JPM_CAT_072513_132949

7/29/2019 JPM_CAT_072513_132949

1/12

7/29/2019 JPM_CAT_072513_132949

2/12

2

North America Equity Research23 July 2013

Ann Duignan(1-212) [email protected]

MachineryCAT (OW) released its dealer retail sales data for the three-month rolling period

ending June 30. The three-month rolling YoY worldwide Machinery sales were

down 8% (vs. down 7% in May and down 9% in April).

Machinery sales growth rates decelerate MoM. On a rolling three-month YoY

basis, worldwide retail Machinery sales were down 8% in June (vs. down 7% in May

13, down 9% in April 13 and up 11% in June 12). ROW sales were down 8%

YoY in June, vs. down 2% YoY in May; this is the fifth consecutive monthly YoY

decline since the prior decline seen in April 2010. On a rolling three-month YoY

basis, NA Machinery sales were down 10% in June (vs. down 16% in May 13,

down 18% in April 13 and up 24% in June 12). Asia/Pacific dealers reported a

decline in June of 21% (vs. down 14% in May 13, down 20% in April 13 and up16% in June 12). Latin American sales were up 9% in June (vs. up 22% in May 13,

up 28% in April 13 and down 3% in June 12). EAME sales were down 4% (vs.

down 2% in May 13, down 3% in April 13 and flat in June 12).

Figure 1: Worldwide Dealer Reported Retail Machinery Sales

Source: Company reports, J.P. Morgan.

(70.0%)

(60.0%)

(50.0%)

(40.0%)

(30.0%)

(20.0%)

(10.0%)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CAT Dealer Reported Retail Machinery SalesWW vs. NA

3MMA

NA Dealer Sales WW Dealer Sa les

7/29/2019 JPM_CAT_072513_132949

3/12

3



Figure 2: North America

Source: Company reports, J.P. Morgan

Figure 3: EAME


Figure 4: Asia/Pacific


Figure 5: Latin America


-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CAT Dealer Reported Retail Machinery SalesNorth America 3MMA

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CAT Dealer Reported Retail Machinery SalesEAME 3MMA

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2008 2009 2010 2011 2012 2013

CAT Dealer Reported Retail Machinery SalesAsia/Pacific 3MMA

(including CAT Japan)

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

140%

150%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CAT Dealer Reported Retail Machinery SalesLatin America 3MMA

7/29/2019 JPM_CAT_072513_132949

4/12

4



Retail Engine Sales

WW Engine sales growth rates improve MoM. On a rolling three-month YoY

basis, worldwide retail engine sales were up 1% in June (vs. down 1% in May 13,

down 5% in April 13 and up 7% in June 12), with YoY improvement across every

major product category except Petroleum; this is the first YoY improvement in WW

sales after six consecutive monthly declines. Industrial reported a YoY increase in

June of 15% (vs. up 1% in May 13, down 7% in April 13 and down 15% in June

12); this is the second consecutive positive monthly growth rate after 15 consecutive

months of YoY declines. Electric Power reported an increase of 1% (vs. down 10%

in May 13, down 11% in April 13 and down 11% in June 12). Petroleum reported

a YoY decline of 10% in June (vs. up 1% in May 13, down 6% in April 13 and up

29% in June 12). Transportation sales were up 15% YoY in June (vs. up 8% in May

13, up 8% in April 13, and up 19% in June 12).

Figure 6: Worldwide Retail/OEM Engine Sales


-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CAT Retail/OEM Engine SalesTotal 3MMA

7/29/2019 JPM_CAT_072513_132949

5/12

5



Figure 7: Petroleum


Figure 8: Electric Power


Figure 9: Industrial


Figure 10: Transportation


Investment Thesis, Valuation and Risks

Caterpillar Inc. (Overweight; Price Target: $100.00)

Investment Thesis

Our Overweight rating on CAT is predicated on the companys long-term growth

prospects and exposure to global GDP, which we believe will be positive over the

long run, as emerging markets are likely to continue to outgrow developed

economies for the foreseeable future, driving incremental demand for hard

commodities. In the near term, the macro-environment remains sluggish and the

company still faces excess supply across several end markets; we believe that most

of the downside risk has been priced into the stock at this point, and that risk/reward

favors owning the stock.

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CAT Retail/OEM Engine SalesPetroleum 3MMA

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CAT Retail/OEM Engine SalesElectric Power 3MMA

-60%

-40%

-20%

0%

20%

40%

60%

80%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CAT Retail/OEM Engine SalesIndustrial 3MMA

-30%

-20%

-10%

0%

10%

20%

30%

2012 2013

CAT Retail/OEM Engine SalesTransportation 3MMA

7/29/2019 JPM_CAT_072513_132949

6/12

6



ValuationWe are maintaining our YE13 price target of $100. As macro uncertainty dissipates,

we believe CATs multiple will expand toward a peak multiple on likely troughearnings. CAT underperformed its peers in 2012 and YTD, and is trading at adiscount to construction-related peers; we believe it will begin to trade more in linewith its peers going forward. Our $100 price target reflects a P/E multiple of ~14xapplied to our 2014 EPS estimate of $7.76, discounted back to YE13.

Risks to Rating and Price Target

Downside risks. If the lack of macro visibility persists, multiples may remain

compressed, which could result in our price target being too high. A slowdown

in spending by mining customers following 7 years of investment well above the

prior cycle is weighing on the stock, in our view, and may continue to do so

through H213. Increasing interest rates could also slow the pace of capital

expenditures, and therefore revenues.

7/29/2019 JPM_CAT_072513_132949

7/12

7



Table 1: CAT Earnings Model

Source: Company reports and J.P. Morgan estimates

Income Statement 2008 2009 2010A 2011A 2012A Q1'13A Q2'13E Q3'13E Q4'13E 2013E 2014E 2015E$ in millions (except per share data) Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Dec-13 Dec-14 Dec-15

Machinery & Power Systems(w Financial Services on Equity Basis)Machinery & Power Systems 31,804 18,148 27,767 57,392 63,068 12,484 14,124 14,717 14,709 56,035 58,771 63,369Total Equipment Sales 48,044 29,540 39,867 57,392 63,068 12,484 14,124 14,717 14,709 56,035 58,771 63,369

YoY Growth 14.5% -38.5% 35.0% 44.0% 9.9% -18.3% -15.3% -6.5% -4.2% -11.2% 4.9% 7.8%

Cost of Goods Sold 38,415 23,886 30,367 43,578 47,055 9 ,639 10,602 11,063 10,822 42,126 42,949 46,290% of Sales 80.0% 80.9% 76.2% 75.9% 74.6% 77.2% 75.1% 75.2% 73.6% 75.2% 73.1% 73.0%

Gross Income 9,629 5,654 9,500 13,814 15,433 2,845 3,522 3,654 3,887 13,908 15,821 17,079SG&A 3,812 3,085 3,689 4,631 5,348 1,275 1,450 1,500 1,550 5,775 6,450 6,900

% of Sales 7.9% 10.4% 9.3% 8.1% 8.5% 10.2% 10.3% 10.2% 10.5% 10.3% 11.0% 10.9%

YoY Growth 13.6% -19.1% 19.6% 25.5% 15.5% 4.2% 5.6% 13.2% 8.7% 8.0% 11.7% 7.0%

R&D 1,728 1,421 1,905 2,297 2,466 562 550 560 580 2,252 2,450 2,500

% of Sales 3.6% 4.8% 4.8% 4.0% 3.9% 4.5% 3.9% 3.8% 3.9% 4.0% 4.2% 3.9%

YoY Growth 23.1% -17.8% 34.1% 20.6% 7.4% -4.3% -13.0% -11.7% -5.4% -8.7% 8.8% 2.0%

Other Operating Expense (33) 691 119 63 (495) 5 40 40 40 125 160 160Operating Profit 4,122 457 3,787 6,823 8,114 1,003 1,482 1,554 1,717 5,756 6,761 7,519

EBIT margin 8.6% 1.5% 9.5% 11.9% 12.9% 8.0% 10.5% 10.6% 11.7% 10.3% 11.5% 11.9%

EBIT YoY growth -10.1% -88.9% 728.7% 80.2% 18.9% -54.3% -40.9% -37.5% 85.5% -29.1% 17.5% 11.2%

Incremental/Decremental EBIT margin -7.6% 19.8% 32.2% 17.3% 22.7% 4 2.6% 40.0% 9 1.1% -122.2% 33.5% 36.7% 16.5%

Other Income (Expense) 80 192 (77) (279) (146) (35) 0 0 0 0 0 0Net Interest Expense 270 475 407 439 512 131 121 124 124 500 469 342Profit Before Taxes -- Machinery & Engines 3,932 174 3,303 6,105 7,456 837 1,361 1,430 1,593 5,256 6,293 7,177Income Taxes 822 (342) 882 1,568 2,314 168 415 443 502 1,528 1,888 2,153

Implied tax rate 20.9% -196.6% 26.7% 25.7% 31.0% 20.1% 30.5% 31.0% 31.5% 29.1% 30.0% 30.0%Net Income -- Machinery & Engines 3,110 516 2,421 4,537 5,142 669 946 987 1,091 3,728 4,405 5,024

Equipment net margin 6.5% 1.7% 6.1% 7.9% 8.2% 5.4% 6.7% 6.7% 7.4% 6.7% 7.5% 7.9%

Equity in profit (loss) of unconsolidated affiliated companie 38 (12) (24) (32) 14 1 1 1 1 4 20 20Equity profit of Financial Products' subsidiaries 409 307 350 453 555 209 168 168 169 714 734 825

Less: Profit/(loss) due to noncontrolling interests (80) 47 31 30 (1) 8 7 7 21 30 30

Net Income 3,557 891 2,700 4,927 5,681 880 1,106 1,149 1,255 4,425 5,129 5,838Financial ProductsRevenues - Non Consolidated 3,588 3,168 2,946 3,057 3,160 814 843 859 886 3,402 3,521 3,861

Revenues -Consolidated 3,280 2,856 2,721 2,746 2,807 726 799 859 839 3,223 3,387 3,251SG&A 616 579 563 621 618 129 140 150 160 579 580 620

% of Sales 17.2% 18.3% 19.1% 20.3% 1 9.6% 15.8% 16.6% 17.5% 18.1% 1 7.0% 16.5% 16.1%

Net Interest Expense 1,162 1,048 916 827 801 191 200 200 200 791 805 830% of sales 32.4% 33.1% 31.1% 27.1% 25.3% 23.5% 23.7% 23.3% 22.6% 23.2% 22.9% 21.5%

Other Operating Expense 1,231 1,160 1,080 1,026 1,000 212 280 285 300 1,077 1 ,140 1300% of sales 34.3% 36.6% 36.7% 33.6% 31.6% 26.0% 33.2% 33.2% 33.9% 31.7% 32.4% 33.7%

Operating Profit 579 381 387 583 741 282 223 224 226 955 996 1,111EBIT Margin 16.1% 12.0% 13.1% 19.1% 23.4% 34.6% 26.5% 26.1% 25.5% 28.1% 28.3% 28.8%

Other Income (38) 14 60 37 39 8 10 10 10 38 40 40Profit Before Taxes - Financial Products 541 395 447 620 780 290 233 234 236 993 1,036 1,151Income Taxes 131 72 86 152 214 78 63 63 63 267 290 322

Tax Rate 24.2% 18.2% 19.2% 24.5% 27.4% 26.9% 26.9% 26.9% 26.9% 26.9% 28.0% 28.0%

Profit of Financial Services 410 323 361 468 566 212 171 171 172 726 746 829Financial Products net margin 11.4% 10.2% 12.3% 15.3% 17.9% 26.0% 2 0.2% 1 9.9% 1 9.5% 21.3% 21.2% 21.5%

Equity in profit (loss) of unconsolidated affiliated companies (1) 0 0

Less: Profit/(loss) due to noncontrolling interests 16 11 17 11 3 3 3 3 12 12 4

Profit 409 307 350 451 555 209 168 168 169 714 734 825ConsolidatedTotal Sales and Revenues 51,324 32,396 42,588 60,138 65,875 13,210 14,923 15,576 15,548 59,258 62,158 66,621

YoY growth 14.2% -36.9% 31.5% 41.2% 9.5% -17.3% -14.1% -5.3% -3.3% -10.0% 4.9% 7.2%

Consolidated EBIT 4,701 838 4,174 7,406 8,855 1,285 1,705 1,778 1,943 6,712 7,757 8,630

Consolidated Profit Before Taxes 4,473 569 3,750 6,725 8,236 1,127 1 ,594 1,664 1,829 6,249 7,329 8,327

Income Taxes 953 (270) 968 1,720 2,528 246 478 506 565 1,795 2,178 2,475Effective Tax Rate 21.3% -47.5% 25.8% 25.6% 30.7% 21.8% 30.0% 30.4% 30.9% 28.7% 29.7% 29.7%

Profit of Consolidated Companies 3,520 839 2,782 5,005 5,708 881 1 ,116 1 ,158 1 ,264 4,454 5,151 5,852Equity in Profit of Unconsolidated Affiliates 37 (12) (24) (32) 14 1 1 1 1 4 20 20

Less: Profit/(loss) due to noncontrolling interests 0 (64) 58 48 41 2 11 10 10 33 42 4

Net Income 3,557 891 2,700 4,925 5,681 880 1,106 1,149 1,255 4,425 5,129 5,868Net margin 6.9% 2.8% 6.3% 8.2% 8.6% 6.7% 7.4% 7.4% 8.1% 7.5% 8.3% 8.8%

Preferred Dividends 0 0 0 0

Net Income to Common -- Reported 3,557 891 2,700 4,925 5,681 880 1,106 1,149 1,255 4,425 5,129 5,868Non-Recurring Items 456 0 0 580 0 0 0 0 0 0 0Discrete tax benefit (456) 0 0 0 (300) (87) (87) 0 0

Total Non-Recurring Items (456) 456 0 0 280 (87) 0 0 0 (87) 0 0

Discontinued Items -- Net of Tax 0 0 0 0 0 0 0 0 0 0 0 0BUCY Related Items -- Net of EBIT & Tax 0 0 0 362 0 0 0 0 0 0 0 0

Net Income -- Continuing 3,101 1,347 2,700 4,925 5,961 793 1,106 1,149 1,255 4,338 5,129 5,868Net Income -- Excluding BUCY 3,101 1,347 2,700 5,287Diluted EPS -- Reported $5.66 $1.42 $4.15 $7.39 $8.48 $1.31 $1.67 $1.74 $1.90 $6.67 $7.76 $8.88Non-Recurring Items ($0.75) $0.75 $0.00 $0.00 $0.42 ($0.13) $0.00 $0.00 $0.00 ($0.13) $0.00 $0.00Discontinued Items -- Net of Tax $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00BUCY Related Items -- Net of EBIT & Tax $0.00 $0 .00 $0.00 $0.54 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Diluted EPS -- Continuing $4.91 $2.15 $4.15 $7.39 $8.90 $1.18 $1.67 $1.74 $1.90 $6.54 $7.76 $8.88

7/29/2019 JPM_CAT_072513_132949

8/12

8



Caterpillar Inc.: Summary of FinancialsIncome Statement - Annual FY12A FY13E FY14E FY15E Income Statement - Quarterly 1Q13A 2Q13E 3Q13E 4Q13ERevenue (Manufacturing) 63,068 56,035 58,771 63,369 Revenue (Manufacturing) 12,484A 14,124 14,717 14,709

COGS (47,055) (42,126) (42,949) (46,290) COGS (9,639)A (10,602) (11,063) (10,822)Gross profit 15,433 13,908 15,821 17,079 Gross profit 2,845A 3,522 3,654 3,887SG&A (5,348) (5,775) (6,450) (6,900) SG&A (1,275)A (1,450) (1,500) (1,550)

R&D Expense (2,466) (2,252) (2,450) (2,500) R&D Expense (562)A (550) (560) (580)

Equity Income 555 714 734 825 Equity Income 209A 168 168 169Other Operating Inc. and Exp. 495 (125) (160) (160) Other Operating Inc. and Exp. (5)A (40) (40) (40)EBIT (Manufacturing) 8,114 5,756 6,761 7,519 EBIT (Manufacturing) 1,003A 1,482 1,554 1,717

Financial Services Income 555 714 734 825 Financial Services Income 209A 168 168 169

Interest Income / (Expense) (512) (500) (469) (342) Interest Income / (Expense) (131)A (121) (124) (124)Other Non-Operating Expenses (146) 0 0 0 Other Non-Operating Expenses (35)A 0 0 0Income before Tax and Min. Interest 7,456 5,256 6,293 7,177 Income before Tax and Min. Interest 837A 1,361 1,430 1,593

Taxes (2,314) (1,528) (1,888) (2,153) Taxes (168)A (415) (443) (502)

Effective Tax Rate 31.0% 29.1% 30.0% 30.0% Effective Tax Rate 20.1%A 30.5% 31.0% 31.5%Minority Interest (41) (33) (42) (4) Minority Interest (2)A (11) (10) (10)

Net Income - Continuing 5,961 4,338 5,129 5,868 Net Income - Continuing 793A 1,106 1,149 1,255

Non-Recurring Items 280 (87) 0 0 Non-Recurring Items (87)A 0 0 0

Net Income - GAAP 5,681 4,425 5,129 5,868 Net Income - GAAP 880A 1,106 1,149 1,255Diluted shares outstanding 670 664 661 661 Diluted shares outstanding 672A 661 661 661

EPS - Recurring 8.90 6.54 7.76 8.88 EPS - Recurring 1.18A 1.67 1.74 1.90EPS - GAAP 8.48 6.67 7.76 8.88 EPS - GAAP 1.31A 1.67 1.74 1.90

EBITDA (Manufacturing) 10,196 8,544 9,761 11,269 EBITDA (Manufacturing) 1,541A 2,232 2,304 2,467

Balance Sheet and Cash Flow Data FY12A FY13E FY14E FY15E Ratio Analysis FY12A FY13E FY14E FY15E

Cash and cash equivalents 3,306 6,395 8,645 11,192 Sales Growth 9.9% (11.2%) 4.9% 7.8%

Accounts receivable 5,634 5,158 5,433 6,597 EBIT Growth (Manufacturing) 18.9% (29.1%) 17.5% 11.2%Inventories 15,547 12,453 12,964 13,570 EPS Growth - Recurring 12.1% (26.6%) 18.7% 14.4%

Other current assets 2,048 2,149 1,394 1,838Current assets 26,535 26,154 28,436 33,197 EBIT Margin 12.9% 10.3% 11.5% 11.9%

PP&E 13,058 12,704 13,004 13,754 Incremental EBIT Margin - - - -

Goodwill and Other Intangibles 10,933 10,690 10,690 10,690 Operating Leverage 1.08 0.80 1.12 1.03Other Assets 7,758 9,622 10,379 11,609 Net Income Margin 9.5% 7.7% 8.7% 9.3%

Total assets 58,284 59,170 62,510 69,251 EBITDA Margin 16.2% 15.2% 16.6% 17.8%

Accounts Payable 6,718 6,997 7,285 8,117 Days Sales (DSO) 32.2 35.1 32.9 34.6

Current Portion of L/T Debt 1,781 1,778 1,778 1,778 Days On Hand (DOH) 116.7 121.3 108.0 104.6

Other Current Liabilities 9,673 8,243 8,666 10,756 Days Payables (DPO) 57.5 59.4 60.7 60.7Current liabilities 18,172 17,018 17,729 20,651

Long-Term Debt 8,705 8,704 7,754 7,254 Net Debt / Total Capital 29.0% 17.1% 3.6% (8.3%)Other Liabilities 13,825 13,634 13,434 13,234 Net Debt / EBITDA 0.7 0.5 0.1 (0.2)Shareholders' equity 17,582 19,814 23,593 28,112 Interest Coverage 19.9 17.1 20.8 32.9

Total Liabilities and Equity 58,284 59,170 62,510 69,251

Return on Assets (ROA) 10.6% 7.4% 8.4% 8.9%Net Income - GAAP 5,711 4,389 5,129 5,868 Return on Equity (ROE) 38.5% 23.2% 23.6% 22.7%D&A 2,082 2,788 3,000 3,750 Return on Capital Employed (ROCE) 22.1% 14.0% 14.9% 15.0%

Change in working capital (2,781) 3,627 679 708

Other - - - - Backlog - - - -Cash flow from operations 4,198 8,154 8,050 9,097Capex (3,335) (2,993) (3,300) (4,500)

Acquisitions 1,400 - - -

Other Investing 67 71 0 0 Valuation FY12A FY13E FY14E FY15E

Cash Flow from Investing (1,868) (2,922) (3,300) (4,500)Dividends (1,623) (1,173) (1,549) (1,549) P/E ratio 10.1 12.9 11.1 9.7Equity Issuance / (Repurchase) 0 (999) 0 0 E V/EBITDA 5.9 6.7 5.5 4.5

Other Financing (238) 15 0 0 Dividend Yield 2.2% 2.7% 2.8% 2.8%Cash Flow from Financing (773) (2,128) (2,499) (2,049) Dividends per Share 1.90 2.32 2.40 2.40Net Change in Cash 1,477 3,089 2,250 2,547Free Cash Flow 1,216 5,516 5,078 4,836

Source: Company reports and J.P. Morgan estimates.

Note: $ in millions (except per-share data).FY ends Dec

7/29/2019 JPM_CAT_072513_132949

9/12

9



Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple researchanalysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document

individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the viewsexpressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part ofany of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or viewsexpressed by the research analyst(s) in this report.

Important Disclosures

Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Caterpillar Inc.within the past 12 months.

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Caterpillar Inc..

Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investmentbanking clients: Caterpillar Inc..

Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following

company(ies) as clients, and the services provided were non-investment-banking, securities-related: Caterpillar Inc.. Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients,and the services provided were non-securities-related: Caterpillar Inc..

Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation from investment bankingCaterpillar Inc..

Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment bankingservices in the next three months from Caterpillar Inc..

Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or servicesother than investment banking from Caterpillar Inc..

Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgancovered companies by visiting https://mm.jpmorgan.com/disclosures/company , calling 1-800-477-0406, or [email protected] with your request. J.P. Morgans Strategy, Technical, and Quantitative Research teams mayscreen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-0406 or e-mail

[email protected] .

Date Rating Share Price($)

Price Target($)

25-Jan-07 UW 59.73 -

02-Jun-08 OW 82.33 94.00

23-Jul-08 N 74.98 --

22-Dec-08 N 42.69 60.00

27-Jan-09 N 32.32 32.00

22-Apr-09 OW 31.39 40.00

22-Jul-09 OW 39.46 43.00

23-Sep-09 OW 53.14 56.00

21-Oct-09 OW 58.40 61.00

17-Dec-09 OW 58.23 65.00

26-Apr-10 OW 71.65 76.0023-Jul-10 OW 68.00 85.00

08-Oct-10 OW 78.74 94.00

22-Oct-10 OW 78.33 99.00

11-Jul-11 OW 108.16 139.00

10-Oct-11 OW 75.52 112.00

26-Jan-12 OW 109.05 132.00

11-Jul-12 OW 79.74 109.00

12-Nov-12 N 84.95 90.00

08-Jan-13 N 94.00 98.00

28-Jan-13 N 97.45 100.00

11-Apr-13 N 86.57 93.00

0

34

68

102

136

170

204

Price($)

Oct

06

Jul

07

Apr

08

Jan

09

Oct

09

Jul

10

Apr

11

Jan

12

Oct

12

Jul

13

Caterpillar Inc. (CAT, CAT US) Price Chart

OW $40OW $61 OW $94 N $100

N N $32 OW $56 OW $85 OW $112 N $98OW $100

UW OW $94 N $60 OW $43OW $65OW $76OW $99 OW $139OW $132OW $109N $90N $93

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.

Break in coverage Jul 23, 2008 - Dec 22, 2008.
https://mm.jpmorgan.com/disclosures/companyhttps://mm.jpmorgan.com/disclosures/companymailto:[email protected]:[email protected]:[email protected]://mm.jpmorgan.com/disclosures/companymailto:[email protected]:[email protected]

7/29/2019 JPM_CAT_072513_132949

10/12

10



23-Apr-13 OW 84.10 100.00

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entireperiod.J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated

Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform theaverage total return of the stocks in the analysts (or the analysts teams) coverage universe.] Neutral [Over the next six to twelvemonths, we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams)coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return ofthe stocks in the analysts (or the analysts teams) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, ifapplicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policyreasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not arecommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stocks expected total return iscompared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appearin the Important Disclosures section of this report, the certifying analysts coverage universe can be found on J.P. Morgans researchwebsite, www.jpmorganmarkets.com.

Coverage Universe: Duignan, Ann P: AGCO Corp. (AGCO), Actuant Corp (ATU), Allison Transmission Holdings (ALSN), Archer-Daniels-Midland (ADM), Bunge Limited (BG), CNH Global (CNH), Caterpillar Inc. (CAT), Commercial Vehicle Group (CVGI),Cummins Inc (CMI), Deere & Co. (DE), Eaton Corp. (ETN), Illinois Tool Works (ITW), Joy Global (JOY), Kennametal Inc. (KMT),Manitowoc Co. (MTW), Modine Manufacturing Company (MOD), Navistar Int'l (NAV), Oshkosh Corp. (OSK), PACCAR Inc. (PCAR),Parker Hannifin (PH), Terex Corp (TEX), Westport Innovations Inc. (WPRT)

J.P. Morgan Equity Research Ratings Distribution, as of June 28, 2013

Overweight(buy)

Neutral(hold)

Underweight(sell)

J.P. Morgan Global Equity Research Coverage 44% 44% 12%

IB clients* 56% 50% 40%

JPMS Equity Research Coverage 42% 50% 8%IB clients* 76% 66% 55%

*Percentage of investment banking clients in each rating category.

For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a holdrating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the tableabove.

Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for coveredcompanies, please see the most recent company-specific research report athttp://www.jpmorganmarkets.com, contact the primary analystor your J.P. Morgan representative, or [email protected] .

Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation basedupon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues.

Other Disclosures

J.P. Morgan ("JPM") is the global brand name for J.P. Morgan Securities LLC ("JPMS") and its affiliates worldwide. J.P. Morgan Cazenove is a marketingname for the U.K. investment banking businesses and EMEA cash equities and equity research businesses of JPMorgan Chase & Co. and its subsidiaries.

All research reports made available to clients are simultaneously available on our client website, J.P. Morgan Markets. Not all research content isredistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your sales

representative.

Options related research: If the information contained herein regards options related research, such information is available only to persons who havereceived the proper option risk disclosure documents. For a copy of the Option Clearing Corporation's Characteristics and Risks of Standardized Options,

please contact your J.P. Morgan Representative or visit the OCC's website athttp://www.optionsclearing.com/publications/risks/riskstoc.pdf

Legal Entities Disclosures

U.S.: JPMS is a member of NYSE, FINRA, SIPC and the NFA. JPMorgan Chase Bank, N.A. is a member of FDIC and is authorized and regulated in theUK by the Financial Services Authority. U.K.: J.P. Morgan Securities plc (JPMS plc) is a member of the London Stock Exchange and is authorized andregulated by the Financial Services Authority. Registered in England & Wales No. 2711006. Registered Office 25 Bank Street, London, E14 5JP. South

Africa: J.P. Morgan Equities South Africa Proprietary Limited is a member of the Johannesburg Securities Exchange and is regulated by the FinancialServices Board. Hong Kong: J.P. Morgan Securities (Asia Pacific) Limited (CE number AAJ321) is regulated by the Hong Kong Monetary Authority and
http://www.jpmorganmarkets.com/http://www.jpmorganmarkets.com/http://www.jpmorganmarkets.com/mailto:[email protected]:[email protected]:[email protected]://www.optionsclearing.com/publications/risks/riskstoc.pdfhttp://www.optionsclearing.com/publications/risks/riskstoc.pdfhttp://www.jpmorganmarkets.com/mailto:[email protected]://www.optionsclearing.com/publications/risks/riskstoc.pdf

7/29/2019 JPM_CAT_072513_132949

11/12

11



the Securities and Futures Commission in Hong Kong. Korea: J.P. Morgan Securities (Far East) Ltd, Seoul Branch, is regulated by the Korea FinancialSupervisory Service. Australia: J.P. Morgan Australia Limited (JPMAL) (ABN 52 002 888 011/AFS Licence No: 238188) is regulated by ASIC and J.P.

Morgan Securities Australia Limited (JPMSAL) (ABN 61 003 245 234/AFS Licence No: 238066) is regulated by ASIC and is a Market, Clearing and

Settlement Participant of ASX Limited and CHI-X. Taiwan: J.P.Morgan Securities (Taiwan) Limited is a participant of the Taiwan Stock Exchange(company-type) and regulated by the Taiwan Securities and Futures Bureau. India: J.P. Morgan India Private Limited, having its registered office at J.P.

Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz East, Mumbai - 400098, is a member of the National Stock Exchange of India Limited (SEBIRegistration Number - INB 230675231/INF 230675231/INE 230675231) and Bombay Stock Exchange Limited (SEBI Registration Number - INB010675237/INF 010675237) and is regulated by Securities and Exchange Board of India. Thailand: JPMorgan Securities (Thailand) Limited is a member

of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Indonesia: PT J.P. MorganSecurities Indonesia is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Philippines: J.P. Morgan Securities PhilippinesInc. is a Trading Participant of the Philippine Stock Exchange and a member of the Securities Clearing Corporation of the Philippines and the SecuritiesInvestor Protection Fund. It is regulated by the Securities and Exchange Commission. Brazil: Banco J.P. Morgan S.A. is regulated by the Comissao deValores Mobiliarios (CVM) and by the Central Bank of Brazil. Mexico: J.P. Morgan Casa de Bolsa, S.A. de C.V., J.P. Morgan Grupo Financiero is amember of the Mexican Stock Exchange and authorized to act as a broker dealer by the National Banking and Securities Exchange Commission.

Singapore: This material is issued and distributed in Singapore by J.P. Morgan Securities Singapore Private Limited (JPMSS) [MIC (P) 049/04/2013 andCo. Reg. No.: 199405335R] which is a member of the Singapore Exchange Securities Trading Limited and is regulated by the Monetary Authority ofSingapore (MAS) and/or JPMorgan Chase Bank, N.A., Singapore branch (JPMCB Singapore) which is regulated by the MAS. Japan: JPMorgan

Securities Japan Co., Ltd. is regulated by the Financial Services Agency in Japan. Malaysia: This material is issued and distributed in Malaysia byJPMorgan Securities (Malaysia) Sdn Bhd (18146-X) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital MarketsServices License issued by the Securities Commission in Malaysia. Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock

Exchange and regulated by the Securities and Exchange Commission of Pakistan. Saudi Arabia: J.P. Morgan Saudi Arabia Ltd. is authorized by theCapital Market Authority of the Kingdom of Saudi Arabia (CMA) to carry out dealing as an agent, arranging, advising and custody, with respect tosecurities business under licence number 35-07079 and its registered address is at 8th Floor, Al-Faisaliyah Tower, King Fahad Road, P.O. Box 51907,

Riyadh 11553, Kingdom of Saudi Arabia. Dubai: JPMorgan Chase Bank, N.A., Dubai Branch is regulated by the Dubai Financial Services Authority(DFSA) and its registered address is Dubai International Financial Centre - Building 3, Level 7, PO Box 506551, Dubai, UAE.

Country and Region Specific DisclosuresU.K. and European Economic Area (EEA): Unless specified to the contrary, issued and approved for distribution in the U.K. and the EEA by JPMS plc.

Investment research issued by JPMS plc has been prepared in accordance with JPMS plc's policies for managing conflicts of interest arising as a result ofpublication and distribution of investment research. Many European regulators require a firm to establish, implement and maintain such a policy. Thisreport has been issued in the U.K. only to persons of a kind described in Article 19 (5), 38, 47 and 49 of the Financial Services and Markets Act 2000

(Financial Promotion) Order 2005 (all such persons being referred to as "relevant persons"). This document must not be acted on or relied on by personswho are not relevant persons. Any investment or investment activity to which this document relates is only available to relevant persons and will beengaged in only with relevant persons. In other EEA countries, the report has been issued to persons regarded as professional investors (or equivalent) in

their home jurisdiction. Australia: This material is issued and distributed by JPMSAL in Australia to "wholesale clients" only. This material does not takeinto account the specific investment objectives, financial situation or particular needs of the recipient. The recipient of this material must not distribute it toany third party or outside Australia without the prior written consent of JPMSAL. For the purposes of this paragraph the term "wholesale client" has the

meaning given in section 761G of the Corporations Act 2001. Germany: This material is distributed in Germany by J.P. Morgan Securities plc, FrankfurtBranch and J.P.Morgan Chase Bank, N.A., Frankfurt Branch which are regulated by the Bundesanstalt fr Finanzdienstleistungsaufsicht. Hong Kong: The1% ownership disclosure as of the previous month end satisfies the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons

Licensed by or Registered with the Securities and Futures Commission. (For research published within the first ten days of the month, the disclosure maybe based on the month end data from two months prior.) J.P. Morgan Broking (Hong Kong) Limited is the liquidity provider/market maker for derivativewarrants, callable bull bear contracts and stock options listed on the Stock Exchange of Hong Kong Limited. An updated list can be found on HKEx

website: http://www.hkex.com.hk. Japan: There is a risk that a loss may occur due to a change in the price of the shares in the case of share trading, andthat a loss may occur due to the exchange rate in the case of foreign share trading. In the case of share trading, JPMorgan Securities Japan Co., Ltd., will bereceiving a brokerage fee and consumption tax (shouhizei) calculated by multiplying the executed price by the commission rate which was individually

agreed between JPMorgan Securities Japan Co., Ltd., and the customer in advance. Financial Instruments Firms: JPMorgan Securities Japan Co., Ltd.,Kanto Local Finance Bureau (kinsho) No. 82 Participating Association / Japan Securities Dealers Association, The Financial Futures Association of Japan,Type II Financial Instruments Firms Association and Japan Investment Advisers Association. Korea: This report may have been edited or contributed to

from time to time by affiliates of J.P. Morgan Securities (Far East) Ltd, Seoul Branch. Singapore: JPMSS and/or its affiliates may have a holding in any ofthe securities discussed in this report; for securities where the holding is 1% or greater, the specific holding is disclosed in the Important Disclosuressection above. India: For private circulation only, not for sale. Pakistan: For private circulation only, not for sale. New Zealand: This material is issued

and distributed by JPMSAL in New Zealand only to persons whose principal business is the investment of money or who, in the course of and for the

purposes of their business, habitually invest money. JPMSAL does not issue or distribute this material to members of "the public" as determined inaccordance with section 3 of the Securities Act 1978. The recipient of this material must not distribute it to any third party or outside New Zealand withoutthe prior written consent of JPMSAL. Canada: The information contained herein is not, and under no circumstances is to be construed as, a prospectus, anadvertisement, a public offering, an offer to sell securities described herein, or solicitation of an offer to buy securities described herein, in Canada or any

province or territory thereof. Any offer or sale of the securit ies described herein in Canada will be made only under an exemption from the requirements to

file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable securities laws or, alternatively,pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made. Theinformation contained herein is under no circumstances to be construed as investment advice in any province or territory of Canada and is not tailored to

the needs of the recipient. To the extent that the information contained herein references securities of an issuer incorporated, formed or created under thelaws of Canada or a province or territory of Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securitiescommission or similar regulatory authority in Canada has reviewed or in any way passed judgment upon these materials, the information contained herein

or the merits of the securities described herein, and any representation to the contrary is an offence. Dubai: This report has been issued to persons regardedas professional clients as defined under the DFSA rules. Brazil: Ombudsman J.P. Morgan: 0800-7700847 / [email protected].

7/29/2019 JPM_CAT_072513_132949

12/12

12



General: Additional information is available upon request. Information has been obtained from sources believed to be reliable but JPMorgan Chase & Co.or its affiliates and/or subsidiaries (collectively J.P. Morgan) do not warrant its completeness or accuracy except with respect to any disclosures relative to

JPMS and/or its affiliates and the analyst's involvement with the issuer that is the subject of the research. All pricing is as of the close of market for the

securities discussed, unless otherwise stated. Opinions and estimates constitute our judgment as of the date of this material and are subject to changewithout notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any

financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are notintended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipient of this report must make its ownindependent decisions regarding any securities or financial instruments mentioned herein. JPMS distributes in the U.S. research published by non-U.S.

affiliates and accepts responsibility for its contents. Periodic updates may be provided on companies/industries based on company specific developments orannouncements, market conditions or any other publicly available information. Clients should contact analysts and execute transactions through a J.P.Morgan subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise.

"Other Disclosures" last revised May 4, 2013.

Copyright 2013 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold orredistributed without the written consent of J.P. Morgan. #$J&098$#*P

Documents

JPM_CAT_072513_132949