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Thursday, June 11, 2009

Caterpillar sets 42-cent quarterly dividend, Despite "Worst Economic Crisis Since the Great Depression"

Caterpillar Inc's (CAT - News) chief executive said on Wednesday there was a good chance revenues would return to the $50 billion mark they topped last year "in the next five years" -- though he warned that progress toward the goal "won't come smoothly."

Speaking at the annual shareholder meeting, Jim Owens said he thought there was "an 80 percent chance some time in the next five years of going back above the $50 billion threshold."

Caterpillar, which reported its first quarterly loss in 17 years two months ago, expects sales of between $31.5 billion and $38.5 billion in 2009, down from $51.3 billion in 2008.

That would be the worst one-year revenue decline since the 1930s.

Sales of the company's distinctive yellow construction and mining machinery have tumbled as result of lower commodity prices and lower oil production.

As in previous years, the meeting drew critics protesting Caterpillar's sales to Israel, whose defense forces have used the company's equipment as part of its effort to put down the Palestinian uprising.

But the protesters did not disrupt the meeting as they have previous gatherings -- even after a resolution they supported failed to pass, which would have forced Caterpillar to publish a report on foreign military sales.

Caterpillar contends that such sales accounted for about $30 million in sales in 2008, or about 0.06 percent of total revenue, and that it believes it would be an inappropriate use of the company's resources to complete the requested report.

All seven shareholder proposals up for vote this year failed to garner enough support, including a push to split the position of chair and CEO and to elect directors annually.

Owens took the unusual step last week of writing to institutional investors as a group to explain the company's opposition to four of the seven items stockholders were voting on.

"Changing our governance practices and corporate structure, as contemplated by the stockholder proposals presented below, will only divert attention and resources," Owens wrote.

"While these types of proposals may have merit at some companies, for the reasons provided below, we strongly encourage you to afford Caterpillar the benefit of individual consideration."

Caterpillar shares were little changed in after-hours trading after closing down 1.62 percent at $37.62.

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.

Disclosure I am long CAT shares

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