You want to compare Caterpillars operations for fiscal 2007 to those of an international competitor, CNH Global, headquartered in the Netherlands. (CNH Global financial statements follow the Caterpillar financial statements at the end of the case.) In particular you want to compare a number of inventory-related metrics. However, the two companies do not use the same inventory costing methods: Caterpillar uses LIFO for a large portion of its inventory whereas CNH Global uses FIFO to cost all of its inventory. International financial reporting standards (IFRS) do not permit companies to use the LIFO method. To compare the two companies, you first must restate Caterpillars relevant balance sheet and income statement numbers from LIFO to FIFO. To do this, we assume that Caterpillar had instead always used the FIFO method of inventory costing. Use the table below to aggregate the data you need to covert LIFO to FIFO for Caterpillar. For these calculations, assume that the marginal tax rate for Caterpillar is 35%

Caterpillar, Inc.	2007	2006	2005
Sales	41,962	38,869	34,006
LIFO Cost of gods sold (COGS)	32,626	29,549	26,558
LIFO Net Income	3,541	3,537	2,854
LIFO Inventory from balance sheet	7,204	6,351	5,224
LIFO Reserve from financial statement notes	2,617?	2,403?	2,345?
Total Assets from the balance sheet	56,132	51,449	47,553

Calculations to convert LIFO to FIFO	2007	2006	2005
FIFO Inventory = LIFO Inventory + LIFO Reserve
FIFO Assets = LIFO Assets + LIFO Reserve
Increase in LIFO Reserve during the year
FIFO COGS = LIFO COGS Increase in LIFO Reserve
After-tax effect of LIFO = (1- Marginal tax rate) * Increase in LIFO Reserve
FIFO Net Income = LIFO Net income + After-tax effect of LIFO method

Complete the table below using information from the financial statements and from the table you completed above. Comment on the results comparing CNH Global with Caterpillars As Reported and As if FIFO income statement and balance sheet information.

Year End December 31, 2007	Caterpillar		CNH Global
	As Reported	As if FIFO	As Reported
Common-size Cost of goods sold1
Net Income
Growth in Net Income
Common-size Net Income
Total assets
Inventory
Common-size Inventory2

STATEMENT 1 Caterpillar Inc Consolidated Results of Operations for the Years Ended December 31 (Dollars in millions except per share data) 2007 2006 2005 Sales and revenues: Sales of Machinery and Engines Revenues of Financial $41,962 $38809 S34,006 2,996 2,648 2,333 44,958 41,517 36,339 Total sales and revenues Operating costs: Cast of goods sold Selling, general and administrative expenseS Resaarch and davelopment expenses Interest expense of Financial Products Other operating expenses 32.626 29.549 26.559 3,821 3,706 3190 1,404 1,347 1,084 1,132 1,023 76 955 40,037 365 32 555 1,054 971 Total operating costs Operating profit ,921 4,92 3,784 Interest expense excluding Financial Products. Other income (expense) 288 274 260 320 214 37 Consolidated profit before taxes 4,953 486 3,901 1,485 4051,120 Provision for income taxes Profit of consolidated companies Equity in profit loss) of unconsolidabed atfiliaed companies.... 73 81 73 Profit 3,541 353 2854 Profit per common share Profit per common share diluted" Weighted-average common shares outstanding (millions) $ 5.55 537 S 4.21 $ 5.37 $ 517 S 4.04 -Basic -Diluted" 659.5 63 705.8 s 1.38 $1.15 98 Cash dividends declared per common share o Diluted by assumed xercise of stock-based compensation awards, using the treasury stock mechod. STATEMENT 1 Caterpillar Inc Consolidated Results of Operations for the Years Ended December 31 (Dollars in millions except per share data) 2007 2006 2005 Sales and revenues: Sales of Machinery and Engines Revenues of Financial $41,962 $38809 S34,006 2,996 2,648 2,333 44,958 41,517 36,339 Total sales and revenues Operating costs: Cast of goods sold Selling, general and administrative expenseS Resaarch and davelopment expenses Interest expense of Financial Products Other operating expenses 32.626 29.549 26.559 3,821 3,706 3190 1,404 1,347 1,084 1,132 1,023 76 955 40,037 365 32 555 1,054 971 Total operating costs Operating profit ,921 4,92 3,784 Interest expense excluding Financial Products. Other income (expense) 288 274 260 320 214 37 Consolidated profit before taxes 4,953 486 3,901 1,485 4051,120 Provision for income taxes Profit of consolidated companies Equity in profit loss) of unconsolidabed atfiliaed companies.... 73 81 73 Profit 3,541 353 2854 Profit per common share Profit per common share diluted" Weighted-average common shares outstanding (millions) $ 5.55 537 S 4.21 $ 5.37 $ 517 S 4.04 -Basic -Diluted" 659.5 63 705.8 s 1.38 $1.15 98 Cash dividends declared per common share o Diluted by assumed xercise of stock-based compensation awards, using the treasury stock mechod