Caterpillar Reports Record Sales and Revenues and Profit for 2012; Inventory Reduced $2 Billion in the Fourth Quarter

Mon Jan 28, 2013 7:30am EST

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PEORIA, Ill.,  Jan. 28, 2013  /PRNewswire/ -- Despite economic and political
uncertainty in  the United States, continued economic turmoil in much of  Europe
 and slower growth in  China, Caterpillar Inc. (NYSE: CAT) today announced
record 2012 sales and revenues of  $65.875 billion, an increase of 10 percent
from  $60.138 billion  in 2011. Profit per share of  $8.48  was also an all-time
record, including the impact of the previously announced goodwill impairment
charge of  $0.87  per share related to  Siwei. The 2012 profit per share of 
$8.48  was up 15 percent from  $7.40  in 2011. Profit was  $5.681 billion, an
increase of 15 percent from  $4.928 billion  in 2011.  

Fourth-quarter 2012 sales and revenues were  $16.075 billion, down  $1.168
billion  from  $17.243 billion  in the fourth quarter of 2011. The impact of
changes in dealer new machine inventories lowered sales by about  $1.4 billion 
as dealers reduced inventories about  $600 million  in the fourth quarter of
2012, compared with an increase of about  $800 million  in the fourth quarter of
2011.  

Fourth-quarter 2012 profit was  $697 million  compared with  $1.547 billion  in
the fourth quarter of 2011. Profit was  $1.04  per share in the fourth quarter
of 2012 compared with profit per share of  $2.32  in the fourth quarter of 2011.
Fourth-quarter 2012 profit was negatively impacted by the previously announced
goodwill impairment charge of  $580 million, or  $0.87  per share. Lower sales
and revenues and the cost impact from sharply lower production and the  $2
billion  decline in Caterpillar inventory also had a negative impact on
fourth-quarter profit. Those impacts were partially offset by a  $300 million 
positive impact related to the settlement of prior-year tax returns.

"From an operational standpoint, 2012 was a very successful year with record
sales and profit in a tough economic climate. Considering the weak economy in 
the United States, along with much of  Europe  in recession and  China  slowing,
we had a solid year. Our incremental operating profit pull through was very
good, we made progress adjusting inventory levels, and our quality and safety
indicators continued to improve," said Caterpillar Chairman and Chief Executive
Officer  Doug Oberhelman.  

"I'm extremely pleased with our performance on reducing inventory  $2 billion 
in the fourth quarter. As the world economy began to soften at mid year, we
increased our focus on reducing inventory. Cat dealers also worked to lower
their inventories, and, as a result, reduced their order rates during the second
half of 2012. The result was a substantial reduction in our production levels
and inventory. The reductions had a significantly negative impact on
fourth-quarter sales and profit. The  $2 billion  inventory reduction in the
fourth quarter was a remarkable effort, but we're not done. Reduced production
levels are likely to continue at least through the first quarter of 2013 until
inventories and dealer order rates move back in line with end-user demand,"
Oberhelman added.  

2013 Outlook
The outlook for 2013 is sales and revenues in a range of  $60 to $68 billion 
and profit per share of  $7.00 to $9.00.  

"The range of our 2013 outlook reflects the level of uncertainty we see in the
world today. We're encouraged by recent improvements in economic indicators, but
remain cautious. While we expect some improvement in the U.S. economy, growth is
expected to be relatively weak. We believe  China's economy will continue to
improve, but not to the growth rates of 2010 and 2011. We also remain concerned
about  Europe  and expect economies in that region will continue to struggle in
2013," said Oberhelman.  

"If the recent improvement in economic indicators continues, 2013 could be
another record year for Caterpillar. We expect the first half of 2013 will be
weaker than the first half of 2012, with better growth in the second half.
However, if, like the last two years, growth and confidence decline in the
second half, 2013 could be a tough year. Either way, as we demonstrated with
inventory reductions in the fourth quarter, our team is prepared to execute and
deliver," Oberhelman added.

Notes:

* Glossary of terms is included on pages 18-19; first occurrence of terms shown
in bold italics.
* Information on non-GAAP financial measures is included on page 20.

For more than 85 years, Caterpillar Inc. has been making sustainable progress
possible and driving positive change on every continent. With 2012 sales and
revenues of  $65.875 billion, Caterpillar is the world's leading manufacturer of
construction and mining equipment, diesel and natural gas engines, industrial
gas turbines and diesel-electric locomotives. The company also is a leading
services provider through Caterpillar Financial Services, Caterpillar
Remanufacturing Services and Progress Rail Services. More information is
available  at:  http://www.caterpillar.com.

FORWARD-LOOKING STATEMENTS
Certain statements in this Press Release relate to future events and
expectations and are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Words such as "believe,"
"estimate," "will be," "will," "would," "expect," "anticipate," "plan,"
"project," "intend," "could," "should" or other similar words or expressions
often identify forward-looking statements. All statements other than statements
of historical fact are forward-looking statements, including, without
limitation, statements regarding our outlook, projections, forecasts or trend
descriptions. These statements do not guarantee future performance, and we do
not undertake to update our forward-looking statements.  

Caterpillar's actual results may differ materially from those described or
implied in our forward-looking statements based on a number of factors,
including, but not limited to: (i) global economic conditions and economic
conditions in the industries and markets we serve; (ii) government monetary or
fiscal policies and infrastructure spending; (iii) commodity or component price
increases and/or limited availability of raw materials and component products,
including steel; (iv) our and our customers', dealers' and suppliers' ability to
access and manage liquidity; (v) political and economic risks and instability,
including national or international conflicts and civil unrest; (vi) our and Cat
Financial's ability to: maintain credit ratings, avoid material increases in
borrowing costs, and access capital markets; (vii) the financial condition and
credit worthiness of Cat Financial's customers; (viii) inability to realize
expected benefits from acquisitions and divestitures, including the acquisition
of Bucyrus International, Inc. and Siwei; (ix) international trade and
investment policies; (x) challenges related to Tier 4 emissions compliance; (xi)
market acceptance of our products and services; (xii) changes in the competitive
environment, including market share, pricing and geographic and product mix of
sales; (xiii) successful implementation of capacity expansion projects, cost
reduction initiatives and efficiency or productivity initiatives, including the
Caterpillar Production System; (xiv) sourcing practices of our dealers or
original equipment manufacturers; (xv) compliance with environmental laws and
regulations; (xvi) alleged or actual violations of trade or anti-corruption laws
and regulations; (xvii) additional tax expense or exposure; (xviii) currency
fluctuations; (xix) our or Cat Financial's compliance with financial covenants;
(xx) increased pension plan funding obligations; (xxi) union disputes or other
employee relations issues; (xxii) significant legal proceedings, claims,
lawsuits or investigations; (xxiii) compliance requirements imposed if carbon
emissions legislation and/or regulations are adopted; (xxiv) changes in
accounting standards; (xxv) failure or breach of IT security; (xxvi) adverse
effects of natural disasters; and (xxvii) other factors described in more detail
under "Item 1A. Risk Factors" in our Form 10-K filed with the SEC on  February
21, 2012  for the year ended  December 31, 2011. This filing is available on our
website at  www.caterpillar.com/secfilings.

 Key Points                                                                                                           
                                                                                                                      
 Fourth Quarter 2012                                                                                                  
 
(Dollars in millions except per share data)                                                                         
                                                                                                                      
                                    Fourth Quarter         Fourth Quarter         $ Change           % Change  
                                    2012                   2011                                                
 Machinery and Power Systems Sales  $         15,357      $         16,557      $      (1,200)    (7)%      
 Financial Products Revenues                  718                   686                32         5%        
 Total Sales and Revenues           $         16,075      $         17,243      $      (1,168)    (7)%      
 Profit                             $         697         $         1,547       $      (850)      (55)%     
 Profit per common share - diluted  $         1.04        $         2.32        $      (1.28)     (55)%     
                                                                                                            
 Full Year 2012                                                                                                       
 
(Dollars in millions except per share data)                                                                         
                                                                                                                      
                                    Full Year              Full Year              $ Change           % Change  
                                    2012                   2011                                                
 Machinery and Power Systems Sales  $         63,068      $         57,392      $      5,676      10%       
 Financial Products Revenues                  2,807                 2,746              61         2%        
 Total Sales and Revenues           $         65,875      $         60,138      $      5,737      10%       
 Profit                             $         5,681       $         4,928       $      753        15%       
 Profit per common share - diluted  $         8.48        $         7.40        $      1.08       15%       
                                                                                                            


2012 Highlights

* 2012 sales and revenues of  $65.875 billion  and profit per share of  $8.48 
were both all-time records.  
* Inventory was significantly reduced during the fourth quarter of 2012, down
about  $2 billion  from the third quarter of 2012.  
* Machinery and Power Systems (M&PS)  operating cash flow was  $4.198 billion 
in 2012, compared with  $7.972 billion  in 2011.  
* M&PS  debt-to-capital ratio  was 37.4 percent, down from 42.7 percent a year
earlier.

2013 Outlook

* The outlook for 2013 is sales and revenues in a range of  $60 to $68 billion 
and profit per share of  $7.00 to $9.00.  
* We expect capital expenditures for 2013 to be slightly below 2012 capital
expenditures of  $3.4 billion.

CONSOLIDATED RESULTS

Fourth Quarter 2012 vs. Fourth Quarter 2011

Consolidated Sales and Revenues Comparison
Fourth Quarter 2012 vs. Fourth Quarter 2011

To access this chart, go to  http://caterpillar.com  for the downloadable
version of Caterpillar 4Q2012 earnings.

The chart above graphically illustrates reasons for the change in Consolidated
Sales and Revenues between the fourth quarter of 2011 (at left) and the fourth
quarter of 2012 (at right). Items favorably impacting sales and revenues appear
as upward stair steps with the corresponding dollar amounts above each bar,
while items negatively impacting sales and revenues appear as downward stair
steps with dollar amounts reflected in parentheses above each bar. Caterpillar
management utilizes these charts internally to visually communicate with the
company's Board of Directors and employees.

Sales and Revenues
Total sales and revenues were  $16.075 billion  in the fourth quarter of 2012, a
decrease of  $1.168 billion, or 7 percent, from the fourth quarter of 2011. When
reviewing the change in sales and revenues, we focus on the following
perspectives:

* Reason for the change:  Sales volume  decreased  $1.655 billion, and the
impact of  currency  was unfavorable  $82 million. The majority of the sales
volume decrease was related to changes in dealer new machine inventories. These
decreases were partially offset by increased  price realization  of  $421
million  and the favorable net impact of acquisitions and divestitures of  $116
million. Financial Products revenues were  $32 million  higher.  
* Sales by geographic region: Excluding acquisitions and divestitures, sales
decreased in all geographic regions except  Latin America, with the most
significant decrease in  North America. Within  Asia/Pacific, decreases in 
China  and other parts of  Asia/Pacific  more than offset sales increases in 
Australia  and  Japan. Within  EAME, lower sales in  Europe  and CIS were
partially offset by increased sales in the  Middle East  and  Africa.  
* Segment: The decrease in sales was primarily due to  Construction Industries,
with sales down 25 percent. Excluding acquisitions and divestitures,  Resource
Industries' sales improved 16 percent, and  Power Systems' sales decreased 9
percent. Financial Products' revenues were up 5 percent.

Consolidated Operating Profit

Consolidated Operating Profit Comparison
Fourth Quarter 2012 vs. Fourth Quarter 2011

To access this chart, go to  http://caterpillar.com  for the downloadable
version of Caterpillar 4Q2012 earnings.


The chart above graphically illustrates reasons for the change in Consolidated
Operating Profit between the fourth quarter of 2011 (at left) and the fourth
quarter of 2012 (at right). Items favorably impacting operating profit appear as
upward stair steps with the corresponding dollar amounts above each bar, while
items negatively impacting operating profit appear as downward stair steps with
dollar amounts reflected in parentheses above each bar. Caterpillar management
utilizes these charts internally to visually communicate with the company's
Board of Directors and employees. The bar entitled Other includes  consolidating
adjustments  and  Machinery and Power Systems other operating (income) expenses.

Operating profit for the fourth quarter of 2012 was  $1.038 billion, a decline
of  $922 million  from the fourth quarter of 2011. The most significant item was
the goodwill impairment charge related to Siwei of  $580 million. The remaining 
$342 million  decline was primarily the result of higher  manufacturing costs 
and lower sales volume (which includes the impact of a favorable mix of
products), partially offset by favorable price realization. Manufacturing costs
were unfavorable primarily due to inefficiencies driven by lower production and
declining inventory in the fourth quarter of 2012.

Other Profit/Loss Items

* Interest expense excluding Financial Products  increased  $8 million  from the
fourth quarter of 2011.  
* Other income/expense  was expense of  $11 million  compared with income of 
$125 million  in the fourth quarter of 2011. The decrease was due to the
unfavorable impact of currency gains and losses.
* The provision for income taxes  in the fourth quarter of 2012 reflects an
effective tax rate of 30.5 percent compared with 26.5 percent for the fourth
quarter of 2011, excluding the items discussed in the next paragraph. The
increase from 26.5 percent to 30.5 percent is primarily due to changes in our
geographic mix of profits from a tax perspective and the expiration of the U.S.
research and development tax credit. While the American Taxpayer Relief Act of
2012 extended the credit, the related benefit will be reported in 2013 results
due to the law's enactment in  January 2013.
The 2012 fourth-quarter tax provision includes a benefit of  $300 million  from
a decrease in tax and interest reserves due to a settlement reached with the
Internal Revenue Service related to 2000 through 2006 U.S. tax returns.
Approximately  $200 million  of this benefit is related to tax, and  $100
million  is related to interest. This was offset by a negative impact of  $237
million  from goodwill not deductible for tax purposes related to the Siwei
goodwill impairment and the divestiture of portions of the Bucyrus distribution
business. This compares to a  $108 million  net benefit in the fourth quarter of
2011.  
* Profit/loss attributable to noncontrolling interests  favorably impacted
profit by  $12 million  compared with the fourth quarter of 2011.

Global Workforce
Caterpillar worldwide full-time employment was 125,341 at the end of 2012
compared with 125,099 at the end of 2011, an increase of 242 full-time
employees. The flexible workforce decreased 6,989 for a net decrease in the
global workforce of 6,747.  

The decrease was the result of divestitures and lower production in the fourth
quarter of 2012, partially offset by acquisitions. Divestitures, primarily the
sale of a majority interest in our third party logistics business and portions
of the Bucyrus distribution business, decreased the global workforce by 7,723.
Acquisitions, primarily Siwei, added 4,643 to the global workforce.

                                  December 31,                             
                                  2012          2011          Change   
 Full-time employment             125,341       125,099       242      
 Flexible workforce               17,716        24,705        (6,989)  
 Total                            143,057       149,804       (6,747)  
                                                                       
 Summary of change                                                     
 U.S. workforce                                               33       
 Non-U.S. workforce                                           (3,700)  
                                                              (3,667)  
                                                                       
 Acquisitions/divestitures net                                (3,080)  
 Total                                                        (6,747)  


 SEGMENT RESULTS                                                                                                                                                                                        
                                                                                                                                                                                                        
 Sales and Revenues by Geographic Region                                                                                                                                                                
 (Millions of dollars)                  Total           %          North            %          Latin            %          EAME           %          Asia/             %             
                                                        Change     America          Change     America          Change                    Change     Pacific           Change        
 Fourth Quarter 2012                                                                                                                                                            
 Construction Industries1               $    4,028     (25)%      $      1,445    (17)%      $      600      (23)%      $    882      (28)%      $      1,101            (32)%  
 Resource Industries2                        5,776     14%               1,467    (13)%             1,095    42%             1,266    32%               1,948            20%    
 Power Systems3                              5,307     (6)%              1,994    (9)%              539      (25)%           1,628    (4)%              1,146            9%     
 All Other Segment4                          255       (49)%             153      (35)%             16       (38)%           48       (67)%             38               (58)%  
 Corporate Items and Eliminations            (9)                         (12)                       1                        1                          1                       
 Machinery & Power Systems Sales        $    15,357    (7)%       $      5,047    (14)%      $      2,251    (2)%       $    3,825    (5)%       $      4,234            (3)%   
                                                                                                                                                                                
 Financial Products Segment                  789       5%                422      2%                103      10%             104      (5)%              160              19%    
 Corporate Items and Eliminations            (71)                        (41)                       (8)                      (6)                        (16)                    
 Financial Products Revenues            $    718       5%         $      381      2%         $      95       9%         $    98       1%         $      144              13%    
                                                                                                                                                                                
 Consolidated Sales and Revenues        $    16,075    (7)%       $      5,428    (13)%      $      2,346    (2)%       $    3,923    (5)%       $      4,378            (3)%   
                                                                                                                                                                                
 Fourth Quarter 2011                                                                                                                                                            
 Construction Industries 1              $    5,355                $      1,743               $      777                 $    1,222               $      1,613                   
 Resource Industries2                        5,056                       1,694                      771                      962                        1,629                   
 Power Systems3                              5,672                       2,203                      722                      1,693                      1,054                   
 All Other Segment4                          496                         235                        26                       145                        90                      
 Corporate Items and Eliminations            (22)                        (15)                       (1)                      (4)                        (2)                     
 Machinery & Power Systems Sales        $    16,557               $      5,860               $      2,295               $    4,018               $      4,384                   
                                                                                                                                                                                
 Financial Products Segment                  752                         413                        94                       110                        135                     
 Corporate Items and Eliminations            (66)                        (38)                       (7)                      (13)                       (8)                     
 Financial Products Revenues            $    686                  $      375                 $      87                  $    97                  $      127                     
                                                                                                                                                                                
 Consolidated Sales and Revenues        $    17,243               $      6,235               $      2,382               $    4,115               $      4,511                   


 1  Does not include inter-segment sales of $115 million and $142 million in fourth quarter 2012 and 2011, respectively.                                                                                                                                         
 2  Does not include inter-segment sales of $208 million and $314 million in fourth quarter 2012 and 2011, respectively.                                                                                                                                         
 3  Does not include inter-segment sales of $455 million and $644 million in fourth quarter 2012 and 2011, respectively.                                                                                                                                         
 4  Does not include inter-segment sales of $773 million and $865 million in fourth quarter 2012 and 2011, respectively.                                                                                                                                         
                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                        


 Sales and Revenues by Segment                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                              
 (Millions of dollars)             Fourth                  Sales              Price                 Currency          Acquisitions/         Other             Fourth                                $ Change                        %        
                                   Quarter  2011           Volume             Realization                             Divestitures                            Quarter  2012                                                         Change   
 Construction Industries           $         5,355        $     (1,306)     $        32          $      (53)      $        -           $    -           $            4,028                   $          (1,327)             (25)%    
 Resource Industries                         5,056              301                  267                1                  151              -                        5,776                              720                 14%      
 Power Systems                               5,672              (559)                94                 (27)               127              -                        5,307                              (365)               (6)%     
 All Other Segment                           496                (78)                 1                  (2)                (162)            -                        255                                (241)               (49)%    
 Corporate Items and Eliminations            (22)               (13)                 27                 (1)                -                -                        (9)                                13                           
 Machinery & Power Systems Sales   $         16,557       $     (1,655)     $        421         $      (82)      $        116         $    -           $            15,357                  $          (1,200)             (7)%     
                                                                                                                                                                                                                                     
 Financial Products Segment                  752                -                    -                  -                  -                37                       789                                37                  5%       
 Corporate Items and Eliminations            (66)               -                    -                  -                  -                (5)                      (71)                               (5)                          
 Financial Products Revenues       $         686          $     -           $        -           $      -         $        -           $    32          $            718                     $          32                  5%       
                                                                                                                                                                                                                                     
 Consolidated Sales and Revenues   $         17,243       $     (1,655)     $        421         $      (82)      $        116         $    32          $            16,075                  $          (1,168)             (7)%     
                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                   


 Operating Profit by Segment                                                                                          
 (Millions of dollars)             Fourth Quarter         Fourth Quarter         $               %             
                                   
2012                  
2011                  
Change         
Change       
 Construction Industries           $         26          $         534         $     (508)          (95)%  
 Resource Industries                         611                   997               (386)          (39)%  
 Power Systems                               697                   823               (126)          (15)%  
 All Other Segment                           126                   236               (110)          (47)%  
 Corporate Items and Eliminations            (534)                 (721)             187                   
 Machinery & Power Systems         $         926         $         1,869       $     (943)          (50)%  
 Financial Products Segment                  180                   134               46             34%    
 Corporate Items and Eliminations            2                     22                (20)                  
 Financial Products                $         182         $         156         $     26             17%    
 Consolidating Adjustments                   (70)                  (65)              (5)                   
 Consolidated Operating Profit     $         1,038       $         1,960       $     (922)          (47)%  
                                                                                                           


Construction Industries
Construction Industries' sales were  $4.028 billion  in the fourth quarter of
2012, a decrease of  $1.327 billion, or 25 percent, from the fourth quarter of
2011. Sales decreased in all geographic regions of the world, driven by dealers
reducing new machine inventory levels in the fourth quarter of 2012 compared
with dealers increasing inventory levels in the fourth quarter of 2011.
Dealer-reported new machine inventory decreased about  $950 million  during the
fourth quarter of 2012 compared with an increase of about  $525 million  during
the fourth quarter of 2011. Dealer deliveries to end users were about the same
as the fourth quarter of 2011.

Construction Industries' profit was  $26 million  in the fourth quarter of 2012
compared with  $534 million  in the fourth quarter of 2011. The decrease in
profit was primarily due to lower sales volume and increased manufacturing costs
from inefficiencies driven by lower production and declining inventory in the
fourth quarter of 2012.  

Resource Industries
Resource Industries' sales were  $5.776 billion  in the fourth quarter of 2012,
an increase of  $720 million, or 14 percent, from the fourth quarter of 2011.
The sales increase was due to higher volume, improved price realization and an
increase in Bucyrus sales of  $102 million. New equipment sales increased, while
sales for aftermarket parts declined. Sales increased in every region of the
world except  North America, where declining coal production contributed to
lower sales.  

As a result of increased production capability, coupled with our existing mining
order backlog, sales were higher than the fourth quarter of 2011. However, new
orders were well below the fourth quarter of 2011.

Resource Industries' profit was  $611 million  in the fourth quarter of 2012
compared with  $997 million  in the fourth quarter of 2011. The decrease was a
result of the goodwill impairment charge related to Siwei of  $580 million.

Excluding the impairment charge, segment profit improved as a result of
favorable price realization and higher sales volume, which included a favorable
mix of products. This was partially offset by higher manufacturing costs
primarily due to inefficiencies driven by lower production and declining
inventory in the fourth quarter of 2012.  

See discussion on the impact of Bucyrus on page 16.

Power Systems
Power Systems' sales were  $5.307 billion  in the fourth quarter of 2012, a
decrease of  $365 million, or 6 percent, from the fourth quarter of 2011. The
decrease was the result of lower sales volume, partially offset by the
acquisition of MWM Holding GmbH (MWM) and improved price realization.

Sales decreased in all regions except  Asia/Pacific. Excluding acquisitions,
sales for petroleum, industrial and electric power applications were lower. Most
of the decline was a result of dealers reducing their inventory levels in 2012
compared with dealers increasing inventory levels in 2011. Rail-related sales
also declined.

Power Systems' profit was  $697 million  in the fourth quarter of 2012 compared
with  $823 million  in the fourth quarter of 2011. The decrease was primarily
due to lower sales volume (which includes the impact of a favorable mix of
products), partially offset by favorable price realization.  

MWM, acquired during the fourth quarter of 2011, added sales of  $127 million,
primarily in EAME, and increased segment profit by  $26 million.

Financial Products Segment
Financial Products' revenues were  $789 million, an increase of  $37 million, or
5 percent, from the fourth quarter of 2011. The increase was primarily due to
the favorable impact from higher average  earning assets, partially offset by
the unfavorable impact from lower average financing rates on new and existing
finance receivables and operating leases.

Financial Products' profit was  $180 million  in the fourth quarter of 2012,
compared with  $134 million  in the fourth quarter of 2011. The increase was
primarily due to a  $34 million  favorable impact from lower claims experience
at Cat Insurance and a  $32 million  favorable impact from higher average
earning assets. These increases were partially offset by a  $17 million 
increase in the provision for credit losses at Cat Financial.

During 2012, Cat Financial's overall portfolio quality reflected continued
improvement. At the end of 2012, past dues at Cat Financial were 2.26 percent
compared with 2.80 percent at the end of the third quarter of 2012 and 2.89
percent at the end of 2011. Write-offs, net of recoveries, were  $46 million 
for the fourth quarter of 2012, up from  $38 million  for the fourth quarter of
2011. Write-offs, net of recoveries, were  $102 million  for 2012, down from 
$158 million  for 2011.  

As of  December 31, 2012, Cat Financial's allowance for credit losses totaled 
$426 million  or 1.49 percent of net finance receivables, compared with  $369
million  or 1.47 percent of net finance receivables at year-end 2011.  

All Other Segment
All Other Segment includes groups that provide services such as component
manufacturing, remanufacturing and logistics.  

The decrease in sales was primarily due to the absence of our third party
logistics business, which was sold in the third quarter of 2012.

The decrease in profit was primarily driven by lower production volume and the
absence of our third party logistics business.  

Corporate Items and Eliminations
Expense for corporate items and eliminations was  $532 million  in the fourth
quarter of 2012, a decrease of  $167 million  from the fourth quarter of 2011.
Corporate items and eliminations include: corporate-level expenses; timing
differences, as some expenses are reported in segment profit on a cash basis;
retirement benefit costs other than service cost; currency differences, as
segment profit is reported using annual fixed exchange rates; and inter-segment
eliminations.  

The decrease in expense from the fourth quarter of 2011 was primarily due to the
favorable impact of currency and timing differences, partially offset by
increased corporate costs. Segment profit for 2012 is based on fixed exchange
rates set at the beginning of 2012, while segment profit for 2011 is based on
fixed exchange rates set at the beginning of 2011. The difference in actual
exchange rates compared with fixed exchange rates is included in corporate items
and eliminations and is not reflected in segment profit.

2013 Outlook

2013 Economic Outlook
World economic conditions, while improving, are still relatively weak.
Indicators improved in many countries in late 2012, suggesting better prospects
for economic growth in 2013. In the large economies, we expect some improvement
in  the United States  and  China, and a continuation of economic uncertainty in
 Europe.  

Overall, we expect the world economy will begin the year with weak growth and
improve as 2013 unfolds. We anticipate overall world economic growth of at least
2.5 percent-a small improvement from our estimate of 2.3 percent for 2012.  

Key points related to this outlook include:

* Central banks reduced interest rates over the past 15 months and some further
cuts are possible. With inflation low, we expect there will be little pressure
to tighten policies in 2013. With the exception of  Europe, monetary easing will
likely offset much of the impacts of tighter fiscal budgets. Overall, we expect
economic policies will be the most favorable for growth since 2010.  
* One sign lower interest rates are working is that both manufacturing and
service purchasing manager indices improved over the past few months. Both ended
2012 at values that signal growth.  
* Another positive sign is that metals prices have improved from their 
mid-August 2012  lows, and fourth-quarter data for  China  indicates increased
imports of coal, iron ore and copper.  
* We expect economic growth will improve demand for most metals in 2013, and
average metal prices in 2013 will be higher than 2012. We expect copper will
average  $3.75  per pound in 2013 and  China  port iron ore  $135  per ton.
Those prices will likely be attractive for production and investment.  
* Coal prices also improved in late 2012, but are currently 5 to 20 percent
below a year ago. We expect that continued relatively low prices for U.S.
natural gas will keep pressure on coal prices in 2013. We are expecting Central
Appalachian coal will average about  $65  per ton, slightly higher than  $63 
per ton in 2012.
* Average interest rates in developed economies are already below lows reached
during the financial crisis, so prospects for lower rates are limited. However,
some central banks are adding liquidity in their financial systems as a way to
increase economic growth.  
* Growth in the developed economies will likely be slow in early 2013 and
improve throughout the year. We expect economic growth will average about 1.5
percent this year, slightly above 2012.  
* Financial conditions have improved in  the United States  in response to past
U.S. Federal Reserve easing. Credit spreads are down, bank capital ratios are
near record highs and banks are easing lending standards. The Fed's plan to
increase monthly bond purchases to  $85 billion  will likely help ease financial
conditions and increase lending. We expect the U.S. economy to grow at least 2.5
percent in 2013.  
* The underlying fundamentals that support U.S. housing construction continue to
improve. Housing affordability is better, the inventory of unsold homes has come
down significantly over the past few years and home prices have begun to
recover. As a result, we expect housing starts to exceed 1 million units in
2013, which would be the highest year since 2007.  
* Nonresidential building construction in  the United States  improved in 2012,
and we expect further growth in 2013. Vacancy rates are down, and property
prices are up, both trends that we expect to continue. Infrastructure
construction is likely to be higher as we expect state and local government
spending to increase in 2013.  
* Interest rates in the Eurozone are at record lows, and credit spreads are
improving. However, economic policies are less aggressive than in  Japan  and 
the United States. As a result, we expect growth in the Eurozone will struggle
to match 2012, and we expect that construction activity will decline for the
sixth consecutive year, reaching the lowest level since at least 1990.  
* We expect the new Japanese government to ease monetary policy and increase
infrastructure spending. We expect Japanese economic growth near 1 percent in
2013.  
* Developing economies have been lowering interest rates for more than a year,
and average rates are close to levels reached during the financial crisis. Low
interest rates will likely contribute to better growth. We expect that, in the
aggregate, developing economies will grow at more than 5 percent in 2013.  
* China's economic slowdown in 2012 unfavorably impacted construction in  China 
and world prices for metals, coal and oil. In the second half of 2012, the
Chinese government accelerated credit growth and infrastructure spending, and,
as a result, economic data in the fourth quarter improved. Our outlook assumes
the Chinese government will maintain pro-growth policies throughout 2013. We
expect economic growth near 8.5 percent and a more favorable environment for
construction and commodity demand.  
* Most other Asian countries also lowered interest rates in 2012, and we expect
faster economic growth in 2013 than 2012. Better economic growth is expected to
be positive for construction.  
* Interest rates in  Latin America  have also been declining and are at record
lows in  Brazil. We expect lower interest rates, higher commodity prices and
better world economic growth will improve economic growth in the region to about
4 percent in 2013. We also expect construction activity to improve as a result
of better economic growth and large infrastructure programs.  
* Most countries in  Africa/Middle East  and CIS have maintained economic
policies close to those adopted in the financial crisis, and, as a result,
growth has generally been sustained. We expect pro-growth policies will continue
throughout 2013, allowing about 4-percent economic growth in  Africa/Middle East
 and in the CIS.

Economic Risks

* Economic policies became more pro-growth in 2012, and, as a result, recent
economic data has been more favorable. Overall, we expect policies to become
even more stimulative, so upside to our outlook is possible. As in the past, we
are concerned that central banks will reverse policies too early once better
economic growth becomes apparent.  
* A downside risk is Eurozone growth lagging behind the rest of the world. As
the disparity becomes more evident, concern about the Eurozone economy and its
currency could return.

Sales and Revenues Outlook
We expect 2013 sales and revenues to be in a range of  $60 to $68 billion 
reflecting both upside and downside potential from  $65.9 billion  of sales and
revenues in 2012.  

We are optimistic that recent positive economic indicators suggest economic
growth in 2013, but we remain cautious about how quickly economic improvement
will translate into higher sales and revenues.  

Following are key points related to the 2013 sales and revenues outlook:

* At the middle of our outlook range, sales and revenues are expected to be
about  $2 billion  lower than in 2012.  
* More than all of the decline in sales and revenues is expected to be in our
Resource Industries segment. Mining customers have announced lower capital
expenditures in 2013, and mining equipment in dealer inventories is expected to
decline in 2013.  
* Sales and revenues will be negatively impacted about  $200 million  per
quarter in our All Other segment during the first half of 2013 as a result of
the absence of sales from our third party logistics business, which was sold in
July of 2012.  
* We expect that Construction Industries' sales will be flat to up slightly in
2013 with improving end-user demand largely offset by the impact of dealers
lowering inventories in 2013.  
* We expect Power Systems' sales to be relatively flat in 2013 compared with
2012.  
* We are expecting price realization to improve about 1 percent in 2013.

2013 Profit Outlook

The outlook for 2013 profit is a range of  $7.00 to $9.00  per share. Profit in
2012 was  $8.48  per share. Absence of the  $580 million  ($0.87  per share)
goodwill impairment related to Siwei is the most significant favorable factor
when comparing the 2013 outlook to 2012 results.  

Other key points related to our profit outlook for 2013:

* Price realization is expected to be positive to profit in 2013, but the impact
is expected to be about offset by higher depreciation and an unfavorable sales
mix.  
* Negative items include lower sales volume and the absence of the  $273 million
 pre-tax gain on the sale of a majority interest of our third party logistics
business in the third quarter of 2012.  
* Absence of the  $300 million  favorable tax benefit from the settlement of
prior-year returns in the fourth quarter of 2012 will be negative, but will be
partially offset by the expectation of a favorable discrete tax benefit of about
 $85 million  in 2013 related to U.S. tax law changes that were enacted in 2013,
but were retroactive to 2012.  
* Excluding discrete items, we expect the effective tax rate for 2013 to be near
the 30.5 percent rate in 2012.  
* Capital expenditures in 2013 are expected to be slightly below the  $3.4
billion  in 2012.

First Quarter of 2013
While we are not providing a specific sales and revenues and profit outlook for
the first quarter of 2013, we are expecting that sales and revenues in the first
quarter are likely to be significantly lower than the first quarter of 2012. The
middle of our full-year outlook for sales and revenues is about  $2 billion 
below 2012 sales and revenues. We expect that sales and revenues will decline
more than  $2 billion  in the first quarter of 2013 compared with the first
quarter of 2012.  

Much of the expected decline in first-quarter sales is a result of the
continuation of reduced production as dealers are expected to continue to lower
their new machine inventories. We expect that dealer inventory reductions will
be negative to sales in the first quarter of 2013, while in the first quarter of
2012 dealers increased inventory which benefitted Caterpillar sales.

Profit is also expected to be significantly lower in the first quarter of 2013
than in the first quarter of 2012-a result of lower expected sales and the
negative cost impact of continuing low production levels and declining
inventory.

 QUESTIONS AND ANSWERS                                                                                                                                                                     
                                                                                                                                                                                        
 Q1:          Your inventory, which had been a concern, declined substantially in the fourth quarter. Can you describe what you did during the quarter to lower inventory and how it    
              impacted your fourth-quarter results?                                                                                                                                     
                                                                                                                                                                                        
 A:           We are pleased with the work that was done throughout the company to achieve significant and orderly inventory reduction in the fourth quarter. The groundwork began      
              around mid-year as economic indicators began to soften. Based on softening economic conditions and the amount of inventory we had available in our Product Distribution   
              Centers (PDCs), dealers also took action to lower their inventories. As a result, new orders from dealers declined sharply in the third quarter, and we began lowering    
              production schedules and incoming material from suppliers around the world. While production schedules began to decline in the third quarter, the most significant impacts 
              on production and the flow of incoming material were in the fourth quarter.                                                                                               
                                                                                                                                                                                        
              Our actions, coupled with dealer inventory reductions, had a significant negative impact on fourth-quarter sales and profit. For sales, the negative impact of dealer     
              inventory changes was about the same as the total company decline in sales and revenues from the fourth quarter of 2011 to the fourth quarter of 2012. The sales decline, 
              along with the negative cost impact from lower production and declining inventory, were significantly unfavorable to profit.                                              
                                                                                                                                                                                        
 Q2:          Is inventory at about the right level, or do you expect further reductions?                                                                                               
                                                                                                                                                                                        
 A:           Yes, we expect further inventory reductions as production levels will continue to decline at least through the first quarter of 2013. However, we expect sales will be    
              lower in the first quarter of 2013 so the decline in inventory will not likely be as significant as in the fourth quarter of 2012.                                        
                                                                                                                                                                                        
 Q3:          While you did not provide specific sales and profit guidance for the first quarter of 2013, your outlook reflects caution regarding the first quarter. Why?               
                                                                                                                                                                                        
 A:           The first quarter is typically a seasonally weaker quarter for dealer sales. The impact of the seasonal weakness is usually partially offset in Caterpillar sales as      
              dealers add to inventories ahead of seasonally stronger second-quarter demand. We do not expect dealers will add inventory in the first quarter as they usually do,       
              rather, we expect dealers will continue to reduce their inventories until they are right sized with demand. We expect this will lead to a weak quarter for Caterpillar    
              sales well below the first quarter of 2012.                                                                                                                               
                                                                                                                                                                                        
 Q4:          Dealer inventory declined in the fourth quarter of 2012. What are your expectations for 2013?                                                                             
                                                                                                                                                                                        
 A:           Although dealer new machine inventory declined in the fourth quarter, it increased more than $1 billion during full-year 2012. Over the course of 2012, we continued to   
              ramp up inventory in our PDCs to better serve dealers and customers. As a result, we expect that dealers will be able to reduce their inventories further in 2013. We     
              expect that dealers will reduce inventories by more than they increased in 2012 and will likely end 2013 with inventory below year-end 2011 levels.                       
                                                                                                                                                                                        
 Q5:          Can you comment on your order backlog at the end of the fourth quarter?                                                                                                   
                                                                                                                                                                                        
 A:           At the end of the fourth quarter, the backlog was $19.6 billion. This represents a $3.5 billion reduction from the end of the third quarter of 2012 and a $10.2 billion   
              reduction from year-end 2011. The most significant decrease in the fourth quarter of 2012 was in Resource Industries. Although dealer deliveries to end users in the      
              fourth quarter of 2012 remained about flat compared with the third quarter of 2012, orders received from Cat dealers have continued to be well below end-user demand.     
                                                                                                                                                                                        
 Q6:          We can calculate incremental operating profit pull through, but the impact of your acquisitions and divestitures makes the calculation difficult. Can you adjust 2012 for 
              acquisitions, divestitures and currency impacts?                                                                                                                          
                                                                                                                                                                                        
 A:           The following table shows the change in sales and revenues and operating profit. It excludes the impact of acquisitions and divestitures that occurred during 2011 or     
              2012, and it adjusts sales and operating profit changes for the impact of currency changes.                                                                               


 (Millions of dollars)                                                                                                                                                                                  
                                                                                                                                                                                   Change          
 2012                                                                                                    2011                                  
 Sales and Revenues                                                            $           65,875                              $           60,138                              $     5,737    
 Acquisitions and Divestitures                                                             (5,521)                                         (2,853)                                   (2,668)  
 Sales and Revenues excluding Acquisitions and Divestitures                                60,354                                          57,285                                    3,069    
                                                                                                                                                                                              
 Sales Currency Impact                                                                     582                                             -                                         582      
 Sales and Revenues excluding Acquisitions, Divestitures and Currency Impacts  $           60,936                              $           57,285                              $     3,651    
                                                                                                                                                                                                           
 Operating Profit                                                              $           8,573                               $           7,153                               $     1,420    
 Acquisitions and Divestitures Operating (Profit) / Loss                                   (103)                                           (9)                                       (94)     
 Operating Profit excluding Acquisitions and Divestitures                                  8,470                                           7,144                                     1,326    
                                                                                                                                                                                              
 Operating Profit Currency Impact                                                          (110)                                           -                                         (110)    
 Operating Profit excluding Acquisitions, Divestitures and Currency Impacts    $           8,360                               $           7,144                               $     1,216    
                                                                                                                                                                                              
 Incremental Margin Rate excluding Acquisitions and Divestitures Impacts                                                                                                                     43%      
                                                                                                                                                                                              
 Incremental Margin Rate excluding Acquisitions, Divestitures and Currency Impacts                                                                                                           33%      


 Q7:  Can you comment on expense related to your short-term incentive compensation plans in 2012?                                                                                                                                                       
                                                                                                                                                                                                                                                        
 A:   Short-term incentive compensation expense is directly related to financial and operational performance.                                                                                                                                           
                                                                                                                                                                                                                                                        
      For 2012, the expense was about $825 million-$230 million in the first quarter, $265 million in the second quarter, $130 million in the third quarter and $200 million in the fourth quarter. In 2011, the total expense was about $1.2 billion.  
      
 Q8:  Can you summarize the impact of Bucyrus operations on 2012 operating profit?                                                                                                                                                                      
                                                                                                                                                                                                                                                        
 A:   Following is a table that summarizes the impact of Bucyrus on fourth-quarter and full-year 2011 and 2012 results.                                                                                                                                 
                                                                                                                                                                                                                                                        


 Impact of Bucyrus on Profit                                                                                                
 Millions of dollars                                                                                                        
                                                                                                                     
 Impact Excluding Divestitures                           Fourth Quarter    Fourth Quarter    Full Year    Full Year  
 Gain/(Loss)                                             2012              2011              
2012        
2011      
 Sales                                                   $ 1,491           $ 1,389           $ 4,758      $ 2,524    
 Cost of goods sold                                      (1,269)           (1,140)           (3,716)      (2,159)    
 SG&A                                                    (161)             (161)             (635)        (351)      
 R&D                                                     (40)              (14)              (153)        (26)       
 Other operating income (costs)                          5                 (7)               3            (84)       
 Operating profit (loss)                                 26                67                257          (96)       
                                                                                                                     
 Interest expense                                        (28)              (35)              (130)        (79)       
 Other income (expense)                                  (9)               (1)               (12)         (228)      
                                                                                                                     
 Profit (loss) before tax                                (11)              31                115          (403)      
 Income tax (provision)/benefit                          5                 (3)               (40)         133        
 Profit (loss) after tax of cons. companies              (6)               28                75           (270)      
 Profit (loss) attributable to non-controlling interest  -                 (1)               (1)          (1)        
 Profit/(loss)                                           $ (6)             $ 27              $ 74         $ (271)    
                                                                                                                     
 Distribution Business Divestitures Gain/(Loss)                                                                      
 SG&A                                                    $ (44)            $ (17)            $ (177)      $ (32)     
 Other operating income (costs)                          124               96                310          96         
 Impact on operating profit                              80                79                133          64         
 Income tax (provision)/benefit                          (62)              (61)              (161)        (55)       
 Profit/(loss)                                           $ 18              $ 18              $ (28)       $ 9        


 Fourth-quarter 2012 operating profit was unfavorably impacted by $58 million to correct for an overstatement of inventory resulting from previously recorded profit on inter-company sales. This error favorably impacted 2011 operating profit by $24 million and first-quarter 2012 operating profit by $34 million. 
                                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                       
 Q9:   Can you comment on M&PS operating cash flow for 2012?                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                       
 A:    Machinery and Power Systems (M&PS) operating cash flow was $4.198 billion in 2012, compared with $7.972 billion in 2011. The decrease was due to unfavorable changes in working capital, most significantly accounts payable. The reduction in payables reflects 
       a decline in material purchases to support inventory reductions achieved in the fourth quarter of 2012. In addition, tax payments, pension contributions and short-term incentive compensation payments were higher in 2012.                                    
       
 The following questions and answers relate to the accounting misconduct at Siwei that was announced on January 18, 2013:                                                                                                                                               
                                                                                                                                                                                                                                                                       
 Q10:  Does the discovery of misconduct at Siwei change Caterpillar's strategy for China or its view of the mining industry?                                                                                                                                           
                                                                                                                                                                                                                                                                       
 A:    No. Caterpillar has 23 existing manufacturing facilities in China, four new facilities under construction, four Research & Development (R&D) centers and three logistics and parts centers, employing more than 15,000 people across the country. In addition,  
       China produces and consumes more coal than any other country in the world. Our strategy to expand our coal mining business in China is unchanged, and we are optimistic about the underground coal mining equipment opportunities. 
The accounting misconduct   
       that occurred at Siwei does not reflect the way Caterpillar does business and is not in keeping with our Worldwide Code of Conduct. The actions of the individuals involved were clearly wrong and purposely designed to overstate the profitability of the     
       company prior to our acquisition. This does not change our plans to develop, grow and improve the business. 
The acquisition is aligned with Caterpillar's strategy to expand in the rapidly growing Chinese coal mining equipment industry utilizing the Siwei 
       roof support products and manufacturing capabilities, combined with Caterpillar's strong commitment to product innovation and safety, to help our mining customers in China become more efficient and safer within their mines.                                 
                                                                                                                                                                                                                                                                       
 Q11:  What is Caterpillar's due diligence process for mergers and acquisitions?                                                                                                                                                                                       
                                                                                                                                                                                                                                                                       
 A:    We believe our process is rigorous and robust and includes Caterpillar personnel and outside accounting, legal and financial advisors. It is important to understand that Siwei was a publicly traded company with audited financial statements. What we        
       discovered at Siwei following the acquisition was deliberate, multi-year, coordinated accounting misconduct that was concealed by the persons responsible.                                                                                                      
                                                                                                                                                                                                                                                                       
 Q12:  Can you provide more details about the nature of the accounting misconduct?                                                                                                                                                                                     
                                                                                                                                                                                                                                                                       
 A:    Caterpillar first became concerned about an issue when discrepancies were identified in November 2012, between the inventory recorded in Siwei's accounting records and the company's actual physical inventory. This was determined by a physical inventory    
       count conducted at Siwei as part of Caterpillar's integration process. Caterpillar promptly launched a comprehensive review and investigation into the nature and source of this discrepancy. This extensive review has identified inappropriate accounting     
       practices involving improper cost allocation that resulted in overstated profit. The review further identified improper revenue recognition practices involving early and, at times unsupported, revenue recognition. This review is ongoing.                   
                                                                                                                                                                                                                                                                       
 Q13:  Have the issues at Siwei had an impact on your 2013 outlook?                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                       
 A:    We do not expect the matters related to Siwei to have a significant impact on Caterpillar's 2013 sales and revenues or profit.                                                                                                                                  
                                                                                                                                                                                                                                                                       
 Q14:  Will there be litigation as a result of the Siwei investigation?                                                                                                                                                                                                
                                                                                                                                                                                                                                                                       
 A:    Caterpillar was misled by the accounting misconduct at Siwei. There has been a tremendous amount of time, energy and resources dedicated to this investigation to date. But, we are not done. We are putting in more effort to finish our investigation as we   
       consider all our options to recover our losses and hold those responsible accountable for their wrongdoing. Caterpillar has a long-standing policy not to comment on pending or contemplated litigation, and further comment is not appropriate at this time.   


 GLOSSARY OF TERMS                                                                                                                                                                                                                                                     
 1.   All Other Segment  - Primarily includes activities such as: the remanufacturing of Cat engines and components and remanufacturing services for other companies as well as the product management, development, manufacturing, marketing and product support of  
      undercarriage, specialty products, hardened bar stock components and ground engaging tools primarily for Caterpillar products; logistics services; the product management, development, marketing, sales and product support of on-highway vocational trucks for 
      North America (U.S. & Canada only); distribution services responsible for dealer development and administration, dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts; and the 50/50 joint     
      venture with Navistar (NC2) until it became a wholly owned subsidiary of Navistar effective September 29, 2011. On July 31, 2012, we sold a majority interest in Caterpillar's third party logistics business.                                                  
 2.   Consolidating Adjustments  - Eliminations of transactions between Machinery and Power Systems and Financial Products.                                                                                                                                           
 3.   Construction Industries  - A segment responsible for small and core construction machines. Responsibility includes business strategy, product design, product management and development, manufacturing, marketing, and sales and product support. The product  
      portfolio includes backhoe loaders, small wheel loaders, small track-type tractors, skid steer loaders, multi-terrain loaders, mini excavators, compact wheel loaders, select work tools, small, medium and large track excavators, wheel excavators, medium    
      wheel loaders, medium track-type tractors, track-type loaders, motor graders and pipe layers. In addition, Construction Industries has responsibility for Power Systems and components in Japan and an integrated manufacturing cost center that supports       
      Machinery and Power Systems businesses.                                                                                                                                                                                                                         
 4.   Currency  - With respect to sales and revenues, currency represents the translation impact on sales resulting from changes in foreign currency exchange rates versus the U.S. dollar. With respect to operating profit, currency represents the net translation 
      impact on sales and operating costs resulting from changes in foreign currency exchange rates versus the U.S. dollar. Currency includes the impact on sales and operating profit for the Machinery and Power Systems lines of business only; currency impacts on 
      Financial Products revenues and operating profit are included in the Financial Products portions of the respective analyses. With respect to other income/expense, currency represents the effects of forward and option contracts entered into by the company  
      to reduce the risk of fluctuations in exchange rates and the net effect of changes in foreign currency exchange rates on our foreign currency assets and liabilities for consolidated results.                                                                  
 5.   Debt-to-Capital Ratio  - A key measure of financial strength used by both management and our credit rating agencies. The metric is a ratio of Machinery and Power Systems debt (short-term borrowings plus long-term debt) and redeemable noncontrolling        
      interest to the sum of Machinery and Power Systems debt, redeemable noncontrolling interest and stockholders' equity.                                                                                                                                           
 6.   EAME  - A geographic region including Europe, Africa, the Middle East and the Commonwealth of Independent States (CIS).                                                                                                                                         
 7.   Earning Assets  - Assets consisting primarily of total finance receivables net of unearned income, plus equipment on operating leases, less accumulated depreciation at Cat Financial.                                                                          
 8.   Financial Products Segment  -Provides financing to customers and dealers for the purchase and lease of Caterpillar and other equipment, as well as some financing for Caterpillar sales to dealers. Financing plans include operating and finance leases,       
      installment sale contracts, working capital loans and wholesale financing plans. The segment also provides various forms of insurance to customers and dealers to help support the purchase and lease of our equipment.                                         
 9.   Latin America  - Geographic region including Central and South American countries and Mexico.                                                                                                                                                                   
 10.  Machinery and Power Systems (M&PS)  - Represents the aggregate total of Construction Industries, Resource Industries, Power Systems, and All Other Segment and related corporate items and eliminations.                                                        
 11.  Machinery and Power Systems Other Operating (Income) Expenses  - Comprised primarily of gains/losses on disposal of long-lived assets, long-lived asset impairment charges, pension curtailment charges and employee redundancy costs.                          
 12.  Manufacturing Costs  - Manufacturing costs exclude the impacts of currency and represent the volume-adjusted change for variable costs and the absolute dollar change for period manufacturing costs. Variable manufacturing costs are defined as having a      
      direct relationship with the volume of production. This includes material costs, direct labor and other costs that vary directly with production volume such as freight, power to operate machines and supplies that are consumed in the manufacturing process. 
      Period manufacturing costs support production but are defined as generally not having a direct relationship to short-term changes in volume. Examples include machinery and equipment repair, depreciation on manufacturing assets, facility support,           
      procurement, factory scheduling, manufacturing planning and operations management.                                                                                                                                                                              
 13.  Power Systems  - A segment responsible for the product management, development, manufacturing, marketing, sales and product support of reciprocating engine powered generator sets, integrated systems used in the electric power generation industry,          
      reciprocating engines and integrated systems and solutions for the marine and petroleum industries; reciprocating engines supplied to the industrial industry as well as Caterpillar machinery; the product management, development, manufacturing, marketing,  
      sales and product support of turbines and turbine-related services; the development, manufacturing, remanufacturing, maintenance, leasing and service of diesel-electric locomotives and components and other rail-related products and services.               
 14.  Price Realization  - The impact of net price changes excluding currency and new product introductions. Consolidated price realization includes the impact of changes in the relative weighting of sales between geographic regions.                             
 15.  Resource Industries  - A segment responsible for business strategy, product design, product management and development, manufacturing, marketing and sales and product support for large track-type tractors, large mining trucks, underground mining equipment, 
      tunnel boring equipment, large wheel loaders, off-highway trucks, articulated trucks, wheel tractor scrapers, wheel dozers, compactors, select work tools, forestry products, paving products, machinery components and electronics and control systems. In     
      addition, Resource Industries manages areas that provide services to other parts of the company, including integrated manufacturing, research and development and coordination of the Caterpillar Production System. On July 8, 2011, the acquisition of Bucyrus 
      International, Inc. was completed. This added the responsibility for business strategy, product design, product management and development, manufacturing, marketing and sales and product support for electric rope shovels, draglines, hydraulic shovels,     
      drills, highwall miners and electric drive off-highway trucks to Resource Industries. In addition, Resource Industries segment profit includes Bucyrus acquisition-related costs and the impact from divestiture of portions of the Bucyrus distribution        
      business.                                                                                                                                                                                                                                                       
 16.  Sales Volume  - With respect to sales and revenues, sales volume represents the impact of changes in the quantities sold for Machinery and Power Systems as well as the incremental revenue impact of new product introductions, including emissions-related    
      product updates. With respect to operating profit, sales volume represents the impact of changes in the quantities sold for Machinery and Power Systems combined with product mix as well as the net operating profit impact of new product introductions,      
      including emissions-related product updates. Product mix represents the net operating profit impact of changes in the relative weighting of Machinery and Power Systems sales with respect to total sales.                                                      
 17.  Siwei  - ERA Mining Machinery Limited (ERA), including its wholly-owned subsidiary Zhengzhou Siwei Mechanical & Electrical Manufacturing Co., Ltd., commonly known as Siwei, which was acquired during the second quarter of 2012. Siwei primarily designs,     
      manufactures, sells and supports underground coal mining equipment in China and is included in our Resource Industries segment.                                                                                                                                 


NON-GAAP FINANCIAL MEASURES
The following definition is provided for "non-GAAP financial measures" in
connection with Regulation G issued by the Securities and Exchange Commission.
This non-GAAP financial measure has no standardized meaning prescribed by U.S.
GAAP and therefore is unlikely to be comparable to the calculation of similar
measures for other companies. Management does not intend this item to be
considered in isolation or substituted for the related GAAP measure.

Machinery and Power Systems
Caterpillar defines Machinery and Power Systems as it is presented in the
supplemental data as Caterpillar Inc. and its subsidiaries with Financial
Products accounted for on the equity basis. Machinery and Power Systems
information relates to the design, manufacture and marketing of our products.
Financial Products information relates to the financing to customers and dealers
for the purchase and lease of Caterpillar and other equipment. The nature of
these businesses is different, especially with regard to the financial position
and cash flow items. Caterpillar management utilizes this presentation
internally to highlight these differences. We also believe this presentation
will assist readers in understanding our business. Pages 24-29 reconcile
Machinery and Power Systems with Financial Products on the equity basis to
Caterpillar Inc. consolidated financial information.

 Caterpillar's latest financial results and outlook are also available via:                              
 Telephone:  
             (800) 228-7717 (Inside the United States and Canada)                                       
             (858) 764-9492 (Outside the United States and Canada)                                      
 Internet:   
             http://www.caterpillar.com/investor                                                        
             http://www.caterpillar.com/irwebcast(live broadcast/replays of quarterly conference call)  


 Caterpillar Inc.                                                                                                                                                              
 
Condensed Consolidated Statement of Results of Operations                                                                                                                    
 
(Unaudited)                                                                                                                                                                  
 
(Dollars in millions except per share data)                                                                                                                                  
                                                                                             Three Months Ended                      Twelve Months Ended                   
                                                                                             December 31,                            December 31,                          
                                                                                             2012                 2011             2012                 2011           
 Sales and revenues:                                                                                                                                                
                        Sales of Machinery and Power Systems                                 $     15,357        $     16,557    $     63,068        $     57,392  
                        Revenues of Financial Products                                             718                 686             2,807               2,746   
                        Total sales and revenues                                                   16,075              17,243          65,875              60,138  
                                                                                                                                                                   
 Operating costs:                                                                                                                                                   
                        Cost of goods sold                                                         11,899              12,763          47,055              43,578  
                        Selling, general and administrative expenses                               1,591               1,487           5,919               5,203   
                        Research and development expenses                                          613                 604             2,466               2,297   
                        Interest expense of Financial Products                                     198                 203             797                 826     
                        Goodwill impairment charge                                                 580                 -               580                 -       
                        Other operating (income) expenses                                          156                 226             485                 1,081   
                        Total operating costs                                                      15,037              15,283          57,302              52,985  
                                                                                                                                                                   
 Operating profit                                                                                   1,038               1,960           8,573               7,153   
                                                                                                                                                                   
                        Interest expense excluding Financial Products                              115                 107             467                 396     
                        Other income (expense)                                                     (11)                125             130                 (32)    
                                                                                                                                                                   
 Consolidated profit before taxes                                                                   912                 1,978           8,236               6,725   
                                                                                                                                                                   
                        Provision (benefit) for income taxes                                       214                 416             2,528               1,720   
                        Profit of consolidated companies                                           698                 1,562           5,708               5,005   
                                                                                                                                                                   
                        Equity in profit (loss) of unconsolidated affiliated companies             2                   -               14                  (24)    
                                                                                                                                                                    
 Profit of consolidated and affiliated companies                                                    700                 1,562           5,722               4,981   
                                                                                                                                                                    
 Less: Profit (loss) attributable to noncontrolling interests                                       3                   15              41                  53      
                                                                                                                                                                    
 Profit  1                                                                                    $     697           $     1,547     $     5,681         $     4,928   
                                                                                                                                                                   
                                                                                                                                                                    
 Profit per common share                                                                      $     1.07          $     2.39      $     8.71          $     7.64    
                                                                                                                                                                   
 Profit per common share - diluted2                                                           $     1.04          $     2.32      $     8.48          $     7.40    
                                                                                                                                                                   
 Weighted average common shares                                                                                                                                     
 outstanding (millions)                                                                                                                                             
                                                           - Basic                                 654.4               647.1           652.6               645.0   
                                                           - Diluted2                              669.3               665.9           669.6               666.1   
                                                                                                                                                                    
 Cash dividends declared per common share                                                     $     1.04          $     0.92      $     2.02          $     1.82    
                                                                                                                                                                   
                                                                                                                                                                  


 1                 Profit attributable to common stockholders.                                                                                                                                                         
 2                 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.                                                                                                     
                                                                                                                                                                                                                       
                                                                                                                                                                                                                       
                                                                                                                                                                                                                       
                                                                                                                                                                                                                       
                                                                                                                                                                                                                       
 Caterpillar Inc.                                                                                                                                                           
 
Condensed Consolidated Statement of Financial Position                                                                                                                    
 
(Unaudited)                                                                                                                                                               
 
(Millions of dollars)                                                                                                                                                     
                                                                                                                     December 31,                   December 31,         
                                                                                                                     2012                           2011                 
 Assets                                                                                                                                                                
                                      Current assets:                                                                                                                 
                                                         Cash and short-term investments                           $         5,490               $         3,057     
                                                         Receivables - trade and other                                       10,092                        10,285    
                                                         Receivables - finance                                               8,860                         7,668     
                                                         Deferred and refundable income taxes                                1,547                         1,580     
                                                         Prepaid expenses and other current assets                           988                           994       
                                                         Inventories                                                         15,547                        14,544    
                                      Total current assets                                                                    42,524                        38,128    
                                                                                                                                                                      
                                      Property, plant and equipment - net                                                     16,461                        14,395    
                                      Long-term receivables - trade and other                                                 1,316                         1,130     
                                      Long-term receivables - finance                                                         14,029                        11,948    
                                      Investments in unconsolidated affiliated companies                                      272                           133       
                                      Noncurrent deferred and refundable income taxes                                         2,011                         2,157     
                                      Intangible assets                                                                       4,016                         4,368     
                                      Goodwill                                                                                6,942                         7,080     
                                      Other assets                                                                            1,785                         2,107     
 Total assets                                                                                                        $         89,356              $         81,446    
                                                                                                                                                                       
 Liabilities                                                                                                                                                           
                                      Current liabilities:                                                                                                            
                                                         Short-term borrowings:                                                                                      
                                                                                  -- Machinery and Power Systems  $         636                 $         93        
                                                                                  -- Financial Products                     4,651                         3,895     
                                                         Accounts payable                                                    6,753                         8,161     
                                                         Accrued expenses                                                    3,667                         3,386     
                                                         Accrued wages, salaries and employee benefits                       1,911                         2,410     
                                                         Customer advances                                                   2,978                         2,691     
                                                         Dividends payable                                                   -                             298       
                                                         Other current liabilities                                           2,055                         1,967     
                                                         Long-term debt due within one year:                                                                         
                                                                                  -- Machinery and Power Systems            1,113                         558       
                                                                                  -- Financial Products                     5,991                         5,102     
                                      Total current liabilities                                                               29,755                        28,561    
                                                                                                                                                                    
                                      Long-term debt due after one year:                                                                                              
                                                                                  -- Machinery and Power Systems            8,666                         8,415     
                                                                                  -- Financial Products                     19,086                        16,529    
                                      Liability for postemployment benefits                                                   11,085                        10,956    
                                      Other liabilities                                                                       3,182                         3,583     
 Total liabilities                                                                                                             71,774                        68,044    
                                                                                                                                                                       
 Redeemable noncontrolling interest                                                                                            -                             473       
                                                                                                                                                                       
 Stockholders' equity                                                                                                                                                  
                                      Common stock                                                                            4,481                         4,273     
                                      Treasury stock                                                                          (10,074)                      (10,281)  
                                      Profit employed in the business                                                         29,558                        25,219    
                                      Accumulated other comprehensive income (loss)                                           (6,433)                       (6,328)   
                                      Noncontrolling interests                                                                50                            46        
 Total stockholders' equity                                                                                                    17,582                        12,929    
 Total liabilities, redeemable noncontrolling interest and stockholders' equity                                      $         89,356              $         81,446    
                                                                                                                                                                   


 Caterpillar Inc.                                                                                                                                         
 
Condensed Consolidated Statement of Cash Flow                                                                                                           
 
(Unaudited)                                                                                                                                             
 
(Millions of dollars)                                                                                                                                   
                                                                                                               Twelve Months Ended                       
                                                                                                               December 31,                              
                                                                                                               2012                   2011             
 Cash flow from operating activities:                                                                                                                
                      Profit of consolidated and affiliated companies                                         $     5,722           $     4,981     
                      Adjustments for non-cash items:                                                                                               
                                                              Depreciation and amortization                        2,813                 2,527     
                                                              Goodwill impairment charge                           580                   -         
                                                              Other                                                (191)                 457       
                      Changes in assets and liabilities, net of acquisitions and divestitures:                                                      
                                                              Receivables - trade and other                        (173)                 (1,345)   
                                                              Inventories                                          (1,149)               (2,927)   
                                                              Accounts payable                                     (1,868)               1,555     
                                                              Accrued expenses                                     183                   308       
                                                              Accrued wages, salaries and employee benefits        (490)                 619       
                                                              Customer advances                                    241                   173       
                                                              Other assets - net                                   252                   (91)      
                                                              Other liabilities - net                              (679)                 753       
 Net cash provided by (used for) operating activities                                                                5,241                 7,010     
 Cash flow from investing activities:                                                                                                                
                      Capital expenditures - excluding equipment leased to others                                   (3,350)               (2,515)   
                      Expenditures for equipment leased to others                                                   (1,726)               (1,409)   
                      Proceeds from disposals of leased assets and property, plant and equipment                    1,117                 1,354     
                      Additions to finance receivables                                                              (12,010)              (10,001)  
                      Collections of finance receivables                                                            8,995                 8,874     
                      Proceeds from sale of finance receivables                                                     132                   207       
                      Investments and acquisitions (net of cash acquired)                                           (618)                 (8,184)   
                      Proceeds from sale of businesses and investments (net of cash sold)                           1,199                 376       
                      Proceeds from sale of available-for-sale securities                                           306                   247       
                      Investments in available-for-sale securities                                                  (402)                 (336)     
                      Other - net                                                                                   167                   (40)      
 Net cash provided by (used for) investing activities                                                                (6,190)               (11,427)  
 Cash flow from financing activities:                                                                                                                
                      Dividends paid                                                                                (1,617)               (1,159)   
                      Distribution to noncontrolling interests                                                      (6)                   (3)       
                      Common stock issued, including treasury shares reissued                                       52                    123       
                      Excess tax benefit from stock-based compensation                                              192                   189       
                      Acquisitions of noncontrolling interests                                                      (449)                 (8)       
                      Proceeds from debt issued (original maturities greater than three months)                     16,015                15,460    
                      Payments on debt (original maturities greater than three months)                              (11,099)              (10,593)  
                      Short-term borrowings - net (original maturities three months or less)                        461                   (43)      
 Net cash provided by (used for) financing activities                                                                3,549                 3,966     
 Effect of exchange rate changes on cash                                                                             (167)                 (84)      
 Increase (decrease) in cash and short-term investments                                                              2,433                 (535)     
 Cash and short-term investments at beginning of period                                                              3,057                 3,592     
 Cash and short-term investments at end of period                                                              $     5,490           $     3,057     


                                                                                                                                                                            
 All short-term investments, which consist primarily of highly liquid investments with original maturities of three months or less, are considered to be cash equivalents.  
                                                                                                                                                                            


 Caterpillar Inc.                                                                                                                                                                                                                 
 Supplemental Data for Results of Operations                                                                                                                                                                                      
 For The Three Months Ended December 31, 2012                                                                                                                                                                                     
 (Unaudited)                                                                                                                                                                                                                      
 (Millions of dollars)                                                                                                                                                                                                            
                                                                                                                        Supplemental Consolidating Data                                                                        
                                                                                                                        Machinery                                                                                         
                                                                                                   Consolidated         and Power Systems  1             Financial Products             Consolidating Adjustments          
 Sales and revenues:                                                                                                                                                                                                  
                                  Sales of Machinery and Power Systems                            $        15,357     $            15,357             $           -                 $          -                     
                                  Revenues of Financial Products                                           718                     -                              807                          (89)       2          
                                  Total sales and revenues                                                 16,075                  15,357                         807                          (89)                  
                                                                                                                                                                                                                     
 Operating costs:                                                                                                                                                                                                     
                                  Cost of goods sold                                                       11,899                  11,899                         -                            -                     
                                  Selling, general and administrative expenses                             1,591                   1,426                          188                          (23)       3          
                                  Research and development expenses                                        613                     613                            -                            -                     
                                  Interest expense of Financial Products                                   198                     -                              199                          (1)        4          
                                  Goodwill impairment charge                                               580                     580                            -                            -                     
                                  Other operating (income) expenses                                        156                     (87)                           238                          5          3          
                                  Total operating costs                                                    15,037                  14,431                         625                          (19)                  
                                                                                                                                                                                                                     
 Operating profit                                                                                           1,038                   926                            182                          (70)                  
                                                                                                                                                                                                                     
                                  Interest expense excluding Financial Products                            115                     126                            -                            (11)       4          
                                  Other income (expense)                                                   (11)                    (84)                           14                           59         5          
                                                                                                                                                                                                                     
 Consolidated profit before taxes                                                                           912                     716                            196                          -                     
                                                                                                                                                                                                                     
                                  Provision for income taxes                                               214                     168                            46                           -                     
                                  Profit of consolidated companies                                         698                     548                            150                          -                     
                                                                                                                                                                                                                     
                                  Equity in profit (loss) of unconsolidated affiliated companies           2                       2                              -                            -                     
                                  Equity in profit of Financial Products' subsidiaries                     -                       147                            -                            (147)      6          
                                                                                                                                                                                                                      
 Profit of consolidated and affiliated companies                                                            700                     697                            150                          (147)                 
                                                                                                                                                                                                                      
 Less: Profit (loss) attributable to noncontrolling interests                                               3                       -                              3                            -                     
                                                                                                                                                                                                                      
 Profit  7                                                                                         $        697        $            697                $           147               $          (147)                 


 1  Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.                                                                                   
 2  Elimination of Financial Products' revenues earned from Machinery and Power Systems.                                                                                                          
 3  Elimination of net expenses recorded by Machinery and Power Systems paid to Financial Products.                                                                                               
 4  Elimination of interest expense recorded between Financial Products and Machinery and Power Systems.                                                                                          
 5  Elimination of discount recorded by Machinery and Power Systems on receivables sold to Financial Products and of interest earned between Machinery and Power Systems and Financial Products.  
 6  Elimination of Financial Products' profit due to equity method of accounting.                                                                                                                 
 7  Profit attributable to common stockholders.                                                                                                                                                   


 Caterpillar Inc.                                                                                                                                                                                                                 
 Supplemental Data for Results of Operations                                                                                                                                                                                      
 For The Three Months Ended December 31, 2011                                                                                                                                                                                     
 (Unaudited)                                                                                                                                                                                                                      
 (Millions of dollars)                                                                                                                                                                                                            
                                                                                                                        Supplemental Consolidating Data                                                                        
                                                                                                                        Machinery                                                                                          
                                                                                                   Consolidated         and Power Systems  1             Financial Products             Consolidating Adjustments          
 Sales and revenues:                                                                                                                                                                                                  
                                  Sales of Machinery and Power Systems                            $        16,557     $            16,557             $           -                 $          -                     
                                  Revenues of Financial Products                                           686                     -                              766                          (80)       2          
                                  Total sales and revenues                                                 17,243                  16,557                         766                          (80)                  
                                                                                                                                                                                                                     
 Operating costs:                                                                                                                                                                                                     
                                  Cost of goods sold                                                       12,763                  12,763                         -                            -                     
                                  Selling, general and administrative expenses                             1,487                   1,344                          177                          (34)       3          
                                  Research and development expenses                                        604                     604                            -                            -                     
                                  Interest expense of Financial Products                                   203                     -                              203                          -          4          
                                  Other operating (income) expenses                                        226                     (23)                           230                          19         3          
                                  Total operating costs                                                    15,283                  14,688                         610                          (15)                  
                                                                                                                                                                                                                     
 Operating profit                                                                                           1,960                   1,869                          156                          (65)                  
                                                                                                                                                                                                                     
                                  Interest expense excluding Financial Products                            107                     118                            -                            (11)       4          
                                  Other income (expense)                                                   125                     63                             8                            54         5          
                                                                                                                                                                                                                     
 Consolidated profit before taxes                                                                           1,978                   1,814                          164                          -                     
                                                                                                                                                                                                                     
                                  Provision for income taxes                                               416                     384                            32                           -                     
                                  Profit of consolidated companies                                         1,562                   1,430                          132                          -                     
                                                                                                                                                                                                                     
                                  Equity in profit (loss) of unconsolidated affiliated companies           -                       -                              -                            -                     
                                  Equity in profit of Financial Products' subsidiaries                     -                       129                            -                            (129)      6          
                                                                                                                                                                                                                      
 Profit of consolidated and affiliated companies                                                            1,562                   1,559                          132                          (129                  
                                                                                                                                                                                                                      
 Less: Profit (loss) attributable to noncontrolling interests                                               15                      12                             3                            -                     
                                                                                                                                                                                                                      
 Profit  7                                                                                         $        1,547      $            1,547              $           129               $          (129)                 


 1  Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.                                                                                   
 2  Elimination of Financial Products' revenues earned from Machinery and Power Systems.                                                                                                          
 3  Elimination of net expenses recorded by Machinery and Power Systems paid to Financial Products.                                                                                               
 4  Elimination of interest expense recorded between Financial Products and Machinery and Power Systems.                                                                                          
 5  Elimination of discount recorded by Machinery and Power Systems on receivables sold to Financial Products and of interest earned between Machinery and Power Systems and Financial Products.  
 6  Elimination of Financial Products' profit due to equity method of accounting.                                                                                                                 
 7  Profit attributable to common stockholders.                                                                                                                                                   


 Caterpillar Inc.                                                                                                                                                                                                                 
 Supplemental Data for Results of Operations                                                                                                                                                                                      
 For The Twelve Months Ended December 31, 2012                                                                                                                                                                                    
 (Unaudited)                                                                                                                                                                                                                      
 (Millions of dollars)                                                                                                                                                                                                            
                                                                                                                        Supplemental Consolidating Data                                                                        
                                                                                                                        Machinery                                                                                         
                                                                                                   Consolidated         and Power Systems  1             Financial Products             Consolidating Adjustments          
 Sales and revenues:                                                                                                                                                                                                  
                                  Sales of Machinery and Power Systems                            $        63,068     $            63,068             $           -                 $          -                     
                                  Revenues of Financial Products                                           2,807                   -                              3,160                        (353)      2          
                                  Total sales and revenues                                                 65,875                  63,068                         3,160                        (353)                 
                                                                                                                                                                                                                     
 Operating costs:                                                                                                                                                                                                     
                                  Cost of goods sold                                                       47,055                  47,055                         -                            -                     
                                  Selling, general and administrative expenses                             5,919                   5,348                          618                          (47)       3          
                                  Research and development expenses                                        2,466                   2,466                          -                            -                     
                                  Interest expense of Financial Products                                   797                     -                              801                          (4)        4          
                                  Goodwill impairment charge                                               580                     580                            -                            -                     
                                  Other operating (income) expenses                                        485                     (495)                          1,000                        (20)       3          
                                  Total operating costs                                                    57,302                  54,954                         2,419                        (71)                  
                                                                                                                                                                                                                     
 Operating profit                                                                                           8,573                   8,114                          741                          (282)                 
                                                                                                                                                                                                                     
                                  Interest expense excluding Financial Products                            467                     512                            -                            (45)       4          
                                  Other income (expense)                                                   130                     (146)                          39                           237        5          
                                                                                                                                                                                                                     
 Consolidated profit before taxes                                                                           8,236                   7,456                          780                          -                     
                                                                                                                                                                                                                     
                                  Provision for income taxes                                               2,528                   2,314                          214                          -                     
                                  Profit of consolidated companies                                         5,708                   5,142                          566                          -                     
                                                                                                                                                                                                                     
                                  Equity in profit (loss) of unconsolidated affiliated companies           14                      14                             -                            -                     
                                  Equity in profit of Financial Products' subsidiaries                     -                       555                            -                            (555)      6          
                                                                                                                                                                                                                      
 Profit of consolidated and affiliated companies                                                            5,722                   5,711                          566                          (555)                 
                                                                                                                                                                                                                      
 Less: Profit (loss) attributable to noncontrolling interests                                               41                      30                             11                           -                     
                                                                                                                                                                                                                      
 Profit  7                                                                                         $        5,681      $            5,681              $           555               $          (555)                 


 1  Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.                                                                                   
 2  Elimination of Financial Products' revenues earned from Machinery and Power Systems.                                                                                                          
 3  Elimination of net expenses recorded by Machinery and Power Systems paid to Financial Products.                                                                                               
 4  Elimination of interest expense recorded between Financial Products and Machinery and Power Systems.                                                                                          
 5  Elimination of discount recorded by Machinery and Power Systems on receivables sold to Financial Products and of interest earned between Machinery and Power Systems and Financial Products.  
 6  Elimination of Financial Products' profit due to equity method of accounting.                                                                                                                 
 7  Profit attributable to common stockholders.                                                                                                                                                   


 Caterpillar Inc.                                                                                                                                                                                                                 
 Supplemental Data for Results of Operations                                                                                                                                                                                      
 For The Twelve Months Ended December 31, 2011                                                                                                                                                                                    
 (Unaudited)                                                                                                                                                                                                                      
 (Millions of dollars)                                                                                                                                                                                                            
                                                                                                                       Supplemental Consolidating Data                                                                        
                                                                                                                       Machinery                                                                                         
                                                                                                  Consolidated         and Power Systems  1             Financial Products             Consolidating Adjustments          
 Sales and revenues:                                                                                                                                                                                                  
                                  Sales of Machinery and Power Systems                            $        57,392     $            57,392             $           -                 $          -                     
                                  Revenues of Financial Products                                           2,746                   -                              3,057                        (311)      2          
                                  Total sales and revenues                                                 60,138                  57,392                         3,057                        (311)                 
                                                                                                                                                                                                                     
 Operating costs:                                                                                                                                                                                                     
                                  Cost of goods sold                                                       43,578                  43,578                         -                            -                     
                                  Selling, general and administrative expenses                             5,203                   4,631                          621                          (49)       3          
                                  Research and development expenses                                        2,297                   2,297                          -                            -                     
                                  Interest expense of Financial Products                                   826                     -                              827                          (1)        4          
                                  Other operating (income) expenses                                        1,081                   63                             1,026                        (8)        3          
                                  Total operating costs                                                    52,985                  50,569                         2,474                        (58)                  
                                                                                                                                                                                                                     
 Operating profit                                                                                           7,153                   6,823                          583                          (253)                 
                                                                                                                                                                                                                     
                                  Interest expense excluding Financial Products                            396                     439                            -                            (43)       4          
                                  Other income (expense)                                                   (32)                    (279)                          37                           210        5          
                                                                                                                                                                                                                     
 Consolidated profit before taxes                                                                           6,725                   6,105                          620                          -                     
                                                                                                                                                                                                                     
                                  Provision (benefit) for income taxes                                     1,720                   1,568                          152                          -                     
                                  Profit of consolidated companies                                         5,005                   4,537                          468                          -                     
                                                                                                                                                                                                                     
                                  Equity in profit (loss) of unconsolidated affiliated companies           (24)                    (24)                           -                            -                     
                                  Equity in profit of Financial Products' subsidiaries                     -                       453                            -                            (453)      6          
                                                                                                                                                                                                                      
 Profit of consolidated and affiliated companies                                                            4,981                   4,966                          468                          (453)                 
                                                                                                                                                                                                                      
 Less: Profit (loss) attributable to noncontrolling interests                                               53                      38                             15                           -                     
                                                                                                                                                                                                                      
 Profit  7                                                                                         $        4,928      $            4,928              $           453               $          (453)                 


 1  Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.                                                                                   
 2  Elimination of Financial Products' revenues earned from Machinery and Power Systems.                                                                                                          
 3  Elimination of net expenses recorded by Machinery and Power Systems paid to Financial Products.                                                                                               
 4  Elimination of interest expense recorded between Financial Products and Machinery and Power Systems.                                                                                          
 5  Elimination of discount recorded by Machinery and Power Systems on receivables sold to Financial Products and of interest earned between Machinery and Power Systems and Financial Products.  
 6  Elimination of Financial Products' profit due to equity method of accounting.                                                                                                                 
 7  Profit attributable to common stockholders.                                                                                                                                                   


 Caterpillar Inc.                                                                                                                                                                                                                                  
 
Supplemental Data for Cash Flow                                                                                                                                                                                                                  
 
For The Twelve Months Ended December 31, 2012                                                                                                                                                                                                    
 
(Unaudited)                                                                                                                                                                                                                                      
 
(Millions of dollars)                                                                                                                                                                                                                            
                                                                                                                                     Supplemental Consolidating Data                                                                            
                                                                                                                                     Machinery                                                                                              
                                                                                                               Consolidated          and Power Systems  1             Financial Products             Consolidating Adjustments              
 Cash flow from operating activities:                                                                                                                                                                                                  
                      Profit of consolidated and affiliated companies                                         $        5,722       $            5,711              $           566               $        (555)    2                  
                      Adjustments for non-cash items:                                                                                                                                                                                 
                                                              Depreciation and amortization                           2,813                    2,082                          731                        -                           
                                                              Undistributed profit of Financial Products              -                        (305)                          -                          305      3                  
                                                              Goodwill impairment charge                              580                      580                            -                          -                           
                                                              Other                                                   (191)                    (298)                          (88)                       195      4                  
                      Changes in assets and liabilities, net of acquisitions and divestitures:                                                                                                                                        
                                                              Receivables - trade and other                           (173)                    -                              (37)                       (136)    4,5                
                                                              Inventories                                             (1,149)                  (1,094)                        -                          (55)     4                  
                                                              Accounts payable                                        (1,868)                  (1,821)                        (15)                       (32)     4                  
                                                              Accrued expenses                                        183                      134                            48                         1        4                  
                                                              Accrued wages, salaries and employee benefits           (490)                    (488)                          (2)                        -                           
                                                              Customer advances                                       241                      241                            -                          -                           
                                                              Other assets - net                                      252                      275                            (7)                        (16)     4                  
                                                              Other liabilities - net                                 (679)                    (819)                          124                        16       4                  
 Net cash provided by (used for) operating activities                                                                   5,241                    4,198                          1,320                      (277)                       
 Cash flow from investing activities:                                                                                                                                                                                                  
                      Capital expenditures - excluding equipment leased to others                                      (3,350)                  (3,335)                        (15)                       -                           
                      Expenditures for equipment leased to others                                                      (1,726)                  (100)                          (1,781)                    155      4,9                
                      Proceeds from disposals of leased assets and property, plant and equipment                       1,117                    244                            891                        (18)     4                  
                      Additions to finance receivables                                                                 (12,010)                 -                              (18,754)                   6,744    5,8,9              
                      Collections of finance receivables                                                               8,995                    -                              14,787                     (5,792)  5,9                
                      Net intercompany purchased receivables                                                           -                        -                              250                        (250)    5                  
                      Proceeds from sale of finance receivables                                                        132                      -                              144                        (12)     5                  
                      Net intercompany borrowings                                                                      -                        (203)                          33                         170      6                  
                      Investments and acquisitions (net of cash acquired)                                              (618)                    (562)                          -                          (56)     9                  
                      Proceeds from sale of businesses and investments (net of cash sold)                              1,199                    1,943                          -                          (744)    8                  
                      Proceeds from sale of available-for-sale securities                                              306                      27                             279                        -                           
                      Investments in available-for-sale securities                                                     (402)                    (8)                            (394)                      -                           
                      Other - net                                                                                      167                      126                            41                         -                           
 Net cash provided by (used for) investing activities                                                                   (6,190)                  (1,868)                        (4,519)                    197                         
 Cash flow from financing activities:                                                                                                                                                                                                  
                      Dividends paid                                                                                   (1,617)                  (1,617)                        (250)                      250      7                  
                      Distribution to noncontrolling interests                                                         (6)                      (6)                            -                          -                           
                      Common stock issued, including treasury shares reissued                                          52                       52                             -                          -                           
                      Excess tax benefit from stock-based compensation                                                 192                      192                            -                          -                           
                      Acquisitions of noncontrolling interests                                                         (449)                    (449)                          -                          -                           
                      Net intercompany borrowings                                                                      -                        (33)                           203                        (170)    6                  
                      Proceeds from debt issued (original maturities greater than three months)                        16,015                   2,209                          13,806                     -                           
                      Payments on debt (original maturities greater than three months)                                 (11,099)                 (1,107)                        (9,992)                    -                           
                      Short-term borrowings - net (original maturities three months or less)                           461                      (14)                           475                        -                           
 Net cash provided by (used for) financing activities                                                                   3,549                    (773)                          4,242                      80                          
 Effect of exchange rate changes on cash                                                                                (167)                    (80)                           (87)                       -                           
 Increase (decrease) in cash and short-term investments                                                                 2,433                    1,477                          956                        -                           
 Cash and short-term investments at beginning of period                                                                 3,057                    1,829                          1,228                      -                           
 Cash and short-term investments at end of period                                                              $        5,490       $            3,306              $           2,184             $        -                           


                                                                                                                                                                                                                                                     
 1  Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.                                                                                                                                      
 2  Elimination of Financial Products' profit after tax due to equity method of accounting.                                                                                                                                                          
 3  Non-cash adjustment for the undistributed earnings from Financial Products.                                                                                                                                                                      
 4  Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.                                                                                                                                     
 5  Reclassification of Financial Products' cash flow activity from investing to operating for receivables that arose from the sale of inventory.                                                                                                    
 6  Elimination of net proceeds and payments to/from Machinery and Power Systems and Financial Products.                                                                                                                                             
 7  Elimination of dividend from Financial Products to Machinery and Power Systems.                                                                                                                                                                  
 8  Elimination of proceeds received from Financial Products related to Machinery and Power Systems' sale of portions of the Bucyrus distribution businesses to Cat dealers.                                                                         
 9  Reclassification of Financial Products' payments related to Machinery and Power Systems' acquisition of Caterpillar Tohoku Limited.                                                                                                              
                                                                                                                                                                                                                                


 Caterpillar Inc.                                                                                                                                                                                                                                  
 
Supplemental Data for Cash Flow                                                                                                                                                                                                                  
 
For The Twelve Months Ended December 31, 2011                                                                                                                                                                                                    
 
(Unaudited)                                                                                                                                                                                                                                      
 
(Millions of dollars)                                                                                                                                                                                                                            
                                                                                                                                     Supplemental Consolidating Data                                                                            
                                                                                                                                     Machinery                                                                                              
                                                                                                               Consolidated          and Power Systems  1             Financial Products             Consolidating Adjustments              
 Cash flow from operating activities:                                                                                                                                                                                                  
                      Profit of consolidated and affiliated companies                                         $        4,981       $            4,966              $           468               $        (453)    2                  
                      Adjustments for non-cash items:                                                                                                                                                                                 
                                                              Depreciation and amortization                           2,527                    1,802                          725                        -                           
                                                              Other                                                   457                      342                            (112)                      227      4                  
                      Financial Products' dividend in excess of profit                                                 -                        147                            -                          (147)    3                  
                      Changes in assets and liabilities, net of acquisitions and divestitures:                                                                                                                                        
                                                              Receivables - trade and other                           (1,345)                  286                            5                          (1,636)  4,5                
                                                              Inventories                                             (2,927)                  (2,924)                        -                          (3)      4                  
                                                              Accounts payable                                        1,555                    1,635                          (8)                        (72)     4                  
                                                              Accrued expenses                                        308                      282                            28                         (2)      4                  
                                                              Accrued wages, salaries and employee benefits           619                      610                            9                          -                           
                                                              Customer advances                                       173                      173                            -                          -                           
                                                              Other assets - net                                      (91)                     (139)                          35                         13       4                  
                                                              Other liabilities - net                                 753                      792                            (26)                       (13)     4                  
 Net cash provided by (used for) operating activities                                                                   7,010                    7,972                          1,124                      (2,086)                     
 Cash flow from investing activities:                                                                                                                                                                                                  
                      Capital expenditures - excluding equipment leased to others                                      (2,515)                  (2,503)                        (12)                       -                           
                      Expenditures for equipment leased to others                                                      (1,409)                  (143)                          (1,342)                    76       4                  
                      Proceeds from disposals of leased assets and property, plant and equipment                       1,354                    259                            1,173                      (78)     4                  
                      Additions to finance receivables                                                                 (10,001)                 -                              (17,058)                   7,057    5,8                
                      Collections of finance receivables                                                               8,874                    -                              15,260                     (6,386)  5                  
                      Net intercompany purchased receivables                                                           -                        -                              (1,164)                    1,164    5                  
                      Proceeds from sale of finance receivables                                                        207                      -                              207                        -                           
                      Net intercompany borrowings                                                                      -                        600                            41                         (641)    6                  
                      Investments and acquisitions (net of cash acquired)                                              (8,184)                  (8,184)                        -                          -                           
                      Proceeds from sale of businesses and investments (net of cash sold)                              376                      712                            11                         (347)    8                  
                      Proceeds from sale of available-for-sale securities                                              247                      13                             234                        -                           
                      Investments in available-for-sale securities                                                     (336)                    (15)                           (321)                      -                           
                      Other - net                                                                                      (40)                     (70)                           26                         4        9                  
 Net cash provided by (used for) investing activities                                                                   (11,427)                 (9,331)                        (2,945)                    849                         
 Cash flow from financing activities:                                                                                                                                                                                                  
                      Dividends paid                                                                                   (1,159)                  (1,159)                        (600)                      600      7                  
                      Distribution to noncontrolling interests                                                         (3)                      (3)                            -                          -                           
                      Common stock issued, including treasury shares reissued                                          123                      123                            4                          (4)      9                  
                      Excess tax benefit from stock-based compensation                                                 189                      189                            -                          -                           
                      Acquisitions of noncontrolling interests                                                         (8)                      (1)                            (7)                        -                           
                      Net intercompany borrowings                                                                      -                        (41)                           (600)                      641      6                  
                      Proceeds from debt issued (original maturities greater than three months)                        15,460                   4,587                          10,873                     -                           
                      Payments on debt (original maturities greater than three months)                                 (10,593)                 (2,269)                        (8,324)                    -                           
                      Short-term borrowings - net (original maturities three months or less)                           (43)                     60                             (103)                      -                           
 Net cash provided by (used for) financing activities                                                                   3,966                    1,486                          1,243                      1,237                       
 Effect of exchange rate changes on cash                                                                                (84)                     (123)                          39                         -                           
 Increase (decrease) in cash and short-term investments                                                                 (535)                    4                              (539)                      -                           
 Cash and short-term investments at beginning of period                                                                 3,592                    1,825                          1,767                      -                           
 Cash and short-term investments at end of period                                                              $        3,057       $            1,829              $           1,228             $        -                           


 1  Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.                                                                                                                
 2  Elimination of Financial Products' profit after tax due to equity method of accounting.                                                                                                                                    
 3  Elimination of Financial Products' dividend to Machinery and Power Systems in excess of Financial Products' profit.                                                                                                        
 4  Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.                                                                                                               
 5  Reclassification of Financial Products' cash flow activity from investing to operating for receivables that arose from the sale of inventory.                                                                              
 6  Elimination of net proceeds and payments to/from Machinery and Power Systems and Financial Products.                                                                                                                       
 7  Elimination of dividend from Financial Products to Machinery and Power Systems.                                                                                                                                            
 8  Elimination of proceeds received from Financial Products related to Machinery and Power Systems' sale of Carter Machinery.                                                                                                 
 9  Elimination of change in investment and common stock related to Financial Products.                                                                                                                                        
                                                                                                                                                                                                          


SOURCE  Caterpillar Inc.


Jim Dugan, Corporate Public Affairs, Caterpillar, +1-309-494-4100 (Office) or
+1-309-360-7311 (Mobile), Dugan_Jim@cat.com

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