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Caterpillar Inc.

NACD Governmental Sales Dealer Script Life Cycle Costing Presentation PowerPoint & Desktop Versions

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Slide #1

Good morning/afternoon/evening. Thanks for the opportunity to introduce you to a governmental purchasing concept called Life Cycle Costing. During the next 20 minutes or so, youll see how you can purchase the best equipment Caterpillar at the lowest cost. Life Cycle Costing provides a proven formula that makes it beneficial to consider ALL of the costs involved in machine ownership. You can remove virtually all of the guesswork from determining the cost of owning and operating a piece of machinery during a life cycle that you determine. Its a simple concept that enables you to identify up front what your major costs will be during the time you own a machine. As you may well know, unplanned repair expenses and even scheduled maintenance costs can be difficult to forecast. Resale value is always tough to predict. But (insert dealer name) and Caterpillar utilize an approach that first of all places a guaranteed cap on your dollar commitment, and actually allows you to retain the savings should your cost experience be less. Life Cycle Costing is ideal for establishing your budgets and utilizing taxpayer dollars in the most efficient manner possible. NOTE: (If appropriate, insert a photo of the specific machine(s) that you will be presenting. Also, be sure to insert your logo below the Caterpillar logo.)

Slide #2

Better yet, there are NO EXCEPTIONS. Your costs can never be higher, but they can be lower. Lets take a closer look at the four guaranteed dollar amounts that provide you with actual machine ownership costs throughout a machines useful life. Five years is a typical life cycle for many machines used in governmental applications, but it can be shorter or longer.

Slide #3

Lets walk through the formula. The first step is establishing the agreed-upon purchase price for the machine and any optional equipment, and for the attachments and work tools. The value of any trade-in will then be deducted. This first step establishes your purchase price or base machine cost.

Slide #4

Next, well provide a guarantee for any repair expense during the agreedupon useful life of the machine. This guarantee sets the maximum amount that you would have to pay for repairs. Should your machine exceed this limit, you would not be liable for any additional repair costs. Typically with Caterpillar equipment, the repair cost will be less than the guarantee. In that case, you will pay less. You can benefit either way; first with a guaranteed maximum. Then by actual repair experience less than the guarantee.

Slide #5

The scheduled maintenance costs over the same life cycle or time period will also be identified. Youll know the exact cost of oil changes, lubrication, hydraulic system service, filters and other routine service conducted at scheduled intervals.

Slide #6

The last element to be considered is the guaranteed resale value, commonly called the repurchase or buyback price. This price establishes the floor for the value of your machine at the conclusion of its useful life. We commit to a guaranteed resale value at the time you purchase your machine, but youre not obligated to accept this price. You can sell your machine to anyone at a higher price. Some governmental agencies auction their equipment at the guaranteed repurchase price. If someone bids more, the budget benefits. If they dont, you still have the guarantee.

Slide #7

When you add up your acquisition cost, plus the cost of any repairs and maintenance, and subtract the cost of the guaranteed resale value, you have your Total Life Cycle Cost. Simply divide that number by the term of the agreement in months or years, and you have your monthly or annual cost.

Slide #8

As noted by the asterisks in the preceding formula, you know all of your costs at the time of purchase, and these costs are protected or guaranteed. You know your machine acquisition cost, your limit on repair expense, your scheduled maintenance costs and the minimum resale value. Other than the

cost of fuel, you know and can budget for ALL of your costs during a machines useful life. You can set that life at any length that you wish. As previously mentioned, five years is a typical length, but you can establish any term that you select for this agreement. If you just look at the initial purchase price, youre only considering a portion of your total costs to own and operate a machine over a given period of time. Having only a partial understanding at the time of purchase can lead to unwanted surprises as the machines operating hours accumulate through months and years of service. At this juncture, do you have any questions about the concept of Life Cycle Costing? Has my explanation been easy for you to understand? Would you like to review any aspect of this total-cost purchasing concept? Slide #9 Okay, lets move on to the eight key benefits of Life Cycle Costing. First and foremost, you get a top-quality Caterpillar machine. When all costs are considered and guaranteed by the bidding equipment dealers, youll also find that the purchase of Caterpillar equipment results in the lowest annual cost. Thirdly, Life Cycle Costing allows you to budget with a high degree of certainty. There are no unwanted surprises or disappointments from the time of purchase to the time of resale. In effect, youre receiving added protection since we provide complete assurance throughout the length of the contract. As you can see, Life Cycle Costing demonstrates our confidence in the Caterpillar equipment that we sell and our commitment to standing behind each machine. Slide #10 In the unlikely event that you need a major repair, we can include provisions for providing a backup machine as part of your agreement. Many customers prefer this approach to avoid the cost of renting a unit or having your own backup machine. When it comes to parts and service support, you can be confident that youll receive the best available. With rare exceptions, parts needs are met off the shelf. Any special orders are available the next

business day. And all of our field and shop service technicians are equipped with the latest equipment and receive regular Caterpillar training. With Life Cycle Costing, you eliminate all the risks of machine ownership, and you have contracted, built-in price protection for the full term of the agreement. Slide #11 For you and the taxpayers of (mention name), the bottom line is complete peace of mind. First in knowing that youve utilized your budget dollars wisely, and second in making the best equipment choice, and actually paying the lowest total owning and operating costs over a predetermined time period. With Life Cycle Costing, you can tailor the process of equipment evaluation, specification writing, bidding, acquisition and follow-up support to your exact specifications and needs. Slide #12 Using the Life Cycle Costing formula as a guide, you control the complete bidding process. After establishing the performance requirements, you finalize the machine and any option, attachment and work tool needs. Then you determine the length of the useful service life. The role of your staff in routine maintenance and repair, and the support that you would like us or any other bid participants to provide are also taken into consideration. Lastly, using Caterpillars GovBidSpec.com and any other tools available to you, you write the bid specifications. By establishing all of the bid parameters, you control the process and create a level playing field for all bid participants. Slide #13 Life Cycle Costing is an outstanding tool that helps you clarify the process. It is designed to attract qualified bidders, that is those who have confidence in the equipment they sell and the support they provide. All qualified bidders are given an equal opportunity. You may wind up eliminating those who lack confidence in their machine, their support and/or resale value. For you, it is better to make this determination with all relevant costs identified prior to making a purchase decision. Ultimately, Life Cycle Costing enables you to obtain the best possible equipment at the lowest possible cost.

Slide #14

Based on the guaranteed resale value, you may be able to return some money to your budget at the conclusion of the contract. By knowing your minimum repurchase value, you have a floor that documents the guaranteed repurchase price. At your option, you can auction or sell the machine at a higher price. The result could be a budget bonus derived from this positive differential.

Slide #15

At the conclusion of this presentation, youll be receiving a copy of this sixpage publication. It includes the formula and an in-depth explanation of the parameters and benefits that weve discussed. Please scan this brochure and let me know if you have any questions or need additional information.

Slide #16

As shown by machine families represented on the cover of this product line brochure, Life Cycle Costing applies to more than 300 top-quality Caterpillar machine models. Whatever your equipment requirements, were likely to have the exact machine, options, attachments and work tools that you need.

Slide #17

In addition to the Life Cycle Costing brochure, youll also be receiving a copy of this 8-page Governmental Products Purchasing Guide. It features more than 50 of the most popular Caterpillar machines among governmental agencies. Photos and brief specifications provide an overview in 14 equipment categories. Keep in mind that the machines included in this brochure only represent the most popular models. Lets take a brief look at these popular equipment categories among governmental agencies. (If discussing a particular machine or product family, the following product sections can be edited as appropriate to match your audience.)

Slide #18

With their front-mounted buckets and rear-mounted backhoes, Backhoe Loaders are among the most versatile machines for governmental applications. These units have an exclusive 205-degree, high-rotation bucket

linkage and a unique excavator-style boom. Some models are also available in an Integrated Toolcarrier (IT) configuration for maximum versatility. Slide #19 Motor graders have long been governmental stalwarts for road maintenance and other work. The Cat H-Series Motor Graders are renowned for their durability, performance, high resale and reliability. By combining advanced electronics and hydraulics with variable horsepower options, longer wheelbases and a new blade design, H-Series Motor Graders allow you to handle in one pass what may take two or more passes with other machines. Slide #20 Caterpillar builds a complete line of Wheel Loaders that set new standards for excellence. These machines deliver excellent breakout force for tough digging, fast load-and-cycle times and precise maneuvering for top allaround performance. Slide #21 Cat Integrated Toolcarriers provide outstanding versatility with a wide variety of Cat Work Tools. Whether working in your yard or on a project in the field, integral quick couplers allow for fast tool changes and efficient movement from one type of job to another. Slide #22 Caterpillars line of industry-exclusive Wheel Loaders with waste handling arrangements were developed specifically for use in waste transfer stations, recycling centers and waste-to-energy plants. Added guarding is included for the radiator, windshield, power train, drive shaft, crankcase and front lights. Slide #23 Whether utilizing a bucket or one of the many Caterpillar provided work tools, Skid Steer Loaders deliver exceptional performance, versatility and ease of operation. They can perform many tasks typical of governmental applications and have four-season versatility in any climate or weather conditions.

Slide #24

Caterpillars smaller Track-type Tractors combine the power and features of larger machines with the versatility and maneuverability of these smaller units. With their comfortable operator stations, excellent visibility and simple joystick controls, Cat Track-type Tractors are everything that you would expect from Caterpillar and more.

Slide #25

The Caterpillar 300 Family Excavators are recognized by their sleek, modern styling and feature innovative hydraulic systems that put power where and when its needed most. The 300 Family gives you the boom, stick, bucket and undercarriage choices to match your needs.

Slide #26

Cat Wheel Excavators provide outstanding performance and rugged durability in a variety of applications from ditch cleaning to volume loading. Their excellent roadability speeds movement from job to job. A comfortable operator station increases productivity and lowers operating costs.

Slide #27

Cat Landfill Compactors combine power, mobility and operator comfort for thorough compacting and high productivity. Rugged construction and easy maintenance provide long life with low owning and operating costs.

Slide #28

Caterpillar Track-type Tractors with waste handling arrangements are ideal to meet the demanding needs of refuse disposal. Value-added features protect machine components, reduce debris entry and facilitate easy cleaning. A trash rack that increases blade capacity and protective guarding are included.

Slide #29

Commonly equipped with interchangeable buckets and forks, Cat Telescopic Handlers give you outstanding reliability, maneuverability and versatility in challenging operating conditions. A full range of application-matched Cat Work Tools increases productivity across a wide range of governmental jobs. A hydraulic quick coupler is standard on most models.

Slide #30

Most Cat Paving Compactors can be used in all phases of compaction, reducing the need for a variety of rollers. High compactive forces enable these versatile machines to deliver top performance in breakdown and intermediate applications. Operated in the static mode, these units are excellent finish rollers, because of their high static pounds per linear inch.

Slide #31

Caterpillar Pavers provide versatile and reliable solutions to the most demanding paving applications. Rubber tired pavers provide rapid mobility and a smooth ride. Tractive effort and flotation are the advantages of steel track pavers. The exclusive Mobil-Trac System provides the best of both worlds by combining high tractive effort with rapid mobility.

Slide #32

A wide variety of Cat Work Tools will handle almost any application imaginable from an auger that digs holes for tree planting to a hydraulic hammer for breaking old concrete. In addition, the ability to change from one work tool to another allows one machine to do multiple tasks. No matter what your need, the odds are we have a work tool that can handle it.

Slide #33

Combined with Life Cycle Costing, a special Caterpillar web site at www.GovBidSpec.com makes it easy for you to purchase Cat machines when working within a bidding process. Youll find a user-friendly, selfexplanatory interface with clear, easy-to-use navigation tools. Straight-to-thepoint content for technical and non-technical users helps you specify equipment. You can create a detailed Request For Proposal in nine of the most popular equipment families.

Slide #34

Building an RFP is simple with GovBidSpec.com. First, select a model and review the bid specifications. If optional equipment is desired, click on the specalog link below the product photo. For added convenience, you can either download the document for editing or print using the Printer Friendly option.

Slide #35

If you prefer, we can prepare a customer support agreement customized to your needs. You benefit from a plan tailored to your needs, and our capabilities will only be applied to supplement your internal staff. Depending on the machine type and its maintenance needs, you can select from various options. Detailed machine inspections and the resulting reports can help you make informed decisions about maintenance needs and priorities. At your option, you can have a complete maintenance and repair agreement as part of the Life Cycle Costing analysis and bidding process.

Slide #36

Through Cat Financial, you have an opportunity to obtain a financing plan that is matched to your needs and budget. Installment loans are one option for purchasing Caterpillar equipment. Lease options are also available for your consideration. (Canadian dealers delete next two sentences.) Governmental agencies can take advantage of a special low-interest governmental lease-purchase plan. Because the interest Cat Financial receives is tax-exempt in the United States, the savings are passed along in lower interest rates. Whatever your needs, a financing plan can be tailored to your needs.

Slide #37

If you have a need for specialized or extra equipment to complete some projects, our Cat Rental Store has exactly what you need for as long as you need it, from a day to a week, a month or longer. You can rent a job-matched machine on an as-needed basis. In addition to Caterpillar machines, we offer a full range of allied equipment including aerial lifts, air compressors, boom trucks, generators, light towers, pumps, scaffolding, trenchers, welders and much more. You benefit from competitive rental rates and delivery to your work site. Based on your job requirements, our experts will recommend equipment, attachments and work tools that are sized to maximize the productivity and efficiency of any rental unit.

Slide #38

Along with every Caterpillar machine, you have complete access to our full range of shop and field service capabilities. Virtually every parts need will be filled off the shelf. Anything we dont have will be available the next day. Should you have a need for a limited-use machine or happen to be under severe budget constraints, top-quality used equipment is also available. When you have a need for operator or maintenance training, our experts are available to work with your staff.

Slide #39

As you can see, theres a lot more involved in Life Cycle Costing than simply selling you a machine on a low-bid basis and walking away. Life Cycle Costing makes it beneficial for you to consider ALL of the costs involved in machine ownership and operation. Ultimately, you get the best equipment at the lowest total cost.

Slide #40

And with (insert dealer name), you are backed by the best in dealer support. Thanks again for the opportunity to introduce you to the governmental purchasing concept called Life Cycle Costing. This widely accepted approach to equipment purchasing is being utilized by governmental agencies all across the United States and Canada. If you have any questions or would like to discuss any aspect of Life Cycle Costing in greater detail, lets do that now. NOTE: (Insert your logo below the copy on this screen.)

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