EX-99.2 3 ex99-2.htm EX. 99.2 / ROIC RECONCILIATION Ex. 99.2 / ROIC Reconciliation
EXHIBIT 99.2

 
Reconciliation of Non-GAAP Financial Measures - Return on Invested Capital

Caterpillar defines Return on Invested Capital (ROIC) as net operating profit after tax divided by average invested capital. Management believes ROIC provides investors with an important perspective on how effectively Caterpillar deploys capital. Management calculates ROIC for the Machinery and Engines Line of Business and uses this metric internally as a high level target to assess overall performance throughout the business cycle. ROIC is a "non-GAAP financial measure" as defined by the Securities and Exchange Commission (SEC) in Regulation G. Non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP and therefore, are unlikely to be comparable with calculations of similar measures for other companies. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measure. The Machinery and Engine Line of Business data is also considered non-GAAP as defined by the SEC. Caterpillar defines Machinery and Engines as Caterpillar Inc. and its subsidiaries with Financial Products on the equity basis.

All financial data below is shown as it was filed with the SEC in the year presented.

 
 
Consolidated
 
Machinery & Engines
 
Financial Products
 
Consolidating Adjustments
(Dollars in millions)
 
 
 
 
 
 
2004
 
2003
 
2002
 
2001
 
2004
 
2003
 
2002
 
2001
 
2004
 
2003
 
2002
 
2001
 
2004
 
2003
 
2002
 
2001
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit after Tax (GAAP)
 
$  2,035 
 
$  1,099 
 
$  798 
 
$  805 
 
$  2,035 
 
$  1,099 
 
$     798 
 
$    805 
 
$     343 
 
$     263 
 
$     187 
 
$     224 
 
$ (343)
 
$   (263)
 
$   (187)
 
$   (224)
Interest expense
 
230 
 
246 
 
279 
 
285 
 
235 
 
250 
 
279 
 
285 
 
- 
 
- 
 
- 
 
- 
 
(5)
 
(13)
 
- 
 
- 
Other income/expense
 
(204)
 
(35)
 
(74)
 
(143)
 
(15)
 
69 
 
1 
 
88 
 
(68)
 
(26)
 
7 
 
(88)
 
(121)
 
(78)
 
(82)
 
(143)
Income tax adjustment(1)
 
(7)
 
(57)
 
(57)
 
(45)
 
(57)
 
(85)
 
(69)
 
(108)
 
22 
 
8 
 
(3)
 
33 
 
28 
 
20 
 
15 
 
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating profit after taxes
 
$  2,054 
 
$  1,253 
 
$  946 
 
$  902
 
$  2,198
 
$  1,342 
 
$   1,009 
 
$  1,070 
 
$     297 
 
$     245 
 
$     191 
 
$     169 
 
$ (441)
 
$   (334)
 
$   (254)
 
$   (337)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets (GAAP)
 
$ 43,091 
 
$ 36,465 
 
$ 32,851 
 
$ 30,657
 
$ 22,265
 
$ 19,210 
 
$ 18,093 
 
$ 17,275 
 
$ 24,612 
 
20,999 
 
$ 18,147 
 
$ 15,895 
 
$ (3,786)
 
$ (3,744)
 
$ (3,389)
 
$ (2,513)
Total liabilities
 
(35,624)
 
(30,387)
 
(27,379)
 
(25,046)
 
(14,798)
 
(13,132)
 
(12,621)
 
(11,664)
 
(21,600)
 
$ (18,452)
 
(16,186)
 
(14,233)
 
774 
 
1,197 
 
1,428 
 
851 
Short-term borrowings
 
4,157 
 
2,757 
 
2,175 
 
2,180
 
93
 
72 
 
64 
 
219 
 
4,396 
 
3,160 
 
2,906 
 
2,164 
 
(332)
 
(475)
 
(795)
 
(203)
Long-term debt duewithin one year
 
3,531 
 
2,981 
 
3,912 
 
3,131
 
6
 
32 
 
258 
 
73 
 
3,525 
 
2,949 
 
3,654 
 
3,058 
 
- 
 
- 
 
- 
 
- 
Long-term debt due after one year
 
15,837 
 
14,078 
 
11,596 
 
11,291
 
3,697
 
3,367 
 
3,403 
 
3,492 
 
12,175 
 
10,711 
 
8,193 
 
7,799 
 
(35)
 
- 
 
- 
 
- 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Invested Capital
 
$ 30,992 
 
$ 25,894 
 
$ 23,155 
 
$ 22,213
 
$ 11,263
 
$ 9,549 
 
$ 9,197 
 
$  9,395 
 
$ 23,108 
 
$ 19,367 
 
$ 16,714 
 
$ 14,683 
 
$ (3,379)
 
$ (3,022)
 
$ (2,756)
 
$ (1,865)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Assumed tax effect of interest and other income / expense.
 
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(Dollars in millions)
 
2004
 
2004
Avg.
 
2003
 
2003
Avg.
 
2002
 
2002
Avg.
 
2001
 
 
 
 
 
 
 
 
Consolidated ROA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit after tax
 
$
2,035
 
 
 
 
$
1,099
 
 
 
 
$
798
 
 
 
 
 
 
Total assets
 
$
43,091
 
 
 
 
$
36,465
 
 
 
 
$
32,851
 
 
 
 
$
30,657
Average total assets
 
 
 
 
$
39,778
 
 
 
 
$
34,658
 
 
 
 
$
31,754
 
 
 
 
Consolidated ROA
 
 
5.1%
 
 
 
 
 
3.2%
 
 
 
 
 
2.5%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated ROIC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating profit after taxes
 
$
2,054
 
 
 
 
$
1,253
 
 
 
 
$
946
 
 
 
 
 
 
Total invested capital
 
$
30,992
 
 
 
 
$
25,894
 
 
 
 
$
23,155
 
 
 
 
$
22,213
Average invested capital
 
 
 
 
$
28,443
 
 
 
 
$
24,525
 
 
 
 
$
22,684
 
 
 
 
Consolidated ROIC
 
 
7.2%
 
 
 
 
 
5.1%
 
 
 
 
 
4.2%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Machinery & Engines ROA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
M&E Profit after tax
 
$
2,035
 
 
 
 
$
1,099
 
 
 
 
$
798
 
 
 
 
 
 
M&E Total assets
 
$
22,265
 
 
 
 
$
19,210
 
 
 
 
$
18,093
 
 
 
 
$
17,275
M&E Average total assets
 
 
 
 
$
20,738
 
 
 
 
$
18,652
 
 
 
 
$
17,684
 
 
 
 
M&E ROA
 
 
9.8%
 
 
 
 
 
5.9%
 
 
 
 
 
4.5%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Machinery & Engines ROIC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
M&E Net operating profit after taxes
 
$
2,198
 
 
 
 
$
1,342
 
 
 
 
$
1,009
 
 
 
 
 
 
M&E Total invested capital
 
$
11,263
 
 
 
 
$
9,549
 
 
 
 
$
9,197
 
 
 
 
$
9,395
M&E Average invested capital
 
 
 
 
$
10,406
 
 
 
 
$
9,373
 
 
 
 
$
9,296
 
 
 
 
M&E ROIC
 
 
21.1%
 
 
 
 
 
14.3%
 
 
 
 
 
10.9%
 
 
 
 
 
 
 
 
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