FREQUENTLY

ASKED QUESTIONS

ISSUED: SEPTEMBER 2016

CONFIDENTIAL: FOR DEALER AND INTERNAL CATERPILLAR USE ONLY. DO NOT DISTRIBUTE TO CUSTOMERS.
GENERAL BUSINESS AND ORGANIZATION
GENERAL BUSINESS AND ORGANIZATION

Does Caterpillar Global Mining still exist?

Yes. Although Caterpillar Global Mining is not a formal division, you could think of it as an
umbrella under which our Caterpillar teams operate.

We internally manage our mining business through two end-to-end divisions: Surface
Mining & Technology (Tom Bluth – VP) and Material Handling & Underground (Doug
Hoerr – VP) with multiple supporting divisions (Global Aftermarket Solutions, Advanced
Components and Systems, Mining Design Center and more) as key business partners to
support mining.

While the internal structure is designed to increase speed, improve execution and
deepen alignment, this umbrella also provides a “familiar face” for collaboration with our
customers about our products and services.

What is the Caterpillar outlook on the long-term future of commodities and the
mining industry?
The key fundamentals that make mining an attractive business — population growth,
urbanization and the rising middle class — have not changed. We continue to believe the
mining industry is an attractive industry for the long term. Our customers face pressures
to operate more efficiently, more safely and more environmentally responsibly, and we
will continue to focus our efforts on delivering the best products to service their needs.

What is the Caterpillar vision on the future of mining?

The key long-term fundamentals that make mining an attractive business have not
changed. Global population growth and urbanization will continue to drive demands for
increasing infrastructure development. The growing global middle class will drive the
demand for energy and goods. These needs require efficient and sustainable use of our
natural resources through mining.

Caterpillar’s world-class product engineering and dependable, experienced support

network are the foundation of our business. Now and in the future, advanced technology
and data / analytics solutions are also top of mind. We are providing these tools to help
our customers navigate the rapidly changing landscape and emerge stronger than ever.
We continue to believe the mining industry is an attractive industry for the long term.
We believe in mining and intend to remain the world’s leading manufacturer of mining
equipment.

What sort of lobbying is Caterpillar doing to support the mining industry? What is
Caterpillar doing to promote the good of the mining industry?
Caterpillar works closely with our mining customers and industry associations to impact
public policy that is important to the industry. We are focused on achieving results for our
dealers and our mining customers.

minexpo 2016: frequently asked questions // 2

How does the outcome of the U.S. election (Trump vs. Clinton) impact the mining
industry?
We are focused on our business, our dealers and our customers. We will be ready in 2017
to work with the new president, whomever that is, as well as the U.S. Congress.

Why is Caterpillar holding on to the dealer distribution model? Why can’t I deal
directly with Caterpillar like I do with other manufacturers?
We provide unparalleled support for our customers through the partnership between
Caterpillar and our dealer network. Customers are able to get the best of both worlds by
having a local organization that shares a deep understanding of local issues combined
with the global strength of Caterpillar Inc. We have aligned our Global Mining organization
with the issues most important to our customers today — increasing productivity,
controlling costs, adopting and adapting technology, and managing equipment through the
complete lifecycle.

How has dealer development progressed with the Bucyrus acquisition?

Are dealers able to support the expanded product lines the same as they
do the traditional Cat line?
Since the Bucyrus acquisition, Caterpillar has been focused on the aftermarket by
developing service strategies, converting parts and integrating components — all of which
are vital to helping our customers reduce costs. We continue to focus on this important
part of the business.

You’re reviewing / discontinuing pieces of Bucyrus. Do you still consider it a good

investment?
We are focusing our product portfolio to allocate funds for more targeted investment in
the products that will produce the highest returns over time. We continue to believe the
mining sector is an attractive industry in the long run. Our mining products remain a great
strategic fit when viewed across an entire cycle.

As per the Caterpillar announcements regarding Room & Pillar and Track Drill
products, is the company still committed to mining?
Caterpillar remains committed to an extensive mining product portfolio. We firmly believe
mining is an attractive long-term industry, and we continue to invest in a broad range of
products, both surface and underground.

Why is Caterpillar reviewing these products at a time when Komatsu acquired Joy
Global to get into some of these businesses?
We believe we have higher returning investment opportunities elsewhere within
Caterpillar and chose to prioritize our investment dollars, directing them to the areas that
generate the highest future OPACC opportunity.

minexpo 2016: frequently asked questions // 3

Are the latest people reductions announced August 18 above and beyond what the
company announced in September 2015?
While the August 18 announcements are in line with the company’s ongoing restructuring
to align its businesses with existing conditions, the impacted positions were not included
in the September 2015 announcement. The ongoing weakness in many key end markets
Caterpillar serves has resulted in more aggressive cost reductions and restructuring.

The workforce reductions announced were referenced in the company's second-quarter

earnings release and are the primary reason for the increase in restructuring costs in 2016,
which were forecast to be about $700 million on July 26, 2016.

These announcements are part of many critical decisions we will continue to make that
will align all of our businesses into a portfolio that offers the highest sustainable growth
and best long-term results.

Is the potential closing of the Houston, Pennsylvania, plant part of the "more than
20" facility closures announced in the September 2015 restructuring announcement?
The potential closing of the Houston facility was not included in the September 2015
restructuring announcements.

How do these decisions impact the Cat dealer network?

Focusing the product portfolio on higher OPACC growth opportunities is expected to
benefit Caterpillar and our entire dealer network. For the existing field population of
machines, Cat dealers will continue to provide support. The company is evaluating current
field support levels to properly support the existing population.

How much are Caterpillar’s revenues from the products the company is reviewing?
Caterpillar doesn't report revenues by product group. Financial results for Room & Pillar
and Track Drills are included in Resource Industries.

Who are potential buyers for the Room & Pillar products?
We anticipate the Room & Pillar products will generate interest from other mining
equipment OEMs with complementary product offerings as well as the private equity
community. We expect to identify the buyers with the highest levels of interest that will
appreciate the value proposition of the Room & Pillar business.

How long will we wait for a buyer?

We will begin working with interested parties immediately and work expediently. We will
provide an update once an alternative is agreed to and finalized.

minexpo 2016: frequently asked questions // 4

In light of reductions in Research & Development (R&D) spending, is Caterpillar still
committed to R&D?
As we project lower sales and revenues this year, we've revised R&D spending, just as
we have revised spending in other operations.

While we do anticipate spending less on R&D in 2016 than recent years, we are still
forecasting to spend more on R&D as a percentage of sales and revenues in 2016 than
many of our competitors, and more than our last five years’ average percentage.

We remain committed to developing the best products and solutions for our customers.

How is Caterpillar helping customers lower costs, improve productivity and help
with the total cost of ownership (TCO)?
Through the Cat dealer network, there are over 300 archived best practices that cover all
elements of equipment management. Many of those best practices have come directly
from our customers.

From a product development standpoint, in our NPI process, we are always evaluating
ways to improve or make our equipment more efficient. Technology and analytics are
moving faster than they ever have, which is helping generate additional TCO opportunities.
MineStar, for example, can enhance safety, reduce costs, improve productivity and boost
efficiency.

Many Cat dealers have tremendous expertise in Fleet Management and can be leveraged
for specific projects that result in improved TCO, fleet availability and productivity.

What is Caterpillar doing to lower prices for machines and parts?

Caterpillar's pricing philosophy is centered on market-based pricing. We are not a cost
plus supplier.

We value our business and our commitment is to maintain explainable and transparent
pricing to our customers. Our goal is to support the lowest machine owning and operating
cost or cost per ton.

Caterpillar routinely, as normal course of business, conducts pricing reviews to ensure our
pricing for both machines and parts is in alignment with our expectations and our goals.
Where there are perceived value differences or when facts and data show that we are
not priced correctly relative to the market, Caterpillar is open to improve and discuss local
competitive issues.

It is important to remember that our dealers are independent businesses and have
ultimate authority over end-customer transaction prices.

minexpo 2016: frequently asked questions // 5

Why does Caterpillar keep increasing parts prices even though the mining business
is struggling?
Caterpillar strives to provide stable pricing for our dealers and customers. Parts prices
did not increase dramatically when commodity prices rose sharply in recent years, and
conversely the prices do not decrease now that we are in a downturn.

Cat parts prices have not continued to increase. Over the course of 2015 and 2016 Cat
parts pricing has remained flat with no general price increase. Currency adjustments have
taken place in some regions, and this can be perceived as an increase. Individual parts get
reviewed and adjusted based on feedback from the field and internal business partners.
These reviews have resulted in a few tenths of a percent increase or decrease depending
on a customer's basket of parts.

There have been significant price decreases in the expanded mining product line during
this downturn.

Caterpillar's pricing philosophy is centered on market-based pricing. Where there are

perceived value differences or facts and data show that we are not priced correctly relative
to the market, Caterpillar is open to improve and discuss local competitive issues.

What is Caterpillar doing to better manage and ensure parts availability?

We are adding inventory across a broad spectrum of parts to improve overall parts
availability. We are also targeting specific families of parts and components for our Mining
customers including C175 engines, Large Mining Trucks, Undercarriage, etc.

Through our Across the Table initiative, we have much better visibility to the actual
availability experienced by the end customer, and we are using this to drive improvements
for our customers

We are using multiple innovative approaches to improve our demand forecasting and
network planning systems and processes including telematics, advanced network
modeling, etc. as well as planning tools such as Plan for Every Serial Number, PCR
process and advanced ordering tools (Future Dated Orders, CPRO, ISR, etc.)

Has Caterpillar progressed in having more parts and repair options for the expanded
line products?
There are over 300 serviceable components now available across the HMS, ERS and Drill
product lines.

Cat dealers have multiple repair options available, including replacement with new, dealer
rebuilds and Cat Reman. Major components available include hydraulic pumps, hydraulic
cylinders, gearboxes, swing drives and other major wear components.

Serviceability updates have been made across all products, including adding service parts
on over 75 percent of the components to ensure the right repair options are available.
Service tooling has also been added through this project.

Approximately 450 new service literature documents have been created in 2016.
Documentation includes Disassembly and Assembly, Specifications, Test and Adjust, Parts
Manuals and Operation & Maintenance Manuals. All updates are available in SIS Web and
Next Gen SIS. Component integration will continue through 2018.

minexpo 2016: frequently asked questions // 6

UNDERGROUND MINING
UNDERGROUND MINING

How is Caterpillar growing and investing in the underground mining segment?

Caterpillar will be showing and discussing a number of new underground mining products
at MINExpo, including

»» A new High Torque Drive System for longwall mining

»» Rock Straight System — continuous longwall mining of low seam hard rock deposits
»» A newly updated R1700K LHD with optional Tier 4 Final equivalent emissions
reduction technology
»» New ground engaging tools for Cat hard rock LHDs
»» The announcement of the AD22 — a new 20-ton hard rock truck
»» Announcement of the kickoff of a battery LHD program

Why has Caterpillar exited the Room & Pillar and Highwall Miner businesses?
Caterpillar identified several chronically underperforming businesses, of which
Room & Pillar was one. The drastic decision to divest or shut down was based on
several key factors:

»» The absence of current orders and prospects

»» Challenging industry conditions
»» Underperforming aftermarket sales

What business decision is driving the manufacturing and sourcing of

products in China?
Building products in China is helping Caterpillar:

»» Consolidate and invest in existing manufacturing facilities

»» Manufacture close to its supply base
»» Manufacture close to key customers (Australia) and developing markets
»» Reduce costs on large steel structures
»» Compete and sell inside China
»» Stay competitive

What is the Caterpillar view on underground coal?

Coal has a critical role to play in the global energy mix and in the steel industry. Caterpillar
remains committed to underground coal mining, but is choosing to focus on and invest in
the most economical means of extracting coal — and that’s longwall mining.

minexpo 2016: frequently asked questions // 8

When can customers expect to see all LHD and Trucks available with
Tier 4 Final engines?
Caterpillar had planned annual releases of Tier 4 products starting in 2018 and ending
in 2024; however, with the current mining downturn, this plan remains fluid. Caterpillar
will introduce the new R1700K, its first Tier 4 Final underground hard rock vehicle, at
MINExpo, with production starting in 2018.

Is Caterpillar planning to develop battery-operated LHDs for hard rock mining?

In the first quarter of 2017, it is expected that Caterpillar will build and begin testing a
prototype battery-operated LHD at the Peoria Proving Grounds. This prototype will then
go underground for a period. Subsequent to the success of this prototype, Caterpillar will
launch a full scale NPI program.

When will Caterpillar announce the availability of the Rock Straight System and
the Rock Header?
»» Rock Straight: Caterpillar opened the order board for the Rock Straight System in June
2016. A campaign page for the product can be found at www.cat.com/rock-straight-us.
There is also content on Dealer.cat.com and Cat.com for this unique product.
»» Rock Header: Caterpillar continues to develop this product. A second generation
prototype is back underground accumulating hours and validating new designs.

minexpo 2016: frequently asked questions // 9

SURFACE MINING
SURFACE MINING

Why is Caterpillar spending money to move its Surface Mining Headquarters to

Tucson during these tough times? What is the benefit of the Tucson hub to the
mining customer?
As we face unprecedented challenges, this is a unique time to reshape our business
and culture. Caterpillar Tucson will serve the long-term vision for mining — delivering
customer success rooted in collaboration, cutting-edge technology & design, and deep
mining expertise.

Tucson Proving Grounds (TPG) and the Tinaja Demonstration Center are both
well-established and successful testing and Caterpillar mining locations that host
thousands of employees and customers each year.

When build-out is complete, the offices will be located in downtown Tucson, near the
University of Arizona and approximately 30 minutes away from TPG. By centralizing
various surface mining product lines into one location we see opportunity to improve
the development cycle and end-product based on proximity to the TPG. where mining
machines and technologies are tested and developed.

A critical enabler for Caterpillar’s decision in this economic environment was Arizona’s
state, county and city teams partnering together to design short- and longer-term
incentives that enable employee relocations, including a newly renovated county-owned
interim office space.

The intent is to improved design efficiencies and drive an enhanced systems

view, working closely across our end-to-end value chain for a more hands-on
design / development environment as we partner with key customers in the field.

I hear Caterpillar has had quality and durability problems with the 793F and 797F
Mining Trucks. What is the status? Are they improving?
The Cat 793 Mining Truck has a long-standing reputation as one of the most reliable mine
workhorses. With proven high productivity and low cost per ton, it is the leader of its
size class. The introduction of the F Series in 2010 saw unprecedented product demand.
The trucks demonstrated outstanding productivity from the start but fell short of the high
reliability expectations for some miners.

Since then, Caterpillar has put an intense focus on reliability for field units and new
production 793F / 797Fs.

Today, field-updated and new production trucks are performing at the high Cat quality
standards customers expect. As these populations grows, customers will experience
quality improvements in action. Availability trends for the F Series trucks are positive with
most fleets exceeding 88 percent and newer fleets generally in the 91-93 percent range.

Examples of improvements include:

»» Two 793Fs in Montana clocked 8,100 hours in one year

»» Updated 795F AC trucks in the field with over 38,000 hour each clocked more than
8,000 hours in one year
»» Key 793F fleets are running at 90 percent availability
»» New 794 AC fleets are running at 90 percent availability
»» New 797F fleets are performing much better than historical norms with availabilities
generally above 90 percent

minexpo 2016: frequently asked questions // 11

I see that Caterpillar is showing only an electric drive 794 AC in the exhibit. Does
this mean that Caterpillar is recognizing that electric drive is better?
The 794 AC is the only new Large Mining Truck introduction since the last MINExpo
and thus the focus of this year’s LMT exhibit. Cat’s mechanical drive trucks still set the
standard for safety, performance and low cost per ton.

The 793F, a class leader and industry workhorse, was shown in the last two MINExpos.
We want the focus of MINExpo 16 to be on our newest model to the Cat Large Mining
Truck product line.

Through complete integration, Caterpillar’s electric drive trucks can bring more value than
competitive offerings to customers who prefer or are already established with electric
drive 290-tonne (320-ton) trucks.

Has Caterpillar addressed quality and life issues around the C175 engine?
Through Cat’s Continuous Product Improvement (CPI) process, our Large Mining
Truck engines are seeing significant improvements in service life and are delivering on
availability and reliability expectations. Highest hour truck engines are running over 27,000
hours before rebuild.

What are the current Caterpillar plans for alternative fuels?

Caterpillar has ongoing advanced research around alternative fuels to lower operating
costs, and is developing technology for Liquefied Natural Gas (LNG) dual fuel solutions
(LNG + Diesel) on Large Mining Trucks. This involves two projects:

1. Trials at two mines of Caterpillar’s proprietary DGB (Dynamic Gas Blending) solution.
DGB runs at a rate of around 50-60 percent LNG replacement of diesel usage.
Current focus is on a retrofit solution for existing LMT truck models.

2. The continued development of the High Pressure Direct Injection (HPDI) technology
announced in 2012. Caterpillar is currently in partnership with a mining company to
develop this solution.

What is the Caterpillar plan for trolley-assisted hauling?

The 795F AC and 794 AC drive systems are trolley capable. Development of a 795-trolley
system has successfully completed lab testing and full-on trolley line testing at our
proving ground. The next phase is fleet field-testing on mine-specific trolley infrastructure
with a mining customer who is working with us on development.

What are the Caterpillar plans for Tier 4 Final?

Caterpillar plans to meet the needs of our customers who require Tier 4 final compliant
machines by building on the success of our industry-leading emissions-reduction
technology. Tier 4 engine technology includes state-of-the-art integrated systems
designed, produced and supported by the industry leader.

System design will be tailored to optimally meet customer needs in each application and
horsepower range. Caterpillar is using Selective Catalytic Reduction with Diesel Exhaust
Fluid (SCR with DEF) on the larger-engine-based mining machines (i.e., 785-797).

minexpo 2016: frequently asked questions // 12

TECHNOLOGY
TECHNOLOGY

How is Caterpillar using and developing technology to help customers improve

productivity and lower costs?
Cat MineStar™ is an integrated and comprehensive suite of technologies and services to
help customers lower their cost per ton, both on the surface and underground.

c at m i n e s ta r f l e e t
We have several case studies in which utilizing Fleet — available for surface
equipment — boosts productivity and efficiency by a minimum of 10 to 15 percent. This is
accomplished in a variety of ways, but some of the more significant instances that Fleet
can impact include:

»» An increased focused on shift change procedures to squeeze out more productive

time in the first and last hour
»» Improved fueling practices

c at m i n e s ta r t e r r a i n
Terrain offers multiple ways to lower costs and improve productivity. It enables many
activities, including allowing customers to:

»» Track and analyze machine utilization and productivity — by machine, by operator

or by area
»» Track material type and amount moved to decrease material dilution
»» Put ore body maps, drilling maps and grade maps in the cab for improved accuracy
when loading, drilling or grading
»» Perform precise blending at the face or on the pad, which improves ore quality and
lowers cost per ton

c at m i n e s ta r h e a lt h
Health offerings help customers proactively monitor their equipment, combining it with
data analytics capabilities and expertise and working together with Caterpillar and Cat
dealers to reduce unplanned downtime. More uptime means more productive time,
meaning lower cost per ton.

Technology products and services will have dedicated areas at the Cat MINExpo exhibit,
including a stage with real examples from customers on how Cat MineStar is helping
them improve productivity and lower their cost per ton.

What is the current status of Caterpillar autonomous offerings for surface and
underground?
With our Cat MineStar Command suite of offerings, Caterpillar has the most
comprehensive suite of remote control, semi-autonomous and autonomous capabilities in
the marketplace. All Command offerings help enhance safety, improve operator comfort
and productivity and boost efficiency and productivity — ultimately lowering customers’
cost per ton.

We offer the following capabilities:

»» Command for dozing. Multiple remote control options — over-the-shoulder, line of

sight and non-line- of-sight — designed to help operators perform more efficiently and
safely. Further questions can be directed to: Alan Pumklin (pumklin_alan_j@cat.com)

minexpo 2016: frequently asked questions // 14

»» Command for drilling. Our first version of this product — a semi-autonomous single
row, multi-hole offering capable of controlling up to three drills via one interface — will
be available in 2017. Caterpillar has recently re-scoped this product to initially offer a
more accessible Command for drilling solution to the marketplace so more customers
can realize the benefits of autonomous drilling sooner. This offering minimizes some of
the barriers to entry, such as infrastructure costs. Further questions can be directed to:
Claude Aboujaoude (aboujaoude_claude_e@cat.com)
»» Command for underground. A remote control and semi-autonomous offering available
on Cat Load Haul Dump Machines. Our latest version of Command for underground on
the R1700K will be on display at MINExpo. Further questions can be directed to:
Randy Schoepke (schoepke_randy@cat.com)
»» Command for hauling. Our sophisticated autonomous haulage system, first deployed
in 2012 and boasting the largest truck fleet operation at a single mine site anywhere
in the world. Our system has proven to exceed manned productivity and has done so
with zero lost time injuries. Further questions can be directed to: Jag Samaraweera
(samaraweera_jagath@cat.com)

What advancements are coming in the technology space?

Cat MineStar continues to focus on advancing capabilities — products or
services — around enhancing safety, improving productivity and optimizing mining
operations. We continue to look at advancements through a lens of how technology can
help our customers be more productive, safer or improve operator performance — and
what advancements will do that the fastest.

»» Example: Our truck spotting product now in development leverages the knowledge
and capabilities from our Terrain and Command for hauling systems to help operators
quickly become more effective and efficient.

Caterpillar actively works with partners from both inside and outside the mining industry
to bring the best advancements in technologies to benefit our customers.

»» Example: Our partnership with Trimble is one of the longest-standing in the industry
at 20 years. Together, through our joint venture Caterpillar Trimble Control Technologies
(CTCT), we make our Terrain for loading and grading product, which for two decades
has been the premier guidance system available.
»» Uptake: We’ve recently partnered with Uptake to build the next version of our
equipment management data analytics platform to harness the innovation from retail
and software development and bring it to mining customers.

Our product offerings will have an increased focus on interoperability — both within

the Cat MineStar suite and Cat products, as well as with other manufacturers. Since
first introduced to the market in the early 2000s, Cat Fleet has been available on any
manufacturer’s trucks — large or small, electric or mechanical drive. Cat MineStar has
open, standard interfaces available, enabling it to connect to other in-pit operational
systems, including planning systems, crusher systems and business systems, such
as ERP systems.

minexpo 2016: frequently asked questions // 15

Who is Uptake and what is the Uptake partnership with Cat?
Uptake is a predictive analytics SaaS platform provider that empowers companies in
major industries to optimize performance, reduce asset failures and enhance safety.
Leveraging unique partnerships with industry leaders, Uptake integrates cross-industry
expertise, data science and workflow connectivity to provide high-value solutions using
massive data sets.

Caterpillar partnered with Uptake in 2015 to jointly develop an end-to-end platform for
predictive diagnostics to help Caterpillar customers monitor and optimize their equipment
more effectively.

Cat Asset Advisor, powered by Uptake, is a next generation of the Cat Equipment Care
Advisor (ECA) platform used by dealer Condition Monitoring Advisors (CMAs). It will have
the basic capabilities of ECA, but will also be highly scalable, provide prediction on the
longevity of components, and offer predictive analytics and automated recommendations
that expand as the system “learns.”

Asset Advisor transforms data into predictive insight gathered across the Cat ecosystem.
The advanced logic behind — and automation of — the recommendations allow CMAs to
monitor more assets and deliver greater measurable dealer value.

minexpo 2016: frequently asked questions // 16

 OUR PARTNERSHIP
GOES BEYOND
THE IRON
Learn more about the Caterpillar MINExpo program
by visiting Dealer.cat.com/minexpo.
For questions or assistance, please contact us by
sending an email to MINExpo@cat.com.

© 2016 Caterpillar All Rights Reserved. CAT, CATERPILLAR, their respective logos, “Caterpillar Yellow,” and the POWER EDGE
trade dress as well as corporate and product identity used herein, are trademarks of Caterpillar and may not be used without
permission. Cat and Caterpillar are registered trademarks of Caterpillar Inc., 100 N.E. Adams, Peoria IL 61629.