Question 5

According to the Accrued Liabilities note, how much had the company incurred in accrued warranties that was unpaid at the most recent balance sheet date (in millions)?

Question 6

For the most recent reporting period, Caterpillar paid interest expense of $404 (in millions).

A. True

B. False

/ 12 0 100% STATEMENT 1 Consolidated Results of Operations for the Year Ended December 31 Caterpillar Inc. 51.22 $ $ 35.773 2.900 42.675 2,786 45,462 2.754 54,722 30,537 36.997 5.478 1. SO 31.260 4,999 1.842 28,044 4.383 1,853 646 Sales and revenues Sales of Machinery Energy & Transportation Revenues of Financial Products Total sales and revenues Operating costs Cost of goods sold Selling general and administrative expenses Research and development expenses Interest expense of Financial Products Goodwill impairment charge Other operating incomal expenses Total operating costs Operating profit Interest expense excluding Financial Products Other income expense Consolidated profit before wes Provision benefit for income Profit dons of consolidated companies Equity in profit loss of unconsolidated listed companies Profit (less) of consolidated and affiliated companies Las Profit oss attributable to noncontrolling interest Profil 1,182 2256 46.429 8,293 1,904 37,375 1,162 531 (57) (518) 14 6,147 5 Profiles per common share Profile per common share-diluted Weighted average common share outstanding millions) -Basie 10.39 10.26 $ $ 127 1.25 5 5 (0.11) (0.11) - Dilutedu 5918 591.4 59.4 5043 5843 Se w ing Consolidated scial Stats INTERNET 02 Caterpillar Inc STATEMENT 3 Donsolidated R ecial Position at December 31 7.85 281 Aste Current Cash and short-term investments Receivables-trade and other Rece -finance Prepaid expenses and other Total current Property, plant and equipment - Long-term recebe-trade and other Long-term -france Noncurrentered und wurde eine Intangible Goodwill Other Totte 5.73 7,051 157 0,487 Current Short-term borrowing Machinery Energy S port Finance Products Accounts payable Accrued espersen Accrued wages, malaries and employee benefits Customer advance Dividenda peyible Other current Long-term det due within one year Machinery, Energy & Transportation France Products Total current abilities Long term det er one year Machinery Energy Transportation France Products bility for postm e ntbeneta e Comedogece 21 and 22 Common wo of $100 Authord 2.000.000.000 where Do 200 m 20591 OT 1. 17.00 20101 Protoped in the Acum other comprehensive income Norcon 2 CATERPILLAR 2877 1213 (1.151) (1.235) STATEMENT 5 Caterpillar Inc Consolidated Statement of Cash Row for the Years Ended December 31 dala Cash flow from operating activities: Profit loss of consolidated and affiliated companie Adjustments for non-cash items: Depreciation and amortization 301 Actuarial (gain lose on pension and postretirement benefits Provision benefit for deterred income taxes Goodwill impairment charge Other 750 Changes in assets and liabilities, net of acquisitions and divestituras Receivables - trade and other Inventories Accounts payable Accrued expenses Accrued wages, salaries and employee benefits Customer advances Other assets-net (192) Other liabilities -net (388) Net cash provided by used for operating activities 5.78 5 830 Cash flow from investing activities: Capital expenditures-excluding equipment leased to others (1.276) (809) Expenditures for equipment leased to others 11.640) (1.438) (1.8191 Proceeds from disposals of lased assets and property, plant and equipment 336 1,164 899 Additions to finance receivables (11,853) (9.339) Collections of finance receivables 10.901 12.018 Proceeds from sale of finance receivables Investments and acquisitions thet of cash acquired) Proceeds from sale of businesses and investment inet of cash sold Proceeds from sale of securities Investments in securities (506) (1.048) Other-net Net cash provided by used for investing activities 2.212) Cash flow from financing activities Dividends paid (1.351) Common stock issued, including treasury shares ressed Common shares repurchased Proceeds from debt issued foriginal maturities greater than three - Machinery, Energy & Transportation - Financial Products Payments on debt original maurities greater than three months - Machinery, Energy & Transportation 1.485 - Financial Products 16.923) Short-term borrowings-net foriginal maturities three months or le 3.058) Othernet Net cash provided by used for financing activities (3.867) Effect of exchange rate changes on canh Incrose decrease in cash and short-term investments and restricted cash 100) 1.121 Cash and short-term investments and restricted cash at beginning of period 8.320 7,199 Cash and short-term investments and restricted cash at end of period $ 7.00 5 8 .320 S 7,199 Al short-term investments, which cont primarily of high quid imestments with original matures of three month ores are considered to be cash equivalent Non-cash activities: In September 2016, 8381 million of medium-term notes with varying inter e sund maturity dates were exchanged for $365 million of 193% medium-term notas due in 2021 and $15 million of ash In addition de change premium of $10 million was paid and is included in the operating activities section of the Consolidated Statement of Cash Flow 21. Guarantees and product warranty Supplier.consortium performance guarantees Caterpillar dealer performance guarantees We have provided guarantees to a customer in Brazil and a customer in Europe related to the performance of contractual obligations We have provided an indemnity to a third party insurance company by supplier consortiums to which our Caterpillar subsidiaries are for potential losses related to performance bonds issued on behar members. The guarantees cover potential damages incurred by the of Caterpillar dealers. The bonds have varying terms and are issued customers resuhing from the supplier consortium non performance to insure governmental agencosa pinst nonperformance by certain The damages are capped except for failure of the consortiums to meet dealers We also provided guarantees to third parties related to the certain obligations outlined in the contract in the normal course of performance of contractual obligations by certain Caterpillar dealers business. The guarantees wil api when the supplier consortiums These quarantees have varying torms and cover potential financial perform all their contractual obligations which are expected to be losses incurred by the third-parties resulting from the dealers completed in 2022 for the customer in Europe and 2025 for the nonperformance customer in Brazil In 2016, we provided a guarantee to an end user related to the Third party logistics business lase quarantees performance of contractual obligations by a Caterpillar dealer. Under the guarantee, which expiros in 2025, non performance by the We have provided guarantees to third party lessons for certain Caterpillar dealer could require Caterpillar to satisfy the contractual properties leased by a third party logistics business, formerly obligations by providing goods, services or financial compensation Caterpillar Logistics Services LCC, in which we sold our equity to the end user up to an annual designated cap. interest in 2015. The guarantees are for the possibility that the third party logistics business would default on real estate lease Customer loan quarantees payments. The guarantees wore granted at lease inception and We provide loan quarantees to third-party lenders for financing generally wil expire at the end of the lease terms. associated with machinery purchased by customers. Those We have dealer performance guarantees and third party quarantogs have varying torms and are secured by the machinery In addition, Cat Financial participates in standby letters of credit performance guarantees that do not limit potential payment to and users roated to indemnities and other commercial contractual issued to third parties on behalf of their customers. These standby obligations. In addition, we have entered into contracts involving lotters of credit have varying terms and beneficiaries and are industry standard Indemnifications that do not limit potential secured by customer assets payment for those unlimited guarantees, we are unable to estimate a maximum potential amount of future payments that could result from claims made. No significant loss has been experienced or is anticipated under any of these guarantees At both December 31, 2018 and 2017 the related liability was $8 million. The maximum potential amount of future payments lundiscounted and without reduction for any amounts that may possibly be recovered under recourse or collateralized provisions we could be required to make under the guarantees at December 31 are as follows 12415 1313 Caterpiller deler performance guarantees Customer lan guarantee Supplier Consortium performance guarantee Third party logistics business lease guarantees Other guarantees Totalguns 2,105 No loss has been experienced or is anticipated under this loon purchase agreement Cat Financial provides guarantees to purchase certain loans of Caterpillar dealers from a special purpose corporation (SPC that qualities as a variable interest antity The purpose of the SPCS to provide short-term working capital loans to Caterpillar dolor This SPC Ses commercial paper and uses the proceeds to fund its can program. Cat Financial has a loan purchase agreement with the SPC that obligatos Cat Financial to purchase certain loans that are not paid at maturity Cat Financial receives a foo for providing this guarantee, which provides a source of liquidity for the SPC.Cat Financial is the primary beneficiary of the SPC as its guarantees result in Cat Financial having both the power to direct the activities that most significantly impact the SPC'S economic performance and the obligation to absorb losses, and therefore Cat Financial has consoldated the financial statements of the SPC As of December 31, 2018 and 2017 the SPC's assets of $1,149 million and $1,107 million, respectively wore primarily comprised of loans to dealers and the SPC's abilities of $1,148 million and $1,106 milion, respectively, ware primarily comprised of commercial paper. The assets of the SPC are not available to pay Cat Financial's creditors Cat Financial may be obligated to perform under the guarantee if the SPC experiences losses Cat Financial is party to agreements in the normal course of business with selected customers and Caterpillar dealers in which they commit to provide a set dollar amount of finanong on a pre approved basis. They also provide lines of credit to cortan customers and Caterpillar dealers, of which a portion rorains unused as of the and of the period Commitments and lines of credit generally have food axpiration dates or other tomination clauses. It has been Cat Financials experience that not all commitments and lines of credit will be used. Management applies the same credit policies when making commitments and granting lines of credit as it does for any other financing Cat Financial does not require collateral for these commitments lines, but if credit is extended. collateral may be required upon funding. The amount of the unused commitments and lines of credit for dostars as of December 31, 2018 and 2017 was $11.353 million and $10,000 million, respectively. The amount of the unused commitments for customers as of December 31, 2018 and 2017 W 815 milion and $715 million, respectively Our product warrantybity is determined by applying historical claim to experience to the current field population and dealer Inventory General historical climates are based on actual warranty experience for each product by machine modellenginesie by customer order location de route North Americal Specificates are developed for each produc e nt month and updated monthly based on actual warranty damer Reduction in bly by Inny new wers Vranty December 31 2. Bart and legales The Company is regulated by federal, state and international veronmental laws governing our use transport and disposal of substances and control of missions in addition to govoming our manufacturing and other spections, these laws han impact the dovolment of our products, including but not limited to required compliance with a missions standards applicable to internal combustion engines. We have made and will continue to make Significant research and development and capital expenditures to comply with these emision standards We are engaged in remedial activities at a number of locations often with other companies, pursuant to federal and state bws When it is probable we will pay remedial costs at a site, and those costs can be reasonably estimated the investigation romediation and operating and maintenance costs are accrued against our earnings. Costs are accrued based on consideration of currently available data and information with respect to each individuals, including able technologies, current applicable laws and regulations, and prior remediation experience. Where no amount within a range of estimates is more likely, we acue the minimum Where multiple potentially responsible parties are involved. we consider our proportionate share of the probable costs in formulating the estimate of probable costs, we do not consider amounts expected to be covered from insurance companies or other. We these accrued amounts on a quarterly basis The amount recorded for environmental remediation is not material and is included in Aconued expenses. We believe there is no more than a remota dance that a material amount or remedial activities at any individual site or at all the sites in the aggregate will be required Onary 2 2015, the Compar a dagundry subpoena from the US District Court for the Cantal District of nois. The subpoena et documents and information from the Company rating to among other things financial information concerning US and non- US Caterpillar subsidiaries including undistributed profits of non- U.S. Subsidiaries and the movement of cash among US and non- US The Company h ave additional subpoenas relating to this investigation r esting additional documents and information rating to among other things the purchase and res p lacement parts by Caterpillar Inc. and non-US Caterpillar subsidiaries, dividend distributions of certain on US Capilaries and Carl SARL and rad structure on March 23, 2017 units with the Department of Commerce, the Federal Deposit Insurance Corporation and the Internal Revenue Service t ed arch and secure w ants at three facilities of the Company in the Peoria i s wa induding is former corpor a ter. The wants identify and a documents and information tad among other things the port of products from the United States, the movement of products between the United States and Sw a nd thentionship between Caterpillar Inc. and Caterpillar SARL, and s out the United States. It is the company's understanding that the warrant, which concem both tax and export active are related to the ongoing grand jury investigation. The Company continuing to cooperate with this investigation The Company's unable to predict the outcome o sonably est a y potent loss, however, we currently believe that this matter will not have a material adverse effect on the Company's consolidated results of operations financial position or liquidity On March 20, 2014, Brazil's Administrative Council for Economic Defense ICADE published a Technical Opinion which named 18 companies and over 100 individuals as defendants including two subsidiaries of Caterpillar Inc, MGE- Equipamentos e Servios Ferroviarios Ltda MGE and Caterpillar Brasida. The publication of the Technical Opinion opened CADE official administrative investigation into allegations that the defendants participated in anticompetitive bid activity for the construction and martorance of metro and train networks in Bral While companies cannot be held onmially table for anticompetitive conduct in Belcriminal charges have been brought against two current employees of MGE and one former employee of MGE involving the same conduct alleged by CADE The Company has responded to al requests for Information from the authorities. The Company is unable to predict the outcome or reasonably estimate the potential loss how we Currently believe that this matter will not have a material adverse effect on the Company's consolidated results of operations financial position or liquidity In addition, we are involved in other unresolved legal actions that arise in the normal counse of business. The most prolont of these unresolved actions involveiguls ted to product design, manufacture and performando a n chading comed asbestos and welding fures pour contracts, mployment issues, environmental matters total property father than income and securitas laws The aggregange of sonay possible losses in NS of accrueda any sociated with these unrechod galaction is not m al In some cases, we cannot reasonab l e age of loss because there is insufficient information regarding the matter However we believe there is no more than a remote chance that anyayansing from these maton would be maal Athough re c ent the outcome of the Unsolved local actions we believe that these actions will not Individually or in the agregova mandladefect on Our consolidated results of options and gewor d 2. Saga formation Asaieternational Our Executive Office is comprised of a Chief Executive Officer CEOL four Group President, a Chief Rancial Officer (CFO a General Counsel & Corporate Secretary and a Chef Human Resources Of The Group Pudents and CFO for a tad set of end-to-end businesses that they manage the General Counsel & Corporate Socwry as the security and Public Policy Division. The Human Resour c e s the Hur Resource Digimon The CEO w as a. $783 $1,391 , amount is not disclosed. O d. $755