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MAKING PROGRESS POSSIBLE
Caterpillar
Dave Burritt Chief Financial Officer &Vice President of Global Finance & Strategic Support
JPMorgan Basics and Industrials Conference
2SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
Certain statements contained in this presentation are forward-looking and involve risks, assumptions and uncertainties that cause actual results of Caterpillar to be materially different from those projected or implied in the forward looking statements. In this context, words such as "will", “believes,” “expects,” “estimates,”“anticipates,” “will be,” “should” and similar words or expressions identify forward-looking statements made on behalf of Caterpillar. It is important to note that actual results of Caterpillar may differ materially from those described or implied in such forward-looking statements based on a number of factors and uncertainties, including, but not limited to, changes in economic conditions; currency exchange or interest rates; political stability; market acceptance of Caterpillar's products and services; significant changes in the competitive environment; changes in law, regulations and tax rates; and other general economic, business and financing conditions and factors.
A more complete summary of risks and uncertainties is described in more detail in Caterpillar's Form 10Q filed with the Securities and Exchange Commission on May 2, 2008. Caterpillar undertakes no obligation to update these forward-looking statements.
3
VISION 2020
STRATEGIC GOALSPeople
CRITICAL SUCCESS FACTORSEMERGING
PEOPLE QUALITY PRODUCT VELOCITY DISTRIBUTION MARKETS Trough
Our Values in Action – INTEGRITY, EXCELLENCE, TEAMWORK, COMMITMENTWORLDWIDE CODE OF CONDUCT
ENTERPRISE STRATEGIC AREAS OF IMPROVEMENT
STRATEGIC PROFILE
Performance Product & Process
New Product Introduction
Order-to-Delivery
Encoding 6 Sigma
Sustainable Development
Growth Beyond Core
Profitable Growth
Economic uncertainty, particularly in the US, is making the short-term
environment a challenge
Strategy UnchangedVision 2020
But, there’s big opportunity for Caterpillar over the next decade,
particularly related to mining, energy, and infrastructure
4
What I’ll Cover Today
Overview of Caterpillar and recent history
Brief review of 2008
A broader look forward
5
5 Years of Growth
$20
$23
$30
$36
$41$43
$1.15
$1.56
$2.88
$4.04
$5.17$5.37
2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007
Sales and Revenues Earnings Per Share$45.0$41.5
$36.3
$30.3
36% EPS CAGR 2002 to 2007
$22.8$20.2
6
Backhoe Loaders Skid Steer Loaders Multi Terrain Loaders Integrated Tool Carriers Wheel Loaders Excavators Wheel Excavators Track-Type TractorsTrack Loaders Pipelayers Landfill Compactors Soil CompactorsWheel Dozers Motor Graders Wheel Tractor Scrapers Articulated TrucksOff Highway Trucks Underground Trucks Underground Loaders Track SkiddersWheel Skidders Feller Bunchers Vibratory Compactors Asphalt CompactorsAsphalt Pavers Pneumatic Compactors Cold Planers Rotary Mixers
Product Range
About 300 Models in a broad range of product categories …
Machines
7From a mini-excavator that fits in
the back of a pick-up to … big ironMachines
Operator
8
35-70% lower undercarriage operating cost
50% better steering performance
Up to 20% lessfuel consumed per hour
60% fewer moving partsin the electric drive train
35% more visibility
50% lessoperator noise
Less fluids used
New D7E at CONEXPO … Innovative From the Inside Out
9
Nonresidential
EnergyMining & Quarrying
Infrastructure Residential Industrial
ForestryWaste
End markets Machines
10
Product Range Broadest Range of Engines in Our
Industry
From 100 KW to 22,000 KW
11
… and everything in between
Model 3003
Model 3616
Engines
12
On-HighwayTruck
Marine Industrial
Cat Machines PetroleumElectric Power
End markets Engines
13
Geographic Diversity
Caterpillar Dealers• 181 Cat dealers• 3,000+ branches & rental stores• Over 120,000 employees
The Global Leader
2007 1997
Geographic Mix - Sales and RevenuesCaterpillar• Broadest footprint in the industry• About 101,000 Employees• About 300 Facilities • In about 50 countries
OutsideNorth
America43%
NorthAmerica
57%
OutsideNorth
America56%
NorthAmerica
44%
14
Caterpillar Overview
Sales & Revenues$45B in 2007 up 8% from 2006
Sales and Costs
7%
30%
63%
MachinesUp 9%
EnginesUp 6%
Financial ProductsUp 13%
4% 9%
31%56%
Material Costs
Factory Labor &
Overhead
SG & AR&D
Machinery & EnginesOperating Costs $37B in 2007
15
Capital Expenditures Research & Development
03 04 05 06 07
$682M$926M
$1.2B
$1.6B $1.7B
08* 03 04 05 06 07
$669M$928M
$1.1B$1.3B $1.4B
08*
Up 15-20%
* Outlook
Investing in the future Increase Capacity and Product Development
$2.3B
3.2% 3.3% 3.5% 4.1% 4.1% 3.2% 3.2%3.3% 3.3%3.3%
% of Sales % of Sales
4.7% 3.4%
16
Sales and Revenues Synergistic growth & improved earnings stability
Products 64%
Integrated Services 36%
$29 Billion
$16 BillionSolar Customer Services
Genuine Cat Replacement Parts
2007 Sales and Revenues$45 Billion
17
1st Quarter 2008 Results
1st Q 1st Q2007 2008
Sales and Revenues $10.0B $11.8B $1.8B 18%
Earnings Per Share $1.26 $1.45 $0.22 18%
Change
Sales & Revenues and EPS up 18% despite a very
weak US economy
18
1st Qtr Sales & Revenue
Percentage Increase by Region
Growth is largely outside North America
Sales and Revenues were up $1.8 Billion …. or 18% vs. the 1st Quarter of 2007
Increase by – Price, Volume, Currency, Financial Products
Volume$1.1B
Currency Translation
$.3B
Price Realization
$.3B
Financial Products
$.1B
37%
30%
24%
4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
AsiaPacific
EAME LatinAmerica
NorthAmerica
19
Maintain Financial Strength
“A” Credit Rating
Priorities for Use of Cash
Cash From OperationsCash From Operations
Fund GrowthFund Growth
Pension/Benefit PlansPension/Benefit Plans
Dividend GrowthDividend Growth
Stock RepurchaseStock Repurchase
Well Established Priorities
20
Cash FlowMachinery & Engines Operating Cash Flow
How we’ve spent increasing cash flow
2005 2006 2007Actual Actual Actual
Operating Cash Flow $ 2.8 $ 4.6 $ 5.4
Key Uses of Cash- Growth (CAPEX & Acquisitions) $ 1.2 $ 2.1 $ 1.9- Dividends $ 0.6 $ 0.7 $ 0.8- Stock Repurchase $ 1.7 $ 3.2 $ 2.4
Billions of Dollars
21
What I’ll Cover Today
Overview of Caterpillar and recent history
Brief review of 2008
A broader look forward
22
50
100
150
200
250
300
350
2002 2003 2004 2005 2006 2007 2008
Machine Industry Unit Index 2002 = 100
North America
Outside North America
Caterpillar Estimate
Worldwide Machine Industry Sales patterns diverging
Sales patterns diverging
-11%
-10% to -15%
28%
18%
23
North America+/- 2% EAME
Up 7 to 12%
Worldwide up 5 to 10%
Latin AmericaUp 15 to 20%
Asia PacificUp 15 to 20%
By Geographic Region2008 Sales and Revenues
24We expect another
record year despite U.S. weakness
2008 Outlook
2007 2008Actual Outlook
Sales and Revenues $45 B Up 5 - 10%
Earnings Per Share $5.37 Up 5 - 15%
25
What I’ll Cover Today
Overview of Caterpillar and recent history
Brief review of 2008
A broader look forward
26
World Economic Growth
2.6
3.1
1.5
3.2
6.6
1.3
3.0 2.92.6
2.8
6.4
1.6
3.43.2
2.8
3.6
6.1
2.5
World North America EAME Latin America Asia Pacific Japan
1990 - 1999 2000 - 2008 2009 - 2017
Strong World Economic Growth
Continues
27
Key Longer-term Trends Long-term Positive for Caterpillar
We expect continued strong growth in worldwide infrastructure
spending over the next decade
Significant growth in the developing world … and they have the money!
Significant need to improve and rebuild infrastructure in the developed world … after years of under investment
2828
Factors Driving Construction
Developed Economies• Old, outdated buildings• Insufficient infrastructure• Modest economic growth
Developing Economies• Large, rapidly growing populations• Inadequate infrastructure• Rapid economic growth
We expect continued good growth in construction
Years of construction
underinvestment
2929
Mining & Energy
• Growing world demand• Prolonged underinvestment• Tight inventories & spare capacity
A Very Positive Future
3030
Commodity Prices Are Favorable Generally positive for investment
Dollars per Market Unit
66
50
72
47
117
92
5041
Oil Coal
6.74
3.05
6.98
3.23
6.50
1.30
3.80
9.60
Natural Gas Copper
Source: Haver Analytics, Business Economics
Estimated Threshold for investment
2006 Average Price2007 Average Price2008 Forecast Average Price
3131
Worldwide Mining Fleets
Source: Parker Bay.
65% 69%
50%56%54% 57%
Coal Mines Metals Mines
Crawlers Trucks Wheel Loaders
1,160
7,838907
657
10,254 1,075
% of Machines More Than 10 Years Old (2007)
Replacement opportunity
Units
32
Our goals for 2010 Sales and Profit
2010 Sales & Revenues
EPS Growth
$50 billion “plus”
In a plausible range of $45 to $60 billion
EPS CAGR of 15% to 20% from a 2005 base
That means EPS in a range of about $8 to $10 per share
Last Year Today
Approaching$60 billion
No Change
33
2.6
3.1
1.5
3.2
6.6
1.3
3.0 2.92.6
2.8
6.4
1.6
3.43.2
2.8
3.6
6.1
2.5
World North America EAME Latin America Asia Pacific Japan
1990 - 1999 2000 - 2008 2009 - 2017
World Economic Growth
Global infrastructure needs
Broadest product line
Global manufacturing footprintUnparalleled global dealer network
On a foundation of a large population of machines & engines
Our customers “Make Progress Possible”
No company is better positioned than Caterpillar
Questions?