Cat Financial Announces Second-Quarter 2011 Results

Cat Financial reported second-quarter revenues of $675 million, an increase of $27 million, or 4 percent, compared with the second quarter of 2010. Second-quarter profit after tax was $107 million, a $25 million, or 30 percent, increase from the second quarter of 2010.

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The increase in revenues was principally due to a $28 million favorable impact from higher earning assets (finance receivables and operating leases at constant interest rates) and a favorable impact from miscellaneous net revenue items, partially offset by a $21 million unfavorable impact from lower interest rates on new and existing finance receivables.

Profit before income taxes was $152 million for the second quarter of 2011, compared to $95 million for the second quarter of 2010. The increase was principally due to a $21 million favorable impact from higher net yield on average earning assets, a $20 million decrease in the provision expense and a favorable impact from miscellaneous net revenue items. These increases were partially offset by an $18 million increase in general, operating and administrative expense.

The provision for income taxes in the second quarter of 2011 reflects an estimated annual effective tax rate of 26 percent compared to 22 percent in the second quarter of 2010. The 2010 second-quarter tax rate was reduced by a benefit of $10 million related to prior years. The 2011 estimated annual tax rate is expected to be less than the U.S. corporate tax rate of 35 percent primarily due to profits in tax jurisdictions with lower tax rates.
New retail financing was $2.9 billion, an increase of $451 million, or 18 percent, from the second quarter of 2010. The increase was primarily related to improvements in our Asia-Pacific and Mining and Latin America operating segments.

At the end of the second quarter of 2011, past dues were 3.73 percent, a decrease from 3.94 percent at the end of the first quarter of 2011, 3.87 percent at the end of 2010 and 5.33 percent at the end of the second quarter of 2010. The decrease in past dues reflects the continued improvement in the global economy. Write-offs, net of recoveries, were $29 million for the second quarter of 2011, down from $52 million in the second quarter of 2010.
As of June 30, 2011, Cat Financial's allowance for credit losses totaled $382 million or 1.52 percent of net finance receivables, compared with $363 million or 1.57 percent of net finance receivables at year-end 2010. The allowance for credit losses as of June 30, 2010, was $383 million, which was 1.70 percent of net finance receivables.

“We continue to see improvements in Cat Financial’s global business. Past dues and quarterly net write-offs were at their lowest levels since 2008 and our retail new business increased for the fifth consecutive quarter,” said Kent Adams, Cat Financial president and vice president of Caterpillar Inc. “Our focus continues to be in three key areas: serving our Caterpillar customers and dealers, managing our portfolio and ensuring we have ample liquidity. As a result, Cat Financial is better positioned than ever to support Caterpillar customers around the world.”

For nearly 30 years, Cat Financial, a wholly-owned subsidiary of Caterpillar Inc., has been providing financial service excellence to Cat customers. The company offers a wide range of financing alternatives to customers and Cat dealers for Cat machinery and engines, Solar® gas turbines and other equipment and marine vessels. Cat Financial has offices and subsidiaries located throughout the Americas, Asia, Australia and Europe, with headquarters in Nashville, Tennessee.