8-KRegulation FDOther Events

CATERPILLAR INC 8-K Report, Regulation FD Disclosure (May 16, 2006)

Filed May 16, 2006For Securities:CAT

Summary

Caterpillar Inc. announced on May 16, 2006, its agreement to acquire Progress Rail Services, Inc. for approximately $1.0 billion, consisting of cash, stock, and assumption of debt. Progress Rail is a significant player in the North American railroad industry, specializing in remanufactured locomotive and railcar products and aftermarket services, with 2005 sales of $1.2 billion. This strategic acquisition aligns with Caterpillar's Vision 2020 strategy, aiming to expand its services portfolio and leverage its remanufacturing capabilities. The acquisition is expected to be accretive to Caterpillar's 2006 earnings per share and will add a new, diversified growth avenue within the transportation sector. Progress Rail's established network of over 90 facilities across the U.S., Canada, and Mexico, along with its experienced management team, are seen as key assets. Caterpillar intends to preserve Progress Rail's entrepreneurial nature and brand identity while integrating Caterpillar's global scale and technological expertise.

Key Highlights

  • 1Caterpillar to acquire Progress Rail Services for approximately $1.0 billion ($800 million cash/stock and $200 million debt assumption).
  • 2Progress Rail had 2005 sales of $1.2 billion and is a leading provider of aftermarket services to the North American railroad industry.
  • 3Acquisition supports Caterpillar's Vision 2020 strategy, focusing on growth in services and leveraging remanufacturing capabilities.
  • 4Transaction expected to be accretive to Caterpillar's 2006 earnings per share.
  • 5Progress Rail operates over 90 facilities across the U.S., Canada, and Mexico with approximately 3,700 employees.
  • 6Caterpillar plans to maintain Progress Rail's brand identity and entrepreneurial culture while integrating Caterpillar's global scale and technology.
  • 7The acquisition is subject to regulatory approvals and expected to close around the end of Q2 2006.

Frequently Asked Questions

Caterpillar expects the acquisition to be accretive to its 2006 profit per share. The company anticipates that Progress Rail will be included in results for the latter half of 2006. Caterpillar does not disclose specific financial information for individual operating units but notes Progress Rail has a history of solid profitability.

The total acquisition cost is approximately $1.0 billion. This includes $800 million in cash and Caterpillar stock (53% cash, 47% stock) and the assumption of $200 million in long-term debt.

No, Caterpillar does not intend to restate prior period financial results as the acquisition is not considered material enough to require restatement based on reporting rules.

While purchase price allocations are still being finalized, Caterpillar expects total intangibles, including goodwill, to be approximately $500 million resulting from this acquisition.

Caterpillar intends to preserve Progress Rail's entrepreneurial nature and maintain its identity. Progress Rail will operate autonomously, similar to other acquisitions like Solar Turbines. Caterpillar will contribute global scale, process capability, and access to technology, while Progress Rail will bring its established network, customer relationships, and expertise.