Caterpillar Inc. (CAT)

Amortization

Amortization of purchased finite-lived intangibles is computed principally using the straight-line method, generally not to exceed a period of 20 years.

Goodwill

For acquisitions accounted for as a business combination, goodwill represents the excess of the cost over the fair value of the net assets acquired. Caterpillar is required to test goodwill for impairment, at the reporting unit level, annually and when events or circumstances make it more likely than not that an impairment may have occurred. A reporting unit is an operating segment or one level below an operating segment (referred to as a component) to which goodwill is assigned when initially recorded. Caterpillar assigns goodwill to reporting units based on the integration plans and the expected synergies resulting from the acquisition. Because Caterpillar is a highly integrated company, the businesses Caterpillar acquires are sometimes combined with or integrated into existing reporting units. When changes occur in the composition of Caterpillar’s operating segments or reporting units, goodwill is reassigned to the affected reporting units based on their relative fair values.

Caterpillar performs the annual goodwill impairment test as of October 1 and monitors for interim triggering events on an ongoing basis. Goodwill is reviewed for impairment utilizing either a qualitative assessment or a quantitative goodwill impairment test. If Caterpillar chooses to perform a qualitative assessment and determines the fair value more likely than not exceeds the carrying value, no further evaluation is necessary. For reporting units where Caterpillar performs the quantitative goodwill impairment test, Caterpillar compares the fair value of each reporting unit, which Caterpillar primarily determines using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. Beginning in 2017, if the carrying value is higher than the fair value, the difference would be recognized as an impairment loss. Prior to 2017, a two-step process was used. For reporting units where Caterpillar performed the two-step process, the first step required Caterpillar to compare the fair value of each reporting unit, which Caterpillar primarily determined using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeded its carrying value, the goodwill was not considered impaired. If the carrying value was higher than the fair value, there was an indication that an impairment may have existed and the second step was required. In step two, the implied fair value of goodwill was calculated as the excess of the fair value of a reporting unit over the fair values assigned to its assets and liabilities. If the implied fair value of goodwill was less than the carrying value of the reporting unit’s goodwill, the difference was recognized as an impairment loss.

Source: 10-K (filing date: 2019-02-14).

Caterpillar Inc., balance sheet: goodwill and intangible assets

US$ in millions

		Dec 31, 2018		Dec 31, 2017		Dec 31, 2016		Dec 31, 2015		Dec 31, 2014
	Customer relationships
	Intellectual property
	Other
	Intangible assets, gross carrying amount
	Accumulated amortization
	Intangible assets, net
	Goodwill
	Intangible assets and goodwill

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

Caterpillar Inc., adjustments to financial statements

US$ in millions

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Adjustment to Total Assets
	Total assets (as reported)
	Less: Goodwill
	Total assets (adjusted)
	Adjustment to Equity Attributable To Common Stockholders
	Equity attributable to common stockholders (as reported)
	Less: Goodwill
	Equity attributable to common stockholders (adjusted)
	Adjustment to Profit (loss) Attributable To Common Stockholders
	Profit (loss) attributable to common stockholders (as reported)
	Add: Goodwill impairment charge
	Profit (loss) attributable to common stockholders (adjusted)

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

Caterpillar Inc., Financial Data: Reported vs. Adjusted

Caterpillar Inc., adjusted financial ratios

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Net Profit Margin
	Reported net profit margin
	Adjusted net profit margin
	Total Asset Turnover
	Reported total asset turnover
	Adjusted total asset turnover
	Financial Leverage
	Reported financial leverage
	Adjusted financial leverage
	Return on Equity (ROE)
	Reported ROE
	Adjusted ROE
	Return on Assets (ROA)
	Reported ROA
	Adjusted ROA

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

Caterpillar Inc., Financial Ratios: Reported vs. Adjusted

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Profit (loss) attributable to common stockholders
	Sales of Machinery, Energy & Transportation
	Profitability Ratio
	Net profit margin1
	Adjusted for Goodwill
	Selected Financial Data (US$ in millions)
	Adjusted profit (loss) attributable to common stockholders
	Sales of Machinery, Energy & Transportation
	Profitability Ratio
	Adjusted net profit margin2

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Sales of Machinery, Energy & Transportation
	Total assets
	Activity Ratio
	Total asset turnover1
	Adjusted for Goodwill
	Selected Financial Data (US$ in millions)
	Sales of Machinery, Energy & Transportation
	Adjusted total assets
	Activity Ratio
	Adjusted total asset turnover2

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Total assets
	Equity attributable to common stockholders
	Solvency Ratio
	Financial leverage1
	Adjusted for Goodwill
	Selected Financial Data (US$ in millions)
	Adjusted total assets
	Adjusted equity attributable to common stockholders
	Solvency Ratio
	Adjusted financial leverage2

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Profit (loss) attributable to common stockholders
	Equity attributable to common stockholders
	Profitability Ratio
	ROE1
	Adjusted for Goodwill
	Selected Financial Data (US$ in millions)
	Adjusted profit (loss) attributable to common stockholders
	Adjusted equity attributable to common stockholders
	Profitability Ratio
	Adjusted ROE2

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Profit (loss) attributable to common stockholders
	Total assets
	Profitability Ratio
	ROA1
	Adjusted for Goodwill
	Selected Financial Data (US$ in millions)
	Adjusted profit (loss) attributable to common stockholders
	Adjusted total assets
	Profitability Ratio
	Adjusted ROA2

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).