caterpillar - Caterpillar Corporation Caterpillar, Inc was...

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Caterpillar Corporation Caterpillar, Inc was founded in 1925. Headquartered in Peoria, Illinois, the company manufactures construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company operates in three primary lines of business: machinery, engines, and financial products. The machinery line of business designs, manufactures, markets, and sells construction, mining, and forestry machinery, such as track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, offhighway trucks, articulated trucks, paving products, telescopic handlers, skid steer loaders, and related parts. It also offers logistics services for other companies. The engines business line designs, manufactures, markets, and sells engines for the company’s machinery; electric power generation systems; on-highway vehicles and locomotives; marine, petroleum, construction, industrial, agricultural, and other applications; and related parts. The financial products line of business includes provision of various financing alternatives to customers and dealers for the company’s machinery and engines, and solar gas turbines, as well as other equipment and marine vessels. It also offers various forms of insurance to customers and dealers to support the purchase and lease of Caterpillar’s equipment; and invests in independent power projects using the company’s power generation equipment and services. Caterpillar markets its products through various distribution centers and dealers worldwide. Your task is to evaluation the possibility of a divestiture of caterpillar’s finance division. You should base your analysis on the Summary Statistics and the excerpts from Caterpillar’s Financial Statements shown on the following pages. Please try to answer the following questions: Show, with a diagram, your recommended method of divesting the division What assets would go with the new company? What liabilities? Estimate the new division’s value.
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STATEMENT 1 Caterpillar Inc. Consolidated Results of Operations for the Years Ended December 31 (Dollars in millions except per share data) A-5 2005 2004 2003 ________ _______ _______ Sales and revenues: Sales of Machinery and Engines. .......................................................................................................... $34,006 $28,336 $21,048 Revenues of Financial Products. ........................................................................................................... 2,333 1,970 1,759 ________ _______ _______ Total sales and revenues. .............................................................................................................. 36,339 30,306 22,807 Operating costs: Cost of goods sold. ......................................................................................................................... 26,558 22,497 16,997 Selling, general and administrative expenses. ............................................................................................ 3,190 2,926 2,322 Research and development expenses. ..................................................................................................... 1,084 928 669 Interest expense of Financial Products . ................................................................................................... 768 524 474 Other operating expenses . ................................................................................................................. 955 747 675 ________ _______ _______ Total operating costs . .................................................................................................................. 32,555 27,622 21,137 ________ _______ _______ Operating profit .............................................................................................................................. 3,784 2,684 1,670 Interest expense excluding Financial Products. ........................................................................................... 260 230 246 Other income (expense) . ................................................................................................................... 377 253 53 ________ _______ _______ Consolidated profit before taxes ......................................................................................................... 3,901 2,707 1,477 Provision for income taxes.
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caterpillar - Caterpillar Corporation Caterpillar, Inc was...

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