11:00AM New York – Caterpillar fell 3% after lowering earnings outlook for the year.

Caterpillar Inc (CAT: chart) reported that third quarter sales of 11.442 billion and earnings of $927 million and earnings per share of $1.40.

Sales and revenues increased $925 million compared to the third quarter of last year, $385 million from higher sales volume, $267 million from improved price realization, $174 million from the effects of currency and $99 million from higher Financial Products revenues.

Third-quarter profit increased $158 million, or $0.26 per share, from third quarter 2006. The increase in profit was due to improved price realization and higher sales volume, partially offset by higher manufacturing costs, including material costs.

The full-year outlook for 2007 is for sales and revenues of about $44 billion and profit per share in the range of $5.20 to $5.60, compared to $5.17 per share in 2006. The previous outlook for 2007 sales and revenues was about $44 billion, and profit per share was $5.30 to $5.80.

Caterpillar's preliminary outlook for 2008 reflects a sales and revenues increase of 5 to 10 percent and profit per share up 5 to 15 percent from the mid-point of the 2007 outlook range.

Sales and revenues for third quarter 2007 were $11.442 billion, up $925 million, or 9 percent, from third quarter 2006. Machinery volume was up $397 million. Engines volume was down $12 million with on-highway truck engines down about $470 million, mostly offset by increases in electric power, petroleum and marine engines. Price realization improved $267 million. Currency had a positive impact on sales of $174 million, driven primarily by the stronger euro.

Machinery and Engines sales improved $826 million despite the impact of the severe drop in demand for on-highway truck engines and weakness in North American construction sales. The strength of economies outside the United States, our broad global footprint and growth in integrated service businesses, all contributed to 8 percent growth in sales. The diversity and strength of our full range of engine products more than offset the profit impact of the severe decline in on-highway truck engines.

Profit per share improved 23 percent, primarily a result of improved price realization and higher physical sales volume. The improvements were partially offset by a $294 million increase in core operating costs and an unfavorable impact from currency of about $60 million.

Machinery and Engines sales outside North America are expected to be up 25 percent from 2006, or about $4.6 billion -- more than offsetting a $2.5 billion, or 12 percent, decline in North America.

The company maintained projection of 2007 sales and revenues at about $44 billion, or a 6% increase from 2006. Sales outside North America are expected to be up about $4.6 billion, or 25 percent, more than offsetting a $2.5 billion, or 12 percent, decline in North America.