008, and $2.5 billion at December 31, 2007, was not expected to
be filled in the following year. Our backlog is generally highest in
the first and second quarters because of seasonal buying trends in our
industry. As we look forward to 2009, we expect our backlog to ease,
particularly in the mining sector, which has begun to experience slowing
investment activities due to declining commodity prices.
Dealers
Our machines are distributed
principally through a worldwide organization of dealers (dealer network),
52 located in the
United States and 128 located outside the United States, serving 182 countries
and operating 3,537
places of
business, including dealer rental outlets. Reciprocating engines are sold
principally through the dealer network and to other manufacturers for use in
their products. Some of the reciprocating engines manufactured by Perkins are
also sold through its worldwide network of 131 distributors located in 172
countries. Most of the electric power generation systems manufactured by FG
Wilson are sold through its worldwide network of 157 dealers located in 180
countries.
These dealers do
not deal exclusively with our products; however, in most cases sales and
servicing of our products are the dealers' principal
businesses. Turbines and large medium speed reciprocating engines are
sold through sales forces employed by the company. At times, these
employees are assisted by independent sales representatives.
The company's
relationship with each of its independent dealers is memorialized in a standard
sales and service agreement. Pursuant to this agreement, the company
grants the dealer the right to purchase and sell its products and to service the
products in a specified geographic service territory. Prices to
dealers are established by the company after receiving input from dealers on
transactional pricing in the marketplace. The company also agrees to
defend its intellectual property and to provide warranty and technical support
to the dealer. The agreement further grants the dealer a
non-exclusive license to use the company's trademarks, service marks and brand
names. In some instances a separate trademark agreement exists
between the company and a dealer.
In exchange for
these rights, the agreement obligates the dealer to develop and promote the sale
of the company's products to current and prospective customers in the dealer's
service territory. Each dealer specifically agrees to employ adequate
sales and support personnel to market, sell and promote the company's products,
demonstrate and exhibit the products, perform the company's product improvement
programs, inform the company concerning any features that might affect the safe
operation of any of the company's products and maintain detailed books and
records of the dealer's financial condition, sales and inventories and make
these books and records available at the company's reasonable
request.
These sales and
service agreements are terminable at will by either party upon 90 days written
notice and provide for termination automatically if the dealer files for
bankruptcy protection or upon the occurrence of comparable action seeking
protection from creditors.
Patents
and Trademarks
Our products are sold primarily under
the brands "Caterpillar," "CAT," design versions of "CAT" and "Caterpillar,"
"Solar Turbines," "MaK," "Perkins," "FG Wilson," "Olympian" and “Progress
Rail.” We own a number of patents and trademarks, which have been
obtained over a period of years and relate to the products we manufacture and
the services we provide. These patents and trademarks have been of
value in the growth of our business and may continue to be of value in the
future. We do not regard any of our business as being dependent upon
any single patent or group of patents.
Research and
Development
We have always
placed strong emphasis on product-oriented research and development relating to
the development of new or improved machines, engines and major
components. In 2008, 2007 and 2006, we spent $1,728 million, $1,404 million and
$1,347 million, or 3.4 percent, 3.1 percent and 3.2 percent of our sales and
revenues, respectively, on our research and development programs. We
expect R&D expenditures in 2009 to decline somewhat from 2008 levels and we
will emphasize product development required to meet Tier 4 emissions
requirements.
Employment
As of December 31,
2008, we employed 112,887 persons of whom 59,378 were located outside the United
States. However, due to deteriorating global economic conditions that
are having a significant impact on our business, the company is
implementing workforce reductions that will reduce the number of
employees in 2009.
In the United States, most of our 53,509
employees are at-will employees and, therefore, not subject to any type of
employment contract or agreement. At select business units, certain
highly specialized employees have been hired under employment contracts that
specify a term of employment and specify pay and other
benefits.
As of December 31, 2008, there were
14,899 U.S. hourly production employees who were covered by collective
bargaining agreements with various labor unions. The United
Automobile, Aerospace and Agricultural Implement Workers of America represents
12,262 Caterpillar employees under a six-year central labor agreement that will
expire March 1, 2011. The International Association of Machinists
represents 2,028 employees under labor agreements that expire on May 23, 2010,
and April 30, 2012.
Outside the United States, the company
enters into employment contracts and agreements in those countries in which such
relationships are mandatory or customary. The provisions of these
agreements correspond in each case with the required or customary terms in the
subject jurisdiction.
Sales
Sales outside the United States were 67
percent of consolidated sales for 2008, 63 percent for 2007, and 54 percent for
2006.
Environmental
Matters
The company is regulated by federal,
state and international environmental laws governing our use, transport and
disposal of substances and control of emissions. In addition to governing our
manufacturing and other operations, these laws often impact the development of
our products, including, but not limited to, required compliance with air
emissions standards applicable to internal combustion engines. Compliance with
these existing laws has not had a material impact on our capital expenditures,
earnings or global competitive position.
We are engaged in remedial activities at
a number of locations, often with other companies, pursuant to federal and state
laws. When it is reasonably probable we will pay remedial costs at a
site, and those costs can be reasonably estimated, the costs are charged against
our earnings. In formulating that estimate, we do not consider
amounts expected to be recovered from insurance companies or
others. The amount recorded for environmental remediation is not
material and is included in the line item “Accrued Expenses” in Statement
2 – “Consolidated Financial Position at December 31” of Exhibit 13.
We cannot reasonably estimate costs at
sites in the very early stages of remediation. Currently, we have a
few sites in the very early stages of remediation, and there is no more than a
remote chance that a material amount for remedial activities at any individual
site, or at all sites in the aggregate, will be required.
Available
Information
The company files electronically with
the Securities and Exchange Commission (SEC) required reports on Form 8-K, Form
10-Q, Form 10-K and Form 11-K; proxy materials; ownership reports for insiders
as required by Section 16 of the Securities Exchange Act of 1934; and
registration statements on Forms S-3 and S-8, as necessary; and any other form
or report as required. The public may read and copy any materials the
company has filed with the SEC at the SEC's Public Reference Room at 100 F
Street, N.E., Washington, DC 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
(800) SEC-0330. The SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the SEC. The company maintains an Internet site
(www.CAT.com) and copies of our annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and any amendments to these reports filed
or furnished with the SEC are available free of charge through our Internet site
(www.CAT.com/secfilings) as soon as reasonably practicable
after filing with the SEC. Copies of our board committee charters,
our board's Guidelines on Corporate Governance Issues, Worldwide Code of Conduct
and other corporate governance information are available on our Internet site
(www.CAT.com/governance), or upon written request to the
Corporate Secretary at 100 NE Adams Street, Peoria, Illinois
61629-7310.
Additional company information may
be obtained as follows:
Current information
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phone our Information Hotline -
(800) 228-7717 (U.S. or Canada) or (858) 244-2080 (outside U.S. or Canada)
to request company publications by mail, listen to a summary of
Caterpillar's latest financial results and current outlook, or to request
a copy of results by facsimile or
mail
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request, view, or download
materials on-line or register for email alerts at www.CAT.com/materialsrequest
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view/download on-line at
www.CAT.com/historical
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Page 11
The statements in
this section describe the most significant risks to our business and should be
considered carefully in conjunction with “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and the “Notes to Consolidated
Financial Statements” of Exhibit 13 to this Form 10-K. In addition,
these statements constitute our cautionary statements under the Private
Securities Litigation Reform Act of 1995. The discussion and analysis
contained in the Management’s Discussion and Analysis of Financial Condition and
Results of Operations and other items in this Form 10-K is forward-looking and
involves uncertainties that could significantly impact results. From
time to time, we also provide forward-looking statements in other materials we
issue to the public or in the form of oral presentation to the
public. Forward-looking statements give current expectations or
forecasts of future events about the company. You can identify these
statements by the fact they do not relate to historical or current facts and by
the use of words such as "believe," "expect," "estimate," "anticipate," "will
be," "should," “plan,” “project,” “intend,” “could” and similar words or
expressions that identify forward-looking statements made on behalf of
Caterpillar.
In particular,
these forward-looking statements include statements relating to future actions,
prospective products, products’ approvals, future performance or results of
current and anticipated products, sales efforts, expenses, interest rates,
foreign exchange rates, the outcome of contingencies, economic conditions,
potential returns, financial condition and financial results. The statements are
based on assumptions or on known or unknown risks and uncertainties. Although we
believe we have been prudent in our assumptions, we cannot guarantee the
realization of these statements. Achievement of future results is subject to
risks, uncertainties and potentially inaccurate assumptions. Should known or
unknown risks or uncertainties materialize or underlying assumptions prove
inaccurate, actual results could materially differ from past results and/or
those anticipated, estimated or projected. Uncertainties include factors that
affect international businesses, as well as matters specific to the company and
the markets it serves.
The company
undertakes no obligation to publicly update forward-looking statements, whether
as a result of new information, future events or otherwise. You may, however,
consult any future related disclosures we make on our Form 10-Q or any Form 8-K
report to the SEC.
The following is a
cautionary discussion of risks, uncertainties and assumptions that we believe
are significant to our business. These are factors that, individually or in the
aggregate, we believe could make our actual results differ materially from
expected or past results. You should note it is impossible to predict or
identify all such factors and, as a result, you should not consider the
following factors to be a complete discussion of risks and
uncertainties.
Changes in Government
Monetary and Fiscal Policies
Most countries have
established central banks to regulate monetary systems and influence economic
activities, generally by adjusting interest rates. Interest rate
changes affect overall economic growth, which alter demand for residential and
nonresidential structures, energy and mined products, which in turn affect sales
of our products that serve these activities. Also, interest rates
affect customers’ abilities to finance machine purchases and can change the
optimal time to keep machines in a fleet. Our outlooks typically
include assumptions about interest rates in a number of
countries. Interest rates higher than those assumptions could result
in lower sales than anticipated.
The ongoing
worldwide financial and credit crisis reduced the availability of liquidity to
fund investments in many markets that we serve. The central banks and other
policy arms of many countries have implemented various actions to restore
liquidity and increase the availability of credit. The effectiveness of these
and related government actions is uncertain and could have a material impact on
the customers and markets we serve and our business, results of operations and
financial condition. Government policies on taxes and spending affect our
businesses. Throughout the world, government spending finances much
infrastructure development, such as highways, airports, sewer and water systems
and dams. Tax regulations determine depreciation lives and the amount
of money users can retain, both of which influence investment
decisions. Developments more unfavorable than anticipated, such as
declines in government revenues, decisions to reduce public spending or
increases in taxes, could negatively impact our results.
Government can also
impact international trade and investment through a variety of policies, such as
import quotas, inspections, capital controls or tariffs. Developments
worse than anticipated in the outlook, which could include lower import quotas,
more detailed inspections or higher tariffs, could negatively impact our
business, results of operations and financial condition.
Environmental
Regulations
Our facilities,
operations and products are subject to increasingly stringent environmental laws
and regulations, including laws and regulations governing emissions to air,
discharges to water and the generation, handling, storage, transportation,
treatment and disposal of general, non-hazardous and hazardous waste materials.
While we believe we are in compliance in all material respects with these
environmental laws and regulations, we cannot ensure that we will not be
adversely affected by costs, liabilities or claims with respect to existing or
subsequently acquired operations or under present laws and regulations or those
that may be adopted or imposed in the future.
Particularly, our
engines are subject to extensive statutory and regulatory requirements governing
exhaust emissions and noise, including standards imposed by the EPA, state
regulatory agencies in the U.S. and other regulatory agencies around the world.
For instance, governments may set new emissions standards that could impact our
products and operations in ways that are difficult to anticipate with accuracy.
Thus, significant changes in standards, or the adoption of new standards, have
the potential to negatively impact our business, results of operations,
financial condition and competitive position.
The EPA has adopted
new and more stringent emission standards, including Tier 4 nonroad diesel
emission requirements applicable to the majority of our nonroad machinery and
engine products commencing in 2011. We previously announced our
intent to make our nonroad engines compliant with the new emission standards,
including the Tier 4 emission requirements, by the stated deadline. Our strategy
for compliance includes using certain technology with state of art integrated
systems, as well as using the flexibility provided by the
regulations.
Although we are
executing comprehensive plans designed to meet Tier 4 emissions requirements,
these plans are subject to many variables, including the timing of our Tier 4
engine development and new machine product introduction. If we are
unable to meet our plans as projected, it could delay or inhibit our ability to
continue placing certain products on the market, which could negatively impact
our financial results and competitive position.
Credit and Equity Market
Volatility, Changes in General Economic Conditions and Economic Conditions of
Industries or Markets We Serve
Our results of
operations are materially affected by the conditions in the global economy
generally and in the global capital markets. The current global financial
crisis, which began in 2007, has deteriorated further and has caused extreme
volatility and disruptions in the capital and credit markets, principally in the
U.S., Europe and Japan. In some cases, the markets have decreased availability
of liquidity and credit capacity for certain issuers and customers.
Although we
generally generate funds from our operations to pay our operating expenses, fund
our capital expenditures, buy back stock, pay dividends and fund our employee
retirement benefit programs, our ability to continue to meet these cash
requirements over the long-term will require substantial liquidity and access to
sources of funds, including capital and credit markets. Changes in global
economic conditions, including material cost increases and decreases in economic
activity in many of the markets that we serve, and the success of plans to
manage cost increases, inventory and other important elements of our business
may significantly impact our ability to generate funds from
operations. Continuing market volatility, changes in counterparty
credit risk, the impact of government intervention in financial markets and
general economic conditions may also adversely impact the ability of the company
to access capital and credit markets to fund operating
needs. Inability to access capital and credit markets may have an
adverse effect on our business, results of operations, financial condition and
competitive position.
In addition, due to
the decreased availability of, and the related high cost in accessing, liquidity
and credit in this current volatile credit and capital market, we may, in a bid
to conserve cash for operations, undertake acquisitions that would be financed
in part through public offerings or private placements of debt or equity
securities, or other arrangements. Such acquisition financing could result in a
decrease of our ratio of earnings to fixed charges and adversely affect other
leverage measures. We cannot guarantee any such acquisition financing would be
available to us on acceptable terms if and when required. If we were to
undertake an acquisition by issuing equity securities or equity-linked
securities, the issued securities may have a dilutive effect on the interests of
the holders of our common shares.
The energy and
mining industries are major users of our machines and
engines. Decisions to purchase our machines and engines are dependent
upon performance of these industries. If demand or output in these industries
increases, the demand for our products would likely
increase. Likewise, if demand or output in these industries declines,
the demand for our products would likely decrease. Prices of commodities in
these industries are frequently volatile and change in response to general
economic conditions, economic growth, commodity inventories and any disruptions
in production. We assume certain prices for key commodities in
preparing our outlooks. Commodity prices lower than those assumed
have the potential to negatively impact our business, results of operations and
financial condition.
The rates of
infrastructure spending, housing starts and commercial construction, play a
significant role in our results. Our products are an integral
component of these activities, and as these activities increase or decrease
inside or outside of the U.S., demand for our products may be significantly
impacted, which could negatively impact our results.
Residential housing
starts have been declining in the U.S. since early 2006 and housing permits in
Europe have declined since late 2006. The situation has worsened with the
deterioration in mortgage and real estate markets and has negatively impacted
our sales in North America and Europe. These downturns could continue if current
levels of volatility and uncertainty in the global capital and credit markets
persist or worsen. Although the U.S. Government has enacted the
Emergency Economic Stabilization Act (EESA) and governments of many countries,
including countries in Europe, Japan and Australia, have adopted similar
initiatives to help restore viability in these markets and the economy
generally, there is no assurance that the measures stipulated in the EESA and
other actions of the U.S. Government or the initiatives of other governments for
the purpose of stabilizing the mortgage, real estates and financial markets will
achieve the intended effect.
The growth in the emerging markets (i.e.
Africa, Asia/Pacific, Latin America, the Middle East and Russia) have positively
impacted our sales and revenues and accounted for a significant portion of our
2008 sales and revenues. However, countries in emerging markets are beginning to
experience slowing growth due to the impact of the global economic downturn. As
a result, the volume of capital and infrastructure projects has declined and
some governments are cutting spending on capital projects, including
construction and infrastructure. If this trend continues or worsens, our sales
in the emerging markets could be adversely impacted, which could have a material
negative impact on our business, results of operations and financial
condition.
Changes in Price and
Significant Shortages of Component Products
We are a
significant user of steel and many commodities required for the manufacture of
our products. As a result, increases in the prices of such
commodities likely would increase costs more than expected, negatively impacting
our business, results of operations and financial condition.
We rely on
suppliers to secure component products, particularly steel, required for the
manufacture of our products. A disruption in deliveries to or from suppliers or
decreased availability of such components or commodities could have an adverse
affect on our ability to meet our commitments to customers or increase our
operating costs. We believe our source of supply of raw materials will be
generally sufficient for our needs in the foreseeable future. However, our
business, results of operations or financial condition could be negatively
impacted should the supply turn out to be insufficient for our
operations.
In addition, the
current general global economic downturn and the volatility in the credit and
capital markets have caused a significant decline in sales and revenues and
limited liquidity for many businesses. If these conditions continue or worsen,
many of our suppliers’ financial viability could be adversely impacted. As a
result, their ability to continue supplying component products for the
manufacture of our products could be significantly undermined, which, in turn,
could negatively impact our ability to meet our customers’ demand for our
products and our business, results of operations and financial
condition.
Currency
Fluctuations
The reporting
currency for our financial statements is the U.S. dollar. Certain of our assets,
liabilities, expenses and revenues, are denominated in currencies other than the
U.S. dollar. To prepare our consolidated financial statements, we must translate
those assets, liabilities, expenses and revenues into U.S. dollars at the
applicable exchange rates. As a result, increases and decreases in the value of
the U.S. dollar vis-à-vis other currencies will affect the amount of these items
in our consolidated financial statements, even if their value has not changed in
their original currency. This could have a significant impact on our results of
operations and financial condition if such increase or decrease in the value of
the U.S. dollar is substantial.
Page 14
Dealer/Original Equipment
Manufacturers Sourcing Practices
We sell finished
products through an independent dealer network and directly to
OEMs. Both carry inventories of finished products as part of ongoing
operations and adjust those inventories based on their assessments of future
needs. Such adjustments can impact our results either positively or
negatively.
In particular, some
of our engine customers are OEMs that manufacture or could in the future
manufacture engines for their own products. Despite their engine
manufacturing abilities, these customers have chosen to outsource certain types
of engine production to us due to the quality of our engine products and in
order to reduce costs, eliminate production risks and maintain company
focus. However, we cannot assure that these customers will continue
to outsource engine manufacture in the future. Increased levels of production
insourcing by these customers could result from a number of factors, such as
shifts in our customers’ business strategies, acquisition by a customer of
another engine manufacturer, the inability of third-party suppliers to meet
specifications and the emergence of low-cost production opportunities in foreign
countries. A significant reduction in the level of engine production
outsourcing from our OEM customers could significantly impact our revenues and,
accordingly, have a material adverse effect on our business, results of
operations and financial condition.
Impact of
Acquisitions
We may from time to
time engage in acquisitions involving some potential risks, including failure to
successfully integrate and realize the expected benefits of such
acquisitions. For example, with any past or future acquisitions,
there is the possibility that:
|
·
|
The business
culture of the acquired business may not match well with our
culture;
|
|
·
|
Technological
and product synergies, economies of scale and cost reductions may not
occur as expected;
|
|
·
|
The company
may acquire or assume unexpected
liabilities;
|
|
·
|
Unforeseen
difficulties may arise in integrating operations and
systems;
|
|
·
|
The company
may fail to retain and assimilate employees of the acquired
business;
|
|
·
|
Higher than
expected finance costs may arise due to unforeseen changes in tax, trade,
environmental, labor, safety, payroll or pension policies in any
jurisdiction in which the acquired business conducts its operations;
and
|
|
·
|
The company
may experience problems in retaining customers and integrating customer
bases.
|
Failure to continue
implementing the company’s acquisition strategy, including successfully
integrating acquired businesses, could have a material adverse effect on our
business, financial condition and results of operations.
In addition, due to
the decreased availability of, and the related high cost in accessing, liquidity
and credit in this current volatile credit and capital market, we may, in a bid
to conserve cash for operations, undertake acquisitions that would be financed
in part through public offerings or private placements of debt or equity
securities, or other arrangements. Such acquisition financing could result in a
decrease of our ratio of earnings to fixed charges and adversely affect other
leverage measures. We cannot guarantee any such acquisition financing would be
available to us on acceptable terms if and when required. If we were to
undertake an acquisition by issuing equity securities or equity-linked
securities, the issued securities may have a dilutive effect on the interests of
the holders of our common shares.
Competition
We operate in a
highly competitive environment, and our outlook depends on a forecast of the
company's share of industry sales predicated on our ability to compete with
others in the marketplace. The company competes on the basis of
product performance, customer service, quality and price. There can be no
assurance that our product will be able to compete successfully with these other
companies. Thus, our share of industry sales could be reduced due to aggressive
pricing or product strategies pursued by competitors, unanticipated product or
manufacturing difficulties, our failure to price our products competitively or
an unexpected buildup in competitors' new machine or dealer-owned rental fleets,
leading to severe downward pressure on machine rental rates and/or used
equipment prices.
The environment
remains competitive from a pricing standpoint. Our sales outlook assumes certain
price increases that we announce from time to time will hold in the
marketplace. Changes in market acceptance of price increases,
changes in market requirements for price discounts or changes in our
competitors’ behavior could have a material impact on the company’s business,
results of operations and financial condition.
In addition, our
results and ability to compete may be impacted positively or negatively by
changes in the sales mix. Our outlook assumes a certain geographic
mix of sales as well as a product mix of sales. If actual results
vary from this projected geographic and product mix of sales, our results could
be negatively impacted.
Changes in Accounting
Standards
Our financial
statements are subject to the application of U.S. generally accepted accounting
principles (GAAP), which are periodically revised and/or
expanded. Accordingly, from time to time we are required to adopt new
or revised accounting standards issued by recognized authoritative bodies,
including the Financial Accounting Standards Board. Market conditions
have prompted accounting standard setters to issue new guidance which further
interprets or seeks to revise accounting pronouncements related to financial
instruments, structures or transactions as well as to issue new standards
expanding disclosures. The impact of accounting pronouncements that
have been issued but not yet implemented is disclosed in our annual and
quarterly reports on Form 10-K and Form 10-Q. An assessment of
proposed standards is not provided as such proposals are subject to change
through the exposure process and, therefore, their effects on our financial
statements cannot be meaningfully assessed. It is possible that
future accounting standards we are required to adopt could change the current
accounting treatment that we apply to our consolidated financial statements and
that such changes could have a material adverse effect on our business, results
of operations and financial condition.
Litigation and
Contingency
We face an inherent
business risk of exposure to various types of claims and lawsuits. We are
involved in various intellectual property, product liability, product warranty
and environmental claims and lawsuits and other legal proceedings that arise in
and outside of the ordinary course of our business. Although it is not possible
to predict with certainty the outcome of every claim and lawsuit, we believe
these lawsuits and claims will not individually or in the aggregate have a
material impact on our business, results of operations and financial condition.
However, we could in the future incur judgments or enter into settlements of
lawsuits and claims that could have a material adverse effect on our business,
results of operations and financial condition in any particular period. In
addition, while we maintain insurance coverage with respect to certain claims,
we may not be able to obtain such insurance on acceptable terms in the future,
if at all, and any such insurance may not provide adequate coverage against any
such claims.
As required by
GAAP, we establish reserves based on our assessment of such
contingencies. Subsequent developments in legal proceedings may
affect our assessment and estimates of the loss contingency recorded as a
reserve, requiring us to make additional material payments, which could result
in an adverse effect on our results of operations.
Risks to Global
Operations
Our global
operations are dependent upon products manufactured, purchased and sold in the
U.S. and internationally and countries with political and economic instability,
each of which exposes our business operations to certain political and economic
risks inherent in operating globally. These risks include:
|
·
|
changes in
regulations;
|
|
·
|
imposition of
currency restrictions and other
restraints;
|
|
·
|
imposition of
burdensome tariffs and quotas;
|
|
·
|
national and
international conflict, including terrorist acts;
and
|
|
·
|
economic
downturns, political instability and war or civil unrest may severely
disrupt economic activity in affected
countries.
|
As a normal practice, we do not assume
such events in our outlooks unless they are already happening when the outlook
is issued. As a result, the occurrence of one or more of these events
has the potential to negatively impact our business, results of operations and
financial condition.
Risk Due to Funding
Obligations Under Pension Plans
We maintain certain
defined benefit pension plans for our employees, which impose on us certain
payment obligations towards the funding of the plans. In determining our future
payment obligations under the plans, we assume certain rates of return on the
plan assets and growth rates of certain costs. An adverse significant change in
the credit and capital market conditions could result in actual rates of return
and growth rates being materially lower than projected. This could
significantly increase our payment obligations under the plans, require us to
take a significant charge on our balance sheet and, as a result, adversely
affect our business, results of operations and financial condition.
Risks Due to Debt
Covenants
We maintain a
number of credit facilities to support (i) our commercial paper program, and
(ii) general corporate purposes (Facilities) and have issued debt securities to
manage liquidity and fund operations (Debt Securities). The
agreements relating to a number of the Facilities and the Debt Securities
contain certain restrictive covenants, including limits on subsidiary debt, the
incurrence of liens, minimum levels of consolidated net worth, minimum interest
coverage ratios and restrictions on consolidation and merger.
Although we do not
believe any of these covenants presently materially restrict our operations, a
breach of one or more of the covenants could result in material adverse consequences that could
negatively impact our business, results of operations and financial condition.
Such adverse consequences may include the acceleration of amounts outstanding
under certain of the Facilities, triggering of an obligation to redeem certain
Debt Securities, termination of existing unused commitments by our lenders,
refusal by our lenders to extend further credit under one or more of the
Facilities or new Facilities, or the lowering or modification of our credit
ratings or those of one or more of our subsidiaries.
We recently
received the consent of lenders under certain credit facilities to our lower
consolidated net worth of $6.087 billion as of December 31, 2008 and to Cat
Financial’s lower quarterly interest coverage ratio of 0.97 as of December 31,
2008. In consideration of these consents, we agreed to increase the
upper range of interest rates applicable to certain amounts that may be drawn by
us and Cat Financial under certain credit facilities by approximately 1.00 to
1.50 percentage points and by Cat Financial under certain of its other
facilities by approximately 1.00 percentage point.
Risks to Financial Services
Line of Business
Inherent in the
operation of Cat Financial is the credit risk associated with its
customers. The creditworthiness of each customer, and the rate of
delinquencies, repossessions and net losses on customer obligations are directly
impacted by several factors, including, but not limited to, relevant industry
and economic conditions, the availability of capital, the experience and
expertise of the customer's management team, commodity prices, political events
and the sustained value of the underlying collateral.
Changes in interest
rates, foreign currency exchange rates and market liquidity conditions could
have a material adverse effect on our earnings and cash
flows. Because a significant amount of loans made by Cat Financial
are made at fixed interest rates, our business is subject to fluctuations in
interest rates. Changes in market interest rates may influence our
financing costs, returns on financial investments and the valuation of
derivative contracts and could reduce our earnings and cash flow. In
addition, since Cat Financial makes a significant amount of loans in currencies
other than the U.S. dollar, fluctuations in foreign currency exchange rates
could also reduce our earnings and cash flow. Cat Financial also
relies on a number of diversified global debt markets and funding programs to
provide liquidity for its global operations, including commercial paper, medium
term notes, retail notes, variable denomination floating rate demand notes,
asset-backed securitizations and bank loans. Significant changes in
market liquidity conditions could impact Cat Financial’s access to funding and
the associated funding costs and reduce its earnings and cash
flow. Although Cat Financial manages interest rate, foreign currency
exchange rate and market liquidity risks through a variety of techniques,
including a match funding program, the selective use of derivatives and a
broadly diversified funding program, there can be no assurance that fluctuations
in interest rates, currency exchange rates and market liquidity conditions will
not have a material adverse effect on its and our earnings and cash
flow. If any of the variety of instruments and strategies Cat
Financial uses to hedge its exposure to these various types of risk is
ineffective, we may incur losses. With respect to Cat Financial’s insurance and
investment management operations, changes in the equity and bond markets could
cause an impairment of the value of its investment portfolio, thus requiring a
negative adjustment to earnings.
The current
difficult and volatile market conditions have adversely affected the financial
industry in which Cat Financial operates. Cat Financial is significant to our
operations and provides financing support to a significant share of our global
sales. The inability of Cat Financial to access funds to support its financing
activities to our customers could have a material adverse effect on our
business, results of operations and financial condition.
Cat Financial’s
liquidity and ongoing profitability are, in large part, dependent upon its
timely access to capital and the costs associated with raising funds in
different segments of the capital markets. Cat Financial depends and
will continue to depend on its ability to access diversified funding
alternatives to meet future cash flow requirements and to continue to fund its
operations. A large portion of Cat Financial's borrowings have been
issued in the medium term note and commercial paper markets and, although Cat
Financial has continued to have access to most of these markets, there can be no
assurance that such markets will continue to be a reliable source of financing
for Cat Financial. If current levels of market disruption and volatility
continue or worsen, Cat Financial could face materially higher financing costs
and become unable to access adequate funding to operate and grow our business or
seek to repay medium term notes and commercial paper as it becomes due or to
meet its other liquidity needs by drawing upon contractually committed lending
agreements primarily provided by global banks and/or by seeking other funding
sources. However, under extreme market conditions, there can be no assurance
such agreements and other funding sources would be available or sufficient. The
extent of any impact on our ability to meet funding or liquidity needs will
depend on several factors, including our operating cash flow, the duration of
any market disruption, the effects of governmental programs such as the Federal
Deposit Insurance Corporation’s (FDIC’s) Temporary Liquidity Guarantee Program
(TLGP), credit conditions generally, the volatility of equity markets, our
credit ratings and credit capacity, the cost of financing and other general
economic and business conditions.
Should current
levels of market disruption and volatility continue or worsen, we may also face
a number of other risks in connection with these events, including:
|
·
|
Market
developments that may affect customer confidence levels and may cause
declines in credit applications and adverse changes in payment patterns,
causing increases in delinquencies and default rates, which could impact
our charge-offs and provision for credit
losses.
|
|
·
|
The process
Cat Financial uses to estimate losses inherent in its credit exposure
requires a high degree of management’s judgment regarding numerous
subjective qualitative factors, including forecasts of economic conditions
and how economic predictors might impair the ability of its borrowers to
repay their loans. Ongoing financial market disruption and
volatility may impact the accuracy of these
judgments.
|
|
·
|
Cat
Financial’s ability to engage in routine funding transactions or borrow
from other financial institutions on acceptable terms or at all could be
adversely affected by further disruptions in the capital markets or other
events, including actions by rating agencies and deteriorating investor
expectations.
|
|
·
|
Since our
counterparties are primarily financial institutions, their ability to
perform in accordance with any of our underlying agreements could be
adversely affected by market volatility and/or disruptions in the equity
and credit markets.
|
Government Programs Designed
to Support Credit Markets
A number of
governmental programs designed to support the global financial system were
implemented in 2008. While we generally support these programs, there
have been unintended consequences of the programs that have impacted Cat
Financial and other companies that do not qualify to participate in
them. As an example, in the United States, some of Cat
Financial's competitors in the banking and manufacturing sectors have
participated in the TLGP. The TLGP was created to strengthen
confidence and encourage liquidity in the banking system by providing a
government guaranty of certain qualifying newly issued senior unsecured debt of
banks, thrifts and certain holding companies. Despite the FDIC’s
intent to support the banking system through the TLGP, some of Cat
Financial's competitors in the manufacturing sector have been permitted to
participate in this program and issue senior unsecured debt with governmental
guarantees at rates significantly below those capable of being offered by Cat
Financial. Likewise, Cat Financial's ability to issue debt
rates that are competitive with those offered by its banking competitors
has been further disadvantaged and accentuated at times by their participation
in governmental programs such as the TLGP. The TLGP, as well as other
governmental initiatives, have effectively created below-market government
subsidized financing for such competitors. This program and other
similar governmental programs in various jurisdictions have disadvantaged
Cat Financial and other non-qualifying companies. The TLGP is
currently set to expire on June 30, 2009, although the FDIC has indicated that
it plans to extend the program at least through October 31,
2009. Other governmental programs may not have clear expiration
dates. Should the TLGP or any other governmental program that
disadvantages Cat Financial be extended or expanded by its respective
government, Cat Financial could continue to be negatively impacted in its
ability to issue senior unsecured debt at rates that are comparable to those
offered by its competition.
Market Acceptance of
Products
Our business relies
on continued global demand for our brands and products. To achieve
business goals, we must develop and sell products that appeal to our dealers,
OEMs and customers. This is dependent on a number of factors
including our ability to manage and maintain key dealer relationships and our
ability to develop effective sales, advertising and marketing
programs. In addition, our continued success in selling products that
appeal to our customers is dependent on leading-edge innovation, with respect to
both products and operations, and on the availability and effectiveness of legal
protection for our innovation. Failure to continue to deliver quality
and competitive products to the marketplace, or to predict market demands for,
or gain market acceptance of, our products, could have material impact on our
business, results of operations and financial condition.
In addition, the
global demand for our products generally depends on our customers’ ability to
pay for our products, which, in turn, depends on their access to funds. Due to
global economic conditions many of our customers may be experiencing increased
difficulty in generating funds from operations. Further, due to
capital and credit market volatility and uncertainty, many financial
institutions have revised their lending standards, thereby decreasing access to
capital. If the capital and credit market volatility continues or worsens, the
liquidity of our customers may decline which, in turn, would reduce their
ability to purchase our products.
Natural
Disasters
The occurrence of
one or more natural disasters, such as tornadoes, hurricanes, earthquakes and
other forms of severe weather in the U.S. or in a country in which we operate or
in which our suppliers are located could adversely affect our operations and
financial performance. Such events could result in physical damage to
and complete or partial closure of one or more of our manufacturing facilities
or distribution centers, temporary or long-term disruption in the supply of
component products from some local and overseas suppliers, disruption in the
transport of our products to dealers and end-users and delay in the delivery of
our products to our distribution centers.
Item
1B. Unresolved Staff
Comments as of December 31,
2008.
|
Not
applicable.
Item
1C. Executive Officers of the Registrant as of December 31,
2008.
|
Name
|
Present
Caterpillar Inc. position and date of
initial
election
|
Principal
positions held during the
past
five years if other than
Caterpillar
Inc. position currently held
|
James W. Owens
(62)
|
Chairman and
Chief Executive Officer (2004)
|
·
·
|
Group
President (1995-2003)
Vice Chairman
(2003-2004)
|
Richard P.
Lavin (56)
|
Group
President (2007)
|
·
|
Vice President
(2004-2007)
|
Stuart L.
Levenick (55)
|
Group
President (2004)
|
·
·
|
Chairman, Shin
Caterpillar Mitsubishi Ltd. (2000-2004)
Vice President
(2000-2004)
|
Douglas R.
Oberhelman (55)
|
Group
President (2001)
|
|
|
Edward J. Rapp
(51)
|
Group
President (2007)
|
·
|
Vice President
(2000-2007)
|
Gérard R.
Vittecoq (60)
|
Group
President (2004)
|
·
|
Vice President
(2000-2004)
|
Steven H.
Wunning (57)
|
Group
President (2004)
|
·
|
Vice President
(1998-2004)
|
James B. Buda
(61)
|
Vice
President, General Counsel and Secretary (2001)
|
|
|
David B.
Burritt (53)
|
Vice President
and Chief Financial Officer (2004)
|
·
|
Controller
(2002-2004)
|
Bradley M.
Halverson (48)
|
Controller
(2004)
|
·
|
Corporate
Business Development Manager, Corporate Services Division (2002-2004)
|
Jananne A.
Copeland (46)
|
Chief
Accounting Officer (2007)
|
·
|
Corporate
Consolidations & Tax Accounting Manager (2002-2004)
|
·
|
Corporate
Financial Reporting Manager, Corporate Services Division (2004–2006)
|
·
|
Corporate
Financial Reporting Manager, Global Finance & Strategic Support
Division(2006 – 2007)
|
Caterpillar's operations are highly
integrated. Although the majority of our plants are involved
primarily in the production of either machines or engines, several plants are
involved in the manufacturing of both. In addition, several plants
are involved in the manufacturing of components which are used in the assembly
of both machines and engines. Caterpillar's parts distribution
centers are involved in the storage and distribution of parts for machines and
engines. Also, the research and development activities carried on at
our Technical Center involve both machines and engines.
Properties we own are believed to be
generally well maintained and adequate for present use. Through
planned capital expenditures, we expect these properties to remain adequate for
future needs. Properties we lease are covered by leases expiring over
terms of generally one to ten years. We anticipate no difficulty in
retaining occupancy of any leased facilities, either by renewing leases prior to
expiration or by replacing them with equivalent leased
facilities.
Headquarters
and Other Key Offices
Our corporate headquarters are in
Peoria, Illinois. Additional marketing and operating headquarters are
located both inside and outside the United States including Miami, Florida, San
Diego, California, Geneva, Switzerland, Beijing, People's Republic of China,
Singapore, Piracicaba, Brazil and Tokyo, Japan. The
Financial Products Division is headquartered in leased offices located in
Nashville, Tennessee.
Parts
Distribution Centers
Distribution of our parts is conducted
from parts distribution centers inside and outside the United States. Cat
Logistics distributes other companies' products, utilizing certain of our
distribution facilities as well as other non-Caterpillar facilities located both
inside and outside the United States. We also own or lease other
storage facilities that support distribution activities.
Technical
Center, Training Centers, Demonstration Areas, and Proving
Grounds
We own a Technical Center located in
Mossville, Illinois, and various other technical and training centers,
demonstration areas and proving grounds located both inside and outside the
United States.
Manufacturing,
Remanufacturing, and Overhaul
Manufacturing, remanufacturing and
overhaul of our products are conducted primarily at the following
locations. These facilities are believed to be suitable for their
intended purposes with adequate capacities for current and projected needs for
existing products.
|
Inside
the U.S.
|
|
|
|
|
Alabama
|
· Lawrence
|
Ohio
|
· Montreal
|
Japan
|
· Albertville
|
· Wamego
|
· Dayton1
|
· Surrey
|
· Akashi
|
· Montgomery
|
Kentucky
|
Pennsylvania
|
· Toronto
|
· Sagamihara
|
Arkansas
|
· Ashland
|
· Chambersburg
|
· Winnipeg
|
Malaysia
|
· Little
Rock
|
· Corbin
|
· Steelton
|
England
|
· Kuala
Lumpur1
|
California
|
· Danville
|
South
Carolina
|
· Barwell
|
Mexico
|
· Gardena
|
· Decoursey
|
· Greenville
|
· Desford
|
· Monterrey
|
· Mohave
|
· Louisville
|
· Jackson
|
· Ferndown
|
· Nuevo
Laredo
|
· Rocklin
|
· Mayfield
|
· Lexington
|
· Peterborough
|
· Reynosa
|
· San
Diego
|
· Raceland
|
· Newberry
|
· Peterlee
|
· Saltillo
|
Colorado
|
Louisiana
|
· Summerville
|
· Rushden
|
· Santa
Catarina
|
· Pueblo
|
· New
Orleans
|
· Sumter
|
· Shrewsbury
|
· Tijuana
|
Florida
|
Michigan
|
Tennessee
|
· Skinningrove
|
· Torreon
|
· Jacksonville
|
· Menominee
|
· Dyersburg
|
· Slough
|
· Veracruz
|
· Wildwood
|
Minnesota
|
· Knoxville
|
· Stafford
|
The
Netherlands
|
Georgia
|
· Minneapolis
|
Texas
|
· Stockton
|
· Almere
|
· Alpharetta
|
· New
Ulm
|
· Amarillo
|
· Wimborne
|
· s'-Hertogenbosch
|
· Griffin
|
· Owatonna
|
· Channelview
|
· Wolverhampton
|
Nigeria
|
· Jefferson
|
Mississippi
|
· De
Soto
|
France
|
· Port
Harcourt2
|
· LaGrange
|
· Corinth
|
· Mabank
|
· Arras
|
Northern
Ireland
|
· Patterson
|
· Oxford
|
· San
Antonio
|
· Chaumont
|
· Belfast
|
· Thomasville
|
· Prentiss
County
|
· Sherman
|
· Echirolles
|
· Larne
|
· Toccoa
|
Missouri
|
· Waco
|
· Grenoble
|
People’s
Republic
|
Illinois
|
· Boonville
|
· Waskom
|
· Rantigny
|
of
China
|
· Alorton
|
· Kansas
City
|
Virginia
|
Germany
|
· Erliban1
|
· Aurora
|
· West
Plains
|
· Petersburg
|
· Kiel
|
· Foshan
|
· Champaign1
|
Montana
|
· Roanoke
|
· Rostock
|
· Qingzhou2
|
· Chicago
|
· Laurel
|
Wisconsin
|
Hungary
|
· Shanghai
|
· Decatur
|
Nebraska
|
· Hudson
|
· Gödöllö
|
· Suzhou
|
· Dixon
|
· Alliance
|
· Prentice
|
India
|
· Tianjin2
|
· East
Peoria
|
· Gering
|
Wyoming
|
· Hosur
|
· Wuxi
|
· Granite
City
|
· Lincoln
|
· Bill
|
· Pondicherry
|
· Xuzhou2
|
· Joliet
|
· Northport
|
· Laramie
|
· Thiruvallur
|
Poland
|
· Mapleton
|
· Sidney
|
· Rock
Springs
|
Indonesia
|
· Janow
Lubelski
|
· Mossville
|
· South
Morrill
|
Outside
the U.S.
|
· Bandung2
|
· Radom1
|
· Peoria
|
Nevada
|
Australia
|
· Jakarta
|
· Sosnowiec
|
· Pontiac
|
· Sparks
|
· Burnie
|
Italy
|
Russia
|
· Rochelle
|
North
Carolina
|
· Melbourne
|
· Anagni
|
· Tosno
|
· Sterling
|
· Clayton
|
· Wivenhoe
|
· Atessa
|
South
Africa
|
· Woodridge1
|
· Franklin
|
Belgium
|
· Bazzano
|
· Boksburg
|
Indiana
|
· Goldsboro
|
· Gosselies
|
· Fano
|
Sweden
|
· Charlestown
|
· Morganton
|
Brazil
|
· Frosinone
|
· Soderhamn
|
· East
Chicago
|
· Sanford
|
· Curitiba
|
· Jesi
|
Switzerland
|
· Franklin
|
· Zebulon
|
· Diadema
|
· Marignano
|
· Riazzino
|
· Lafayette
|
North
Dakota
|
· Hortolandia
|
· Milan
|
Tunisia
|
Kansas
|
· West
Fargo
|
· Piracicaba
|
· Minerbio
|
· Sfax
|
· Fort
Scott
|
|
Canada
|
|
|
|
|
· Edmonton
|
|
|
1
|
Facility of
affiliated company (50 percent or less owned)
|
2
|
Facility of
partially owned subsidiary (more than 50 percent, less than 100
percent)
|
We have disclosed certain individual
legal proceedings in this filing. Additionally, we are involved in
other unresolved legal actions that arise in the normal course of business. The
most prevalent of these unresolved actions involve disputes related to product
design, manufacture and performance liability (including claimed asbestos and
welding fumes exposure), contracts, employment issues or intellectual property
rights. Although it is not possible to predict with certainty
the outcome of these unresolved legal actions we believe that these actions will
not individually or in the aggregate have a material adverse effect on our
consolidated financial position, liquidity or results of
operations.
On May 14, 2007,
the U.S. Environmental Protection Agency (EPA) issued a Notice of Violation to
Caterpillar Inc., alleging various violations of Clean Air Act Sections 203, 206
and 207. EPA claims that Caterpillar violated such sections by
shipping engines and catalytic converter after-treatment devices separately,
introducing into commerce a number of uncertified and/or misbuilt engines and
failing to timely report emissions-related defects. Caterpillar is
currently engaging in negotiations with EPA to resolve these issues, but we are
unable at this time to place precise estimates on the potential exposure to
penalties. However, Caterpillar is cooperating with EPA and, based
upon initial discussions and although penalties could potentially exceed
$100,000, management does not believe that this issue will have a material
adverse impact on our financial position.
On September 29,
2004, Kruse Technology Partnership (Kruse) filed a lawsuit against Caterpillar
in the United States District Court for the Central District of California
alleging that certain Caterpillar engines built from October 2002 to the present
infringe upon certain claims of three of Kruse's patents on engine fuel
injection timing and combustion strategies. Caterpillar denied
Kruse's allegations and filed a counterclaim seeking a declaration from the
court that Caterpillar is not infringing upon Kruse's patents and that the
patents are invalid and unenforceable. On December 20, 2008,
Caterpillar and Kruse entered into a confidential settlement agreement whereby
all pending claims with regard to the lawsuit were settled. The
settlement, which did not have a material impact on our financial statements,
included an agreement by both parties to not bring any future actions in the
matter. Subsequent to the agreement, the court entered an order
dismissing the case.
Item
4. Submission
of Matters to a Vote of Security
Holders.
|
Not
applicable.
Item
5. Market for Registrant's Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities.
|
Stock
Information
Information required by Item 5 regarding
our stock is incorporated by reference from the Supplemental Stockholder
Information section of Exhibit 13 under “Listing Information,” “Price Ranges,”
“Number of Stockholders” and “Performance Graph” and from the Management’s
Discussion and Analysis section of Exhibit 13 under “Dividends paid per common
share.”
Sale of
Unregistered Securities
Non-U.S.
Employee Stock Purchase Plans
We have 30 employee stock purchase plans
administered outside the United States for our foreign employees. As
of December 31, 2008, those plans had approximately 12,200 active participants
in the aggregate. During the fourth quarter of 2008, approximately
82,000 shares of Caterpillar common stock or foreign denominated equivalents
were distributed under the plans. Participants in some foreign plans
have the option of receiving non-U.S. share certificates (foreign-denominated
equivalents) in lieu of U.S. shares of Caterpillar common stock upon withdrawal
from the plan. These equivalent certificates are tradable only on the
local stock market and are included in our determination of shares
outstanding.
Distributions of Caterpillar stock under
the plans are exempt from registration under the Securities Act of 1933 (Act)
pursuant to 17 CFR 230.903 of the Act.
Purchases of
Securities
Issuer Purchases
of Equity Securities
Period
|
|
Total
number
of
Shares
Purchased
|
|
Average
Price
Paid
per Share
|
|
Total
Number
of
Shares Purchased Under the Program
|
|
Approximate
Dollar Value of Shares that may yet be Purchased under the Program
(dollars in billions)
|
October 1-31,
2008
|
|
1,000,000
|
(2)
|
|
$
|
65.56
|
|
|
1,000,000
|
(2)
|
|
$
|
3.789
|
(1)
|
November
1-30, 2008
|
|
1,000,000
|
(3)
|
|
|
35.06
|
|
|
1,000,000
|
(3)
|
|
|
3.755
|
(1)
|
December
1-31, 2008
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
3.739
|
(1)
(4)
|
Total
|
|
2,000,000
|
|
|
$
|
58.16
|
|
|
2,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This
comprises shares purchased under Caterpillar’s share repurchase program
approved in February 2007 by the Board of Directors for a total amount of
$7.50 billion over the next five years, expiring on December 31, 2011. In
August 2007, the Board of Directors authorized the use of derivative
contracts for stock repurchases under the program in addition to open
market purchases to reduce stock repurchase price
volatility.
|
(2)
|
Shares were
purchased through derivative contracts.
|
(3)
|
Shares were
purchased through open market.
|
(4)
|
This number
includes $16 million in expired derivative contracts applied toward the
value of shares under the
program.
|
Other Purchases of Equity
Securities
|
|
Total
number
|
|
Average
Price
|
|
Total
Number
of
Shares Purchased
|
|
Approximate
Dollar Value of Shares that may yet be Purchased
|
Period
|
|
of Shares
Purchased (1)
|
|
Paid per
Share
|
|
Under the
Program
|
|
under the
Program
|
October 1-31,
2008
|
|
4,446
|
|
|
$
|
57.07
|
|
|
N/A
|
|
|
N/A
|
|
November
1-30, 2008
|
|
6,051
|
|
|
|
38.78
|
|
|
N/A
|
|
|
N/A
|
|
December
1-31, 2008
|
|
1,321
|
|
|
|
38.53
|
|
|
N/A
|
|
|
N/A
|
|
Total
|
|
11,818
|
|
|
$
|
45.63
|
|
|
|
|
|
|
|
|
(1)
|
Represents
shares delivered back to issuer for the payment of taxes resulting from
the exercise of stock options by employees and
Directors.
|
Item
6. Selected Financial
Data.
|
Information required by Item 6 is
incorporated by reference from the "Five-year Financial Summary" and
"Management’s Discussion and Analysis” of Exhibit 13.
Page 24
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of
Operations.
|
Information
required by Item 7 is incorporated by reference from the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” of
Exhibit 13.
This Management’s Discussion and
Analysis of Financial Condition and Results of Operations should be read in
conjunction with our discussion of cautionary statements and significant risks
to the company’s business under Item 1A. Risk Factors of this Form
10-K.
Item 7A. Quantitative and Qualitative Disclosures
About Market
Risk.
|
Information required by Item 7A appears
in Note 1 – “Operations and summary of significant accounting policies,” Note 3
– “Derivative financial instruments and risk management,” Note
19 – “Fair values disclosures” and Note 20 – “Concentration of credit risk” of
Exhibit 13. Other information required by Item 7A is incorporated by
reference from “Management’s Discussion and Analysis” of Exhibit
13.
Item 8. Financial Statements and Supplementary
Data.
|
Information required by Item 8 is
incorporated by reference from the “Report of Independent Registered Public
Accounting Firm” and from the “Financial Statements and Notes to Consolidated
Financial Statements” of Exhibit 13. Other information required by
Item 8 is included in "Computation of Ratios of Earnings to Fixed Charges" filed
as Exhibit 12 to this Form 10-K.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial
Disclosure.
|
Not
Applicable.
Disclosure
Controls and Procedures
Under
the supervision and with the participation of our management, including our
chief executive officer and our chief financial officer, we conducted an
evaluation of our disclosure controls and procedures; as such term is defined
under Exchange Act Rule 13a-15(e). Based on this evaluation, our
chief executive officer and our chief financial officer concluded that our
disclosure controls and procedures were effective as of the end of the period
covered by this annual report.
Management’s
Report on Internal Control Over Financial Reporting
The management of Caterpillar is
responsible for establishing and maintaining adequate internal control over
financial reporting. Our internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of our
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Our
internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the company's assets that could have a material effect on the financial
statements.
Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Page 25
Management assessed the effectiveness of
the company's internal control over financial reporting as of December 31, 2008.
In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control —
Integrated Framework. Based
on this assessment management concluded that, as of December 31, 2008, the
company's internal control over financial reporting was effective based on those
criteria.
Management has excluded Caterpillar
Japan Ltd. from our assessment of internal control over financial reporting as
of December 31, 2008 because Caterpillar Japan Ltd. was consolidated by the
company on August 1, 2008. Caterpillar Japan Ltd. is a 67
percent owned subsidiary of the company with total assets and total
revenues represent five percent and less than one percent, respectively, of the
related consolidated financial statement amounts as of and for the year ended
December 31, 2008. Prior to consolidation, the company accounted for
its investment in this entity under the equity method.
The effectiveness of the company's
internal control over financial reporting as of December 31, 2008 has been
audited by PricewaterhouseCoopers LLP, an independent registered public
accounting firm. The report appears under the “Report of Independent Registered
Public Accounting Firm” of Exhibit 13.
Changes
in Internal Control over Financial Reporting
During
the last fiscal quarter, there has been no significant change in the company's
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the company's internal control over
financial reporting.
Not Applicable.
Item 10. Directors, Executive Officers and
Corporate
Governance.
|
Identification
of Directors and Business Experience
Information required by this Item is
incorporated by reference from the 2009 Proxy Statement.
Identification
of Executive Officers and Business Experience
Information required by this Item
appears in Item 1C of this Form 10-K.
Family
Relationships
There are no family relationships
between the officers and directors of the company. All officers serve
at the pleasure of the board of directors and are elected annually at a meeting
of the board.
Legal
Proceedings Involving Officers and Directors
Information required by this Item is
incorporated by reference from the 2009 Proxy Statement.
Audit
Committee Financial Expert
Information required by this Item is
incorporated by reference from the 2009 Proxy Statement.
Identification
of Audit Committee
Information required by this Item is
incorporated by reference from the 2009 Proxy Statement.
Stockholder
Recommendation of Board Nominees
Information required by this Item is
incorporated by reference from the 2009 Proxy Statement.
Compliance
with Section 16(a) of the Exchange Act
Information required by this Item
relating to compliance with Section 16(a) of the Securities Exchange Act of 1934
is incorporated by reference from the 2009 Proxy Statement.
Page 26
Code of
Ethics
Our Worldwide Code of Conduct (Code),
first published in 1974 and most recently amended in 2005, sets a high standard
for honesty and ethical behavior by every employee, including the principal
executive officer, principal financial officer, controller and principal
accounting officer. The Code is posted on our website at www.CAT.com/governance and is incorporated by reference as
Exhibit 14 to this Form 10-K. To obtain a copy of the Code at no
charge, submit a written request to the Corporate Secretary at 100 NE Adams
Street, Peoria, Illinois 61629-7310. We will post on our
website any required amendments to or waivers granted under our Code pursuant to
SEC or New York Stock Exchange disclosure rules.
Information required by this Item is
incorporated by reference from the 2009 Proxy Statement.
Item
12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder
Matters.
|
Information required by this Item
relating to security ownership of certain beneficial owners and management is
incorporated by reference from the 2009 Proxy Statement.
Information
required by this item relating to securities authorized for issuance under
equity compensation plans is included in the following table:
Equity
Compensation Plan Information
(as
of December 31, 2008)
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
|
Number of
securities to be issued upon exercise of outstanding options,
warrants
|
|
Weighted-average
exercise price of outstanding options, warrants
|
|
Number of
securities remaining available for future issuance under equity
compensation plans (excluding securities
|
|
Plan
category
|
|
and
rights1
|
|
and
rights
|
|
reflected in
column (a))
|
|
Equity
compensation plans approved by
security holders
|
|
63,591,637
|
|
|
$45.6767
|
|
|
25,213,927
|
|
|
Equity
compensation plans not approved
by security holders
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
Total
|
|
63,591,637
|
|
|
$45.6767
|
|
|
25,213,927
|
|
|
|
1
|
Excludes any
cash payments in-lieu-of
stock.
|
Item
13. Certain Relationships and Related Transactions, and
Director
Independence.
|
Information required by this Item is
incorporated by reference from the 2009 Proxy Statement.
Item
14. Principal Accountant Fees and
Services.
|
Information required by this Item is
incorporated by reference from the 2009 Proxy Statement.
Item
15. Exhibits and Financial Statement
Schedules.
|
(a) |
The following
documents are incorporated by reference from Exhibit
13:
|
1. Financial
Statements:
|
·
|
Report of Independent Registered
Public Accounting Firm
|
|
·
|
Statement 1
- Consolidated Results of
Operations
|
|
·
|
Statement 2
- Consolidated Financial
Position
|
|
·
|
Statement 3 - Changes
in Consolidated Stockholders'
Equity
|
|
·
|
Statement 4
- Consolidated Statement of Cash
Flow
|
|
·
|
Notes to Consolidated Financial
Statements
|
2. Financial Statement
Schedules:
|
·
|
All
schedules are omitted because the required information is shown in the
financial statements or the notes thereto incorporated by reference from
Exhibit 13 or considered to be
immaterial.
|
(b)
|
Exhibits:
|
|
1.1
|
Underwriting
Agreement dated December 3, 2008 between Caterpillar Inc. and Banc of
America Securities LLC and J.P. Morgan Securities Inc., as representatives
of the several underwriters named therein (incorporated by reference from
Exhibit 1.1 to Form 8-K filed December 5, 2008).
|
|
|
3.1
|
Restated
Certificate of Incorporation (incorporated by reference from Exhibit 3(i)
to the Form 10-Q filed for the quarter ended March 31,
1998).
|
|
|
3.2
|
Bylaws amended and restated as of
February 11, 2004 (incorporated by reference from Exhibit 3.3 to
the Form 10-Q filed for the quarter ended March 31, 2004).
|
|
|
4.1
|
Indenture
dated as of May 1, 1987, between the Registrant and The First
National Bank of Chicago, as Trustee (incorporated by reference from
Exhibit 4.1 to Form S-3 (Registration No. 333-22041) filed
February 19, 1997).
|
|
|
4.2
|
First
Supplemental Indenture, dated as of June 1, 1989, between Caterpillar
Inc. and The First National Bank of Chicago, as Trustee (incorporated by
reference from Exhibit 4.2 to Form S-3 (Registration
No. 333-22041) filed February 19, 1997).
|
|
|
4.3
|
Appointment
of Citibank, N.A. as Successor Trustee, dated October 1, 1991, under
the Indenture, as supplemented, dated as of May 1, 1987 (incorporated
by reference from Exhibit 4.3 to Form S-3 (Registration
No. 333-22041) filed February 19, 1997).
|
|
|
4.4
|
Second
Supplemental Indenture, dated as of May 15, 1992, between Caterpillar
Inc. and Citibank, N.A., as Successor Trustee (incorporated by reference
from Exhibit 4.4 to Form S-3 (Registration No. 333-22041)
filed February 19, 1997).
|
|
|
4.5
|
Third
Supplemental Indenture, dated as of December 16, 1996, between
Caterpillar Inc. and Citibank, N.A., as Successor Trustee (incorporated by
reference from Exhibit 4.5 to Form S-3 (Registration
No. 333-22041) filed February 19, 1997).
|
|
|
4.6
|
Tri-Party
Agreement, dated as of November 2, 2006, between Caterpillar Inc.,
Citibank, N.A. and U.S. Bank National Association appointing U.S. Bank as
Successor Trustee under the Indenture dated as of May 1, 1987, as
amended and supplemented (incorporated by reference from Exhibit 4.6 to
the 2006 Form 10-K).
|
|
|
4.7
|
Form of
Global Note used in connection with Caterpillar's issuance and sale of
7.000 percent Notes due 2013 and 7.900 percent Notes due 2018 in December,
2008 (incorporated by reference from Exhibit 4.1 to Form 8-K filed
December 5, 2008).
|
|
|
4.8
|
Form of
Global Debenture used in connection with Caterpillar's issuance and sale
of 8.250 percent Debentures due 2038 in December, 2008 (incorporated by
reference from Exhibit 4.2 to Form 8-K filed December 5,
2008).
|
|
|
|
Caterpillar
Inc. 1996 Stock Option and Long-Term Incentive Plan amended and restated
through fourth amendment.
|
|
|
|
Caterpillar
Inc. 2006 Long-Term Incentive Plan as amended and restated through fifth
amendment.
|
|
10.3
|
Supplemental
Pension Benefit Plan, as amended and restated January 2003 (incorporated
by reference from Exhibit 10.3 to the 2004 Form 10-K).
|
|
10.4
|
Supplemental
Employees' Investment Plan, as amended and restated through December 1,
2002 (incorporated by
reference from Exhibit 10.4 to the 2002 Form
10-K).
|
|
10.5
|
Caterpillar
Inc. Executive Incentive Compensation Plan, effective as of January 1,
2002 (incorporated by
reference from Exhibit 10.5 to the 2002 Form
10-K).
|
|
10.6
|
Directors'
Deferred Compensation Plan, as amended and restated through January 1,
2005 (incorporated by reference from Exhibit 10.6 to the 2006 Form
10-K).
|
|
|
Directors'
Charitable Award Program, as amended and restated through April 1,
2008.
|
|
10.8
|
Deferred
Employees' Investment Plan, as amended and restated through February 16,
2005 (incorporated by reference as Exhibit 10.8 to the 2005 Form
10-K).
|
|
10.9
|
Five-Year
Credit Agreement dated September 21, 2006 (2006 Five-Year Credit
Agreement) among Caterpillar Inc., Caterpillar Financial Services
Corporation, Caterpillar International Finance p.l.c. and Caterpillar
Finance Corporation, the Banks named therein, Citibank, N.A., The Bank of
Tokyo-Mitsubishi UFJ, Ltd., Citibank International plc, ABN AMRO Bank
N.V., Bank of America, N.A., Barclays Bank PLC, J.P. Morgan Securities,
Inc., Société Générale and Citigroup Global Markets Inc. (incorporated by
reference from Exhibit 99.1 to Form 8-K filed September 26,
2006).
|
|
10.10
|
Japan Local
Currency Addendum to the 2006 Five-Year Credit Agreement among Caterpillar
Financial Services Corporation, Caterpillar Finance Corporation, the Japan
Local Currency Banks named therein, Citibank, N.A. and The Bank of
Tokyo-Mitsubishi UFJ, Ltd. (incorporated by reference from Exhibit 99.2 to
Form 8-K filed September 26, 2006).
|
|
10.11
|
Local
Currency Addendum to the 2006 Five-Year Credit Agreement among Caterpillar
Financial Services Corporation, Caterpillar International Finance p.l.c.,
the Local Currency Banks named therein, Citibank, N.A., and
Citibank International plc (incorporated by reference from Exhibit 99.3 to
Form 8-K filed September 26, 2006).
|
|
10.12
|
Amendment No.
1 to the 2006 Five-Year Credit Agreement among Caterpillar Inc.,
Caterpillar Financial Services Corporation, Caterpillar Finance
Corporation and Caterpillar International Finance p.l.c., the Banks, Japan
Local Currency Banks and Local Currency Banks named therein, The Bank of
Tokyo-Mitsubishi UFJ, Ltd., Citibank International plc and Citibank, N.A.
(incorporated by reference from Exhibit 10.12 to Form 10-Q filed October
31, 2008).
|
|
10.13
|
Omnibus
Amendment and Waiver Agreement (Amendment No. 2) to the 2006 Five-Year
Credit Agreement among Caterpillar Inc., Caterpillar Financial Services
Corporation, Caterpillar Finance Corporation, Caterpillar International
Finance p.l.c., the Banks and Local Currency Banks named therein, Citibank
International plc and Citibank, N.A. (incorporated by reference from
Exhibit 10.13 to Form 10-Q filed October 31, 2008).
|
|
10.14
|
Amendment No.
3 to the 2006 Five-Year Credit Agreement among Caterpillar Inc.,
Caterpillar Financial Services Corporation, Caterpillar Finance
Corporation and Caterpillar International Finance Limited (f/k/a
Caterpillar International Finance p.l.c.), the Banks, Japan Local Currency
Banks and Local Currency Banks named therein, The Bank of Tokyo-Mitsubishi
UFJ, Ltd., Citibank International plc and Citibank, N.A. (incorporated by
reference from Exhibit 99.4 to Form 8-K filed September 23,
2008).
|
|
10.15
|
Five-Year
Credit Agreement dated September 20, 2007 (2007 Five-Year Credit
Agreement) among Caterpillar Inc., Caterpillar Financial Services
Corporation and Caterpillar Finance Corporation, certain financial
institutions named therein, Citibank, N.A., The Bank of Tokyo-Mitsubishi
UFJ, Ltd., ABN AMRO Bank N.V., Bank of America, N.A., Barclays Bank PLC,
J.P. Morgan Securities, Inc., Société Générale and Citigroup Global
Markets Inc. (incorporated by reference from Exhibit 99.1 to Form 8-K
filed September 25, 2007).
|
|
10.16
|
Japan Local
Currency Addendum to the 2007 Five-Year Credit Agreement among Caterpillar
Financial Services Corporation, Caterpillar Finance Corporation, the Japan
Local Currency Banks named therein, Citibank, N.A. and The Bank of
Tokyo-Mitsubishi UFJ, Ltd. (incorporated by reference from Exhibit 99.2 to
Form 8-K filed September 25, 2007).
|
|
10.17
|
Amendment No.
1 to the 2007 Five-Year Credit Agreement among Caterpillar Inc.,
Caterpillar Financial Services Corporation and Caterpillar Finance
Corporation, the Banks and Japan Local Currency Banks named therein, The
Bank of Tokyo-Mitsubishi UFJ, Ltd. and Citibank, N.A. (incorporated by
reference from Exhibit 99.3 to Form 8-K filed September 23,
2008).
|
|
10.18
|
364-Day
Credit Agreement dated September 18, 2008 (2008 364-Day Credit Agreement)
among Caterpillar Inc., Caterpillar Financial Services Corporation,
Caterpillar Finance Corporation, the Banks named therein, Citibank, N.A.,
The Bank of Tokyo-Mitsubishi UFJ, Ltd., ABN AMRO Bank N.V., Bank of
America, N.A., Barclays Bank PLC, J.P. Morgan Securities, Inc., Société
Générale and Citigroup Global Markets Inc. (incorporated by reference from
Exhibit 99.1 to Form 8-K filed September 23, 2008).
|
|
10.19
|
Japan Local
Currency Addendum to the 2008 364-Day Credit Agreement among Caterpillar
Financial Services Corporation, Caterpillar Finance Corporation, the Japan
Local Currency Banks named therein, Citibank, N.A. and The Bank of
Tokyo-Mitsubishi UFJ, Ltd. (incorporated by reference from Exhibit 99.2 to
Form 8-K filed September 23, 2008).
|
|
10.20
|
Amendment No.
1 to the 2008 364-Day Credit Agreement among Caterpillar Inc., Caterpillar
Financial Services Corporation, Caterpillar Finance Corporation, the Banks
and Japan Local Currency Banks named therein, The Bank of Tokyo -
Mitsubishi UFJ, Ltd. and Citibank, N.A. (incorporated by reference from
Exhibit 99.1 to Form 8-K filed January 26, 2009).
|
|
10.21
|
Amendment No.
2 to the 2007 Five-Year Credit Agreement among Caterpillar Inc.,
Caterpillar Financial Services Corporation, Caterpillar Finance
Corporation, the Banks and Japan Local Currency Banks named therein, The
Bank of Tokyo-Mitsubishi UFJ, Ltd. and Citibank, N.A. (incorporated by
reference from Exhibit 99.2 to Form 8-K filed January 26,
2009).
|
|
10.22
|
Amendment No.
4 to the 2006 Five-Year Credit Agreement among Caterpillar Inc.,
Caterpillar Financial Services Corporation, Caterpillar Finance
Corporation, Caterpillar International Finance Limited (f/k/a Caterpillar
International Finance p.l.c.), the Banks, Japan Local Currency Banks and
Local Currency Banks named therein, The Bank of Tokyo-Mitsubishi UFJ,
Ltd., Citibank International plc and Citibank, N.A. (incorporated by
reference from Exhibit 99.3 to Form 8-K filed January 26,
2009).
|
|
10.23
|
Amendment No.
1 to 2007 Japan Local Currency Addendum among Caterpillar Financial
Services Corporation, Caterpillar International Finance Limited (f/k/a
Caterpillar international Finance p.l.c.), the Local Currency Banks named
therein, Citibank International plc and Citibank, N.A. (incorporated by
reference from Exhibit 99.4 to Form 8-K filed January 26,
2009).
|
|
10.24
|
Amendment No.
1 to 2006 Japan Local Currency Addendum among Caterpillar Financial
Services Corporation, Caterpillar Finance Corporation, The Bank of
Tokyo-Mitsubishi UFJ, Ltd. and Citibank, N.A. (incorporated by reference
from Exhibit 99.5 to Form 8-K filed January 26, 2009).
|
|
10.25
|
Amendment No.
1 to 2006 Local Currency Addendum among Caterpillar Financial Services
Corporation, Caterpillar Finance Corporation, The Bank of Tokyo-Mitsubishi
UFJ, Ltd. and Citibank, N.A. (incorporated by reference from Exhibit 99.6
to Form 8-K filed January 26, 2009).
|
|
|
Computations
of Earnings per Share.
|
|
|
Computation
of Ratios of Earnings to Fixed Charges.
|
|
|
General and
Financial Information for 2008 containing the information required by SEC
Rule 14a-3 for an annual report to security holders.
|
|
14
|
Caterpillar
Worldwide Code of Conduct (incorporated by reference from Exhibit 14 to
the 2005 Form 10-K).
|
|
|
Subsidiaries
and Affiliates of the Registrant.
|
|
|
Consent of
Independent Registered Public Accounting Firm.
|
|
|
Certification
of James W. Owens, Chairman and Chief Executive Officer of Caterpillar
Inc., as required pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
|
|
|
Certification
of David B. Burritt, Vice President and Chief Financial Officer of
Caterpillar Inc., as required pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
Certification
of James W. Owens, Chairman and Chief Executive Officer of Caterpillar
Inc. and David B. Burritt, Vice President and Chief Financial Officer of
Caterpillar Inc., as required pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
|
Annual CEO
certification to the New York Stock Exchange for fiscal year
2008.
|
Form 10-K
SIGNATURES
|
|
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
CATERPILLAR
INC.
(Registrant)
|
|
February 20,
2009
|
|
By:
|
/s/James B. Buda |
|
|
|
|
James B.
Buda, Secretary
|
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
|
|
|
|
|
|
February 20,
2009
|
/s/James
W. Owens
|
|
Chairman of the Board,
Director
and Chief Executive
Officer
|
|
(James W.
Owens)
|
|
|
February 20,
2009
|
/s/Richard
P. Lavin
|
|
Group
President
|
|
(Richard P.
Lavin)
|
|
|
February 20,
2009
|
/s/Stuart
L. Levenick |
|
Group
President
|
|
(Stuart L.
Levenick)
|
|
|
February 20,
2009
|
/s/
Douglas R. Oberhelman
|
|
Group
President
|
|
(Douglas R.
Oberhelman)
|
|
|
February 20,
2009
|
/s/Edward
J. Rapp
|
|
Group
President
|
|
(Edward J.
Rapp)
|
|
|
February 20,
2009
|
/s/Gerard
R. Vittecoq
|
|
Group
President
|
|
(Gerard R.
Vittecoq)
|
|
|
February 20,
2009
|
/s/Steven
H. Wunning
|
|
Group
President
|
|
(Steven
H. Wunning)
|
|
|
February 20,
2009
|
/s/David
B. Burritt
|
|
Vice President and Chief Financial
Officer
|
|
(David B.
Burritt)
|
|
|
February 20,
2009
|
/s/Bradley
M. Halverson
|
|
Controller
|
|
(Bradley M.
Halverson)
|
|
|
February 20,
2009
|
/s/Jananne A.
Copeland
|
|
|
|
(Jananne A.
Copeland)
|
|
Chief Accounting
Officer
|
Page 31
February
20, 2009
|
/s/W. Frank
Blount
|
|
Director
|
|
(W. Frank
Blount)
|
|
|
February
20, 2009
|
/s/John R.
Brazil
|
|
Director
|
|
(John R.
Brazil)
|
|
|
February 20, 2009
|
/s/Daniel M.
Dickinson
|
|
Director
|
|
(Daniel M.
Dickinson)
|
|
|
February
20, 2009
|
/s/John T.
Dillon
|
|
Director
|
|
(John T.
Dillon)
|
|
|
February
20, 2009
|
/s/Eugene V.
Fife
|
|
Director
|
|
(Eugene V.
Fife)
|
|
|
February
20, 2009
|
/s/Gail D.
Fosler
|
|
Director
|
|
(Gail D.
Fosler)
|
|
|
February
20, 2009
|
/s/Juan
Gallardo
|
|
Director
|
|
(Juan
Gallardo)
|
|
|
February
20, 2009
|
/s/David R.
Goode
|
|
Director
|
|
(David R.
Goode)
|
|
|
February
20, 2009
|
/s/Peter A.
Magowan
|
|
Director
|
|
(Peter A.
Magowan)
|
|
|
February
20, 2009
|
/s/William A.
Osborn
|
|
Director
|
|
(William A.
Osborn)
|
|
|
February
20, 2009
|
/s/Charles D.
Powell
|
|
Director
|
|
(Charles D.
Powell)
|
|
|
February
20, 2009
|
/s/Edward B. Rust,
Jr.
|
|
Director
|
|
(Edward B. Rust,
Jr.)
|
|
|
February
20, 2009
|
/s/Joshua I.
Smith
|
|
Director
|
|
(Joshua I.
Smith)
|
|
|
Page 32