Divestitures and Assets held for sale

Bucyrus Distribution Business Divestiture

In conjunction with our acquisition of Bucyrus in July 2011, we announced our intention to sell the Bucyrus distribution business to Caterpillar dealers that support mining customers around the world in a series of individual transactions. Bucyrus predominantly employed a direct to end customer model to sell and support products. The intention is for Bucyrus products to be sold and serviced by Caterpillar dealers, consistent with our long-held distribution strategy. We expect these transitions will occur in phases based on the mining business opportunity within each dealer territory.

As portions of the Bucyrus distribution business are sold or classified as held for sale, they will not qualify as discontinued operations because Caterpillar expects significant continuing direct cash flows from the Caterpillar dealers after the divestitures. The gain or loss on disposal, along with the continuing operations of these disposal groups, will be reported in the Resource Industries segment. Goodwill will be allocated to each disposal group using the relative fair value method. The value of the customer relationship intangibles related to each portion of the Bucyrus distribution business to be sold will be included in the disposal groups. The disposal groups will be recorded at the lower of their carrying value or fair value less cost to sell. In the second quarter of 2012, we recorded a goodwill impairment for $27 million related to a disposal group being sold to one of the Caterpillar dealers. After the goodwill impairment, the carrying value of the disposal group was lower than its fair value less costs to sell. Fair value was determined based upon the negotiated sales price. The impairment was recorded in Other operating (income) expenses and included in the Resource Industries segment.

In the second quarter of 2012, three sale transactions were completed whereby we sold portions of the Bucyrus distribution business to Finning International, WesTrac Pty Limited, a wholly owned subsidiary of Seven Group Holdings Limited, and Ferreyros S.A.A. for $306 million, $400 million and $75 million respectively, subject to certain working capital adjustments. After-tax profit was unfavorably impacted by $8 million in the second quarter of 2012 as a result of the Bucyrus distribution business divestiture activities. This is comprised of $160 million of income (included in Other operating (income) expenses) related to the sales transactions, offset by costs incurred related to the Bucyrus distribution divestiture activities of $57 million (included in Selling, general and administrative expenses) and income tax of $111 million.

Assets sold included customer relationship intangibles of $146 million, other assets of $117 million, which consisted primarily of inventory and fixed assets, and allocated goodwill of $230 million related to the Bucyrus distribution divestiture activities.

As part of these divestitures, Cat Financial provided $400 million of financing to WesTrac Pty Limited and $75 million to Ferreyros S.A.A. These loans are included in Receivables – finance and Long-term receivables – finance in the Consolidated Statement of Financial Position.

For the first half of 2012, after-tax profit was unfavorably impacted by $28 million as a result of the Bucyrus distribution divestiture activities. This is comprised of $155 million of income (included in Other operating (income) expenses) related to the sales transactions, offset by costs incurred related to the Bucyrus distribution divestiture activities of $83 million (included in Selling, general and administrative expenses) and income tax of $100 million.

As of June 30, 2012, nine divestiture transactions were classified as held for sale and are expected to close throughout the remainder of 2012. Current assets held for sale were included in Prepaid expenses and other current assets and non-current assets held for sale were included in Other assets in the Consolidated Statement of Financial Position.

Subsequent to June 30, 2012, three sale transactions were completed whereby we sold portions of the Bucyrus distribution business to Barloworld Limited, Hewitt Equipment Limited and Toromont Industries Ltd, which were classified as held for sale at June 30, 2012.

Third Party Logistics Business Divestiture

On July 31, 2012, Platinum Equity acquired a 65 percent equity stake in Caterpillar Logistics Services LLC, the third party logistics division of our wholly owned subsidiary, Caterpillar Logistics Inc. (Cat Logistics). The sale of the third party business supports Caterpillar's increased focus on the continuing growth opportunities in its core businesses. Under the terms of the agreement, Caterpillar will retain a 35 percent equity stake. Current assets held for sale were included in Prepaid expenses and other current assets and non-current assets held for sale were included in Other assets in the Consolidated Statement of Financial Position at June 30, 2012. Current liabilities held for sale were included in Other current liabilities and non-current liabilities held for sale were included in Other liabilities in the Consolidated Statement of Financial Position.

The disposal will not qualify as discontinued operations because Caterpillar expects significant continuing involvement through the noncontrolling interest. The financial impact of the disposal, along with the continuing operations of the disposal group, will be reported in the All Other operating segment.

The major classes of assets and liabilities held for sale for a portion of the Bucyrus distribution business and the third party logistics divestitures were as follows:



(Millions of dollars)	June 30, 2012		December 31, 2011

Receivables - trade and other	$	186	$	25
Prepaid expenses and other current assets	10		—
Inventory	141		109
Current assets	$	337	$	134

Property plant and equipment - net	$	222	$	28
Intangible assets	136		186
Goodwill	191		296
Other assets	62		—
Non-current assets	$	611	$	510

Accounts payable	$	19	$	—
Accrued expenses	15		—
Accrued wages, salaries and employee benefits	30		—
Current liabilities	$	64	$	—

Other liabilities	$	44	$	—
Liability for postemployment benefits	55		—
Long-term liabilities	$	99	$	—