Caterpillar Issues Proxy Statement and Highlights Record-Breaking 2008

Caterpillar’s 2008 sales and revenues were $51.324 billion, a 14 percent increase over 2007, the sixth straight year for record sales and revenues. Profit per share of $5.66 was also a record, up 5 percent from 2007. Caterpillar set many other records in 2008, enhancing the company’s global strength and positioning the company for future success:

• Capital expenditures of $2.4 billion in 2008 increased 44 percent compared to 2007.
• Caterpillar invested $1.7 billion for research and development in 2008, up 23 percent.
• Total wages and benefits provided by Caterpillar to employees were $9.1 billion, up 9 percent compared to 2007.
• The Caterpillar Foundation provided a record $39 million in grants in 2008, up 7 percent.
• Health care expenditures for employees and retirees by the company totaled more than $600 million.
• Incentive pay for employees totaled $670 million, up 13.6 percent. Caterpillar’s incentive pay program covers thousands of employees, and the payments are based on aggressive goals established at the start of each year.

The proxy statement includes detailed 2008 compensation information for Caterpillar’s senior leaders, including cash and equity-based compensation. It’s notable that the equity portion of the compensation is primarily comprised of stock appreciation rights (SARs) granted in March 2008 with a grant price of $73.20 per share. These SARs will only have value if the shares are above this price during the term of the grant. This follows Caterpillar’s long-held philosophy of pay for performance and pay at risk, which clearly aligns executive compensation with stockholders’ interests.

For 2009, Caterpillar has already announced that it expects significant reductions in total compensation for its senior leadership group. These reflect planned reductions in the company’s incentive compensation program and equity-based compensation—directly tied to share price— again designed to align the interests of our senior managers and executives with the interests of Caterpillar’s stockholders.

About Caterpillar
For more than 80 years, Caterpillar Inc. has been making progress possible and driving positive and sustainable change on every continent. With 2008 sales and revenues of $51.324 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The company also is a leading services provider through Caterpillar Financial Services, Caterpillar Remanufacturing Services, Caterpillar Logistics Services and Progress Rail Services. More information is available at: http://www.cat.com/.

SAFE HARBOR
Certain statements in this release relate to future events and expectations and as such constitute forward-looking statements involving known and unknown factors that may cause actual results of Caterpillar Inc. to be different from those expressed or implied in the forward-looking statements. In this context, words such as “will,” “would,” “expect,” “anticipate,” “should” or other similar words and phrases often identify forward-looking statements made on behalf of Caterpillar. It is important to note that actual results of the company may differ materially from those described or implied in such forward-looking statements based on a number of factors and uncertainties, including, but not limited to, (i) adverse change in general economic conditions; (ii) adverse change in the industries Caterpillar serves including construction, infrastructure, mining, energy, marine and electric power generation; (iii) Caterpillar’s ability to manage material, including steel, and freight costs; (iv) Caterpillar’s ability to generate cash from operations, secure external funding for its operations and manage its liquidity needs; (v) material adverse change in customers’ access to liquidity and capital; (vi) currency exchange or interest rates changes; (vii) political stability; (viii) market acceptance of the company’s products and services; (ix) significant changes in the competitive environment; (x) epidemic diseases; (xi) severe change in weather conditions negatively impacting operations; (xii) changes in law, regulations and tax rates; and (xiii) other general economic, business and financing conditions and factors described in more detail in the company’s Form 10-K filed with the Securities and Exchange Commission on February 20, 2009. This filing is available on our website at www.cat.com/sec_filings. We do not undertake to update our forward-looking statements.