This summary is based on the first quarter fiscal 2007 earnings call conducted by Caterpillar Inc. (CAT: chart) on April 20, 2007.

Management:

Chief Financial Officer: David Burritt
Director, Investor Relations: Mike DeWalt
Group President: Doug Oberhelman

Key Investors Issues

- EPS were $1.23 per share compared to $1.20 per share last year.
- Net income was $816 million from $840 million a year ago.
- Sales of machinery in the North American market dropped 12.8% to $3.1 billion from a year ago.

First Quarter Highlights

Sales and revenues were just over $10 billion and profit per share was $1.23.

Sales and revenues were up about 7% and profit per share rose 3 cents per share from last year.

The company was up $624 million, and that is despite a decline in North American Machinery and Engines sales volumes, excluding Progress Rail of $996 million.

- That is almost $1 billion of downsized news in North America.
- North America suffered weak construction sales, particularly for housing, and a big drop-off in on-highway truck engines.

There was also another factor and that is the change in Dealer Machine Inventories, primarily in North America.

The company expected the changes in Dealer Machine Inventory would negatively impact sales by about $1 billion in 2007. That is the difference between last year''s increase in dealer inventories and expectation this year that they will come down. The impact on sales was over $500 million worldwide more than all of it, about $600 million, in North America. For the most part, it was due to the absence of last year''s buildup in inventory.

Dealers took inventory down in North America, but in most of the rest of the world inventory went up somewhat, a result of strongly increasing sales outside North America.

With the North American Machinery and Engines sales volume down almost $1 billion, but total sales and revenues up $624 million, there is about $1.6 billion of positives to discuss. They were robust sales of Machinery and Engines outside North America.

- Sales volume outside North America was a positive $896 million. Europe, Africa, Middle East revenue was up 36%, Asia-Pacific 22%, and Latin America was up 15%.

The company saw weakness in US construction overall, again particularly housing.

Coal mining in the US was weak, and off-highway truck in the US was off sharply.

- The company saw continued strength in areas like commodity-related industries, metals mining, coal mining outside the US, and oil and gas.
- The company saw strength in engines for electric power generation, marine engines, machines for infrastructure development, particularly outside North America, and machines for construction, including housing outside North America. So of the $1.6 billion of sales and revenues positives sales volume outside North America was about $900 million of that.

The other items were $389 million of sales from Progress Rail which were acquired in June of 2006.

- Progress Rail is a service-related business that is outperforming expectations.
- Currency had a favorable impact of $184 million on sales and revenues.
- Price realization was positive $105 million, despite an unfavorable impact of geographic sales mix.