Caterpillar Reports Second-Quarter 2017 Results

PEORIA, Ill., July 25, 2017 /PRNewswire/ --


                                 Second Quarter
                                 --------------


    ($ in billions except profit
     per share)                                2017    2016
    ----------------------------               ----    ----


    Sales and Revenues                      $11.331 $10.342
    ------------------                      ------- -------


    Profit Per Share                          $1.35   $0.93
    ----------------                          -----   -----


    Adjusted Profit Per Share                 $1.49   $1.09
    --  Second-quarter sales and revenues up $1 billion from a year ago
    --  Profitability across enterprise reflects strong operational performance
    --  Delivered strong operating cash flow and increased the quarterly cash
        dividend
    --  Raised full-year outlook for 2017 sales and revenues and profit per
        share

Caterpillar Inc. (NYSE: CAT) today announced second-quarter 2017 sales and revenues of $11.3 billion, compared with $10.3 billion in the second quarter of 2016. Second-quarter 2017 profit per share was $1.35, compared with $0.93 per share in the second quarter of 2016. Excluding restructuring costs and a gain on the sale of an equity investment in IronPlanet, second-quarter 2017 adjusted profit per share was $1.49, compared to second-quarter 2016 adjusted profit per share of $1.09.

Caterpillar's financial position continued to strengthen. Machinery, Energy & Transportation (ME&T) operating cash flow was $2.0 billion during the quarter, and ME&T's debt-to-capital ratio improved to 38.6 percent, compared with 41.7 percent at the end of the first quarter of 2017. In June, the company announced a quarterly cash dividend increase and ended the quarter with an enterprise cash balance of $10.2 billion.

"Our team delivered an impressive quarter. As demand increased, we continued to control costs and generated higher profit margins," said Caterpillar CEO Jim Umpleby. "While a number of our end markets remain challenged, construction in China and gas compression in North America were highlights in the quarter. Mining and oil-related activities have come off of recent lows, and we are seeing improving demand for construction in most regions."

2017 Outlook

As a result of increased demand across many end markets and disciplined cost control, Caterpillar is raising its 2017 outlook. Some risks remain in the outlook, including weakness in the Middle East and Latin America, as well as geopolitical and commodity risk.

In April 2017, Caterpillar provided an outlook range for full-year 2017 sales and revenues of $38 billion to $41 billion with a midpoint of $39.5 billion. The company is raising its full-year 2017 expectations for sales and revenues to a range of $42 billion to $44 billion with a midpoint of $43 billion.

For the full year of 2017, Caterpillar expects profit per share of about $3.50 at the midpoint of the sales and revenues outlook range, or adjusted profit per share of about $5.00. The previous outlook for 2017 profit was about $2.10 per share at the midpoint of the sales and revenues outlook, or adjusted profit per share of about $3.75. The company now expects to incur about $1.2 billion of restructuring costs in 2017. The outlook does not include potential mark-to-market gains or losses related to pension and other postemployment benefit (OPEB) plans.

"Given our performance in the first half of the year and current quotation and ordering activity, we are confident in raising our full-year 2017 outlook," continued Umpleby. "We remain focused on serving our customers, delivering strong operational performance and executing our ongoing restructuring activities. During the second half of 2017, we anticipate making targeted investments in initiatives that are important to our future competitiveness, including enhanced digital capabilities and accelerating technology updates to our products. We intend to do this without adding to the structural costs we've worked so hard to streamline. These investments will prepare us to take advantage of the growth opportunities ahead."

Notes:

    --  Glossary of terms is included on pages 14-15; first occurrence of terms
        shown in bold italics.
    --  Information on non-GAAP financial measures is included on page 16.
    --  Caterpillar will conduct a teleconference and live webcast, with a slide
        presentation, beginning at 10 a.m. Central Time on Tuesday, July 25,
        2017, to discuss its 2017 second-quarter financial results. The
        accompanying slides will be available before the webcast on the
        Caterpillar website at
        http://www.caterpillar.com/investors/events-and-presentations.

About Caterpillar:
For more than 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent. Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets. With 2016 sales and revenues of $38.537 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 principally operates through its three product segments - Construction Industries, Resource Industries and Energy & Transportation - and also provides financing and related services through its Financial Products segment. For more information, visit caterpillar.com. To connect with us on social media, visit caterpillar.com/social-media.

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 speak only as of the date they are made, 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 and regional economic conditions and economic conditions in the industries we serve; (ii) commodity price changes, material price increases, fluctuations in demand for our products or significant shortages of material; (iii) government monetary or fiscal policies; (iv) political and economic risks, commercial instability and events beyond our control in the countries in which we operate; (v) our ability to develop, produce and market quality products that meet our customers' needs; (vi) the impact of the highly competitive environment in which we operate on our sales and pricing; (vii) information technology security threats and computer crime; (viii) additional restructuring costs or a failure to realize anticipated savings or benefits from past or future cost reduction actions; (ix) failure to realize all of the anticipated benefits from initiatives to increase our productivity, efficiency and cash flow and to reduce costs; (x) inventory management decisions and sourcing practices of our dealers and our OEM customers; (xi) a failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xii) union disputes or other employee relations issues; (xiii) adverse effects of unexpected events including natural disasters; (xiv) disruptions or volatility in global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xv) failure to maintain our credit ratings and potential resulting increases to our cost of borrowing and adverse effects on our cost of funds, liquidity, competitive position and access to capital markets; (xvi) our Financial Products segment's risks associated with the financial services industry; (xvii) changes in interest rates or market liquidity conditions; (xviii) an increase in delinquencies, repossessions or net losses of Cat Financial's customers; (xix) currency fluctuations; (xx) our or Cat Financial's compliance with financial and other restrictive covenants in debt agreements; (xxi) increased pension plan funding obligations; (xxii) alleged or actual violations of trade or anti-corruption laws and regulations; (xxiii) international trade policies and their impact on demand for our products and our competitive position; (xxiv) additional tax expense or exposure; (xxv) significant legal proceedings, claims, lawsuits or government investigations; (xxvi) new regulations or changes in financial services regulations; (xxvii) compliance with environmental laws and regulations; and (xxviii) other factors described in more detail in Caterpillar's Forms 10-Q, 10-K and other filings with the Securities and Exchange Commission.

CONSOLIDATED RESULTS

Consolidated Sales and Revenues

Consolidated Sales and Revenues Comparison

Second Quarter 2017 vs. Second Quarter 2016

To access this chart, go to http://www.caterpillar.com/en/investors/quarterly-results.html for the downloadable version of Caterpillar 2Q 2017 earnings.

The chart above graphically illustrates reasons for the change in Consolidated Sales and Revenues between the second quarter of 2016 (at left) and the second quarter of 2017 (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 $11.331 billion in the second quarter of 2017, an increase of $989 million, or 10 percent, compared with $10.342 billion in the second quarter of 2016. The increase was primarily due to higher sales volume, with the largest increase in Construction Industries mostly due to higher end-user demand for construction equipment. Sales volume for Resource Industries increased due to improved end-user demand for aftermarket parts and the favorable impact of changes in dealer inventories. Energy & Transportation's sales were higher mostly due to increased demand for aftermarket parts for reciprocating engines. Favorable price realization in Construction Industries also contributed to the sales improvement. The unfavorable impact of currency was mostly the result of a weaker euro and British pound. Financial Products' segment revenues were about flat.

Sales increased in Asia/Pacific, North America and Latin America, and were about flat in EAME. Asia/Pacific sales increased 25 percent primarily due to an increase in construction equipment sales in China resulting from increased infrastructure and residential investment. In North America, sales increased 7 percent due to higher demand for aftermarket parts and construction equipment, partially offset by the unfavorable impact of changes in dealer inventories as dealers decreased inventories more in the second quarter of 2017 than in the second quarter of 2016. Sales increased 20 percent in Latin America primarily due to stabilizing economic conditions in several countries in the region that resulted in improved end-user demand from low levels.

Consolidated Operating Profit

Consolidated Operating Profit Comparison

Second Quarter 2017 vs. Second Quarter 2016

To access this chart, go to http://www.caterpillar.com/en/investors/quarterly-results.html for the downloadable version of Caterpillar 2Q 2017 earnings.

The chart above graphically illustrates reasons for the change in Consolidated Operating Profit between the second quarter of 2016 (at left) and the second quarter of 2017 (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, Energy & Transportation other operating (income) expenses.

Operating profit for the second quarter of 2017 was $1.251 billion, compared with $785 million in the second quarter of 2016. The increase of $466 million was primarily due to higher sales volume, including a favorable mix of products. Improved price realization and lower variable manufacturing costs were about offset by higher period costs. Price realization was favorable in Construction Industries and about flat in Resource Industries and Energy & Transportation.

Variable manufacturing costs were lower primarily due to the favorable impact from cost absorption, partially offset by higher warranty expense. Cost absorption was favorable as inventory decreased in the second quarter of 2016 and increased in the second quarter of 2017.

Period costs increased primarily due to higher short-term incentive compensation expense, partially offset by the favorable impact of restructuring and cost reduction actions over the past year. These actions primarily impacted depreciation expense and research and development (R&D) expenses.

Restructuring costs of $169 million in the second quarter of 2017 were primarily related to restructuring programs in Resource Industries and Energy & Transportation, compared to $139 million in the second quarter of 2016.

Other Profit/Loss Items

    --  Other income/expense in the second quarter of 2017 was income of $29
        million, compared with income of $84 million in the second quarter of
        2016. The unfavorable change was a result of currency translation and
        hedging net losses during the second quarter of 2017, primarily due to
        the euro and British pound. The unfavorable change was partially offset
        by a pretax gain of $85 million on the sale of Caterpillar's equity
        investment in IronPlanet.
    --  The provision for income taxes in the second quarter reflects an
        estimated annual tax rate of 32 percent, which excludes the discrete
        item discussed in the following paragraph, compared to 25 percent for
        the second quarter of 2016. The increase is primarily due to higher
        non-U.S. restructuring costs in 2017 that are taxed at relatively lower
        non-U.S. tax rates, along with other changes in the geographic mix of
        profits from a tax perspective.

In addition, a tax benefit of $10 million was recorded for the settlement of stock-based compensation awards with tax deductions in excess of cumulative U.S. GAAP compensation expense.

Excluding restructuring costs, gain on sale of equity investment and discrete items, the 2017 estimated annual tax rate is expected to be 29 percent.

Global Workforce

Caterpillar worldwide, full-time employment was about 94,800 at the end of the second quarter of 2017, a decrease of about 5,200 full-time employees from the end of the second quarter of 2016, primarily the result of restructuring programs. The flexible workforce increased by about 3,500, primarily due to higher production volumes. In total, the global workforce decreased by about 1,700.



                                 June 30
                                 -------

                            2017            2016   Increase/

                                                 (Decrease)
                                                 ---------

    Full-time employment  94,800         100,000             (5,200)

    Flexible workforce    16,400          12,900               3,500
                          ------          ------               -----

    Total                111,200         112,900             (1,700)
                         =======         =======              ======


    Geographic summary
    ------------------

    U.S. workforce        48,500          49,600             (1,100)

    Non-U.S. workforce    62,700          63,300               (600)
                          ------          ------                ----

    Total                111,200         112,900             (1,700)
                         =======         =======              ======

SEGMENT RESULTS




    Sales and Revenues by Geographic Region

                                                                                                                                                   %      North           %            Latin           %                        %           Asia/             %

    (Millions of dollars)                                                                                                           Total         Change   America        Change        America        Change       EAME        Change       Pacific          Change
                                                                                                                                    -----         ------   -------        ------        -------        ------       ----        ------       -------          ------

    Second Quarter 2017
    -------------------

    Construction Industries(1)                                                                                                             $4,930     11%          $2,318           3%            $364          31%        $964        (5)%            $1,284          44%

    Resource Industries(2)                                                                                                                  1,759     21%             612          14%             299          16%         396         25%               452          32%

    Energy & Transportation(3)                                                                                                              3,941      5%           1,982          10%             312          13%       1,079          2%               568         (6)%

    All Other Segments?                                                                                                                        33   (20)%              10        (29)%               1        (50)%          11         22%                11        (31)%

    Corporate Items and Eliminations                                                                                                         (24)                   (22)                           -                     (2)                            -
                                                                                                                                              ---                     ---                          ---                     ---                           ---

    Machinery, Energy & Transportation                                                                                                    $10,639     10%          $4,900           7%            $976          20%      $2,448          2%            $2,315          25%


    Financial Products Segment                                                                                                               $776      2%            $505           7%             $79         (4)%        $101        (2)%               $91        (10)%

    Corporate Items and Eliminations                                                                                                         (84)                   (51)                        (15)                     (5)                         (13)
                                                                                                                                              ---                     ---                          ---                      ---                           ---

    Financial Products Revenues                                                                                                              $692    (1)%            $454           3%             $64         (9)%         $96        (2)%               $78        (13)%


    Consolidated Sales and Revenues                                                                                                       $11,331     10%          $5,354           7%          $1,040          18%      $2,544          2%            $2,393          23%
                                                                                                                                          =======                  ======                       ======                   ======                        ======


    Second Quarter 2016
    -------------------

    Construction Industries(1)                                                                                                             $4,426                  $2,247                         $277                   $1,010                          $892

    Resource Industries(2)                                                                                                                  1,457                     539                          258                      317                           343

    Energy & Transportation(3)                                                                                                              3,750                   1,809                          277                    1,062                           602

    All Other Segments?                                                                                                                        41                      14                            2                        9                            16

    Corporate Items and Eliminations                                                                                                         (29)                   (25)                           -                     (2)                          (2)
                                                                                                                                              ---                     ---                          ---                     ---                           ---

    Machinery, Energy & Transportation                                                                                                     $9,645                  $4,584                         $814                   $2,396                        $1,851


    Financial Products Segment                                                                                                               $759                    $473                          $82                     $103                          $101

    Corporate Items and Eliminations                                                                                                         (62)                   (34)                        (12)                     (5)                         (11)
                                                                                                                                              ---                     ---                          ---                      ---                           ---

    Financial Products Revenues                                                                                                              $697                    $439                          $70                      $98                           $90


    Consolidated Sales and Revenues                                                                                                       $10,342                  $5,023                         $884                   $2,494                        $1,941
                                                                                                                                          =======                  ======                         ====                   ======                        ======


    1          Does not include inter-segment sales of $29 million and $12 million in second quarter 2017 and 2016, respectively.

    2          Does not include inter-segment sales of $77 million and $57 million in second quarter 2017 and 2016, respectively.

    3          Does not include inter-segment sales of $827 million and $658 million in second quarter 2017 and 2016, respectively.

    4          Does not include inter-segment sales of $105 million and $101 million in second quarter 2017 and 2016, respectively.




    Sales and Revenues by Segment


                                          Second             Sales            Price                                            Second                        $         %

    (Millions of dollars)              Quarter 2016         Volume         Realization      Currency         Other          Quarter 2017           Change            Change
                                       ------------         ------         -----------      --------         -----          ------------           ------            ------

    Construction Industries                          $4,426           $374             $191            $(61)        $    -                $4,930              $504               11%

    Resource Industries                               1,457            313              (7)             (4)             -                 1,759               302               21%

    Energy & Transportation                           3,750            236              (3)            (42)             -                 3,941               191                5%

    All Other Segments                                   41            (8)               -               -             -                    33               (8)            (20)%

    Corporate Items and Eliminations                   (29)             4                2              (1)             -                  (24)                5
                                                        ---            ---              ---              ---            ---                   ---               ---


    Machinery, Energy & Transportation               $9,645           $919             $183           $(108)        $    -               $10,639              $994               10%


    Financial Products Segment                         $759         $    -          $    -          $    -           $17                   $776               $17                2%

    Corporate Items and Eliminations                   (62)             -               -               -          (22)                  (84)             (22)
                                                        ---            ---             ---             ---           ---                    ---               ---

    Financial Products Revenues                        $697       $      -        $      -        $      -          $(5)                  $692              $(5)             (1)%


    Consolidated Sales and Revenues                 $10,342           $919             $183           $(108)          $(5)               $11,331              $989               10%
                                                    =======           ====             ====            =====            ===                =======              ====




    Operating Profit (Loss) by Segment

                                          Second              Second                      $     %

    (Millions of dollars)              Quarter 2017        Quarter 2016        Change         Change
                                       ------------        ------------        ------         ------

    Construction Industries                           $901                $550           $351           64%

    Resource Industries                                 97               (163)           260           n/a  %

    Energy & Transportation                            700                 602             98           16%

    All Other Segments                                (20)               (14)           (6)        (43)%

    Corporate Items and
     Eliminations                                    (526)              (297)         (229)
                                                      ----                ----           ----

    Machinery, Energy &
     Transportation                                 $1,152                $678           $474           70%

    Financial Products
     Segment                                          $191                $202          $(11)         (5)%

    Corporate Items and
     Eliminations                                      (5)               (31)            26
                                                       ---                 ---            ---

    Financial Products                                $186                $171            $15            9%

    Consolidating Adjustments                         (87)               (64)          (23)


    Consolidated Operating
     Profit                                         $1,251                $785           $466           59%
                                                    ======                ====           ====



    CONSTRUCTION INDUSTRIES



    (Millions of dollars)

    Sales Comparison

                                                                               Second                                        Sales        Price      Currency                  Second            $            %
                                                                                                         Volume                                                   Quarter 2017            Change       Change
                                                                           Quarter 2016                                                Realization
                                                                           ------------                                                -----------


    Sales
     Comparison(1)                                                               $4,426                                           $374          $191        ($61)                  $4,930         $504          11%


    Sales by Geographic Region


                                                                               Second                                        Second              $       %
                                                                           Quarter 2017                                  Quarter 2016     Change       Change
                                                                           ------------                                  ------------     ------       ------

    North America                                                                $2,318                                         $2,247           $71           3%

    Latin America                                                                   364                                            277            87          31%

    EAME                                                                            964                                          1,010          (46)        (5)%

    Asia/Pacific                                                                  1,284                                            892           392          44%

    Total(1)                                                                     $4,930                                         $4,426          $504          11%


    Segment Profit

                                                                               Second                                        Second              $       %
                                                                           Quarter 2017                                  Quarter 2016     Change       Change
                                                                           ------------                                  ------------     ------       ------

    Segment Profit                                                                 $901                                           $550          $351          64%


    1 Does not include inter-segment sales of $29 million and $12 million in second quarter 2017 and 2016, respectively.

Construction Industries' sales were $4.930 billion in the second quarter of 2017, compared with $4.426 billion in the second quarter of 2016. The increase was due to higher sales volume and favorable price realization.

    --  Sales volume increased primarily due to higher end-user demand for
        construction equipment in Asia/Pacific and North America, partially
        offset by the unfavorable impact of changes in dealer inventories. A
        more significant decrease in North America dealer inventories in the
        second quarter of 2017 than in the second quarter of 2016 was partially
        offset by an increase in dealer inventories in Asia/Pacific in the
        second quarter of 2017.
    --  Although market conditions remain competitive, price realization was
        favorable due to a particularly weak pricing environment in the second
        quarter of 2016 and previously announced price increases impacting the
        second quarter of 2017.

Sales increased in Asia/Pacific and Latin America and were about flat in North America and EAME.

    --  Sales in Asia/Pacific were higher as a result of an increase in end-user
        demand, primarily in China, stemming from increased government support
        for infrastructure and strong residential investment. In addition,
        changes in dealer inventories in China favorably impacted sales as
        dealer inventories increased in the second quarter of 2017 and were
        about flat in the second quarter of 2016.
    --  Sales in Latin America were higher due to an increase in end-user demand
        and the favorable impact of changes in dealer inventories, which
        increased in the second quarter of 2017 and were about flat in the
        second quarter of 2016. Although construction activity remained weak
        across the region, end-user demand increased from low levels due to
        stabilizing economic conditions in several countries in the region.
    --  In North America, an increase in end-user demand and favorable price
        realization was mostly offset by an unfavorable impact from changes in
        dealer inventories. End-user demand was higher primarily due to improved
        residential and non-residential building construction activity, slightly
        offset by lower sales for infrastructure construction equipment. The
        unfavorable impact of changes in dealer inventories resulted from a more
        significant decrease in dealer inventories in the second quarter of 2017
        than in the second quarter of 2016.
    --  Sales in EAME were about flat as lower end-user demand and the
        unfavorable impact of the weaker euro and British pound were mostly
        offset by favorable price realization. The decline in end-user demand
        was primarily in Africa/Middle East due to volatile financial and
        economic conditions, as well as continued tight construction spending in
        oil-producing countries.

Construction Industries' profit was $901 million in the second quarter of 2017, compared with $550 million in the second quarter of 2016. The increase in profit was primarily due to favorable price realization and higher sales volume, including a favorable mix of products. Period costs were about flat as higher short-term incentive compensation expense was mostly offset by the favorable impact of restructuring and cost reduction actions.


    RESOURCE INDUSTRIES



    (Millions of dollars)

    Sales Comparison

                                                       Second                                            Sales                   Price            Currency           Second                   $     %
                                                                                                          Volume               Realization                         Quarter 2017        Change      Change
                                                    Quarter 2016
                                                    ------------


    Sales
     Comparison(1)                                                   $1,457                                               $313              ($7)           ($4)                 $1,759        $302        21%


    Sales by Geographic Region


                                                       Second                                            Second                              $       %
                                                    Quarter 2017                                      Quarter 2016               Change            Change
                                                    ------------                                      ------------               ------            ------

    North America                                                      $612                                               $539               $73             14%

    Latin America                                                       299                                                258                41             16%

    EAME                                                                396                                                317                79             25%

    Asia/Pacific                                                        452                                                343               109             32%

    Total(1)                                                         $1,759                                             $1,457              $302             21%


    Segment Profit (Loss)

                                                       Second                                            Second                              $       %
                                                                                                    Quarter 2016               Change            Change
                                                    Quarter 2017
                                                    ------------

    Segment Profit
     (Loss)                                                             $97                                             ($163)             $260             n/a  %


    1 Does not include inter-segment sales of $77 million and $57 million in second quarter 2017 and 2016, respectively.

Resource Industries' sales were $1.759 billion in the second quarter of 2017, an increase of $302 million, or 21 percent, from the second quarter of 2016. The increase was primarily due to higher sales volume for aftermarket parts and the favorable impact of changes in dealer inventories. Dealer inventories were about flat in the second quarter of 2017, compared with a decrease in the second quarter of 2016. Dealer deliveries for equipment were about flat. Increases in certain commodity prices over the past year, along with continued commodity consumption, have resulted in increased mining activity, driving the need for maintenance and rebuild activities. The company believes commodity prices need to stabilize at these higher levels to drive stronger activity and longer-term demand for equipment.

Resource Industries' profit was $97 million in the second quarter of 2017, compared with a loss of $163 million in the second quarter of 2016. The favorable change was due to higher sales volume, including a favorable mix of products, lower period costs and the favorable impact of cost absorption. These items were partially offset by higher warranty expense. Period costs were lower primarily due to the favorable impact of restructuring and cost reduction actions, partially offset by an increase in short-term incentive compensation expense. The favorable impact of cost absorption was a result of a decrease in inventory in the second quarter of 2016, compared to an increase in inventory in the second quarter of 2017.


    ENERGY & TRANSPORTATION



    (Millions of dollars)

    Sales Comparison

                                                                               Second                                          Sales        Price      Currency                  Second          $      %
                                                                           Quarter 2016                                        Volume    Realization                                       Change     Change
                                                                                                                                                                    Quarter 2017



    Sales
     Comparison(1)                                                               $3,750                                             $236          ($3)       ($42)                  $3,941       $191        5%


    Sales by Geographic Region


                                                                               Second                                          Second              $            %
                                                                           Quarter 2017                                    Quarter 2016     Change           Change
                                                                           ------------                                    ------------     ------           ------

    North America                                                                $1,982                                           $1,809          $173          10%

    Latin America                                                                   312                                              277            35          13%

    EAME                                                                          1,079                                            1,062            17           2%

    Asia/Pacific                                                                    568                                              602          (34)        (6)%

    Total(1)                                                                     $3,941                                           $3,750          $191           5%


    Segment Profit

                                                                               Second                                          Second              $            %
                                                                           Quarter 2017                                                     Change           Change
                                                                                                      Quarter 2016


    Segment Profit                                                                 $700                                             $602           $98          16%


    1 Does not include inter-segment sales of $827 million and $658 million in second quarter 2017 and 2016, respectively.

Energy & Transportation's sales were $3.941 billion in the second quarter of 2017, compared with $3.750 billion in the second quarter of 2016. The increase was primarily due to higher sales of aftermarket parts for reciprocating engines.

    --  Oil and Gas - Sales increased in North America due to higher demand for
        reciprocating engines used in gas compression as natural gas
        infrastructure build-out continues and for aftermarket parts as a result
        of strong rebuild activity in well servicing and gas compression
        applications. This was partially offset by a decrease in demand for
        equipment used in production applications in Asia/Pacific.
    --  Industrial - Sales were higher in all regions reflecting increased sales
        for aftermarket parts.
    --  Power Generation - Sales were about flat as a slight increase in North
        America was mostly offset by decreases in other regions.
    --  Transportation - Sales decreased in North America as the rail industry
        continues to have a significant number of idle locomotives. This was
        partially offset by an increase in sales for rail services as North
        American rail traffic has increased. Sales declined in marine
        applications mostly due to lower demand, primarily for offshore vessels.

Energy & Transportation's profit was $700 million in the second quarter of 2017, compared with $602 million in the second quarter of 2016. The increase was primarily due to higher sales volume and lower variable manufacturing costs, partially offset by higher period costs. Variable manufacturing costs were favorable primarily due to cost absorption and improved material costs. Cost absorption was favorable as inventory increased in the second quarter of 2017 and was about flat in the second quarter of 2016. The increase in period costs was primarily due to higher short-term incentive compensation expense.


    FINANCIAL PRODUCTS SEGMENT



    (Millions of dollars)

    Revenues by Geographic Region

                                      Second       Second          $     %
                                  Quarter 2017 Quarter 2016  Change    Change
                                  ------------ ------------  ------    ------

    North America                         $505          $473       $32         7%

    Latin America                           79            82       (3)      (4)%

    EAME                                   101           103       (2)      (2)%

    Asia/Pacific                            91           101      (10)     (10)%

    Total                                 $776          $759       $17         2%


    Segment Profit

                                      Second       Second          $     %
                                  Quarter 2017 Quarter 2016  Change    Change
                                  ------------ ------------  ------    ------

    Segment Profit                        $191          $202     ($11)      (5)%

Financial Products' revenues were $776 million in the second quarter of 2017, an increase of $17 million, or 2 percent, from the second quarter of 2016. The increase was due to a favorable impact from intercompany lending activity in North America, higher average financing rates in North America and a favorable impact from returned or repossessed equipment in North America. These favorable impacts were partially offset by lower average earning assets in North America and lower average financing rates in Asia/Pacific.

Financial Products' profit was $191 million in the second quarter of 2017, compared with $202 million in the second quarter of 2016. The decrease was primarily due to the absence of gains on sales of securities at Insurance Services, an increase in SG&A expenses due to higher short-term incentive compensation expense and an unfavorable impact from lower average earning assets. These unfavorable impacts were partially offset by a decrease in the provision for credit losses at Cat Financial, increased intercompany lending activity and a favorable impact from returned or repossessed equipment.

At the end of the second quarter of 2017, past dues at Cat Financial were 2.71 percent, compared with 2.93 percent at the end of the second quarter of 2016. Write-offs, net of recoveries, were $26 million for the second quarter of 2017, compared with $33 million for the second quarter of 2016.

As of June 30, 2017, Cat Financial's allowance for credit losses totaled $338 million, or 1.25 percent of finance receivables, compared with $346 million, or 1.25 percent of finance receivables as of June 30, 2016. The allowance for credit losses at year-end 2016 was $343 million, or 1.29 percent of finance receivables.

Corporate Items and Eliminations

Expense for corporate items and eliminations was $531 million in the second quarter of 2017, an increase of $203 million from the second quarter of 2016. Corporate items and eliminations include: restructuring costs; 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 for ME&T, as segment profit is reported using annual fixed exchange rates; cost of sales methodology differences as segments use a current cost methodology; and inter-segment eliminations.

The increase in expense from the second quarter of 2016 was primarily due to timing differences, an increase in restructuring costs, higher stock-based compensation expense and other methodology differences.

QUESTIONS AND ANSWERS


    Q1:                 Can you comment on second-quarter
                        restructuring costs and your 2017
                        outlook for restructuring costs?


    A:                  Restructuring costs of $169 million in
                        the second quarter of 2017 were
                        primarily related to programs in
                        Resource Industries and Energy &
                        Transportation. Second-quarter
                        restructuring costs included a LIFO
                        Inventory Decrement Benefit of $33
                        million related to the closure of the
                        Gosselies, Belgium, facility.


                       We have incurred $921 million of
                        restructuring costs through the first
                        six months of 2017 and expect to incur
                        about $1.2 billion for the full-year
                        2017, slightly lower than the previous
                        outlook for 2017 restructuring costs of
                        $1.25 billion. We expect costs for the
                        remainder of 2017 to be primarily for
                        previously announced restructuring
                        actions.


    Q2:                 Can you discuss changes in dealer
                        inventories during the second quarter
                        of 2017?


    A:                  Changes in dealer inventories had little
                        impact on sales from the second quarter
                        of 2016 to the second quarter of 2017.
                        Dealer machine and engine inventories
                        decreased about $300 million in the
                        second quarter of 2017, compared to a
                        decrease of about $400 million in the
                        second quarter of 2016. During the
                        first six months of 2017 and 2016,
                        dealer machine and engine inventories
                        decreased about $100 million.


    Q3:                 Can you discuss changes to your order
                        backlog by segment?


    A:                  At the end of the second quarter of
                        2017, the order backlog was about $14.8
                        billion, about flat with the first
                        quarter of 2017. Resource Industries'
                        order backlog increased about $300
                        million, Construction Industries'
                        decreased about $300 million and Energy
                        & Transportation's was about flat. It
                        is not uncommon for the construction
                        order backlog to decline during the
                        second-quarter selling season.


                       Compared with the second quarter of
                        2016, the order backlog increased about
                        $3.0 billion. The increase was across
                        all segments, most significantly in
                        Construction Industries and Resource
                        Industries.


    Q4:                 Can you comment on expense related to
                        your 2017 short-term incentive
                        compensation plans?


    A:                  Short-term incentive compensation
                        expense is directly related to
                        financial and operational performance,
                        measured against targets set annually.
                        Second-quarter 2017 expense was about
                        $415 million. Second-quarter 2016
                        expense was about $85 million.


                       For 2017, our current outlook includes
                        short-term incentive compensation
                        expense of about $1.3 billion. Our 2017
                        outlook, issued in January, assumed
                        short-term incentive compensation
                        expense of about $750 million.  Full-
                        year 2016 short-term incentive
                        compensation expense was about $250
                        million, significantly below targeted
                        levels.


    Q5:                 Can you comment on your balance sheet
                        and cash priorities?


    A:                  The ME&T debt-to-capital ratio was
                        38.6 percent at the end of the second
                        quarter of 2017, compared with 41.7
                        percent at the end of the first quarter
                        of 2017. Our cash and liquidity
                        positions remain strong with an
                        enterprise cash balance of $10.232
                        billion as of June 30, 2017. ME&T
                        operating cash flow for the second
                        quarter of 2017 was $2.029 billion,
                        compared with $1.168 billion in the
                        second quarter of 2016. The increase
                        was primarily due to higher profit
                        adjusted for non-cash charges,
                        including short-term incentive
                        compensation expense, in the second
                        quarter of 2017 versus the second
                        quarter of 2016.


                       Although our short-term priorities for
                        the use of cash may vary from time to
                        time as business needs and conditions
                        dictate, our long-term cash deployment
                        strategy remains unchanged: maintain a
                        strong financial position in support of
                        our credit rating; provide capital to
                        support growth; appropriately fund
                        employee benefit plans; pay dividends;
                        and repurchase common stock.

GLOSSARY OF TERMS



              1.     Adjusted Profit Per Share - Profit per share
                     excluding restructuring costs for 2017 and
                     2016. For 2017, adjusted profit per share
                     also excludes a gain on the sale of an
                     equity investment in IronPlanet recognized
                     in the second quarter.

              2.     All Other Segments - Primarily includes
                     activities such as: business strategy,
                     product management and development, and
                     manufacturing of filters and fluids,
                     undercarriage, tires and rims, ground
                     engaging tools, fluid transfer products,
                     precision seals, and rubber sealing and
                     connecting components primarily for Cat(R)
                     products; parts distribution; distribution
                     services responsible for dealer development
                     and administration including a wholly owned
                     dealer in Japan, dealer portfolio management
                     and ensuring the most efficient and
                     effective distribution of machines, engines
                     and parts; digital investments for new
                     customer and dealer solutions that integrate
                     data analytics with state-of-the art
                     digital technologies while transforming the
                     buying experience.

              3.     Consolidating Adjustments - Elimination of
                     transactions between Machinery, Energy &
                     Transportation and Financial Products.

              4.     Construction Industries - A segment primarily
                     responsible for supporting customers using
                     machinery in infrastructure, forestry and
                     building construction applications.
                     Responsibilities include 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,
                     telehandlers, select work tools, small,
                     medium and large track excavators, wheel
                     excavators, medium wheel loaders, compact
                     track loaders, medium track-type tractors,
                     track-type loaders, motor graders,
                     pipelayers, forestry and paving products and
                     related parts.

              5.     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, Energy & Transportation lines of
                     business only excluding restructuring costs;
                     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
                     (hedging) and the net effect of changes in
                     foreign currency exchange rates on our
                     foreign currency assets and liabilities for
                     consolidated results (translation).

              6.     Debt-to-Capital Ratio - A key measure of
                     Machinery, Energy & Transportation's
                     financial strength used by management. The
                     metric is defined as Machinery, Energy &
                     Transportation's short-term borrowings,
                     long-term debt due within one year and
                     long-term debt due after one year (debt)
                     divided by the sum of Machinery, Energy &
                     Transportation's debt and shareholders'
                     equity. Debt also includes Machinery, Energy
                     & Transportation's long-term borrowings
                     from Financial Products.

              7.     EAME - A geographic region including Europe,
                     Africa, the Middle East and the Commonwealth
                     of Independent States (CIS).

              8.     Earning Assets - Assets consisting primarily
                     of total finance receivables net of unearned
                     income, plus equipment on operating leases,
                     less accumulated depreciation at Cat
                     Financial.

              9.     Energy & Transportation - A segment primarily
                     responsible for supporting customers using
                     reciprocating engines, turbines, diesel-
                     electric locomotives and related parts
                     across industries serving power generation,
                     industrial, oil and gas and transportation
                     applications, including marine and rail-
                     related businesses. Responsibilities include
                     business strategy, product design, product
                     management and development, manufacturing,
                     marketing and sales and product support of
                     turbines and turbine-related services,
                     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 oil and gas industries;
                     reciprocating engines supplied to the
                     industrial industry as well as Cat
                     machinery; the remanufacturing of Cat
                     engines and components and remanufacturing
                     services for other companies; the business
                     strategy, product design, product management
                     and development, manufacturing,
                     remanufacturing, leasing and service of
                     diesel-electric locomotives and components
                     and other rail-related products and
                     services and product support of on-highway
                     vocational trucks for North America.

             10.     Financial Products Segment - Provides
                     financing alternatives to customers and
                     dealers around the world for Caterpillar
                     products, as well as financing for vehicles,
                     power generation facilities and marine
                     vessels that, in most cases, incorporate
                     Caterpillar products. Financing plans
                     include operating and finance leases,
                     installment sale contracts, working capital
                     loans and wholesale financing plans. The
                     segment also provides insurance and risk
                     management products and services that help
                     customers and dealers manage their business
                     risk. Insurance and risk management products
                     offered include physical damage insurance,
                     inventory protection plans, extended service
                     coverage for machines and engines, and
                     dealer property and casualty insurance. The
                     various forms of financing, insurance and
                     risk management products offered to
                     customers and dealers help support the
                     purchase and lease of our equipment.
                     Financial Products segment profit is
                     determined on a pretax basis and includes
                     other income/expense items.

             11.     Latin America - A geographic region including
                     Central and South American countries and
                     Mexico.

             12.     LIFO Inventory Decrement Benefits - A
                     significant portion of Caterpillar's
                     inventory is valued using the last-in,
                     first-out (LIFO) method. With this method,
                     the cost of inventory is comprised of
                     "layers" at cost levels for years when
                     inventory increases occurred. A LIFO
                     decrement occurs when inventory decreases,
                     depleting layers added in earlier, generally
                     lower cost years. A LIFO decrement benefit
                     represents the impact on operating profit of
                     charging cost of goods sold with prior-year
                     cost levels rather than current period
                     costs.



             13.     Machinery, Energy & Transportation (ME&T) -
                     Represents the aggregate total of
                     Construction Industries, Resource
                     Industries, Energy & Transportation and All
                     Other Segments and related corporate items
                     and eliminations.

             14.     Machinery, Energy & Transportation Other
                     Operating (Income) Expenses - Comprised
                     primarily of gains/losses on disposal of
                     long-lived assets, gains/losses on
                     divestitures and legal settlements and
                     accruals. Restructuring costs classified as
                     other operating expenses on the Results of
                     Operations are presented separately on the
                     Operating Profit Comparison.

             15.     Pension and Other Postemployment Benefit
                     (OPEB) - The company's defined benefit
                     pension and postretirement benefit plans.

             16.     Period Costs - Includes period manufacturing
                     costs, ME&T selling, general and
                     administrative (SG&A) and research and
                     development (R&D) expenses excluding the
                     impact of currency and exit-related costs
                     that are included in restructuring costs
                     (see definition below). 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. SG&A and R&D costs
                     are not linked to the production of goods or
                     services and include marketing, legal and
                     finance services and the development of new
                     and significant improvements in products or
                     processes.

             17.     Price Realization - The impact of net price
                     changes excluding currency and new product
                     introductions. Price realization includes
                     geographic mix of sales, which is the impact
                     of changes in the relative weighting of
                     sales prices between geographic regions.

             18.     Resource Industries - A segment primarily
                     responsible for supporting customers using
                     machinery in mining, quarry, waste, and
                     material handling applications.
                     Responsibilities include business strategy,
                     product design, product management and
                     development, manufacturing, marketing and
                     sales and product support. The product
                     portfolio includes large track-type
                     tractors, large mining trucks, hard rock
                     vehicles, longwall miners, electric rope
                     shovels, draglines, hydraulic shovels, track
                     and rotary drills, highwall miners, large
                     wheel loaders, off-highway trucks,
                     articulated trucks, wheel tractor scrapers,
                     wheel dozers, landfill compactors, soil
                     compactors, material handlers, continuous
                     miners, scoops and haulers, hardrock
                     continuous mining systems, select work
                     tools, machinery components, electronics and
                     control systems and related parts. In
                     addition to equipment, Resource Industries
                     also develops and sells technology products
                     and services to provide customers fleet
                     management, equipment management analytics
                     and autonomous machine capabilities.
                     Resource Industries also manages areas that
                     provide services to other parts of the
                     company, including integrated manufacturing
                     and research and development.

             19.     Restructuring Costs - Primarily costs for
                     employee separation, long-lived asset
                     impairments and contract terminations. These
                     costs are included in Other Operating
                     (Income) Expenses. Restructuring costs also
                     include other exit-related costs primarily
                     for accelerated depreciation, inventory
                     write-downs, equipment relocation and
                     project management costs and also LIFO
                     inventory decrement benefits from inventory
                     liquidations at closed facilities (primarily
                     included in Cost of goods sold).

             20.     Sales Volume - With respect to sales and
                     revenues, sales volume represents the impact
                     of changes in the quantities sold for
                     Machinery, Energy & Transportation 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, Energy & Transportation
                     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, Energy
                     & Transportation sales with respect to total
                     sales. The impact of sales volume on segment
                     profit includes intersegment sales.

             21.     Variable Manufacturing Costs - Represents
                     volume-adjusted costs excluding the impact
                     of currency and restructuring costs (see
                     definition above). 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.

NON-GAAP FINANCIAL MEASURES

The non-GAAP financial measures Caterpillar uses have no standardized meaning prescribed by U.S. GAAP and therefore are unlikely to be comparable to the calculation of similar measures for other companies. Management does not intend these items to be considered in isolation or substituted for the related GAAP measure.

Adjusted Profit per Share

Caterpillar believes it is important to separately quantify the profit impact of two special items in order for the company's results to be meaningful to readers. These items consist of restructuring costs, which are incurred in the current year to generate longer-term benefits, and a gain on sale of an equity investment. Caterpillar does not consider these items indicative of earnings from ongoing business activities and believes the non-GAAP measure will provide useful perspective on underlying business results and trends, and a means to assess the company's period-over-period results.

Reconciliations of adjusted profit per share to the most directly comparable GAAP measure, diluted profit per share, are as follows:


                         Second Quarter         2017 Outlook
                         --------------         ------------

                         2016              2017               Previous (1)            Current (2)
                         ----              ----               -----------             ----------

     Profit per
     share         $0.93             $1.35              $2.10                   $3.50

     Per share
     restructuring
     costs(3)      $0.16             $0.23              $1.65                   $1.59

     Per share
     gain on sale
     of equity
     investment4       -          ($0.09)                 -                ($0.09)

     Adjusted
     profit per
     share         $1.09             $1.49              $3.75                   $5.00

     1 2017 Sales and Revenues Outlook in a range of $38-$41 billion (as of April 25, 2017). Profit per share at midpoint.

                            2 2017 Sales and Revenues Outlook in a range of $42-$44 billion. Profit per share at midpoint.

     3 At estimated
      annual tax rate
      based on full-
      year outlook for
      per share
      restructuring
      costs at
      statutory tax
      rates. Second-
      quarter 2017 and
      2017 Outlook at

     estimated annual
      rate of 22 percent.
      2017 Outlook
      includes $15
      million increase to
      prior year taxes
      related to non-
      U.S. restructuring
      costs recognized in

     the first quarter
      of 2017. Second-
      quarter 2017
      includes a
      favorable
      interim
      adjustment of
      $0.01 per share
      resulting from
      the difference
      in the estimated

     annual tax rate
      for consolidated
      reporting of 32
      percent and the
      estimated annual
      tax rate for
      profit per share
      excluding
      restructuring
      costs, gain on
      sale of

      equity investment
      and discrete
      items of 29
      percent.

      4 At U.S.
      statutory tax
      rate of 35
      percent.

Machinery, Energy & Transportation

Caterpillar defines Machinery, Energy & Transportation as it is presented in the supplemental data as Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis. Machinery, Energy & Transportation information relates to the design, manufacture and marketing of Caterpillar 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. The company also believes this presentation will assist readers in understanding Caterpillar's business. Pages 17-25 reconcile Machinery, Energy & Transportation 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/en/investors.html

                http://www.caterpillar.com/en/investors/quarterly-results.html (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                                          Six Months Ended

                                                                                                           June 30,                                              June 30,

                                                                                                          2017                               2016                               2017      2016
                                                                                                          ----                               ----                               ----      ----

    Sales and revenues:

                                                                   Sales of Machinery, Energy &
                                                                   Transportation                          $10,639                                                       $9,645                      $19,769             $18,425

                                                                  Revenues of Financial Products               692                                                          697                        1,384               1,378


                                                                  Total sales and revenues                  11,331                                                       10,342                       21,153              19,803


    Operating costs:

                                                                  Cost of goods sold                         7,769                                                        7,419                       14,527              14,241

                                                                   Selling, general and
                                                                   administrative expenses                   1,289                                                        1,123                        2,334               2,211

                                                                   Research and development
                                                                   expenses                                    453                                                          468                          871                 976

                                                                   Interest expense of Financial
                                                                   Products                                    162                                                          148                          321                 300

                                                                   Other operating (income)
                                                                   expenses                                    407                                                          399                        1,432                 796


                                                                  Total operating costs                     10,080                                                        9,557                       19,485              18,524



    Operating profit                                                                        1,251                                                   785                              1,668                   1,279


                                                                   Interest expense excluding
                                                                   Financial Products                          121                                                          130                          244                 259

                                                                  Other income (expense)                        29                                                           84                           24                  84



    Consolidated profit before taxes                                                        1,159                                                   739                              1,448                   1,104


                                                                   Provision (benefit) for income
                                                                   taxes                                       361                                                          184                          451                 276


                                                                   Profit of consolidated
                                                                   companies                                   798                                                          555                          997                 828


                                                                   Equity in profit (loss) of
                                                                   unconsolidated affiliated
                                                                   companies                                     5                                                          (2)                           -                (3)



    Profit of consolidated and affiliated companies                                           803                                                   553                                997                     825


    Less:  Profit (loss) attributable to noncontrolling interests                               1                                                     3                                  3                       4


    Profit (1)                                                                                     $802                                                         $550                            $994                $821
                                                                                                   ====                                                         ====                            ====                ====



    Profit per common share                                                                       $1.36                                                        $0.94                           $1.69               $1.41


    Profit per common share - diluted (2)                                                         $1.35                                                        $0.93                           $1.67               $1.40


    Weighted-average common shares outstanding (millions)

                                                                  - Basic                                    590.2                                                        584.1                        588.8               583.4

                                                                  - Diluted (2)                              595.4                                                        588.6                        594.4               588.2


    Cash dividends declared per common share                                                      $1.55                                                        $1.54                           $1.55               $1.54

         (1)    Profit
                 attributable
                 to common
                 shareholders.

                Diluted by
                 assumed
                 exercise of
                 stock-based
                 compensation
                 awards using
                 the treasury
                 stock
         (2)    method.


                                                                  Caterpillar Inc.

                                               Condensed Consolidated Statement of Financial Position

                                                                     (Unaudited)

                                                                (Millions of dollars)


                                                                                                             June 30,                              December 31,

                                                                                                                       2017                                 2016

    Assets

                                                                                                      Current assets:

                                                                                                       Cash and short-
                                                                                                       term investments                                 $10,232                           $7,168

                                                                                                       Receivables -
                                                                                                       trade and other                                    6,675                            5,981

                                                                                                       Receivables -
                                                                                                       finance                                            8,920                            8,522

                                                                                                       Prepaid expenses
                                                                                                       and other current
                                                                                                       assets                                             1,776                            1,682

                                                                                                      Inventories                                         9,388                            8,614
                                                                                                                                                          -----                            -----

                                                                                                      Total current assets                               36,991                           31,967


                                                                                                       Property, plant and
                                                                                                       equipment - net                                   14,420                           15,322

                                                                                                       Long-term
                                                                                                       receivables - trade
                                                                                                       and other                                            940                            1,029

                                                                                                       Long-term
                                                                                                       receivables -
                                                                                                       finance                                           13,197                           13,556

                                                                                                       Noncurrent deferred
                                                                                                       and refundable
                                                                                                       income taxes                                       2,866                            2,790

                                                                                                      Intangible assets                                   2,232                            2,349

                                                                                                      Goodwill                                            6,142                            6,020

                                                                                                      Other assets                                        1,722                            1,671


    Total assets                                                                                                                           $78,510                             $74,704
                                                                                                                                           =======                             =======


    Liabilities

                                                                                                      Current liabilities:

                                                                                                       Short-term
                                                                                                       borrowings:

                                                                                                                             --Machinery, Energy &
                                                                                                                             Transportation                          $5                            $209

                                                                                                                            -- Financial Products                 6,775                           7,094

                                                                                                      Accounts payable                                    5,778                            4,614

                                                                                                      Accrued expenses                                    3,211                            3,003

                                                                                                       Accrued wages,
                                                                                                       salaries and
                                                                                                       employee benefits                                  1,986                            1,296

                                                                                                      Customer advances                                   1,533                            1,167

                                                                                                      Dividends payable                                     461                              452

                                                                                                       Other current
                                                                                                       liabilities                                        1,787                            1,635

                                                                                                       Long-term debt
                                                                                                       due within one
                                                                                                       year:

                                                                                                                             --Machinery, Energy &
                                                                                                                             Transportation                           5                             507

                                                                                                                            -- Financial Products                 6,592                           6,155
                                                                                                                                                                  -----                           -----

                                                                                                       Total current
                                                                                                       liabilities                                       28,133                           26,132


                                                                                                       Long-term debt due
                                                                                                       after one year:

                                                                                                                             --Machinery, Energy &
                                                                                                                             Transportation                       8,815                           8,436

                                                                                                                            -- Financial Products                15,000                          14,382

                                                                                                       Liability for
                                                                                                       postemployment
                                                                                                       benefits                                           9,248                            9,357

                                                                                                      Other liabilities                                   3,235                            3,184


    Total liabilities                                                                                                64,431                                             61,491
                                                                                                                     ------                                             ------




    Shareholders' equity

                                                                                                      Common stock                                        5,316                            5,277

                                                                                                      Treasury stock                                   (17,307)                        (17,478)

                                                                                                       Profit employed in
                                                                                                       the business                                      27,471                           27,377

                                                                                                       Accumulated other
                                                                                                       comprehensive income
                                                                                                       (loss)                                           (1,471)                         (2,039)

                                                                                                       Noncontrolling
                                                                                                       interests                                             70                               76


    Total shareholders' equity                                                                                       14,079                                             13,213
                                                                                                                     ------                                             ------

    Total liabilities and shareholders' equity                                                                                             $78,510                             $74,704
                                                                                                                                           =======                             =======


                                                                       Caterpillar Inc.

                                                        Condensed Consolidated Statement of Cash Flow

                                                                         (Unaudited)

                                                                    (Millions of dollars)


                                                                                                       Six Months Ended

                                                                                                         June 30,

                                                                                                       2017                         2016

    Cash flow from operating activities:

                                                  Profit of
                                                  consolidated
                                                  and affiliated
                                                  companies                                       $997                                      $825

                                                  Adjustments for
                                                  non-cash
                                                  items:

                                                 Depreciation and amortization                   1,430                                     1,494

                                                 Other                                             487                                       368

                                                 Changes in
                                                  assets and
                                                  liabilities,
                                                  net of
                                                  acquisitions
                                                  and
                                                  divestitures:

                                                 Receivables - trade and other                   (442)                                      573

                                                 Inventories                                     (688)                                      305

                                                 Accounts payable                                1,113                                       208

                                                 Accrued expenses                                  251                                         1

                                                  Accrued wages, salaries and
                                                  employee benefits                                641                                     (743)

                                                 Customer advances                                 322                                        93

                                                 Other assets - net                              (280)                                    (127)

                                                 Other liabilities - net                            90                                     (193)
                                                                                                   ---                                      ----

    Net cash provided by (used for) operating
     activities                                                          3,921                                           2,804
                                                                         -----                                           -----

    Cash flow from investing activities:

                                                 Capital
                                                  expenditures -
                                                  excluding
                                                  equipment
                                                  leased to
                                                  others                                         (371)                                    (580)

                                                  Expenditures for
                                                  equipment
                                                  leased to
                                                  others                                         (753)                                  (1,025)

                                                 Proceeds from
                                                  disposals of
                                                  leased assets
                                                  and property,
                                                  plant and
                                                  equipment                                        563                                       383

                                                  Additions to
                                                  finance
                                                  receivables                                  (5,264)                                  (4,643)

                                                  Collections of
                                                  finance
                                                  receivables                                    5,508                                     4,466

                                                  Proceeds from
                                                  sale of finance
                                                  receivables                                       83                                        42

                                                  Investments and
                                                  acquisitions
                                                  (net of cash
                                                  acquired)                                       (21)                                     (38)

                                                 Proceeds from
                                                  sale of
                                                  businesses and
                                                  investments
                                                  (net of cash
                                                  sold)                                             91                                         -

                                                  Proceeds from
                                                  sale of
                                                  securities                                       187                                       195

                                                  Investments in
                                                  securities                                     (207)                                    (243)

                                                 Other - net                                         5                                      (14)


    Net cash provided by (used for) investing
     activities                                                          (179)                                        (1,457)
                                                                          ----                                          ------

    Cash flow from financing activities:

                                                 Dividends paid                                  (906)                                    (898)

                                                  Distribution to
                                                  noncontrolling
                                                  interests                                        (6)                                        -

                                                 Common stock
                                                  issued,
                                                  including
                                                  treasury shares
                                                  reissued                                          83                                      (47)

                                                 Proceeds from
                                                  debt issued
                                                  (original
                                                  maturities
                                                  greater than
                                                  three months)                                  4,868                                     2,841

                                                 Payments on debt
                                                  (original
                                                  maturities
                                                  greater than
                                                  three months)                                (4,225)                                  (3,331)

                                                 Short-term
                                                  borrowings -
                                                  net (original
                                                  maturities
                                                  three months or
                                                  less)                                          (505)                                      391


    Net cash provided by (used for) financing
     activities                                                          (691)                                        (1,044)
                                                                          ----                                          ------

    Effect of exchange rate changes on cash                                 13                                               1
                                                                           ---                                             ---

    Increase (decrease) in cash and short-term
     investments                                                         3,064                                             304

    Cash and short-term investments at beginning
     of period                                                           7,168                                           6,460
                                                                         -----                                           -----

    Cash and short-term investments at
     end of period                                                                  $10,232                                    $6,764
                                                                                    =======                                    ======


    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 June 30, 2017

                                                                                                                     (Unaudited)
                                                                                                                (Millions of dollars)


                                                                                                                        Supplemental Consolidating Data
                                                                                                                        -------------------------------

                                                                                                          Machinery,

                                                                                Consolidated               Energy &                      Financial        Consolidating
                                                                                                                                         Products          Adjustments
                                                                                                      Transportation (1)
                                                                                                                                                                    ---

    Sales and revenues:

                                           Sales of Machinery, Energy &
                                           Transportation                                    $10,639                                              $10,639                   $      -     $       -

                                          Revenues of Financial Products                         692                                                    -                       793          (101)      (2)
                                                                                                                                                                                            ----

                                          Total sales and revenues                            11,331                                               10,639                        793          (101)


    Operating costs:

                                          Cost of goods sold                                   7,769                                                7,769                          -             -

                                           Selling, general and administrative
                                           expenses                                            1,289                                                1,154                        139            (4)      (3)

                                          Research and development expenses                      453                                                  453                          -             -

                                           Interest expense of Financial
                                           Products                                              162                                                    -                       167            (5)        4

                                          Other operating (income) expenses                      407                                                  111                        301            (5)      (3)
                                                                                                                                                                                                    ---

                                          Total operating costs                               10,080                                                9,487                        607           (14)



    Operating profit                                                                        1,251                                                1,152                        186           (87)


                                           Interest expense excluding Financial
                                           Products                                              121                                                  146                          -          (25)        4

                                          Other income (expense)                                  29                                                 (35)                         2             62         5
                                                                                                                                                                                                    ---


    Consolidated profit before taxes                                                        1,159                                                  971                        188              -


                                          Provision (benefit) for income taxes                   361                                                  303                         58              -


                                          Profit of consolidated companies                       798                                                  668                        130              -


                                           Equity in profit (loss) of
                                           unconsolidated affiliated companies                     5                                                    5                          -             -

                                           Equity in profit of Financial
                                           Products' subsidiaries                                  -                                                 129                          -         (129)        6
                                                                                                                                                                                            ----


    Profit of consolidated and affiliated
     companies                                                                                803                                                  802                        130          (129)


    Less:  Profit (loss) attributable to
     noncontrolling interests                                                 1                                                -                                          1            -
                                                                            ---                                              ---                                        ---          ---


    Profit 7                                                                                  $802                                                 $802                       $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,
                 Energy & Transportation.
    ---         -----------------------------------

    (3)          Elimination of net expenses recorded
                 by Machinery, Energy &
                 Transportation paid to Financial
                 Products.
    ---         -------------------------------------

    4            Elimination of interest expense
                 recorded between Financial Products
                 and Machinery, Energy &
                 Transportation.
    ---         ------------------------------------

    5            Elimination of discount recorded by
                 Machinery, Energy & Transportation
                 on receivables sold to Financial
                 Products and of interest earned
                 between Machinery, Energy &
                 Transportation and Financial
                 Products.
    ---         ------------------------------------

    6            Elimination of Financial Products'
                 profit due to equity method of
                 accounting.
    ---         -----------------------------------

    7            Profit attributable to common
                 shareholders.
    ---         ------------------------------



                                                                                                            Caterpillar Inc.
                                                                                               Supplemental Data for Results of Operations
                                                                                                For the Three Months Ended June 30, 2016
                                                                                                               (Unaudited)
                                                                                                          (Millions of dollars)


                                                                                                      Supplemental Consolidating Data
                                                                                                      -------------------------------

                                                                                         Machinery,

                                                                 Consolidated             Energy &                          Financial      Consolidating
                                                                                                                            Products
                                                                                     Transportation (1)                                     Adjustments
                                                                                                                                            -----------

    Sales and revenues:

                            Sales of Machinery, Energy &
                            Transportation                                    $9,645                                            $9,645                   $      - $       -

                           Revenues of Financial Products                        697                                                 -                       778       (81)      (2)
                                                                                                                                                                      ---

                           Total sales and revenues                           10,342                                             9,645                        778       (81)


    Operating costs:

                           Cost of goods sold                                  7,419                                             7,419                          -         -

                            Selling, general and administrative
                            expenses                                           1,123                                               981                        147        (5)      (3)

                           Research and development expenses                     468                                               468                          -         -

                            Interest expense of Financial
                            Products                                             148                                                 -                       152        (4)        4

                           Other operating (income) expenses                     399                                                99                        308        (8)      (3)
                                                                                                                                                                             ---

                           Total operating costs                               9,557                                             8,967                        607       (17)



    Operating profit                                                          785                                               678                        171       (64)


                            Interest expense excluding Financial
                            Products                                             130                                               143                          -      (13)        4

                           Other income (expense)                                 84                                                 5                         28         51         5
                                                                                                                                                                             ---


    Consolidated profit before taxes                                          739                                               540                        199          -


                           Provision (benefit) for income taxes                  184                                               122                         62          -


                           Profit of consolidated companies                      555                                               418                        137          -


                            Equity in profit (loss) of
                            unconsolidated affiliated companies                  (2)                                              (2)                         -         -

                            Equity in profit of Financial
                            Products' subsidiaries                                 -                                              135                          -     (135)        6
                                                                                                                                                                     ----


    Profit of consolidated and affiliated
     companies                                                                553                                               551                        137      (135)


    Less:  Profit (loss) attributable to
     noncontrolling interests                                                   3                                                 1                          2          -
                                                                              ---                                               ---                        ---        ---


    Profit 7                                                                  $550                                              $550                       $135     $(135)
                                                                              ====                                              ====                       ====      =====


    (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,
                 Energy & Transportation.
    ---         -----------------------------------

    (3)          Elimination of net expenses recorded
                 by Machinery, Energy &
                 Transportation paid to Financial
                 Products.
    ---         -------------------------------------

    4            Elimination of interest expense
                 recorded between Financial Products
                 and Machinery, Energy &
                 Transportation.
    ---         ------------------------------------

    5            Elimination of discount recorded by
                 Machinery, Energy & Transportation
                 on receivables sold to Financial
                 Products and of interest earned
                 between Machinery, Energy &
                 Transportation and Financial
                 Products.
    ---         ------------------------------------

    6            Elimination of Financial Products'
                 profit due to equity method of
                 accounting.
    ---         -----------------------------------

    7            Profit attributable to common
                 shareholders.
    ---         ------------------------------


                                                                                                                    Caterpillar Inc.
                                                                                                      Supplemental Data for Results of Operations
                                                                                                         For the Six Months Ended June 30, 2017
                                                                                                                      (Unaudited)
                                                                                                                 (Millions of dollars)


                                                                                                                          Supplemental Consolidating Data
                                                                                                                          -------------------------------

                                                                                                         Machinery,

                                                                                Consolidated              Energy &                          Financial     Consolidating
                                                                                                     Transportation (1)                      Products      Adjustments
                                                                                                     -----------------                       --------      -----------

    Sales and revenues:

                                           Sales of Machinery, Energy &
                                           Transportation                                    $19,769                                            $19,769                   $      -   $       -

                                          Revenues of Financial Products                       1,384                                                  -                     1,570        (186)      (2)
                                                                                                                                                                                        ----

                                          Total sales and revenues                            21,153                                             19,769                      1,570        (186)


    Operating costs:

                                          Cost of goods sold                                  14,527                                             14,527                          -           -

                                           Selling, general and administrative
                                           expenses                                            2,334                                              2,078                        265          (9)      (3)

                                          Research and development expenses                      871                                                871                          -           -

                                           Interest expense of Financial
                                           Products                                              321                                                  -                       330          (9)        4

                                          Other operating (income) expenses                    1,432                                                839                        603         (10)      (3)
                                                                                                                                                                                                ---

                                          Total operating costs                               19,485                                             18,315                      1,198         (28)



    Operating profit                                                                        1,668                                              1,454                        372        (158)


                                           Interest expense excluding Financial
                                           Products                                              244                                                290                          -        (46)        4

                                          Other income (expense)                                  24                                               (88)                         -         112         5
                                                                                                                                                                                                ---


    Consolidated profit before taxes                                                        1,448                                              1,076                        372            -


                                          Provision (benefit) for income taxes                   451                                                337                        114            -


                                          Profit of consolidated companies                       997                                                739                        258            -


                                           Equity in profit (loss) of
                                           unconsolidated affiliated companies                     -                                                 -                         -           -

                                           Equity in profit of Financial
                                           Products' subsidiaries                                  -                                               255                          -       (255)        6
                                                                                                                                                                                        ----


    Profit of consolidated and affiliated
     companies                                                                                997                                                994                        258        (255)


    Less:  Profit (loss) attributable to
     noncontrolling interests                                                 3                                               -                                         3          -


    Profit 7                                                                                  $994                                               $994                       $255       $(255)
                                                                                              ====                                               ====                       ====        =====


    (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,
                 Energy & Transportation.
    ---         -----------------------------------

    (3)          Elimination of net expenses recorded
                 by Machinery, Energy &
                 Transportation paid to Financial
                 Products.
    ---         -------------------------------------

    4            Elimination of interest expense
                 recorded between Financial Products
                 and Machinery, Energy &
                 Transportation.
    ---         ------------------------------------

    5            Elimination of discount recorded by
                 Machinery, Energy & Transportation
                 on receivables sold to Financial
                 Products and of interest earned
                 between Machinery, Energy &
                 Transportation and Financial
                 Products.
    ---         ------------------------------------

    6            Elimination of Financial Products'
                 profit due to equity method of
                 accounting.
    ---         -----------------------------------

    7            Profit attributable to common
                 shareholders.
    ---         ------------------------------



                                                                                                                Caterpillar Inc.
                                                                                                  Supplemental Data for Results of Operations
                                                                                                     For the Six Months Ended June 30, 2016
                                                                                                                  (Unaudited)
                                                                                                             (Millions of dollars)


                                                                                                        Supplemental Consolidating Data
                                                                                                        -------------------------------

                                                                                          Machinery,

                                                                 Consolidated              Energy &                          Financial        Consolidating
                                                                                                                                               Adjustments
                                                                                      Transportation (1)                      Products
                                                                                                                                                        ---

    Sales and revenues:

                            Sales of Machinery, Energy &
                            Transportation                                    $18,425                                            $18,425                    $      - $       -

                           Revenues of Financial Products                       1,378                                                  -                      1,537      (159)      (2)
                                                                                                                                                                        ----

                           Total sales and revenues                            19,803                                             18,425                       1,537      (159)


    Operating costs:

                           Cost of goods sold                                  14,241                                             14,241                           -         -

                            Selling, general and administrative
                            expenses                                            2,211                                              1,936                         286       (11)      (3)

                           Research and development expenses                      976                                                976                           -         -

                            Interest expense of Financial
                            Products                                              300                                                  -                        307        (7)        4

                           Other operating (income) expenses                      796                                                204                         606       (14)      (3)
                                                                                                                                                                                ---

                           Total operating costs                               18,524                                             17,357                       1,199       (32)



    Operating profit                                                         1,279                                              1,068                         338      (127)


                            Interest expense excluding Financial
                            Products                                              259                                                283                           -      (24)        4

                           Other income (expense)                                  84                                               (47)                         28        103         5
                                                                                                                                                                                ---


    Consolidated profit before taxes                                         1,104                                                738                         366          -


                           Provision (benefit) for income taxes                   276                                                162                         114          -


                           Profit of consolidated companies                       828                                                576                         252          -


                            Equity in profit (loss) of
                            unconsolidated affiliated companies                   (3)                                               (3)                          -         -

                            Equity in profit of Financial
                            Products' subsidiaries                                  -                                               249                           -     (249)        6
                                                                                                                                                                        ----


    Profit of consolidated and affiliated
     companies                                                                 825                                                822                         252      (249)


    Less:  Profit (loss) attributable to
     noncontrolling interests                                                    4                                                  1                           3          -
                                                                               ---                                                ---                         ---        ---


    Profit 7                                                                   $821                                               $821                        $249     $(249)
                                                                               ====                                               ====                        ====      =====


         (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,
                 Energy & Transportation.
         ---    -----------------------------------

         (3)    Elimination of net expenses recorded
                 by Machinery, Energy &
                 Transportation paid to Financial
                 Products.
         ---    -------------------------------------

           4     Elimination of interest expense
                 recorded between Financial Products
                 and Machinery, Energy &
                 Transportation.
         ---    ------------------------------------

           5     Elimination of discount recorded by
                 Machinery, Energy & Transportation
                 on receivables sold to Financial
                 Products and of interest earned
                 between Machinery, Energy &
                 Transportation and Financial
                 Products.
         ---    ------------------------------------

           6     Elimination of Financial Products'
                 profit due to equity method of
                 accounting.
         ---    -----------------------------------

           7     Profit attributable to common
                 shareholders.
         ---    ------------------------------


                                                                                                          Caterpillar Inc.

                                                                                                  Supplemental Data for Cash Flow

                                                                                               For the Six Months Ended June 30, 2017

                                                                                                            (Unaudited)

                                                                                                        (Millions of dollars)


                                                                                                                                                 Supplemental Consolidating Data
                                                                                                                                                 -------------------------------

                                                                                                                                  Machinery,

                                                                                               Consolidated                        Energy &                         Financial              Consolidating
                                                                                                                                                                    Products                Adjustments
                                                                                                                              Transportation (1)
                                                                                                                                                                                                        ---

    Cash flow from operating activities:

                                                  Profit of
                                                  consolidated
                                                  and affiliated
                                                  companies                               $997                                                       $994                                                $258                 $(255)   (2)

                                                  Adjustments for
                                                  non-cash
                                                  items:

                                                 Depreciation and amortization           1,430                                                        998                                                 432                      -

                                                  Undistributed profit of
                                                  Financial Products                         -                                                     (255)                                                  -                   255    (3)

                                                 Other                                     487                                                        453                                                (87)                   121      4

                                                 Changes in
                                                  assets and
                                                  liabilities,
                                                  net of
                                                  acquisitions
                                                  and
                                                  divestitures:

                                                 Receivables - trade and other           (442)                                                      (54)                                                 63                  (451)   4,5

                                                 Inventories                             (688)                                                     (688)                                                  -                     -

                                                 Accounts payable                        1,113                                                      1,145                                                (52)                    20      4

                                                 Accrued expenses                          251                                                        234                                                  17                      -

                                                  Accrued wages, salaries and
                                                  employee benefits                        641                                                        634                                                   7                      -

                                                 Customer advances                         322                                                        322                                                   -                     -

                                                 Other assets - net                      (280)                                                     (152)                                               (48)                  (80)     4

                                                 Other liabilities - net                    90                                                       (78)                                                 88                     80      4
                                                                                           ---                                                        ---                                                 ---                    ---    ---

    Net cash provided by (used for) operating
     activities                                                          3,921                                               3,553                                                     678                       (310)
                                                                         -----                                               -----                                                     ---                        ----

    Cash flow from investing activities:

                                                 Capital
                                                  expenditures -
                                                  excluding
                                                  equipment
                                                  leased to
                                                  others                                 (371)                                                     (367)                                                (4)                     -

                                                  Expenditures for
                                                  equipment
                                                  leased to
                                                  others                                 (753)                                                      (12)                                              (749)                     8      4

                                                 Proceeds from
                                                  disposals of
                                                  leased assets
                                                  and property,
                                                  plant and
                                                  equipment                                563                                                         87                                                 481                    (5)     4

                                                  Additions to
                                                  finance
                                                  receivables                          (5,264)                                                         -                                            (6,240)                   976      5

                                                  Collections of
                                                  finance
                                                  receivables                            5,508                                                          -                                              6,602                (1,094)     5

                                                  Net intercompany
                                                  purchased
                                                  receivables                                -                                                         -                                              (425)                   425      5

                                                  Proceeds from
                                                  sale of finance
                                                  receivables                               83                                                          -                                                 83                      -

                                                  Net intercompany
                                                  borrowings                                 -                                                        44                                             (1,500)                 1,456      6

                                                  Investments and
                                                  acquisitions
                                                  (net of cash
                                                  acquired)                               (21)                                                      (21)                                                  -                     -

                                                 Proceeds from
                                                  sale of
                                                  businesses and
                                                  investments
                                                  (net of cash
                                                  sold)                                     91                                                         91                                                   -                     -

                                                  Proceeds from
                                                  sale of
                                                  securities                               187                                                          9                                                 178                      -

                                                  Investments in
                                                  securities                             (207)                                                      (11)                                              (196)                     -

                                                 Other - net                                 5                                                       (25)                                                 30                      -


    Net cash provided by (used for) investing
     activities                                                          (179)                                              (205)                                                (1,740)                      1,766
                                                                          ----                                                ----                                                  ------                       -----

    Cash flow from financing activities:

                                                 Dividends paid                          (906)                                                     (906)                                                  -                     -

                                                  Distribution to
                                                  noncontrolling
                                                  interests                                (6)                                                       (6)                                                  -                     -

                                                 Common stock
                                                  issued,
                                                  including
                                                  treasury shares
                                                  reissued                                  83                                                         83                                                   -                     -

                                                  Net intercompany
                                                  borrowings                                 -                                                     1,500                                                (44)               (1,456)     6

                                                 Proceeds from
                                                  debt issued
                                                  (original
                                                  maturities
                                                  greater than
                                                  three months)                          4,868                                                        361                                               4,507                      -

                                                 Payments on debt
                                                  (original
                                                  maturities
                                                  greater than
                                                  three months)                        (4,225)                                                     (505)                                            (3,720)                     -

                                                 Short-term
                                                  borrowings -
                                                  net (original
                                                  maturities
                                                  three months or
                                                  less)                                  (505)                                                     (200)                                              (305)                     -


    Net cash provided by (used for) financing
     activities                                                          (691)                                                327                                                     438                     (1,456)
                                                                          ----                                                 ---                                                     ---                      ------

    Effect of exchange rate changes on cash                                 13                                                 (6)                                                     19                           -
                                                                           ---                                                 ---                                                     ---                         ---

    Increase (decrease) in cash and short-term
     investments                                                         3,064                                               3,669                                                   (605)                          -

    Cash and short-term investments at beginning
     of period                                                           7,168                                               5,257                                                   1,911                           -
                                                                         -----                                               -----                                                   -----                         ---

    Cash and short-term investments at
     end of period                                                             $10,232                                                   $8,926                                             $1,306                   $   -
                                                                               =======                                                   ======                                             ======                 === ===


         (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 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, Energy & Transportation and Financial
                 Products.
         ---    -------------------------------------------------


                                                                                                         Caterpillar Inc.

                                                                                                  Supplemental Data for Cash Flow

                                                                                              For the Six Months Ended June 30, 2016

                                                                                                            (Unaudited)

                                                                                                       (Millions of dollars)


                                                                                                                                                Supplemental Consolidating Data
                                                                                                                                                -------------------------------

                                                                                                                                  Machinery,

                                                                                               Consolidated                        Energy &                          Financial            Consolidating
                                                                                                                                                                     Products
                                                                                                                              Transportation (1)                                           Adjustments
                                                                                                                                                                                           -----------

    Cash flow from operating activities:

                                                  Profit of
                                                  consolidated
                                                  and affiliated
                                                  companies                              $825                                                         $822                                              $252                $(249)     (2)

                                                  Adjustments for
                                                  non-cash
                                                  items:

                                                 Depreciation and amortization          1,494                                                        1,056                                               438                     -

                                                  Undistributed profit of
                                                  Financial Products                        -                                                       (242)                                                -                  242      (3)

                                                 Other                                    368                                                          257                                                 9                   102        4

                                                 Changes in
                                                  assets and
                                                  liabilities,
                                                  net of
                                                  acquisitions
                                                  and
                                                  divestitures:

                                                 Receivables - trade and other            573                                                           45                                                19                   509      4,5

                                                 Inventories                              305                                                          309                                                 -                  (4)       4

                                                 Accounts payable                         208                                                          284                                              (16)                 (60)       4

                                                 Accrued expenses                           1                                                            8                                               (7)                    -

                                                  Accrued wages, salaries and
                                                  employee benefits                     (743)                                                       (726)                                             (17)                    -

                                                 Customer advances                         93                                                           93                                                 -                    -

                                                 Other assets - net                     (127)                                                       (187)                                               82                  (22)       4

                                                 Other liabilities - net                (193)                                                       (332)                                              117                    22        4
                                                                                         ----                                                         ----                                               ---                   ---      ---

    Net cash provided by (used for) operating
     activities                                                          2,804                                               1,387                                                    877                         540
                                                                         -----                                               -----                                                    ---                         ---

    Cash flow from investing activities:

                                                 Capital
                                                  expenditures -
                                                  excluding
                                                  equipment
                                                  leased to
                                                  others                                (580)                                                       (577)                                              (3)                    -

                                                  Expenditures for
                                                  equipment
                                                  leased to
                                                  others                              (1,025)                                                        (41)                                          (1,001)                   17        4

                                                 Proceeds from
                                                  disposals of
                                                  leased assets
                                                  and property,
                                                  plant and
                                                  equipment                               383                                                           49                                               344                  (10)       4

                                                  Additions to
                                                  finance
                                                  receivables                         (4,643)                                                           -                                          (6,026)                1,383        5

                                                  Collections of
                                                  finance
                                                  receivables                           4,466                                                            -                                            6,007               (1,541)       5

                                                  Net intercompany
                                                  purchased
                                                  receivables                               -                                                           -                                              396                 (396)       5

                                                  Proceeds from
                                                  sale of finance
                                                  receivables                              42                                                            -                                               42                     -

                                                  Net intercompany
                                                  borrowings                                -                                                       (832)                                          (1,000)                1,832        6

                                                  Investments and
                                                  acquisitions
                                                  (net of cash
                                                  acquired)                              (38)                                                        (38)                                                -                    -

                                                  Proceeds from
                                                  sale of
                                                  securities                              195                                                           17                                               178                     -

                                                  Investments in
                                                  securities                            (243)                                                        (15)                                            (228)                    -

                                                 Other - net                             (14)                                                         (1)                                             (20)                    7        8
                                                                                                                                                                                                                                  ---

    Net cash provided by (used for) investing
     activities                                                        (1,457)                                            (1,438)                                               (1,311)                       1,292
                                                                        ------                                              ------                                                 ------                       -----

    Cash flow from financing activities:

                                                 Dividends paid                         (898)                                                       (898)                                              (7)                    7        7

                                                 Common stock
                                                  issued,
                                                  including
                                                  treasury shares
                                                  reissued                               (47)                                                        (47)                                                7                   (7)       8

                                                  Net intercompany
                                                  borrowings                                -                                                       1,000                                               832               (1,832)       6

                                                 Proceeds from
                                                  debt issued
                                                  (original
                                                  maturities
                                                  greater than
                                                  three months)                         2,841                                                            1                                             2,840                     -

                                                 Payments on debt
                                                  (original
                                                  maturities
                                                  greater than
                                                  three months)                       (3,331)                                                         (7)                                          (3,324)                    -

                                                 Short-term
                                                  borrowings -
                                                  net (original
                                                  maturities
                                                  three months or
                                                  less)                                   391                                                          255                                               136                     -


    Net cash provided by (used for) financing
     activities                                                        (1,044)                                                304                                                    484                     (1,832)
                                                                        ------                                                 ---                                                    ---                      ------

    Effect of exchange rate changes on cash                                  1                                                (14)                                                    15                           -
                                                                           ---                                                 ---                                                    ---                         ---

    Increase (decrease) in cash and short-term
     investments                                                           304                                                 239                                                     65                           -

    Cash and short-term investments at beginning
     of period                                                           6,460                                               5,340                                                  1,120                           -
                                                                         -----                                               -----                                                  -----                         ---

    Cash and short-term investments at
     end of period                                                             $6,764                                                    $5,579                                            $1,185                   $   -
                                                                               ======                                                    ======                                            ======                 === ===


    (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 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, Energy &
                 Transportation and Financial
                 Products.
    ---         -------------------------------------

    7            Elimination of dividend from Financial
                 Products to Machinery, Energy &
                 Transportation.
    ---         --------------------------------------

    8            Elimination of change in investment
                 and common stock related to Financial
                 Products.
    ---         --------------------------------------

View original content:http://www.prnewswire.com/news-releases/caterpillar-reports-second-quarter-2017-results-300493513.html

SOURCE Caterpillar Inc.