The market was caught offguard by yesterday's dramatic raid of three Caterpillar offices, including its Peoria Headquarters, which reportedly included agents from the IRS, FDIC and Commerce Department, and sent the stock tumbling by the most in over half a year. The raid took place just one week after former CAT CEO Doug Oberhelman met with Donald Trump, which prompted the president to say that he "loves" Caterpillar.

While the catalyst behind the raid still remains unclear, we reminded readers yesterday that this was not the first time CAT has gotten in trouble with the authorities: back in 2014 CAT and PWC got in trouble before Congress for evading taxes using offshore locations when this infamous line came up: "What the heck, we’ll all be retired when this audit comes up on audit."

And while we await more details, overnight the WSJ reported that Caterpillar's new CEO apologized to the firm’s employees and pledged to continue cooperating with federal authorities following the raid.

“We were surprised by today’s actions primarily because we have been so cooperative with the authorities in this investigation,” CEO Jim Umpleby said in an internal memo to employees, which was reviewed by The Wall Street Journal. “We will continue to work toward a resolution of these matters, just as we did today.”

Umpleby, who became CEO at the start of the year, apologized to the heavy-machinery giant’s employees, who witnessed agents executing a search warrant at the company’s facilities. “I’m sorry that we had to experience this today,” he said. Mr. Umpleby called Caterpillar an “honorable company.” He added that “we have acted in good faith and as a good corporate citizen.”

Umpleby said the company believes the search warrant is connected in part to a previous matter related to the company’s Switzerland-based subsidiary that has been under review for more than three years. “Because of the broad nature of today’s warrant, we don’t have enough information at this time to provide a full understanding of the authorities’ intent,” Mr. Umpleby wrote in an internal memo to employees that was reviewed by the Journal.

The U.S. attorney’s spokeswoman declined to comment on what investigators were seeking. She said agents from the Internal Revenue Service, the Federal Deposit Insurance Corp.’s inspector general and the U.S. Department of Commerce took part in the raids and that no arrests were made. People familiar with the matter said officials searched company headquarters in Peoria, Ill., an office building in Morton, Ill., and a data center in East Peoria, Ill.

As the WSJ notes, the investigation comes at a difficult time for Caterpillar. The company recently reported its fourth-straight year of declining revenue amid a slump in commodity prices and construction. Jim Umpleby succeeded Doug Oberhelman as chief executive at the beginning of this year, and Mr. Oberhelman is slated to retire as chairman at the end of the month. Since President Donald Trump’s election, Mr. Oberhelman has become an influential voice for the interest of major U.S. companies. He has praised plans to cut corporate taxes. He is also on a panel of executives and labor leaders advising Mr. Trump on how to boost American manufacturing.

Caterpillar has also pushed back against IRS proposals related to its Switzerland subsidiary. In its most recent annual securities filing, Caterpillar said it was “vigorously contesting” the agency’s proposed taxes and penalties of about $2 billion. “We believe that the relevant transactions complied with applicable tax laws and did not violate judicial doctrines,” the company said in the filing.

The Securities and Exchange Commission also began investigating Caterpillar’s Swiss subsidiary in 2014. A U.S. Senate subcommittee also described the unit as part of a strategy by Caterpillar to reduce its U.S. tax exposure on sales of replacement parts outside of the U.S.

Caterpillar said the SEC notified the company in late 2015 that it had concluded its investigation without recommending a penalty. A 2014 report by the Senate Permanent Subcommittee on Investigations found that Caterpillar’s U.S. operations effectively removed itself from the business of selling replacement parts to independent dealers overseas by assigning the profit to the Swiss subsidiary.

The committee found that Caterpillar’s U.S. entity continued to manage the parts business, though, while lowering the company’s U.S. taxes on the parts’ profit. Parts sales are important profit generators for Caterpillar and other companies that make expensive, long-lasting machinery. Compared with small margins on some of those equipment sales, analysts estimate some of Caterpillar’s parts sales generate margins as high as 30%. Caterpillar’s global dealer network allows the company to keep ringing up sales even as machinery moves from owners in one country to another.