What were the key drivers of Caterpillar's revenue growth in Q3 2006?

Caterpillar's revenue growth was primarily driven by a substantial increase in sales volume for both Machinery and Engines, coupled with improved price realization. Favorable currency exchange rates also contributed positively to sales.

How did the acquisition of Progress Rail Services impact Caterpillar's financial results?

The acquisition of Progress Rail Services, completed in June 2006, contributed approximately $438 million in sales to the North America Machinery segment in the third quarter. It is expected to bolster Caterpillar's remanufacturing capabilities and aftermarket services in the railroad industry.

What are Caterpillar's expectations for sales and profit in the upcoming year (2007)?

For 2007, Caterpillar anticipates sales and revenues to be flat to up 5% from 2006. Profit per share is projected to be flat to up 10% from the midpoint of the 2006 outlook. This outlook factors in a slowing U.S. economy, a significant drop in on-highway truck engine sales, and weaker housing construction, but is supported by continued strength in other global industries and services.

What is Caterpillar's stance on stock-based compensation expenses?

Caterpillar adopted SFAS 123R effective January 1, 2006, which requires expensing stock-based compensation. This resulted in a pretax expense of approximately $135 million for 2006 and is expected to continue in future years, with an estimated pretax expense of $170 million to $220 million from 2007 to 2009. This adoption has reduced reported profit and profit per share.

CAT 10-Q Quarterly Report Q3 FY2006 — Revenue, Net Income, EPS

Summary

Caterpillar Inc. reported record third quarter and nine-month results for 2006, driven by strong sales volume and improved price realization across its Machinery and Engines segments. Total sales and revenues for the third quarter increased 17% year-over-year to $10.517 billion, with profit per share reaching $1.14. The company highlighted robust performance in key industries such as mining, energy, and infrastructure development, with significant contributions from international markets. The company also announced the successful acquisition of Progress Rail Services, Inc. for approximately $1 billion, which is expected to enhance its remanufacturing capabilities and aftermarket services. Despite facing increased operating costs, including higher manufacturing and SG&A expenses, Caterpillar remains focused on its 2010 strategic goals and the execution of its 6 Sigma quality initiative.

Key Highlights

1Record third quarter sales and revenues of $10.517 billion, up 17% from the prior year.
2Third quarter profit per share of $1.14, an increase of 21% compared to the prior year.
3Acquisition of Progress Rail Services, Inc. for approximately $1 billion, strengthening its rail aftermarket business.
4Significant growth in Machinery and Engines sales volume and price realization, particularly in international markets like EAME and Latin America.
5Financial Products segment revenue increased 15%, driven by growth in earning assets and higher interest rates.
6Operating profit improved due to higher price realization and sales volume, though partially offset by increased operating costs.
7Positive outlook for 2006 with projected sales of $41 billion and profit per share between $5.05 and $5.30, despite some cost pressures.

CATERPILLAR INC Quarterly Report for Q3 Ended Sep 30, 2006

Summary

Key Highlights

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