Caterpillar Joint Venture Announcement — VirtualSite Solutions
What is the VirtualSite Solutions joint venture?
Caterpillar and Trimble are extending their relationship by forming a new
joint venture called VirtualSite Solutions. The new joint venture will integrate
the expertise of Trimble and Caterpillar in the areas of product design and
software development to transform the way contractors manage their businesses.
The joint venture will create information rich worksites allowing customers to
more efficiently and safely manage their equipment fleets, reduce operating
costs and improve productivity in the area of fuel consumption, maintenance,
worksite productivity and fleet logistics.
What is the structure of the VirtualSite Solutions joint venture?
VirtualSite Solutions will be 65 percent owned by Trimble and 35 percent
owned by Caterpillar. Contributions by each party were not disclosed. The joint
venture will be located in Westminster, Colorado, home of Trimble's Engineering
and Construction product development and marketing organization. An office will
also be established in Peoria, Illinois, where the joint venture staff will work
closely with Caterpillar's Electronics & Connected Worksite Division, which has
enterprise responsibility for product-related hardware and software technology
and Caterpillar's global electronics strategy. The joint venture will initially
focus on applications for road construction, paving, heavy construction and
What products will be part of the new joint venture?
The joint venture will initially offer software solutions for asset
management, asset utilization, productivity monitoring, and health and condition
What is the current status of the new agreements with Caterpillar and when do
you expect the joint venture to begin operations?
All formal agreements have been completed. The VirtualSite Solutions joint
venture begins operations immediately.
What is the duration of the joint venture?
There is no defined duration for the joint venture. It is intended to be a
What is the significance of the new joint venture for Trimble?
The overriding goal of the joint venture is to drive adoption of the
Connected Construction Site. VirtualSite will integrate the deep expertise of
both parent companies in the areas of product design and software development.
The relationship will accelerate the introduction of solutions that will enable
contractors to better manage the worksite and all of the machines in their
Why did Trimble and Caterpillar form VirtualSite Solutions instead of
expanding the scope of the Caterpillar Trimble Control Technologies (CTCT) joint
The types of solutions developed by the two joint ventures and the way those
are brought to market warranted the establishment of two separate joint
ventures. The CTCT joint venture is focused on machine control applications.
VirtualSite's main focus is in the area of software applications that address
the Connected Construction Site continuum — from the management of assets at the
fleet level to the analysis and optimization of productivity across a site or
multiple sites, incorporating detailed information from each individual asset.
Will there be any changes to the existing CTCT joint venture?
There will be no change in accounting or structure of the CTCT joint venture. What will change is the way products of the existing joint venture will be brought to the aftermarket. Trimble, through the Caterpillar and the Trimble distribution networks, will now be responsible for the distribution of Caterpillar's AccuGrade® system for dealer installation, in addition to continued distribution, through the Trimble distribution network, of its Trimble® Grade Control Systems (GCS).
What strengths will the new joint venture bring to the construction market?
Trimble and Caterpillar are both leaders in their markets. Caterpillar is
the undisputed leader in heavy-duty construction equipment. Trimble is the
leading innovator in applying positioning technology, wireless communications
and information technology to the construction market. The combination of
capabilities will enable the joint venture to accelerate the pace of innovation
in creating an information-based connected worksite for contractors.
How will the products from the new joint venture be distributed?
A new distribution channel to bring the emerging technology to users will be
established. The new dealer distribution channel, named SITECH, will be the
outlet for products and services for the aftermarket. Trimble will have primary
responsibility for managing the SITECH dealer relationship. Caterpillar dealers
will form strategic relationships with SITECH dealers to provide total site
solutions for customers.
How will products be supported?
Both Caterpillar and Trimble pride themselves on the quality and
professionalism of the level of support provided by their distribution channels.
The new agreement will not change this. Each SITECH distributor will continue to
carry the primary responsibility for servicing their customers. However, both
channels will work together to provide the most timely and professional level of
support to their shared customers.
Will the SITECH dealerships sell aftermarket technology on all manufacturers
Yes. SITECH dealers will sell machine control and site infrastructure
solutions for all manufacturers' machines in the aftermarket.
What is Trimble's financial investment to form the joint venture?
Specific contributions by each party were not disclosed.
What effect will the joint venture have on revenues, expenses, accounting or
earnings for Trimble over the near term? Long term?
The long-term market opportunity is very large. The joint venture is
expected to be accretive in 2009 and Trimble expects the joint venture to
deliver approximately two points of revenue growth to Trimble in 2009.
How will the joint venture be accounted for?
The joint venture will be consolidated by Trimble. CAT will receive 35
percent of the profits or loss from the joint venture.
Certain statements made in this frequently asked questions (FAQ) document are
forward looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and are made
pursuant to the safe harbor provisions of the Securities Litigation Reform Act
of 1995. These statements include those relating to the expected financial
impact of our joint venture in 2009 and 2010. These statements involve risks and
uncertainties, and actual events and results may differ materially from those
described in this FAQ. Factors that could cause or contribute to such
differences include, but are not limited to SITECH's ability to sell existing
products, the market's acceptance of new products produced within the
VirtualSite joint venture, and the ability of the joint venture to successfully
establish the SITECH channel. Among other things, macro-economic trends
including in the financial markets and additional competitive issues may have an
adverse effect on the results and growth of the joint venture. More information
about potential factors which could affect Trimble's business and financial
results is set forth in reports filed with the SEC, including Trimble's
quarterly reports on Form 10-Q and its annual report on Form 10-K. All forward
looking statements are based on information available to Trimble as of the date
hereof, and Trimble assumes no obligation to update such statements.