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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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FORM
8-K
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Current
Report
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Pursuant
to
Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date
of
Report (Date of earliest event reported):
June
14, 2006
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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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1-768
(Commission
File Number)
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37-0602744
(IRS
Employer
Identification 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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Former
name
or former address, if changed since last report: N/A
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the
following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
230.425)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
8.01.
Other Events.
The
following is a
prepared statement given by Chairman James W. Owens at the 2006 Annual
Stockholders' meeting held June 14, 2006. The furnishing of these materials
is
not intended to constitute a representation that such furnishing is required
by
Regulation FD or that the materials include material investor information that
is not otherwise publicly available. In addition, the Registrant does not assume
any obligation to update such information in the future.
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2006
Annual Meeting
of Stockholders
With
the conclusion
of the business meeting portion of the day’s schedule, I’d like once again to
welcome you to Caterpillar’s 2006 Annual Meeting of Stockholders. I appreciate
your interest and want to thank you for making the decision to invest in our
company.
Before
I begin this
afternoon’s presentation, let me call your attention to this safe harbor
statement and remind you that much of what we’ll discuss today is
forward-looking.
Let’s
start with a
brief look back at 2005 — certainly an exciting year of growth and profitability
for Caterpillar. We continued to achieve positive financial results and
attractive returns for our stockholders in an environment conducive to industry
growth and higher sales.
At
the same time,
we also introduced and began executing a new enterprise strategy — the first in
a series of three five-year strategic plans that will lead us toward our Vision
2020. I’ll talk more about that strategy and Our
Values in
Action
in a few
minutes.
First,
let’s review
our financial results. You can see that 2005 was our second consecutive record
year for both sales and profits. Our sales and revenues were up 20 percent
over
2004, topping $36 billion. Earnings of $2.85 billion were up 40 percent and
reached $4.04 per share.
Turning
to our
outlook, prospects for continued strong results are promising. In the outlook
included in our first quarter 2006 earnings release, we projected sales and
revenues of about $40 billion for 2006. While we’re not updating our corporate
outlook at this time, that would have our company nearly doubling in size in
just three years. And with that earnings announcement — the best first quarter
in company history — we also raised our earnings per share outlook for the year
to a range of $4.85 to $5.20.
Looking
back over
time, you can see that our performance has been on a significant upward trend
since hitting a plateau around $10 billion in sales and revenues in the early
1990s. Between 1990 and 2006, our compound annual growth rate for sales and
revenues is 8.1 percent. For earnings per share, between 1993 and 2006, it’s
15.2 percent.
Certainly,
we have
strong economic winds at our backs. 2004 was the world economy’s best year in
more than two decades. While growth slowed somewhat in 2005, it was still an
excellent year, and we expect about the same in 2006. In the U.S., we’re
predicting GDP growth of 3.2 percent, and growth in other industrial countries
looks set to improve as well. But the star performers are the developing
nations. Most have brought inflation under control; local interest rates are
the
lowest in years, and exports are competitive. Increases in energy and metals
prices and output have provided huge benefits.
China’s
growing
importance is well known. With four years of more than 9 percent growth, it
has
become the world’s largest consumer or producer of many products. But the
developing economy story extends far beyond China. Take India. Its population
is
just short of China’s, and it is growing rapidly too — completing three years of
more than 7 percent annual economic growth. Russia and other countries in the
former Soviet Union are improving their economic policies, and the worldwide
surge in energy and metals prices continues to support growth. Southeast Asia,
Africa and the Middle East, and Latin America are having their best periods
of
growth since the 1970s.
Such
good times
lead some to say a collapse or retrenchment is inevitable. But I believe today’s
successes are the result of solid underlying factors. My optimism rests on
three
primary factors:
One,
well into the
third year of expansion, inflation is not a significant concern. Core inflation
has been remarkably low in most industrial countries for a decade. And the
longest surge in commodity prices in almost 30 years hasn’t created a problem
because wage increases, a key inflation driver, are offset by productivity
gains.
Two,
interest rates
reflect the low inflation environment, tumbling to their lowest levels in
decades. Even with recent increases, rates remain well below what they were
at
this stage of the last business cycle. Prolonged periods of low interest rates
have historically meant faster economic growth — a big positive for our
business.
And
three, with
incomes and corporate profits rising, the world can afford to invest in
infrastructure and commercial and industrial capacity. In the 1980s and 90s,
inflation and real interest rates were high, leading to several extended
downturns. To cope, businesses and governments underinvested in construction,
and that’s coming back to haunt us now. Traffic jams create pollution and waste
fuel. Port crowding ties up ships and forces shippers to use longer alternate
routes. Many commodity-producing countries are having trouble moving goods
due
to insufficient rail, road, and port capacity. Our growing world economy can
no
longer tolerate the costs of inadequate infrastructure.
I’m
pleased to see
corrective action is beginning to take place. Passage of new highway legislation
in the U.S. last year will encourage investment in our road network.
A
good portion of
the increased investment in global mining will go to upgrade supporting
infrastructure. And the huge windfall gains from higher energy and metals prices
in developing countries will also fund infrastructure improvements.
Overall,
we’re
three years into a period of solid growth in many of the industries we serve
—
global mining, global energy, and infrastructure development in particular.
And
the future looks very strong in each industry.
Caterpillar’s
growth continues to translate into positive results for all our stakeholders.
Our record profits and strong cash flow have enabled us to reinvest in the
business, improve funding of employee benefit plans, and reward our
stockholders.
In
2005, we focused
on growing the business by reinvesting $1.2 billion in capital expenditures.
We
recently announced the acquisition of Progress Rail, an aftermarket supplier
to
the rail industry and a great fit for Caterpillar.
For
our employees,
we improved the already well-funded status of our pension plans by contributing
$912 million in 2005.
And
for
stockholders, we increased the dividend 22 percent in 2005. And this morning,
the board approved an increase in the quarterly dividend to 30 cents — a 20
percent increase. You can see our dividend history here — and I am proud to say
that during this period our dividend has increased over 200 percent. Our stock
has also split twice in the last 10 years, in July 1997 and July
2005.
Positioning
Caterpillar for strong future growth is our new enterprise strategy — the first
in a series of three five-year plans leading to our Vision 2020. It was
introduced in October 2005 and includes specific goals in the areas of people,
product and process performance, and profitable growth.
While
not a
dramatic shift in direction, the new strategy does set aggressive targets,
particularly in the areas of employee safety, product quality, and customer
order-to-deliver capability.
It
also puts a
strong focus on alignment and execution across all 30 of our business units.
Our
22 autonomous profit centers, supported by eight service center units, are
all
driving for solid leadership positions in their respective markets and product
lines. This organizational structure encourages the entrepreneurial zeal that
will ensure our continued success in the global marketplace.
Based
on our
leadership team’s and employees’ enthusiastic response to the roll-out of our
new strategy, I am confident in our ability to deliver on our financial goals
if
the projected market environment materializes.
At
the foundation
of our strategy is Our
Values in
Action,
the update to our
Worldwide Code of Conduct. The Code was first published in 1974, and this
updated version now clearly defines the values and behaviors that have made
us
successful for 80 years — and will drive our success in the future.
Integrity,
excellence, teamwork, and commitment are an expression of our heritage and
culture. They set global standards and expectations for our behavior — the way
we treat one another and everyone with whom we come in contact in our
business.
These
values are
what you can expect from all of us at Caterpillar — starting at the highest
levels, with our board and officers. I am proud to report that Caterpillar
is
recognized as a leader in corporate governance. According to Institutional
Shareholder Services’ ratings, we consistently outperform other companies in
both the capital goods industry and the S&P 500 index. In February, we were
named one of Institutional Investor magazine’s “most shareholder-friendly
companies.”
As
you know, with
the exception of myself as chairman and CEO, our board is composed entirely
of
independent directors, and earlier this year we designated a “presiding
director.” We also named a Chief Ethics & Compliance Officer and a Director
of Sustainability. Our commitment to honest, ethical, sustainable performance
is
strong.
So
is our
commitment to sustainable development. This year, for the first time, we
published a sustainability report in conjunction with our annual report. Its
publication was an important milestone for several reasons:
First,
it clearly
defines what sustainable development means to Caterpillar, serving as an
important tool for educating employees, dealers, customers, suppliers, and
others about why sustainable development is a key strategic issue.
Enabling
development is at the heart of our business, and we are excited by the business
opportunities that supporting sustainable
development
presents. We are implementing a comprehensive, coherent strategy to leverage
core strengths, technologies, capabilities, and experiences to pursue
sustainable development as a driver of profitable growth. Remanufacturing and
clean diesel technology are just two examples.
Second,
the report
publicly documents our progress and accomplishments in a number of areas —
including customer education, product emissions, remanufacturing, environmental
impact, strategic philanthropy, and more.
Some
have
criticized us for not doing more in terms of sustainable development, and many
of these criticisms have come because we haven’t done a thorough job of telling
our story. This report goes a long way toward addressing that
issue.
Third,
the report
honestly describes the challenges we face and lays out some bold goals for
the
future, including specific metrics and targets for 2010. Never before have
we
been so open about our challenges and future plans. Doing so will help us gain
credibility externally and inspire us internally to achieve the goals we have
identified.
Fourth,
it has helped us
establish relationships with key external stakeholders. Fifteen advisors from
academia, business, government, and non-governmental organizations provided
input and guidance throughout the development of the report and challenged
us to
think critically about the topics and content we included. External stakeholders
provide a unique perspective and valuable insights that can help us as we learn
to pursue development in new and more sustainable ways.
If
you haven’t had
a chance to look at our sustainability report, we have copies available. I
encourage you to read it and learn how Caterpillar — together with our dealers,
customers, and other stakeholders — can make the intelligent choices that will
drive the growth of our business and help create a more sustainable
world.
With
our new
strategy and values in place, I am increasingly confident in Caterpillar’s
future.
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Overall,
our
product line remains the global leader, number one or two in virtually
every market we serve.
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Our
brands
are strong and recognized worldwide as the highest in customer
value.
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Our
global
manufacturing footprint is well established, with a highly integrated
supply chain.
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Our
distribution, sales, rental, and product support capabilities are
stronger
than any competitor, delivering a terrific value proposition to our
demanding customer base.
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Our
service
businesses are growing at a record
pace.
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Our
investments in product technology are
increasing.
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And
Cat
employees are the best and most experienced in the
business.
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That’s
why I’m so
excited about our company’s future. We have embarked on the “good to great”
journey. We are committed to taking what is a very good company today and making
it better, because we know what all our stakeholders expect — and deserve — is
an even better Caterpillar tomorrow.
With
that, I’d like
to say thank you once again for your interest in Caterpillar and for being
here
with us today. We’ll now begin the question-and-answer period.
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Pursuant
to
the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
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CATERPILLAR
INC.
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June
14,
2006
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By:
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/s/James
B.
Buda
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James
B.
Buda
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Vice
President
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