SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

x ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2019~~2020

Commission File No. 001-11241

(Exact name of Registrant as specified in its charter)

Registrant's telephone number, including area code:(615) 341-1000

Name of each exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ü ]☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [ü ]☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~[ ]~~☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ~~[ ]~~☐ No [ü ]☒

As of ~~October 31, 2019, one~~November 4, 2020, 1 share of common stock of the registrant was outstanding, which is owned by Caterpillar Inc.

The registrant is a wholly owned subsidiary of Caterpillar Inc. and meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q, and is therefore filing this form with the reduced disclosure format.

In addition to the accompanying unaudited consolidated financial statements for Caterpillar Financial Services Corporation (together with its subsidiaries, "Cat Financial," "the Company," "we," "us" or "our"), we suggest that you read our ~~2018~~2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February ~~14, 2019.~~19, 2020. The Company files electronically with the SEC required reports on Form 8-K, Form 10-Q, Form 10-K; registration statements on Form S-3; and other forms or reports as required. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports filed or furnished with the SEC are available free of charge through Caterpillar’s website (www.caterpillar.com/secfilings) as soon as reasonably practicable after filing with the SEC. In addition, the public may obtain more detailed information about our parent company, Caterpillar, by visiting its website (www.caterpillar.com). None of the information contained at any time on our website or Caterpillar’s website is incorporated by reference into this document.

Caterpillar Financial Services Corporation

CONSOLIDATED STATEMENTS OF PROFIT

(Dollars in Millions)

Three Months Ended
September 30, Nine Months Ended
September 30,
2019
2018 2019 2018

Revenues:
Retail finance $ 346
$ 330
$ 1,031
$ 975
Operating lease 262
259
777
760
Wholesale finance 125
108
375
304
Other, net 15
38
58
109
Total revenues 748
735
2,241
2,148

Expenses:

Interest 198
194
599
558
Depreciation on equipment leased to others 205
208
611
616
General, operating and administrative 128
109
378
326
Provision for credit losses 20
47
144
218
Other 9
11
28
28
Total expenses 560
569
1,760
1,746

Other income (expense) (4 ) (3 ) (14 ) (15 )

Profit before income taxes 184
163
467
387

Provision for income taxes 49
32
144
85

Profit of consolidated companies 135
131
323
302

Less: Profit attributable to noncontrolling interests 6
6
17
15

Profit⁽¹⁾
$ 129
$ 125
$ 306
$ 287

⁽¹⁾Profit attributable to Caterpillar Financial Services Corporation.

See Notes to Consolidated Financial Statements (Unaudited).

Caterpillar Financial Services Corporation

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Millions)

Gains (losses) deferred, net of tax (expense)/benefit of:

2020 $14 three months, $4 nine months;

2019 $(20) three months, $(14) nine months

Gains (losses) deferred, net of tax (expense)/benefit of:

2020 $14 three months, $4 nine months;

2019 $(20) three months, $(14) nine months

(Gains) losses reclassified to earnings, net of tax expense/(benefit) of:

2020 $(14) three months, $(9) nine months;

2019 $22 three months, $25 nine months

(Gains) losses reclassified to earnings, net of tax expense/(benefit) of:

2020 $(14) three months, $(9) nine months;

2019 $22 three months, $25 nine months

Comprehensive income (loss) attributable to Caterpillar Financial

Services Corporation

See Notes to Consolidated Financial Statements (Unaudited).

Caterpillar Financial Services Corporation

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Dollars in Millions, except share data)

See Notes to Consolidated Financial Statements (Unaudited).

Caterpillar Financial Services Corporation

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

(Dollars in Millions)

Adjustment to adopt new accounting guidance(1)

Adjustment to adopt new accounting guidance(2)

Three Months Ended September 30, 2018
Common
stock

Additional
paid-in
capital

Retained
earnings

Accumulated
other
comprehensive
income/(loss)

Noncontrolling
interests
Total
Balance at June 30, 2018 $ 745
$ 2
$ 3,131
$ (784 ) $ 147
$ 3,241
Profit of consolidated companies 125
6
131
Foreign currency translation, net of tax (44 ) (6 ) (50 )
Derivative financial instruments, net of tax —
—
Balance at September 30, 2018 $ 745
$ 2
$ 3,256
$ (828 ) $ 147
$ 3,322

Three Months Ended September 30, 2019
Balance at June 30, 2019 $ 745
$ 2
$ 2,954
$ (831 ) $ 164
$ 3,034
Profit of consolidated companies 129
6
135
Foreign currency translation, net of tax (160 ) (5 ) (165 )
Derivative financial instruments, net of tax (5 ) (5 )
Balance at September 30, 2019 $ 745
$ 2
$ 3,083
$ (996 ) $ 165
$ 2,999

Nine Months Ended September 30, 2018
Balance at December 31, 2017 $ 745
$ 2
$ 2,969
$ (592 ) $ 140
$ 3,264
Profit of consolidated companies

287

15
302
Foreign currency translation, net of tax

(233 ) (8 ) (241 )
Derivative financial instruments, net of tax

(3 )
(3 )
Balance at September 30, 2018 $ 745
$ 2
$ 3,256
$ (828 ) $ 147
$ 3,322

Nine Months Ended September 30, 2019

Balance at December 31, 2018 $ 745
$ 2
$ 2,874
$ (925 ) $ 153
$ 2,849
Profit of consolidated companies

306

17
323
Foreign currency translation, net of tax

(127 ) (5 ) (132 )
Derivative financial instruments, net of tax

(41 )
(41 )
Adjustment to adopt new accounting
guidance⁽¹⁾
(97 ) 97
—
Balance at September 30, 2019 $ 745
$ 2
$ 3,083
$ (996 ) $ 165
$ 2,999

⁽¹⁾~~See Note 2 regarding~~Adjustment to adopt new accounting guidance related to reclassification of certain tax effects from accumulated other comprehensive ~~income/~~income (loss).

(2) Adjustment to adopt new accounting guidance related to credit losses (See Note 2).

See Notes to Consolidated Financial Statements (Unaudited).

Caterpillar Financial Services Corporation

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Millions)

Cash, cash equivalents and restricted cash at beginning of year(1)

Cash, cash equivalents and restricted cash at end of period(1)

Nine Months Ended
September 30,
2019 2018
Cash flows from operating activities:
Profit of consolidated companies $ 323
$ 302
Adjustments for non-cash items:

Depreciation and amortization 621
626
Amortization of receivables purchase discount (346 ) (274 )
Provision for credit losses 144
218
Other, net 128
93
Changes in assets and liabilities:

Other assets 65
11
Payable to dealers and others 26
(32 )
Accrued expenses (44 ) 5
Other payables with Caterpillar (14 ) (27 )
Other liabilities 51
(40 )
Net cash provided by operating activities 954
882

Cash flows from investing activities:

Expenditures for equipment on operating leases (1,079 ) (1,093 )
Capital expenditures - excluding equipment on operating leases (14 ) (99 )
Proceeds from disposals of equipment 548
619
Additions to finance receivables (10,633 ) (10,151 )
Collections of finance receivables 10,161
9,132
Net changes in Caterpillar purchased receivables 763
(484 )
Proceeds from sales of receivables 183
416
Net change in variable lending to Caterpillar 51
(18 )
Additions to other notes receivable with Caterpillar (80 ) (390 )
Collections on other notes receivable with Caterpillar 222
300
Settlements of undesignated derivatives (38 ) (2 )
Net cash provided by (used for) investing activities 84
(1,770 )

Cash flows from financing activities:

Net change in variable lending from Caterpillar (627 ) (63 )
Payments on borrowings with Caterpillar (93 ) —
Proceeds from debt issued (original maturities greater than three months) 7,348
7,026
Payments on debt issued (original maturities greater than three months) (6,054 ) (5,636 )
Short-term borrowings, net (original maturities three months or less) (1,006 ) (479 )
Net cash provided by (used for) financing activities (432 ) 848

Effect of exchange rate changes on cash, cash equivalents and restricted cash (9 ) (13 )

Increase/(decrease) in cash, cash equivalents and restricted cash 597
(53 )
Cash, cash equivalents and restricted cash at beginning of year⁽¹⁾
773
732
Cash, cash equivalents and restricted cash at end of period⁽¹⁾
$ 1,370
$ 679

⁽¹⁾As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, restricted cash, which is included in Other assets in the Consolidated Statements of Financial Position, was $4 million and $7$5 million, respectively. Restricted cash primarily includes cash related to syndication activities.

See Notes to Consolidated Financial Statements (Unaudited).

Notes to Consolidated Financial Statements

1.Summary of Significant Accounting Policies

A.Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of (a) the consolidated profit for the three and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, (b) the consolidated comprehensive income for the three and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, (c) the consolidated financial position ~~as of~~at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, (d) the consolidated changes in shareholder's equity for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 and (e) the consolidated cash flows for the nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019. The preparation of financial statements, in conformity with generally accepted accounting principles ~~in the United States of America (U.S. GAAP)~~ and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), requires management to make estimates and assumptions that affect the reported amounts. Significant estimates include residual values for leased assets, allowance for credit losses and income taxes. ~~Actual~~The continued impact of the COVID-19 pandemic could cause our actual results ~~may~~to differ materially from ~~these estimates.~~the estimates and assumptions used in preparation of the financial statements. Changes in estimates are recorded in the period that the events or circumstances giving rise to such changes occur.

Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, ~~2018 (2018~~2019 (2019 Form 10-K) ~~filed with the SEC on February 14, 2019.~~. The December 31, ~~2018~~2019 financial position data included herein was derived from the audited consolidated financial statements included in the ~~2018~~2019 Form 10-K but does not include all disclosures required by ~~U.S. GAAP.~~generally accepted accounting principles. Certain amounts for prior periods have been reclassified to conform ~~with~~to the current period financial statement presentation.

We consolidate all variable interest entities (VIEs) where we are the primary beneficiary. For VIEs, we assess whether we are the primary beneficiary as prescribed by the accounting guidance on the consolidation of VIEs. The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity. Please refer to Note 87 for more information.

We have customers and dealers that are VIEs of which we are not the primary beneficiary. Although we have provided financial support to these entities and therefore have a variable interest, we do not have the power to direct the activities that most significantly impact their economic performance. Our maximum exposure to loss from our involvement with these VIEs is limited to the credit risk inherently present in the financial support that we have provided. ~~These risks are~~Credit risk was evaluated and reflected in our financial statements as part of our overall portfolio of finance receivables and related allowance for credit losses.

B.Accounting Policy Updates

For a discussion of our significant accounting ~~(Accounting Standards Update (ASU) 2016-02) – In February 2016, the Financial Accounting Standards Board (FASB) issued~~policies, see Note 1 in our 2019 Form 10-K. Significant accounting ~~guidance~~policies that ~~revises the~~have been revised since our 2019 Form 10-K are shown below. These accounting for leases. Under the new guidance, lessees are required to recognize a right-of-use asset and a lease liability for substantially all leases. The new guidance will continue to classify leases as either financing or operating, with classification affecting the pattern of expense recognition. The accounting applied by a lessor under the new guidance will be substantially equivalent to current lease accounting guidance. The new guidance waspolicy changes were effective January 1, ~~2019 and was applied using a modified retrospective approach through a cumulative effect adjustment to retained earnings as~~2020 with the adoption of ~~January 1, 2019. The prior~~the new credit loss accounting guidance discussed in Note 2. Prior period comparative information has not been ~~recasted~~recast and continues to be reported under the accounting guidance in effect for those periods.

The new guidance provides a number of optional practical expedients in transition. We elected the "package of practical expedients," which allows us not to reassess under the new guidance our prior conclusions about lease identification, lease classification and initial direct costs. We did not elect the use-of-hindsight practical expedient. In addition, the new guidance provides practical expedients for an entity’s ongoing lessee accounting. We have elected not to separate lease and non-lease components for the majority of our asset classes. We have elected the short-term lease recognition exemption for all leases that qualify, which means we will not recognize right-of-use assets or lease liabilities for these leases with a term of twelve months or less. Finance Receivables

The most significant effects of adoption relate to the recognition of right-of-use assets and lease liabilities on our balance sheet for operating leases and providing new disclosures about our leasing activities. The adoption did not have a material impact on our results of operations.

~~In March 2019, the FASB issued Leases - Codification improvements (ASU 2019-01) which amended the new leasing guidance. Under these amendments, lessors that~~Finance receivables are not manufacturers or dealers will use their cost, less any discounts that may apply, as the fair value of the underlying asset, and lessors within the scope of Financial Services-Depository and Lending guidance will present all principal payments received under leases within investment activities on the statement of cash flows. We adopted the new guidance effective January 1, 2019, and the adoption did not have a material impact to our financial statements.

~~See Note 4 for additional information.~~

~~Reclassification of certain tax effects from accumulated other comprehensive income~~ (ASU 2018-02) – In February 2018, the FASB issued accounting guidance to allow a reclassification from accumulated other comprehensive income (AOCI) to retained earnings for stranded tax effects resulting from U.S. tax reform legislation. We adopted the guidance effective January 1, 2019 and the resulting reclassification was included in the period of adoption. The reclassification resulted in decreased retained earnings and increased AOCI of $97 million.

~~We adopted the following ASU effective January 1, 2019, which did not have a material impact on our financial statements:~~

~~Credit losses~~ (ASU 2016-13) – In June 2016, the FASB issued accounting guidance to introduce a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The new guidance will apply to loans, accounts receivable, trade receivables, other financial assets measured at amortized cost, loan commitments and other off-balance sheet credit exposures. The new guidance will also apply to debt securities and other financial assets measured at fair value through other comprehensive income. We will adopt the new guidance effective January 1, 2020. An implementation team is continuing to work on the design of new processes and controls as well as assessing the effects of the new guidance. While we are still evaluating the impact of the new guidance, we do not expect a material impact to our financial statements.

We consider the applicability and impact of all ASUs. ASUs not listed above were assessed and either determined to be not applicable or not expected to have a material impact on our financial statements.

~~A summary of finance receivables included in the Consolidated Statements of Financial Position was as follows:~~

⁽¹⁾~~Includes failed sale leasebacks.~~

⁽²⁾~~Includes $11 million and $9 million of finance leases with Caterpillar as of September 30, 2019 and December 31, 2018, respectively.~~

⁽³⁾~~Includes $22 million and $0 million of finance receivables~~generally classified as held for ~~sale as~~investment and recorded at amortized cost given that we have the intent and ability to hold them for the foreseeable future. Amortized cost is the principal balance outstanding plus accrued interest less write-downs, net of ~~September 30, 2019~~unamortized purchase discounts and ~~December 31, 2018, respectively.~~deferred fees and costs.

The allowance for credit losses is anmanagement’s estimate of expected losses over the ~~losses inherent in~~life of our finance receivable portfolio calculated using loss forecast models that take into consideration historical credit loss experience, current economic conditions and ~~includes consideration~~forecasts and scenarios that capture country and industry-specific economic factors. In addition, qualitative factors not able to be fully captured in our loss forecast models, including borrower-specific and company-specific macro-economic factors, are considered in the evaluation of ~~accounts that have been individually identified as impaired, as well as pools~~the adequacy of ~~finance receivables where~~our allowance for credit losses. These qualitative factors are subjective and require a degree of management judgment.

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist and on an individual basis when it is ~~probable~~determined that ~~certain~~similar risk characteristics do not exist. Finance receivables in the pool are impaired but the individual accounts cannot yet be identified. In identifying and measuring impairment, management takes into consideration past loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of underlying collateral and current economic conditions.

~~Accounts~~ are identified for individual ~~review~~evaluation based on past-due status and information available about the customer, such as financial statements, news reports and published credit ratings, as well as general information regarding industry trends and the economic environment in which our customers operate. The allowance for credit losses attributable to finance receivables that are individually evaluated ~~and determined to be impaired~~ is based on the present value of expected future cash flows discounted at the receivables' effective interest rate, the fair value of the collateral for collateral-dependent receivables or the observable market price of the receivable. In determining collateral value, we estimate the current fair market value of the collateral less selling costs. We also consider credit enhancements such as additional collateral and contractual third-party guarantees. ~~The~~See Note 3 for a description of our portfolio segments and allowance methodologies.

Receivable balances, including accrued interest, are written off against the allowance for credit losses ~~attributable~~when, in the judgment of management, they are considered uncollectible (generally upon repossession of the collateral). The amount of the write-off is determined by comparing the fair value of the collateral, less cost to sell, to the amortized cost. Subsequent recoveries, if any, are credited to the allowance for credit losses when received.

2.New Accounting Pronouncements

A.Adoption of New Accounting Standards

Credit losses (Accounting Standards Update (ASU) 2016-13) – In June 2016, the Financial Accounting Standards Board (FASB) issued new accounting guidance to introduce a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The new guidance applies to loans, accounts receivable, trade receivables, other financial assets measured at amortized cost, loan commitments and other off-balance sheet credit exposures. The new guidance also applies to debt securities and other financial assets measured at fair value through other comprehensive income. The new guidance was effective January 1, 2020. We applied the new guidance using a modified retrospective approach through a cumulative effect adjustment to retained earnings as of January 1, 2020. We have not recast prior period comparative information, which we continue to report under the accounting guidance in effect for those periods.

The most significant effects of adoption relate to the change in methodology for estimating our Allowance for credit losses from an incurred loss model to a current expected credit loss model. We elected to present accrued interest receivable related to our finance receivables in Finance receivables, net. In prior period comparative information, accrued interest receivable continues to be reported in Other assets. Our adoption of the new guidance did not have a material impact on our financial statements.

The cumulative effect of initially applying the new credit loss guidance to our consolidated financial statements on January 1, 2020 was as follows:


Consolidated Statement of Financial Position (Millions of dollars)	Balance as of December 31, 2019		Cumulative Impact from Adopting New Credit Loss Standard		Balance as of January 1, 2020
Assets:
Finance receivables, net	$	27,832	$	42	$	27,874
Other assets	$	1,292	$	(53)	$	1,239

Liabilities:
Other liabilities	$	893	$	2	$	895

Shareholder's equity
Retained earnings	$	3,162	$	(13)	$	3,149

See Note 3 for additional information.

We adopted the following ASUs effective January 1, 2020, none of which had a material impact on our financial statements:

B.Accounting Standards Issued But Not Yet Adopted

Reference rate reform (ASU 2020-04) – In March 2020, the FASB issued accounting guidance to ease the potential burden in accounting for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance is optional and may be elected over time as reference rate reform activities occur between March 12, 2020 through December 31, 2022. We are evaluating the impact of reference rate reform on our contracts and assessing the impacts of adopting this guidance on our financial statements.

We consider the applicability and impact of all ASUs. We assessed ASUs not listed above and determined that they either were not applicable or were not expected to have a material impact on our financial statements.

3.Finance Receivables

Effective January 1, 2020, we implemented the new credit loss guidance using a modified retrospective approach. Prior period comparative information has not been recast and continues to be reported under the accounting guidance in effect for those periods. See Note 2 for additional information.

A summary of finance receivables included in the Consolidated Statements of Financial Position was as follows:

Retail loans, net(1)

Wholesale loans, net(1)

(1) Includes failed sale leasebacks.

Revenues from finance leases were $124 million and $135 million for the three months ended September 30, 2020 and 2019, respectively, and $368 million and $388 million for the nine months ended September 30, 2020 and 2019, respectively, and are included in retail and wholesale finance revenue in the Consolidated Statements of Profit. The residual values for finance leases are included in Finance receivables, net in the Consolidated Statements of Financial Position. Residual value adjustments are recognized through a reduction of finance revenue over the remaining ~~accounts not yet individually identified~~lease term.

A portfolio segment is the level at which we develop a systematic methodology for determining our allowance for credit losses. Our portfolio segments and related methods for estimating expected credit losses are as ~~impaired is estimated~~follows:

We provide loans and finance leases to end-user customers primarily for the purpose of financing new and used Caterpillar machinery, engines and equipment for commercial use, the majority of which operate in construction-related industries. We also provide financing for vehicles, power generation facilities and marine vessels that, in most cases, incorporate Caterpillar products. The average original term of our customer finance receivable portfolio was approximately 48 months with an average remaining term of approximately 23 months as of September 30, 2020.

We typically maintain a security interest in financed equipment and we require physical damage insurance coverage on the financed equipment, both of which provide us with certain rights and protections. If our collection efforts fail to bring a defaulted account current, we generally can repossess the financed equipment, after satisfying local legal requirements, and sell it within the Caterpillar dealer network or through third-party auctions.

We estimate the allowance for credit losses related to our customer finance receivables based on loss forecast models utilizing probabilities of default ~~our estimate of the loss emergence period~~ and ~~the~~our estimated loss given ~~default.~~default based on past loss experience adjusted for current conditions and reasonable and supportable forecasts capturing country and industry-specific macro-economic factors.

Our forecasts for the markets in which we operate slightly improved during the three months ended September 30, 2020, but continued to reflect an overall decline in economic conditions resulting from a contracting economy, elevated unemployment rates and an increase in delinquencies due to the COVID-19 pandemic. We believe the economic forecasts employed represent reasonable and supportable forecasts, followed by a reversion to long-term trends.

We provide financing to Caterpillar dealers in the form of wholesale financing plans. Our wholesale financing plans provide assistance to dealers by financing their mostly new Caterpillar equipment inventory and rental fleets on a secured and unsecured basis. In addition, ~~qualitative factors not able~~we provide unsecured loans to ~~be fully captured in our loss forecast models including industry trends, macroeconomic factors and model imprecision are considered in the evaluation of the adequacy of~~Caterpillar dealers for working capital.

We estimate the allowance for credit ~~losses. These qualitative factors~~losses for dealer finance receivables based on historical loss rates with consideration of current economic conditions and reasonable and supportable forecasts.

Although our forecasts continued to indicate a decline in economic conditions, our Dealer portfolio segment has not historically experienced increased credit losses during prior economic downturns due to our close working relationships with the dealers and their financial strength. Therefore, we made no adjustments to historical loss rates during the three and nine months ended September 30, 2020.

Caterpillar Purchased Receivables

We purchase receivables from Caterpillar, primarily related to the sale of equipment and parts to dealers. Caterpillar purchased receivables are ~~subjective and require~~non-interest-bearing short-term trade receivables that are purchased at a ~~degree of management judgment.~~discount.

~~Our~~We estimate the allowance for credit losses ~~is segregated into three portfolio segments:~~for Caterpillar purchased receivables based on historical loss rates with consideration of current economic conditions and reasonable and supportable forecasts.

~~Customer~~ ~~- Finance receivables with end-user customers.~~

~~Dealer~~ ~~- Finance receivables with Caterpillar dealers.~~

Although our forecasts continued to indicate a decline in economic conditions, our Caterpillar Purchased Receivables ~~- Trade receivables purchased from Caterpillar entities.~~

A portfolio segment ishas not historically experienced increased credit losses during prior economic downturns due to the ~~level at which~~short-term maturities of the ~~Company develops a systematic methodology for determining its allowance for credit losses.~~receivables, our close working relationships with the dealers and their financial strength. Therefore, we made no adjustments to historical loss rates during the three and nine months ended September 30, 2020.

Classes of finance receivables

We further evaluate our portfolio segments by the class of finance receivables, which is defined as a level of information (below a portfolio segment) in which the finance receivables have the same initial measurement attribute and a similar method for assessing and monitoring credit risk. Typically, our finance receivables within a geographic area have similar credit risk profiles and methods for assessing and monitoring credit risk. Our classes, which align with management reporting for credit losses, are as follows:

•North America - Finance receivables originated in the United States and Canada.

•EAME - Finance receivables originated in Europe, Africa, the Middle East and the Commonwealth of Independent States.

•Asia/Pacific - Finance receivables originated in Australia, New Zealand, China, Japan, Southeast Asia and India.

•Mining - Finance receivables related to large mining customers worldwide.

•Latin America - Finance receivables originated in Mexico and Central and South American countries.

•Caterpillar Power Finance - Finance receivables originated worldwide related to marine vessels with Caterpillar engines and Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems.

Our allowance for credit losses as of September 30, 2019 was $434 million or 1.57 percent of our recorded investment in finance receivables compared with $511 million or 1.80 percent as of December 31, 2018. An analysis of the allowance for credit losses was as follows:

Adjustment to adopt new accounting guidance(1)

(Millions of dollars)
September 30, 2019
Allowance for Credit Losses: Customer Dealer
Caterpillar
Purchased
Receivables
Total
Balance at beginning of year $ 486
$ 21
$ 4
$ 511
Receivables written off (238 ) —
—
(238 )
Recoveries on receivables previously written off 31
—
—
31
Provision for credit losses 120
24
—
144
Adjustment due to sale of receivables (11 ) —
—
(11 )
Foreign currency translation adjustment (3 ) —
—
(3 )
Balance at end of period $ 385
$ 45
$ 4
$ 434

Individually evaluated for impairment $ 182
$ 39
$ —
$ 221
Collectively evaluated for impairment 203
6
4
213
Ending Balance $ 385
$ 45
$ 4
$ 434

Recorded Investment in Finance Receivables:

Individually evaluated for impairment $ 665
$ 78
$ —
$ 743
Collectively evaluated for impairment 18,301
4,401
4,175
26,877
Ending Balance $ 18,966
$ 4,479
$ 4,175
$ 27,620

(Millions of dollars)
December 31, 2018
Allowance for Credit Losses: Customer Dealer
Caterpillar
Purchased
Receivables
Total
Balance at beginning of year $ 353
$ 9
$ 3
$ 365
Receivables written off (235 ) —
—
(235 )
Recoveries on receivables previously written off 46
—
—
46
Provision for credit losses 337
12
1
350
Adjustment due to sale of receivables (7 ) —
—
(7 )
Foreign currency translation adjustment (8 ) —
—
(8 )
Balance at end of year $ 486
$ 21
$ 4
$ 511

Individually evaluated for impairment $ 288
$ 14
$ —
$ 302
Collectively evaluated for impairment 198
7
4
209
Ending Balance $ 486
$ 21
$ 4
$ 511

Recorded Investment in Finance Receivables:

Individually evaluated for impairment $ 859
$ 78
$ —
$ 937
Collectively evaluated for impairment 18,724
4,082
4,691
27,497
Ending Balance $ 19,583
$ 4,160
$ 4,691
$ 28,434

UNAUDITED


(Millions of dollars)	December 31, 2019
Allowance for Credit Losses:	Customer		Dealer		Caterpillar Purchased Receivables		Total
Balance at beginning of year	$	486	$	21	$	4	$	511
Receivables written off	(281)		0		0		(281)
Recoveries on receivables previously written off	44		0		0		44
Provision for credit losses	138		24		0		162
Adjustment due to sale of receivables	(11)		0		0		(11)
Foreign currency translation adjustment	(1)		0		0		(1)
Balance at end of year	$	375	$	45	$	4	$	424

Individually evaluated	$	178	$	39	$	0	$	217
Collectively evaluated	197		6		4		207
Ending Balance	$	375	$	45	$	4	$	424

Finance Receivables:
Individually evaluated	$	594	$	78	$	0	$	672
Collectively evaluated	18,770		4,366		4,448		27,584
Ending Balance	$	19,364	$	4,444	$	4,448	$	28,256

Credit quality of finance receivables

At origination, we evaluate credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit-rating agency ratings, loan-to-value ratios, probabilities of default, industry trends, macroeconomic factors and other internal metrics. On an ongoing basis, we monitor credit quality based on past-due status ~~and collection experience~~ as there is a meaningful correlation between the past-due status of customers and the risk of loss.

In determining past-due status, we consider the entire ~~recorded investment in~~ finance ~~receivables~~receivable past due when any installment is over 30 days past due.

UNAUDITED

Customer

The ~~tables~~table below ~~summarize~~summarizes the aging category of our amortized cost of finance receivables in the Customer portfolio segment by origination year.


(Millions of dollars)	September 30, 2020
	2020		2019		2018		2017		2016		Prior		Revolving Finance Receivables		Total Finance Receivables
North America
Current	$	2,697	$	2,711	$	1,588	$	660	$	288	$	59	$	89	$	8,092
31-60 days past due	41		57		39		21		9		3		1		171
61-90 days past due	12		24		21		13		4		1		0		75
91+ days past due	6		29		30		20		8		5		0		98

EAME
Current	903		1,049		684		313		92		28		0		3,069
31-60 days past due	6		9		6		3		1		0		0		25
61-90 days past due	4		4		1		0		1		1		0		11
91+ days past due	6		8		13		8		40		43		0		118

Asia/Pacific
Current	1,162		1,033		502		147		40		12		31		2,927
31-60 days past due	9		25		23		7		1		0		0		65
61-90 days past due	4		9		7		4		0		0		0		24
91+ days past due	3		21		12		2		0		0		0		38

Mining
Current	340		618		339		208		104		160		160		1,929
31-60 days past due	0		0		1		0		0		0		0		1
61-90 days past due	0		1		4		2		0		0		0		7
91+ days past due	1		11		8		24		0		0		1		45

Latin America
Current	402		393		182		64		18		38		0		1,097
31-60 days past due	0		3		3		2		0		0		0		8
61-90 days past due	1		1		1		1		0		0		0		4
91+ days past due	0		13		45		25		7		5		0		95

Caterpillar Power Finance
Current	149		260		138		274		117		132		129		1,199
31-60 days past due	0		0		18		0		0		3		0		21
61-90 days past due	0		0		0		0		0		0		0		0
91+ days past due	0		0		3		8		29		90		0		130

Total	$	5,746	$	6,279	$	3,668	$	1,806	$	759	$	580	$	411	$	19,249

Finance receivables in the Customer portfolio segment are substantially secured by collateral, primarily in the form of Caterpillar and other machinery. For those contracts where the borrower is experiencing financial difficulty, repayment of the outstanding amounts is generally expected to be provided through the operation or repossession and sale of the machinery.

Dealer

As of September 30, 2020, our total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $78 million that was 91+ days past due in Latin America. These past due receivables were originated in 2017.

UNAUDITED

Caterpillar Purchased Receivables

The table below summarizes the aging category of our amortized cost of finance receivables in the Caterpillar Purchased Receivables portfolio segment.


(Millions of dollars)
	September 30, 2020
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables














North America	$	11	$	5	$	6	$	22	$	1,850	$	1,872
EAME	1		1		0		2		633		635
Asia/Pacific	1		0		1		2		596		598
Mining	0		0		0		0		0		0
Latin America	0		0		0		0		433		433
Caterpillar Power Finance	0		0		1		1		6		7
Total	$	13	$	6	$	8	$	27	$	3,518	$	3,545

The table below summarizes our recorded investment in finance receivables by aging category.


(Millions of dollars)
	December 31, 2019
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables
Customer
North America	$	72	$	23	$	55	$	150	$	8,085	$	8,235
EAME	30		31		141		202		2,882		3,084
Asia/Pacific	40		14		29		83		2,733		2,816
Mining	5		0		19		24		2,266		2,290
Latin America	41		23		80		144		1,131		1,275
Caterpillar Power Finance	10		10		225		245		1,419		1,664
Dealer
North America	0		0		0		0		2,514		2,514
EAME	0		0		0		0		600		600
Asia/Pacific	0		0		0		0		487		487
Mining	0		0		0		0		4		4
Latin America	0		0		78		78		758		836
Caterpillar Power Finance	0		0		0		0		3		3
Caterpillar Purchased Receivables
North America	15		6		18		39		2,450		2,489
EAME	1		0		2		3		574		577
Asia/Pacific	1		0		0		1		891		892
Mining	0		0		0		0		0		0
Latin America	0		0		0		0		475		475
Caterpillar Power Finance	0		0		0		0		15		15
Total	$	215	$	107	$	647	$	969	$	27,287	$	28,256

(Millions of dollars)
September 30, 2019

31-60
Days
Past Due

61-90
Days
Past Due

91+
Days
Past Due

Total
Past Due
Current
Recorded
Investment in
Finance
Receivables

91+ Still
Accruing
Customer

North America $ 73
$ 16
$ 48
$ 137
$ 7,875
$ 8,012
$ 15
EAME 33
10
136
179
2,853
3,032
4
Asia/Pacific 36
21
24
81
2,972
3,053
6
Mining 1
24
19
44
1,810
1,854
—
Latin America 43
29
93
165
1,152
1,317
1
Caterpillar Power Finance 1
1
241
243
1,455
1,698
14
Dealer

North America —
—
—
—
2,481
2,481
—
EAME —
—
—
—
624
624
—
Asia/Pacific —
—
—
—
472
472
—
Mining —
—
—
—
4
4
—
Latin America —
—
81
81
814
895
—
Caterpillar Power Finance —
—
—
—
3
3
—
Caterpillar Purchased Receivables⁽¹⁾

North America 12
5
17
34
2,675
2,709

EAME 1
—
2
3
507
510

Asia/Pacific 1
—
1
2
467
469

Mining —
—
—
—
—
—

Latin America —
—
—
—
471
471

Caterpillar Power Finance —
—
—
—
16
16

Total $ 201
$ 106
$ 662
$ 969
$ 26,651
$ 27,620
$ 40

⁽¹⁾~~Caterpillar Purchased Receivables are non-interest bearing trade receivables purchased at a discount.~~

UNAUDITED

(Millions of dollars)
December 31, 2018

31-60
Days
Past Due

61-90
Days
Past Due

91+
Days
Past Due

Total
Past Due
Current
Recorded
Investment in
Finance
Receivables

91+ Still
Accruing
Customer

North America $ 65
$ 18
$ 84
$ 167
$ 7,883
$ 8,050
$ 14
EAME 19
9
153
181
2,850
3,031
5
Asia/Pacific 25
9
8
42
2,923
2,965
5
Mining 28
1
9
38
1,642
1,680
—
Latin America 38
29
71
138
1,421
1,559
—
Caterpillar Power Finance 10
1
384
395
1,903
2,298
—
Dealer

North America —
—
—
—
2,210
2,210
—
EAME —
—
—
—
619
619
—
Asia/Pacific —
—
—
—
514
514
—
Mining —
—
—
—
4
4
—
Latin America —
—
78
78
731
809
—
Caterpillar Power Finance —
—
—
—
4
4
—
Caterpillar Purchased Receivables⁽¹⁾

North America 22
12
18
52
2,982
3,034

EAME 1
—
1
2
546
548

Asia/Pacific 5
1
1
7
756
763

Mining —
—
—
—
—
—

Latin America —
—
—
—
338
338

Caterpillar Power Finance —
—
—
—
8
8

Total $ 213
$ 80
$ 807
$ 1,100
$ 27,334
$ 28,434
$ 24

⁽¹⁾~~Caterpillar Purchased Receivables are non-interest bearing trade receivables purchased at a discount.~~

~~UNAUDITED~~

Impaired finance receivables

~~For all classes, a~~A finance receivable is considered impaired, based on current information and events, if it is probable that we will be unable to collect all amounts due according to the contractual terms. Impaired finance receivables include finance receivables that have been restructured and are considered to be troubled debt restructures.

In our Customer portfolio segment, impaired finance receivables and the related unpaid principal balances and allowance were as follows:


(Millions of dollars)
	As of December 31, 2019
Impaired Finance Receivables With No Allowance Recorded		Recorded Investment		Unpaid Principal Balance		Related Allowance
North America		$	6	$	6	$	0
EAME		0		0		0
Asia/Pacific		0		0		0
Mining		22		22		0
Latin America		8		8		0
Caterpillar Power Finance		58		58		0
Total		$	94	$	94	$	0
Impaired Finance Receivables With An Allowance Recorded
North America		$	30	$	30	$	11
EAME		61		61		29
Asia/Pacific		8		8		2
Mining		37		36		9
Latin America		58		58		20
Caterpillar Power Finance		306		319		107
Total		$	500	$	512	$	178
Total Impaired Finance Receivables
North America		$	36	$	36	$	11
EAME		61		61		29
Asia/Pacific		8		8		2
Mining		59		58		9
Latin America		66		66		20
Caterpillar Power Finance		364		377		107
Total		$	594	$	606	$	178

UNAUDITED


(Millions of dollars)
	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Impaired Finance Receivables With No Allowance Recorded		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
North America		$	10	$	0	$	10	$	0
EAME		15		0		7		0
Asia/Pacific		0		0		0		0
Mining		26		0		29		1
Latin America		22		0		22		1
Caterpillar Power Finance		57		1		53		2
Total		$	130	$	1	$	121	$	4
Impaired Finance Receivables With An Allowance Recorded
North America		$	30	$	0	$	36	$	1
EAME		80		1		88		2
Asia/Pacific		12		1		9		1
Mining		65		1		49		2
Latin America		69		1		73		4
Caterpillar Power Finance		376		1		422		8
Total		$	632	$	5	$	677	$	18
Total Impaired Finance Receivables
North America		$	40	$	0	$	46	$	1
EAME		95		1		95		2
Asia/Pacific		12		1		9		1
Mining		91		1		78		3
Latin America		91		1		95		5
Caterpillar Power Finance		433		2		475		10
Total		$	762	$	6	$	798	$	22

There were $78 million in impaired finance receivables with a related allowance of $39 million ~~and $14 million~~ as of ~~September 30, 2019 and~~ December 31, ~~2018, respectively,~~2019 for the Dealer portfolio segment, all of which was in Latin America. There were no0 impaired finance receivables as of ~~September 30, 2019 and~~ December 31, ~~2018,~~2019 for the Caterpillar Purchased Receivables portfolio segment. ~~Our recorded investment in impaired~~

Non-accrual finance receivables ~~and the related unpaid principal balances and allowance for the Customer portfolio segment were as follows:~~

(Millions of dollars)
As of September 30, 2019 As of December 31, 2018
Impaired Finance Receivables With
No Allowance Recorded
Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance

Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance
North America $ 9
$ 9
$ —
$ 10
$ 10
$ —
EAME —
—
—
1
1
—
Asia/Pacific —
—
—
1
1
—
Mining 23
23
—
33
33
—
Latin America 25
25
—
29
29
—
Caterpillar Power Finance 71
113
—
69
83
—
Total $ 128
$ 170
$ —
$ 143
$ 157
$ —
Impaired Finance Receivables With
An Allowance Recorded

North America $ 31
$ 30
$ 9
$ 40
$ 41
$ 14
EAME 60
60
27
92
92
57
Asia/Pacific 10
10
4
4
4
2
Mining 61
59
18
56
55
26
Latin America 66
64
22
75
75
25
Caterpillar Power Finance 309
322
102
449
455
164
Total $ 537
$ 545
$ 182
$ 716
$ 722
$ 288
Total Impaired Finance Receivables

North America $ 40
$ 39
$ 9
$ 50
$ 51
$ 14
EAME 60
60
27
93
93
57
Asia/Pacific 10
10
4
5
5
2
Mining 84
82
18
89
88
26
Latin America 91
89
22
104
104
25
Caterpillar Power Finance 380
435
102
518
538
164
Total $ 665
$ 715
$ 182
$ 859
$ 879
$ 288

~~UNAUDITED~~

(Millions of dollars)
Three Months Ended
September 30, 2019 Three Months Ended
September 30, 2018
Impaired Finance Receivables With
No Allowance Recorded
Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized
North America $ 10
$ —
$ 19
$ —
EAME 15
—
4
—
Asia/Pacific —
—
30
1
Mining 26
—
35
—
Latin America 22
—
37
1
Caterpillar Power Finance 57
1
94
2
Total $ 130
$ 1
$ 219
$ 4
Impaired Finance Receivables With
An Allowance Recorded

North America $ 30
$ —
$ 47
$ —
EAME 80
1
59
—
Asia/Pacific 12
1
2
—
Mining 65
1
60
1
Latin America 69
1
51
1
Caterpillar Power Finance 376
1
374
4
Total $ 632
$ 5
$ 593
$ 6
Total Impaired Finance Receivables

North America $ 40
$ —
$ 66
$ —
EAME 95
1
63
—
Asia/Pacific 12
1
32
1
Mining 91
1
95
1
Latin America 91
1
88
2
Caterpillar Power Finance 433
2
468
6
Total $ 762
$ 6
$ 812
$ 10

~~UNAUDITED~~

(Millions of dollars)
Nine Months Ended
September 30, 2019 Nine Months Ended
September 30, 2018
Impaired Finance Receivables With
No Allowance Recorded
Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized
North America $ 10
$ —
$ 17
$ 1
EAME 7
—
17
—
Asia/Pacific —
—
31
2
Mining 29
1
65
2
Latin America 22
1
41
2
Caterpillar Power Finance 53
2
149
5
Total $ 121
$ 4
$ 320
$ 12
Impaired Finance Receivables With
An Allowance Recorded

North America $ 36
$ 1
$ 51
$ 1
EAME 88
2
41
1
Asia/Pacific 9
1
5
—
Mining 49
2
43
2
Latin America 73
4
69
3
Caterpillar Power Finance 422
8
364
8
Total $ 677
$ 18
$ 573
$ 15
Total Impaired Finance Receivables

North America $ 46
$ 1
$ 68
$ 2
EAME 95
2
58
1
Asia/Pacific 9
1
36
2
Mining 78
3
108
4
Latin America 95
5
110
5
Caterpillar Power Finance 475
10
513
13
Total $ 798
$ 22
$ 893
$ 27

Recognition of income is suspended and the finance receivable is placed on non-accrual status when management determines that collection of future income is not ~~probable (generally after~~probable. Contracts on non-accrual status are generally more than 120 days past ~~due)~~due or have been restructured in a troubled debt restructuring (TDR). Recognition is resumed and previously suspended income is recognized when the finance receivable becomes current and collection of remaining amounts is considered probable. Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms. Interest earned but uncollected prior to the receivable being placed on non-accrual status is written off through Provision for credit losses when, in the judgment of management, it is considered uncollectible.

UNAUDITED

In our Customer portfolio segment, finance receivables which were on non-accrual status and finance receivables over 90 days past due and still accruing income were as follows:


(Millions of dollars)	September 30, 2020
	Amortized Cost
	Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing
North America	$	82	$	1	$	28
EAME	137		0		1
Asia/Pacific	26		0		13
Mining	38		1		10
Latin America	95		2		0
Caterpillar Power Finance	207		17		0
Total	$	585	$	21	$	52

There was $2 million and $8 million of interest income recognized during the three and nine months ended September 30, 2020, respectively, for customer finance receivables on non-accrual status.


(Millions of dollars)	December 31, 2019
	Recorded Investment
	Non-accrual Finance Receivables		91+ Still Accruing
North America	$	44	$	15
EAME	165		4
Asia/Pacific	21		8
Mining	47		0
Latin America	89		2
Caterpillar Power Finance	361		0
Total	$	727	$	29

As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, there were ~~$81 million and~~ $78 million ~~respectively,~~ in finance receivables on non-accrual status ~~for the~~in our Dealer portfolio segment, all of which was in Latin America. ~~The recorded investment~~There were 0 finance receivables in ~~Customer~~our Dealer portfolio segment more than 90 days past due and still accruing income as of September 30, 2020 and 0 interest income was recognized on dealer finance receivables on non-accrual status ~~was as follows:~~ during the three and nine months ended September 30, 2020.

(Millions of dollars) September 30,
2019 December 31,
2018
North America $ 38
$ 77
EAME 168
154
Asia/Pacific 19
4
Mining 44
50
Latin America 103
106
Caterpillar Power Finance 372
416
Total $ 744
$ 807

~~UNAUDITED~~

Troubled debt restructurings

A restructuring of a finance receivable constitutes a ~~troubled debt restructuring (TDR)~~TDR when the lender grants a concession it would not otherwise consider to a borrower experiencing financial difficulties. Concessions granted may include extended contract maturities, inclusion of interest only periods, below market interest rates, ~~extended skip~~ payment ~~periods~~deferrals and reduction of principal and/or accrued interest.

~~As of September 30, 2019 and December 31, 2018, there were no additional funds committed to lend to a borrower whose terms have been modified in a TDR.~~

UNAUDITED

There were no0 finance receivables modified as TDRs during the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 for the Dealer or Caterpillar Purchased Receivables portfolio segments. ~~Our recorded investment in finance~~Finance receivables in the Customer portfolio segment modified as TDRs ~~was~~were as follows:


(Dollars in millions)	Three Months Ended September 30, 2020					Three Months Ended September 30, 2019
	Number of Contracts	Pre-TDR Amortized Cost		Post-TDR Amortized Cost		Number of Contracts	Pre-TDR Recorded Investment		Post-TDR Recorded Investment
North America	3	$	1	$	1	4	$	0	$	0

Asia/Pacific	79	4		4		0	0		0
Mining	12	5		5		0	0		0
Latin America	3	16		16		0	0		0
Caterpillar Power Finance	8	50		50		4	56		55
Total	105	$	76	$	76	8	$	56	$	55

	Nine Months Ended September 30, 2020					Nine Months Ended September 30, 2019
	Number of Contracts	Pre-TDR Amortized Cost		Post-TDR Amortized Cost		Number of Contracts	Pre-TDR Recorded Investment		Post-TDR Recorded Investment
North America	13	$	10	$	10	12	$	5	$	4
EAME	0	0		0		19	17		17
Asia/Pacific(1)	183	12		12		0	0		0
Mining(2)	52	22		22		1	6		6
Latin America	9	18		18		4	2		2
Caterpillar Power Finance	14	87		87		19	154		152
Total	271	$	149	$	149	55	$	184	$	181

(Dollars in millions) Three Months Ended
September 30, 2019 Three Months Ended
September 30, 2018

Number of
Contracts

Pre-TDR
Recorded
Investment

Post-TDR
Recorded
Investment

Number of
Contracts

Pre-TDR
Recorded
Investment

Post-TDR
Recorded
Investment
North America 4
$ —
$ —
4
$ —
$ —
Caterpillar Power Finance 4
56
55
2
40
40
Total 8
$ 56
$ 55
6
$ 40
$ 40

Nine Months Ended
September 30, 2019 Nine Months Ended
September 30, 2018

Number of
Contracts

Pre-TDR
Recorded
Investment

Post-TDR
Recorded
Investment

Number of
Contracts

Pre-TDR
Recorded
Investment

Post-TDR
Recorded
Investment
North America 12
$ 5
$ 4
34
$ 13
$ 13
EAME 21
21
17
—
—
—
Mining 1
6
6
1
29
29
Latin America 4
2
2
1
3
3
Caterpillar Power Finance 19
154
152
7
93
60
Total 57
$ 188
$ 181
43
$ 138
$ 105

(1) During the nine months ended September 30, 2020, 183 contracts with a pre-TDR and post-TDR amortized cost of $12 million were related to seven customers.

(2) During the nine months ended September 30, 2020, 52 contracts with a pre-TDR and post-TDR amortized cost of $22 million were related to three customers.

TDRs in the Customer portfolio segment with a payment default (defined as 91+ days past due) which had been modified within twelve months prior to the default date, were as follows:


(Dollars in millions)	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019
	Number of Contracts	Post-TDR Amortized Cost		Number of Contracts	Post-TDR Recorded Investment
North America	1	$	6	0	$	0


Mining	1	1		0	0

Caterpillar Power Finance	2	18		0	0
Total	4	$	25	0	$	0

	Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
	Number of Contracts	Post-TDR Amortized Cost		Number of Contracts	Post-TDR Recorded Investment
North America	2	$	6	0	$	0
EAME	2	10		0	0

Mining	1	1		0	0
Latin America	3	1		0	0
Caterpillar Power Finance	2	18		0	0
Total	10	$	36	0	$	0

(Dollars in millions) Three Months Ended
September 30, 2019 Three Months Ended
September 30, 2018

Number of
Contracts

Post-TDR
Recorded
Investment

Number of
Contracts

Post-TDR
Recorded
Investment
North America —
$ —
7
$ 9
Latin America —
—
1
—
Caterpillar Power Finance —
—
3
33
Total —
$ —
11
$ 42

Nine Months Ended
September 30, 2019 Nine Months Ended
September 30, 2018

Number of
Contracts

Post-TDR
Recorded
Investment

Number of
Contracts

Post-TDR
Recorded
Investment
North America —
$ —
10
$ 10
Latin America —
—
3
1
Caterpillar Power Finance —
—
3
33
Total —
$ —
16
$ 44

UNAUDITED


4.	~~Leases~~


A.	~~Lessor Arrangements~~

~~We lease Caterpillar equipment, machinery~~4.Derivative Financial Instruments and engines and other equipment to customers and dealers around the world, primarily through sales-type (non-tax) leases, where the lessee for tax purposes is considered to be the owner of the equipment during the term of the lease. We also offer tax leases that are classified as either operating or direct finance leases for financial accounting purposes, depending on the characteristics of the lease. For tax purposes, we are considered the owner of the equipment.Risk Management

~~Our lease agreements may include options for the lessee to purchase the underlying asset at the end of the lease term for either a stated fixed price or fair market value.~~

The residual values for leased assets, which are an estimate of the market value of leased equipment at the end of the lease term, are based on an analysis of historical wholesale market sales prices, projected forward on a level trend line without consideration for inflation or possible future pricing action. At the inception of the lease, residual values are estimated with consideration of the following critical factors: market size and demand, any known significant market/product trends, total expected hours of usage, machine configuration, application, location, model changes, quantities, past remarketing experience, third-party residual guarantees and contractual customer purchase options. Many of these factors are gathered in an application survey that is completed prior to quotation. The lease agreement also clearly defines applicable return conditions and remedies for non-compliance, to ensure that the leased equipment will be in good operating condition upon return. Model changes and updates, as well as market strength and product acceptance, are monitored and adjustments are made to residual values in accordance with the significance of any such changes. Our sales staff work closely with customers and dealers to manage the sale of lease returns and the recovery of residual exposure.

The residuals for leases classified as operating leases are included in Equipment on operating leases, net in the Consolidated Statements of Financial Position. The residuals for leases classified as finance leases are included in Finance receivables, net in the Consolidated Statements of Financial Position.

During the term of our operating leases, we evaluate the carrying value of our equipment on a regular basis taking into consideration expected residual values at lease termination. Adjustments to depreciation expense reflecting revised estimates of expected residual values at the end of the lease terms are recorded prospectively on a straight-line basis. For finance leases, residual value adjustments are recognized through a reduction of finance revenue.

~~Contractual maturities for finance lease receivables (classified as sales-type and direct finance leases) were as follows:~~

(Millions of dollars) September 30, 2019
Amounts due in
Retail
leases

Wholesale
leases
Total
Remaining three months of 2019 $ 917
$ 3
$ 920
2020 2,840
19
2,859
2021 1,766
12
1,778
2022 881
5
886
2023 383
2
385
Thereafter 204
2
206
Total 6,991
43
7,034
Guaranteed residual value 398
26
424
Unguaranteed residual value 825
5
830
Unearned income (683 ) (4 ) (687 )
Total $ 7,531
$ 70
$ 7,601

~~UNAUDITED~~

(Millions of dollars) December 31, 2018
Amounts due in
Retail
leases

Wholesale
leases
Total
2019 $ 3,024
$ 29
$ 3,053
2020 2,055
21
2,076
2021 1,092
12
1,104
2022 465
5
470
2023 171
2
173
Thereafter 62
2
64
Total 6,869
71
6,940
Guaranteed residual value 416
42
458
Unguaranteed residual value 854
3
857
Unearned income (640 ) (7 ) (647 )
Total $ 7,499
$ 109
$ 7,608

Our finance lease receivables generally may be repaid or refinanced without penalty prior to contractual maturity and we also sell finance lease receivables to third parties to mitigate the concentration of credit risk with certain customers. Accordingly, this presentation should not be regarded as a forecast of future cash collections.

~~The carrying amount of Equipment on operating leases, net in the Consolidated Statements of Financial Position was as follows:~~

(Millions of dollars)
September 30,
2019 December 31,
2018
Equipment on operating leases, at cost $ 5,229
$ 5,201
Less: Accumulated depreciation (1,662 ) (1,639 )
Equipment on operating leases, net ⁽¹⁾
$ 3,567
$ 3,562

⁽¹⁾ ~~Includes $101 million and $45 million of operating leases with Caterpillar as of September 30, 2019 and December 31, 2018, respectively.~~

The carrying amount of residual assets covered by residual value guarantees and subject to operating leases was $20 million and $25 million as of September 30, 2019 and December 31, 2018, respectively.

~~At September 30, 2019, payments due for operating leases were as follows:~~

(Millions of dollars)
Remaining Three
Months of 2019
2020 2021 2022 2023 Thereafter Total
$ 245
$ 758
$ 433
$ 216
$ 96
$ 58
$ 1,806

~~At December 31, 2018, scheduled minimum rental payments for operating leases were as follows:~~

(Millions of dollars)
2019 2020 2021 2022 2023 Thereafter Total
$ 808
$ 503
$ 257
$ 115
$ 41
$ 15
$ 1,739

~~UNAUDITED~~

We sell operating lease receivables to third parties to mitigate the concentration of credit risk with certain customers. Accordingly, this presentation should not be regarded as a forecast of future cash collections.

~~Revenues from finance and operating leases were as follows:~~

(Millions of dollars)
Three Months Ended
September 30, 2019 Nine Months Ended
September 30, 2019
Finance lease revenue (included in retail and wholesale finance revenue) $ 135
$ 388
Operating lease revenue 262
777
Total $ 397
$ 1,165

We typically pay property taxes on tax leases directly to the taxing authorities and invoice the lessee for reimbursement. These property tax reimbursements are accounted for as variable lease payments and are included in Operating lease revenues in the Consolidated Statements of Profit. We individually assess our operating lease receivables for impairment. If collectability of a recorded operating lease receivable is not considered probable, we recognize a current-period adjustment against operating lease revenue.


B.	~~Lessee Arrangements~~

We lease certain property, vehicles and other equipment primarily through operating leases. We recognize a lease liability and corresponding right-of-use asset based on the present value of lease payments. To determine the present value of lease payments for most of our leases, we use our incremental borrowing rate based on information available on the lease commencement date. We have elected not to separate payments for lease components from non-lease components. Our lease agreements may include options to extend or terminate the lease. When it is reasonably certain that we will exercise that option, we have included the option in the recognition of right-of-use assets and lease liabilities. Our variable lease costs primarily include maintenance, taxes and insurance. We have elected not to recognize right-of-use assets or lease liabilities for leases with a term of twelve months or less.

~~Our finance leases are not significant and therefore are not included in the following disclosures.~~

~~The components of lease cost were as follows:~~

(Millions of dollars)
Three Months Ended
September 30, 2019 Nine Months Ended
September 30, 2019
Operating lease cost $ 2
$ 6
Short-term lease cost $ —
$ 1
Variable lease cost $ —
$ —

~~Supplemental information related to operating leases was as follows:~~

(Millions of dollars)

Consolidated Statements of
Financial Position Location
September 30,
2019 January 1,
2019
Right-of-use assets Other assets $ 22
$ 22
Lease liabilities Other liabilities $ 22
$ 23
Weighted average remaining lease term 5 years
4 years
Weighted average discount rates 2.4 % 2.6 %

~~UNAUDITED~~

~~At September 30, 2019, maturities of operating lease liabilities were as follows:~~

(Millions of dollars)
Remaining three months of 2019 $ 2
2020 7
2021 4
2022 3
2023 3
Thereafter 4
Total lease payments 23
Less: imputed interest (1 )
Total $ 22

~~At December 31, 2018, minimum payments for operating leases having initial non-cancelable terms in excess of one year were as follows:~~

(Millions of dollars)
2019 $ 8
2020 6
2021 4
2022 2
2023 2
Thereafter 2
Total $ 24

~~Supplemental cash flow information related to operating leases was as follows:~~

(Millions of dollars)
Nine Months Ended
September 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities $ 6
Right-of-use assets obtained in exchange for operating lease obligations⁽¹⁾
$ 24

⁽¹⁾~~Includes a $23 million impact of initial recognition of right-of-use assets and lease liabilities.~~

~~UNAUDITED~~


5.	~~Derivative Financial Instruments and Risk Management~~

Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. Our Risk Management Policy (policy) allows for the use of derivative financial instruments to manage foreign currency exchange rate and interest rate exposures. Our policy specifies that derivatives are not to be used for speculative purposes. Derivatives that we use are primarily foreign currency forward, option and cross currency contracts and interest rate contracts. Our derivative activities are subject to the management, direction and control of our senior financial officers. ~~Risk management practices, including the use of financial derivative instruments, are presented~~We present at least annually to our Board of Directors and the Audit Committee of the Caterpillar Inc. Board of Directors on our risk management practices, including our use of financial derivative instruments.

We recognize all derivatives at ~~least annually.~~

~~All derivatives are recognized~~their fair value on the Consolidated Statements of Financial ~~Position at their fair value.~~Position. On the date the derivative contract is entered into, the derivative instrument is (1) designated as a hedge of the fair value of a recognized asset or liability (fair value hedge), (2) designated as a hedge of a forecasted transaction or the variability of cash flows (cash flow hedge) or (3) undesignated. ~~Changes~~We record in current earnings changes in the fair value of a derivative that is qualified, designated and highly effective as a fair value hedge, along with the gain or loss on the hedged recognized asset or liability that is attributable to the hedged ~~risk, are recorded~~risk. We record in ~~current earnings. Changes~~Accumulated other comprehensive income (loss) (AOCI) changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge, ~~are recorded in Accumulated other comprehensive income/(loss) (AOCI),~~ to the extent effective, on the Consolidated Statements of Financial Position until ~~they are reclassified~~we reclassify them to earnings in the same period or periods during which the hedged transaction affects earnings. ~~Changes~~We report changes in the fair value of undesignated derivative instruments ~~are reported~~ in current earnings. ~~Cash~~We classify cash flows from designated derivative financial instruments ~~are classified~~ within the same category as the item being hedged on the Consolidated Statements of Cash Flows. ~~Cash~~We include cash flows from undesignated derivative financial instruments ~~are included~~ in the investing category on the Consolidated Statements of Cash Flows.

We formally document all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as fair value hedges to specific assets and liabilities on the Consolidated Statements of Financial Position and linking cash flow hedges to specific forecasted transactions or variability of cash flow.

We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the designated derivatives that are used in hedging transactions are highly effective in offsetting changes in fair value or cash flow of hedged items. When a derivative is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, we discontinue hedge accounting prospectively in accordance with derecognition criteria for hedge accounting.

Foreign currency exchange rate risk

We have balance sheet positions and expected future transactions denominated in foreign currencies, thereby creating exposure to movements in exchange rates. In managing foreign currency risk, our objective is to minimize earnings volatility resulting from conversion and the remeasurement of net foreign currency balance sheet positions and future transactions denominated in foreign currencies. Our policy allows the use of foreign currency forward, option and cross currency contracts to offset the risk of currency mismatch between our assets and liabilities and exchange rate risk associated with future transactions denominated in foreign currencies. Our foreign currency forward and option contracts are primarily undesignated. We designate fixed-to-fixed cross currency contracts as cash flow hedges to protect against movements in exchange rates on foreign currency fixed-rate assets and liabilities.

Interest rate risk

Interest rate movements create a degree of risk by affecting the amount of our interest payments and the value of our fixed-rate debt. Our practice is to use interest rate contracts to manage our exposure to interest rate changes.

We have a match-funding policy that addresses interest rate risk by aligning the interest rate profile (fixed or floating rate and duration) of our debt portfolio with the interest rate profile of our finance receivable portfolio within predetermined ranges on an ongoing basis. In connection with that policy, we use interest rate derivative instruments to modify the debt structure to match assets within the finance receivable portfolio. This matched funding reduces the volatility of margins between interest-bearing assets and interest-bearing liabilities, regardless of which direction interest rates move.

Our policy allows us to use fixed-to-floating, floating-to-fixed and floating-to-floating interest rate contracts to meet the match-funding objective. We designate fixed-to-floating interest rate contracts as fair value hedges to protect debt against changes in fair value due to changes in the benchmark interest rate. We designate most floating-to-fixed interest rate contracts as cash flow hedges to protect against the variability of cash flows due to changes in the benchmark interest rate.

UNAUDITED

As of September 30, ~~2019, $3~~2020, $17 million of deferred net losses, net of tax, included in equity (AOCI in the Consolidated Statements of Financial Position), related to our floating-to-fixed interest rate contracts, are expected to be reclassified to Interest expense over the next twelve months. The actual amount recorded in Interest expense will vary based on interest rates at the time the hedged transactions impact earnings.

As of September 30, 2020, the cumulative amount of fair value hedging adjustments related to our fixed-to-floating interest rate contracts included in the carrying amount of Long-term debt was $64 million. Fair value gains and losses on these interest rate contracts and the related hedged items generally offset within interest expense. We have, at certain times, liquidated fixed-to-floating interest rate contracts that resulted in deferred gains at the time of liquidation. The deferred gains associated with these interest rate contracts are included in Long-term debt in the Consolidated Statements of Financial Position and are being amortized to Interest expense over the remaining term of the previously designated hedged item.

The location and fair value of derivative instruments reported in the Consolidated Statements of Financial Position were as follows:


(Millions of dollars)		Asset (Liability) Fair Value
	Consolidated Statements of Financial Position Location	September 30, 2020		December 31, 2019
Designated derivatives
Interest rate contracts	Other assets	$	63	$	5
Interest rate contracts	Accrued expenses	(12)		(25)
Cross currency contracts	Other assets	16		67
Cross currency contracts	Accrued expenses	(39)		(3)
		$	28	$	44
Undesignated derivatives
Foreign exchange contracts	Other assets	$	57	$	7
Foreign exchange contracts	Accrued expenses	(18)		(21)
Cross currency contracts	Other assets	12		5
Cross currency contracts	Accrued expenses	0		(1)


		$	51	$	(10)

(Millions of dollars) Asset (Liability) Fair Value

Consolidated Statements of
Financial Position Location
September 30,
2019 December 31,
2018
Designated derivatives
Interest rate contracts Other assets $ 7
$ 4
Interest rate contracts Accrued expenses (61 ) (40 )
Cross currency contracts Other assets 118
88
Cross currency contracts Accrued expenses (6 ) (9 )
$ 58
$ 43
Undesignated derivatives

Foreign exchange contracts Other assets $ 22
$ 15
Foreign exchange contracts Accrued expenses (14 ) (12 )
Cross currency contracts Other assets 6
5
Cross currency contracts Accrued expenses —
(2 )
$ 14
$ 6

The total notional amount of our derivative instruments was ~~$8.64~~ $11.54 billion and ~~$10.21~~$8.93 billion as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. The notional amounts of derivative financial instruments do not represent amounts exchanged by the parties. ~~The~~We calculate the amounts exchanged by the parties ~~are calculated~~ by ~~reference to~~referencing the notional amounts and by other terms of the derivatives, such as foreign currency exchange rates and interest rates.

UNAUDITED

The effect of derivatives designated as hedging instruments on the Consolidated Statements of Profit was as follows:


Cash Flow Hedges
(Millions of dollars)	Three Months Ended September 30, 2020
			Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI		Classification	Amount of Gains (Losses) Reclassified from AOCI		Amount of the line items in the Consolidated Statements of Profit
Interest rate contracts	$	1	Interest expense	$	(16)	$	137
Cross currency contracts	(64)		Other income (expense)	(63)		(10)
			Interest expense	8		137
	$	(63)		$	(71)

	Three Months Ended September 30, 2019
			Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI		Classification	Amount of Gains (Losses) Reclassified from AOCI		Amount of the line items in the Consolidated Statements of Profit
Interest rate contracts	$	(12)	Interest expense	$	(3)	$	198
Cross currency contracts	100		Other income (expense)	89		(4)
			Interest expense	9		198
	$	88		$	95

	Nine Months Ended September 30, 2020
			Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI		Classification	Amount of Gains (Losses) Reclassified from AOCI		Amount of the line items in the Consolidated Statements of Profit
Interest rate contracts	$	(23)	Interest expense	$	(40)	$	462
Cross currency contracts	2		Other income (expense)	(35)		(26)
			Interest expense	28		462
	$	(21)		$	(47)

	Nine Months Ended September 30, 2019
			Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI		Classification	Amount of Gains (Losses) Reclassified from AOCI		Amount of the line items in the Consolidated Statements of Profit
Interest rate contracts	$	(72)	Interest expense	$	(2)	$	599
Cross currency contracts	132		Other income (expense)	91		(14)
			Interest expense	23		599
	$	60		$	112

Cash Flow Hedges
(Millions of dollars) Three Months Ended September 30, 2019
Recognized in Earnings

Amount of Gains
(Losses) Recognized
in AOCI
Classification
Amount of Gains (Losses)
Reclassified
from AOCI

Amount of the line
items in the Consolidated
Statements of Profit
Interest rate contracts $ (12 ) Interest expense $ (3 ) $ (198 )
Cross currency contracts 100
Other income (expense) 89
(4 )
Interest expense 9
(198 )
$ 88
$ 95

Three Months Ended September 30, 2018
Recognized in Earnings

Amount of Gains
(Losses) Recognized in
AOCI (Effective Portion)
Classification
Reclassified from
AOCI to Earnings
(Effective Portion)

Recognized in
Earnings
(Ineffective Portion)
Interest rate contracts $ 3
Interest expense $ —
$ —
Cross currency contracts 53
Other income (expense) 51
—
Interest expense 5
—
$ 56
$ 56
$ —

Nine Months Ended September 30, 2019
Recognized in Earnings

Amount of Gains
(Losses) Recognized
in AOCI
Classification
Amount of Gains (Losses)
Reclassified
from AOCI

Amount of the line
items in the Consolidated
Statements of Profit
Interest rate contracts $ (72 ) Interest expense $ (2 ) $ (599 )
Cross currency contracts 132
Other income (expense) 91
(14 )
Interest expense 23
(599 )
$ 60
$ 112

Nine Months Ended September 30, 2018
Recognized in Earnings

Amount of Gains
(Losses) Recognized in
AOCI (Effective Portion)
Classification
Reclassified from
AOCI to Earnings
(Effective Portion)

Recognized in
Earnings
(Ineffective Portion)
Interest rate contracts $ 8
Interest expense $ 1
$ —
Cross currency contracts 143
Other income (expense) 141
—
Interest expense 13
—
$ 151
$ 155
$ —

UNAUDITED

The effect of derivatives not designated as hedging instruments on the Consolidated Statements of Profit was as follows:


(Millions of dollars)		Three Months Ended September 30,					(Millions of dollars)		Three Months Ended September 30,
	Classification	2019			2018			Classification	2020		2019
Foreign exchange contracts	Other income (expense)	$	12		$	12	Foreign exchange contracts	Other income (expense)	$	(74)	$	12
Cross currency contracts	Other income (expense)	3			1		Cross currency contracts	Other income (expense)	1		3
		$	15		$	13
									$	(73)	$	15
		Nine Months Ended September 30,
	Classification	2019			2018				Nine Months Ended September 30,
								Classification	2020		2019
Foreign exchange contracts	Other income (expense)	$	(26	)	$	23	Foreign exchange contracts	Other income (expense)	$	1	$	(26)
Cross currency contracts	Other income (expense)	2			6		Cross currency contracts	Other income (expense)	11		2
		$	(24	)	$	29
									$	12	$	(24)

We enter into International Swaps and Derivatives Association (ISDA) master netting agreements that permit the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement generally permits us or the counterparty to determine the net amount payable for contracts due on the same date and in the same currency for similar types of derivative transactions. The master netting agreements generally also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event.

Collateral is generally not required of the counterparties or us under the master netting agreements. As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, no cash collateral was received or pledged under the master netting agreements.

The effect of net settlement provisions of the master netting agreements on our derivative balances upon an event of default or a termination event was as follows:


(Millions of dollars)	September 30, 2020		December 31, 2019
Derivative Assets
Gross Amount of Recognized Assets	$	148	$	84
Gross Amounts Offset	0		0
Net Amount of Assets(1)	148		84

Gross Amounts Not Offset	(37)		(21)

Net Amount	$	111	$	63

Derivative Liabilities
Gross Amount of Recognized Liabilities	$	(69)	$	(50)
Gross Amounts Offset	0		0
Net Amount of Liabilities(1)	(69)		(50)

Gross Amounts Not Offset	37		21

Net Amount	$	(32)	$	(29)

(Millions of dollars) September 30,
2019 December 31,
2018
Derivative Assets
Gross Amount of Recognized Assets $ 153
$ 112
Gross Amounts Offset —
—
Net Amount of Assets⁽¹⁾
153
112
Gross Amounts Not Offset (39 ) (34 )
Net Amount $ 114
$ 78

Derivative Liabilities
Gross Amount of Recognized Liabilities $ (81 ) $ (63 )
Gross Amounts Offset —
—
Net Amount of Liabilities⁽¹⁾
(81 ) (63 )
Gross Amounts Not Offset 39
34
Net Amount $ (42 ) $ (29 )

⁽¹⁾ As presented in the Consolidated Statements of Financial Position.

UNAUDITED

5.Accumulated Other Comprehensive Income (Loss)


6.	~~Accumulated Other Comprehensive Income/(Loss)~~

We present Comprehensive ~~income/~~income (loss) and its components ~~are presented~~ in the Consolidated Statements of Comprehensive Income. Changes in Accumulated other comprehensive ~~income/~~income (loss), net of tax, included in the Consolidated Statements of Changes in Shareholder's Equity, consisted of the following:


(Millions of dollars)	Foreign currency translation		Derivative financial instruments		Total
Three Months Ended September 30, 2019
Balance at June 30, 2019	$	(758)	$	(73)	$	(831)
Other comprehensive income (loss) before reclassifications	(160)		68		(92)
Amounts reclassified from accumulated other comprehensive (income) loss	0		(73)		(73)

Other comprehensive income (loss)	(160)		(5)		(165)
Balance at September 30, 2019	$	(918)	$	(78)	$	(996)

Three Months Ended September 30, 2020
Balance at June 30, 2020	$	(957)	$	(55)	$	(1,012)
Other comprehensive income (loss) before reclassifications	145		(49)		96
Amounts reclassified from accumulated other comprehensive (income) loss	0		57		57

Other comprehensive income (loss)	145		8		153
Balance at September 30, 2020	$	(812)	$	(47)	$	(859)

Nine Months Ended September 30, 2019
Balance at December 31, 2018	$	(889)	$	(36)	$	(925)
Other comprehensive income (loss) before reclassifications	(127)		46		(81)
Amounts reclassified from accumulated other comprehensive (income) loss	0		(87)		(87)
Adjustment to adopt new accounting guidance(1)	98		(1)		97
Other comprehensive income (loss)	(29)		(42)		(71)
Balance at September 30, 2019	$	(918)	$	(78)	$	(996)

Nine Months Ended September 30, 2020
Balance at December 31, 2019	$	(777)	$	(68)	$	(845)
Other comprehensive income (loss) before reclassifications	(35)		(17)		(52)
Amounts reclassified from accumulated other comprehensive (income) loss	0		38		38

Other comprehensive income (loss)	(35)		21		(14)
Balance at September 30, 2020	$	(812)	$	(47)	$	(859)

(Millions of dollars)
Foreign
currency
translation

Derivative
financial
instruments
Total
Three Months Ended September 30, 2018
Balance at June 30, 2018 $ (776 ) $ (8 ) $ (784 )
Other comprehensive income/(loss) before reclassifications (44 ) 42
(2 )
Amounts reclassified from accumulated other comprehensive (income)/loss —
(42 ) (42 )
Other comprehensive income/(loss) (44 ) —
(44 )
Balance at September 30, 2018 $ (820 ) $ (8 ) $ (828 )

Three Months Ended September 30, 2019
Balance at June 30, 2019 $ (758 ) $ (73 ) $ (831 )
Other comprehensive income/(loss) before reclassifications (160 ) 68
(92 )
Amounts reclassified from accumulated other comprehensive (income)/loss —
(73 ) (73 )
Other comprehensive income/(loss) (160 ) (5 ) (165 )
Balance at September 30, 2019 $ (918 ) $ (78 ) $ (996 )

Nine Months Ended September 30, 2018
Balance at December 31, 2017 $ (587 ) $ (5 ) $ (592 )
Other comprehensive income/(loss) before reclassifications (233 ) 115
(118 )
Amounts reclassified from accumulated other comprehensive (income)/loss —
(118 ) (118 )
Other comprehensive income/(loss) (233 ) (3 ) (236 )
Balance at September 30, 2018 $ (820 ) $ (8 ) $ (828 )

Nine Months Ended September 30, 2019
Balance at December 31, 2018 $ (889 ) $ (36 ) $ (925 )
Other comprehensive income/(loss) before reclassifications (127 ) 46
(81 )
Amounts reclassified from accumulated other comprehensive (income)/loss —
(87 ) (87 )
Adjustment to adopt new accounting guidance⁽¹⁾
98
(1 ) 97
Other comprehensive income/(loss) (29 ) (42 ) (71 )
Balance at September 30, 2019 $ (918 ) $ (78 ) $ (996 )

⁽¹⁾~~See Note 2 regarding~~Adjustment to adopt new accounting guidance related to reclassification of certain tax effects from ~~accumulated~~Accumulated other comprehensive ~~income/~~income (loss).

UNAUDITED

The effect of the reclassifications out of Accumulated other comprehensive ~~income/~~income (loss) on the Consolidated Statements of Profit was as follows:


(Millions of dollars)		Three Months Ended September 30,				Nine Months Ended September 30,
Derivative financial instruments	Classification of income (expense)	2020		2019		2020		2019
Cross currency contracts	Other income (expense)	$	(63)	$	89	$	(35)	$	91
Cross currency contracts	Interest expense	8		9		28		23
Interest rate contracts	Interest expense	(16)		(3)		(40)		(2)
Reclassifications before tax		(71)		95		(47)		112
Tax (provision) benefit		14		(22)		9		(25)
Total reclassifications from Accumulated other comprehensive income (loss)		$	(57)	$	73	$	(38)	$	87

6.Segment Information

(Millions of dollars) Three Months Ended
September 30, Nine Months Ended
September 30,
Derivative financial instruments
Classification of
income (expense)
2019 2018 2019 2018
Cross currency contracts Other income (expense) $ 89
$ 51
$ 91
$ 141
Cross currency contracts Interest expense 9
5
23
13
Interest rate contracts Interest expense (3 ) —
(2 ) 1
Reclassifications before tax 95
56
112
155
Tax (provision) benefit (22 ) (14 ) (25 ) (37 )
Total reclassifications from Accumulated other comprehensive
income/(loss)
$ 73
$ 42
$ 87
$ 118


7.	~~Segment Information~~

A. Basis for Segment Information

We report information internally for operating segments based on management responsibility. Our operating segments provide financing alternatives to customers and dealers around the world for Caterpillar products ~~as well as~~and provide financing for vehicles, power generation facilities and marine vessels that, in most cases, incorporate Caterpillar products. Financing plans include operating and finance leases, ~~installment sale contracts,~~retail loans, working capital loans to Caterpillar dealers and wholesale financing plans within each of the operating segments. Certain operating segments also purchase short-term trade receivables from Caterpillar.

B. Description of Segments

We have six operating segments that offer financing services. Following is a brief description of our segments:

•North America - Includes our operations in the United States and Canada.

•EAME - Includes our operations in Europe, Africa, the Middle East and the Commonwealth of Independent States.

•Asia/Pacific - Includes our operations in Australia, New Zealand, China, Japan, Southeast Asia and India.

•Latin America - Includes our operations in Mexico and Central and South American countries.

•Caterpillar Power Finance - Provides financing worldwide for marine vessels with Caterpillar engines and for Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems.

•Mining - Provides financing for large mining customers worldwide.

To align with changes in executive management responsibilities and measurement of segment performance, our management reporting was updated effective January 1, 2020. Prior year data has been revised to conform to the 2020 presentation.

C. Segment Measurement and Reconciliations

Cash, debt and other expenses are allocated to our segments based on their respective portfolios. The related Interest expense is calculated based on the amount of allocated debt and the rates associated with that debt. The performance of each segment is assessed based on a consistent leverage ratio. The Provision for credit losses is based on each segment's respective finance receivable portfolio. Capital expenditures include expenditures for equipment on operating leases and other miscellaneous capital expenditures.

Reconciling items are created based on accounting differences between segment reporting and consolidated external reporting. For the reconciliation of Profit before income taxes, we have grouped the reconciling items as follows:

•Unallocated - This item is related to corporate requirements and strategies that are considered to be for the benefit of the entire organization. Also included are the consolidated results of the special purpose corporation (see Note 87 for additional information) and other miscellaneous items.

UNAUDITED

•Timing - Timing differences in the recognition of costs between segment reporting and consolidated external reporting.

~~UNAUDITED~~

•Methodology - Methodology differences between segment reporting and consolidated external reporting are as follows:

◦Segment assets include off-balance sheet managed assets for which we maintain servicing responsibilities.


◦	~~Segment assets include off-balance sheet managed assets for which we maintain servicing responsibilities.~~


◦	~~The impact of differences between the actual leverage and the segment leverage ratios.~~


◦	~~Interest expense includes realized forward points on foreign currency forward contracts.~~


◦	~~The net gain or loss from interest rate derivatives is excluded from segment reporting.~~

◦The impact of differences between the actual leverage and the segment leverage ratios.

◦Interest expense includes realized forward points on foreign currency forward contracts.

◦The net gain or loss from interest rate derivatives is excluded from segment reporting.

Supplemental segment data and reconciliations to consolidated external reporting for the three months ended September 30 was as follows:


(Millions of dollars) 2020	External Revenues		Profit before income taxes		Interest Expense		Depreciation on equipment leased to others		Provision for credit losses		Assets at September 30, 2020		Capital expenditures
North America	$	314	$	81	$	72	$	116	$	7	$	14,686	$	206
EAME	70		(3)		7		16		31		4,968		10
Asia/Pacific	83		38		20		1		9		4,444		1
Latin America	50		19		12		3		4		2,630		3
Caterpillar Power Finance	12		(25)		7		0		25		1,394		16
Mining	68		20		14		33		(5)		2,572		41
Total Segments	597		130		132		169		71		30,694		277
Unallocated	5		(76)		59		0		(1)		1,613		3
Timing	(4)		(1)		0		0		0		11		0
Methodology	0		43		(54)		0		0		(161)		0
Inter-segment Eliminations (1)	0		0		0		0		0		(392)		0
Total	$	598	$	96	$	137	$	169	$	70	$	31,765	$	280

2019	External Revenues		Profit before income taxes		Interest Expense		Depreciation on equipment leased to others		Provision for credit losses		Assets at December 31, 2019		Capital expenditures
North America	$	412	$	126	$	99	$	146	$	3	$	15,496	$	265
EAME	70		13		12		16		5		4,918		21
Asia/Pacific	90		42		25		3		6		4,540		(1)
Latin America	64		19		24		4		3		2,809		2
Caterpillar Power Finance	23		9		10		1		(3)		1,673		0
Mining	82		14		18		35		6		2,966		99
Total Segments	741		223		188		205		20		32,402		386
Unallocated	14		(87)		66		0		0		1,896		2
Timing	(7)		(4)		0		0		0		16		0
Methodology	0		52		(56)		0		0		(216)		0
Inter-segment Eliminations (1)	0		0		0		0		0		(405)		0
Total	$	748	$	184	$	198	$	205	$	20	$	33,693	$	388

(Millions of dollars)

2019
External
Revenues

Profit
before
income
taxes

Interest
Expense

Depreciation
on equipment
leased to
others

Provision
for
credit
losses

Assets at
September 30,
2019

Capital
expenditures
North America $ 414
$ 127
$ 99
$ 147
$ 3
$ 15,764
$ 265
EAME 72
14
13
16
6
4,924
21
Asia/Pacific 96
45
26
3
6
4,488
(1 )
Latin America 67
19
25
6
2
2,996
2
Caterpillar Power Finance 23
9
10
1
(3 ) 1,766
—
Mining 69
10
14
32
6
2,471
99
Total Segments 741
224
187
205
20
32,409
386
Unallocated 14
(87 ) 66
—
—
1,986
2
Timing (7 ) (4 ) —
—
—
19
—
Methodology —
51
(55 ) —
—
(144 ) —
Inter-segment Eliminations ⁽¹⁾
—
—
—
—
—
(363 ) —
Total $ 748
$ 184
$ 198
$ 205
$ 20
$ 33,907
$ 388

2018
External
Revenues

Profit
before
income
taxes

Interest
Expense

Depreciation
on equipment
leased to
others

Provision
for
credit
losses

Assets at
December 31,
2018

Capital
expenditures
North America $ 402
$ 121
$ 94
$ 148
$ 7
$ 15,632
$ 204
EAME 69
12
12
17
8
4,862
20
Asia/Pacific 92
44
29
4
—
4,639
3
Latin America 61
15
23
6
6
2,972
1
Caterpillar Power Finance 33
(21 ) 13
1
34
2,259
—
Mining 64
19
15
32
(7 ) 2,234
67
Total Segments 721
190
186
208
48
32,598
295
Unallocated 23
(72 ) 62
—
(1 ) 1,957
3
Timing (9 ) 6
—
—
—
55
—
Methodology —
39
(54 ) —
—
(159 ) —
Inter-segment Eliminations ⁽¹⁾
—
—
—
—
—
(270 ) —
Total $ 735
$ 163
$ 194
$ 208
$ 47
$ 34,181
$ 298

⁽¹⁾ Elimination is primarily related to intercompany loans.

UNAUDITED

Supplemental segment data and reconciliations to consolidated external reporting for the nine months ended September 30 was as follows:


(Millions of dollars) 2020	External Revenues		Profit before income taxes		Interest Expense		Depreciation on equipment leased to others		Provision for credit losses		Assets at September 30, 2020		Capital expenditures
North America	$	1,052	$	218	$	253	$	399	$	54	$	14,686	$	647
EAME	203		27		30		47		44		4,968		23
Asia/Pacific	251		113		70		6		23		4,444		6
Latin America	151		27		56		9		23		2,630		7
Caterpillar Power Finance	49		(34)		21		0		48		1,394		16
Mining	224		27		45		103		26		2,572		75
Total Segments	1,930		378		475		564		218		30,694		774
Unallocated	20		(210)		161		0		(1)		1,613		9
Timing	(16)		(3)		0		0		0		11		0
Methodology	0		147		(174)		0		0		(161)		0
Inter-segment Eliminations (1)	0		0		0		0		0		(392)		0
Total	$	1,934	$	312	$	462	$	564	$	217	$	31,765	$	783

2019	External Revenues		Profit before income taxes		Interest Expense		Depreciation on equipment leased to others		Provision for credit losses		Assets at December 31, 2019		Capital expenditures
North America	$	1,224	$	373	$	294	$	434	$	12	$	15,496	$	831
EAME	211		58		38		50		2		4,918		62
Asia/Pacific	277		128		81		9		14		4,540		9
Latin America	181		25		70		13		31		2,809		9
Caterpillar Power Finance	78		(40)		34		2		65		1,673		0
Mining	245		41		54		103		20		2,966		171
Total Segments	2,216		585		571		611		144		32,402		1,082
Unallocated	48		(253)		195		0		0		1,896		11
Timing	(23)		(13)		0		0		0		16		0
Methodology	0		148		(167)		0		0		(216)		0
Inter-segment Eliminations (1)	0		0		0		0		0		(405)		0
Total	$	2,241	$	467	$	599	$	611	$	144	$	33,693	$	1,093

(Millions of dollars)

2019
External
Revenues

Profit
before
income
taxes

Interest
Expense

Depreciation
on equipment
leased to
others

Provision
for
credit
losses

Assets at
September 30,
2019

Capital
expenditures
North America $ 1,229
$ 374
$ 295
$ 437
$ 12
$ 15,764
$ 832
EAME 217
60
40
50
3
4,924
62
Asia/Pacific 295
139
85
9
14
4,488
9
Latin America 189
25
73
17
31
2,996
21
Caterpillar Power Finance 78
(40 ) 34
2
65
1,766
—
Mining 208
29
42
96
19
2,471
158
Total Segments 2,216
587
569
611
144
32,409
1,082
Unallocated 48
(253 ) 195
—
—
1,986
11
Timing (23 ) (13 ) —
—
—
19
—
Methodology —
146
(165 ) —
—
(144 ) —
Inter-segment Eliminations ⁽¹⁾
—
—
—
—
—
(363 ) —
Total $ 2,241
$ 467
$ 599
$ 611
$ 144
$ 33,907
$ 1,093

2018
External
Revenues

Profit
before
income
taxes

Interest
Expense

Depreciation
on equipment
leased to
others

Provision
for
credit
losses

Assets at
December 31,
2018

Capital
expenditures
North America $ 1,141
$ 321
$ 267
$ 427
$ 32
$ 15,632
$ 870
EAME 208
24
35
56
32
4,862
56
Asia/Pacific 269
128
84
14
(5 ) 4,639
10
Latin America 193
(1 ) 77
21
54
2,972
28
Caterpillar Power Finance 98
(60 ) 40
2
98
2,259
—
Mining 196
35
45
95
1
2,234
131
Total Segments 2,105
447
548
615
212
32,598
1,095
Unallocated 68
(204 ) 182
1
(1 ) 1,957
97
Timing (25 ) 12
—
—
7
55
—
Methodology —
132
(172 ) —
—
(159 ) —
Inter-segment Eliminations ⁽¹⁾
—
—
—
—
—
(270 ) —
Total $ 2,148
$ 387
$ 558
$ 616
$ 218
$ 34,181
$ 1,192

⁽¹⁾ Elimination is primarily related to intercompany loans.


8.	~~Guarantees~~

UNAUDITED

7.Commitments and Contingent Liabilities

Guarantees

We provide loan guarantees to third-party lenders for financing associated with machinery purchased by customers. These guarantees have varying terms and are secured by the machinery being financed. We also provide residual value guarantees to third-party lenders associated with machinery leased to customers. These guarantees have varying terms. In addition, we participate in standby letters of credit issued to third parties on behalf of our customers. These standby letters of credit have varying terms and beneficiaries and are secured by customer assets.

No significant loss has been experienced or is anticipated under any of these guarantees. At September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the related recorded liability was less than $1 million. The maximum potential amount of future payments (undiscounted 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 was ~~$84~~$37 million and ~~$97~~$65 million at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

~~UNAUDITED~~

We provide guarantees to repurchase certain loans of Caterpillar dealers from a special-purpose corporation (SPC) that qualifies as a VIE (see Note 1 for additional information regarding the accounting guidance on the consolidation of VIEs). The purpose of the SPC is to provide short-term working capital loans to Caterpillar dealers. This SPC issues commercial paper and uses the proceeds to fund its loan program. We have a loan purchase agreement with the SPC that obligates us to purchase certain loans that are not paid at maturity. We receive a fee for providing this guarantee, which provides a source of liquidity for the SPC. We are the primary beneficiary of the SPC as our guarantees result in us 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 we have consolidated the financial statements of the SPC. As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the SPC’s assets of ~~$1.39~~$1.10 billion and ~~$1.15~~$1.45 billion, respectively, were primarily comprised of loans to dealers, which are included in Finance receivables, net in the Consolidated Statements of Financial Position, and the SPC's liabilities of ~~$1.39~~$1.10 billion and ~~$1.15~~$1.45 billion, respectively, were primarily comprised of commercial paper, which is included in Short-term borrowings in the Consolidated Statements of Financial Position. The assets of the SPC are not available to pay our creditors. We may be obligated to perform under the guarantee if the SPC experiences losses. No loss has been experienced or is anticipated under this loan purchase agreement.


9.	~~Fair Value Measurements~~

Litigation and claims


A.	~~Fair Value Measurements~~

We are involved in unresolved legal actions that arise in the normal course of business. Although it is not possible to predict with certainty the outcome of our unresolved legal actions, we believe that these unresolved legal actions will neither individually nor in the aggregate have a material adverse effect on our consolidated results of operations, financial position or liquidity.

UNAUDITED

8.Fair Value Measurements

A.Fair Value Measurements

The guidance on fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. This guidance also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with this guidance, fair value measurements are classified under the following hierarchy:

•Level 1 – Quoted prices for identical instruments in active markets.

•Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.

•Level 3 – Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.

When available, we use quoted market prices to determine fair value and we classify such measurements within Level 1. In some cases where market prices are not available, we make use of observable market-based inputs to calculate fair value, in which case the measurements are classified within Level 2. If quoted or observable market prices are not available, fair value is based upon valuations in which one or more significant inputs are unobservable, including internally developed models that use, where possible, current market-based parameters such as interest rates, yield curves and currency rates. These measurements are classified within Level 3.

Fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable.

Fair value measurement includes the consideration of nonperformance risk. Nonperformance risk refers to the risk that an obligation (either by a counterparty or us) will not be fulfilled. For financial assets traded in an active market (Level 1), the nonperformance risk is included in the market price. For certain other financial assets and liabilities (Level 2 and 3), our fair value calculations have been adjusted accordingly.

Derivative financial instruments

The fair value of interest rate contracts is primarily based on standard industry accepted valuation models that utilize the appropriate market-based forward swap curves and zero-coupon interest rates to determine discounted cash flows. The fair value of foreign currency forward and cross currency contracts is based on standard industry accepted valuation models that discount cash flows resulting from the differential between the contract price and the market-based forward rate.

Derivative financial instruments are measured on a recurring basis at fair value and are classified as Level 2 measurements. We had derivative financial instruments in a net asset position included in our Consolidated Statements of Financial Position of ~~$72~~$79 million and ~~$49~~$34 million as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

~~UNAUDITED~~

Impaired loans

Our impaired loans are subject to measurement at fair value on a nonrecurring basis and are classified as Level 3 measurements. A loan is considered impaired when management determines that collection of contractual amounts due is not probable. In these cases, an allowance for credit losses may be established based either on the present value of expected future cash flows discounted at the receivables' effective interest rate, the fair value of the collateral for collateral-dependent receivables or the observable market price of the receivable. In determining collateral value, we estimate the current fair market value of the collateral less selling costs. We had impaired loans carried at the fair value of ~~$373~~ $269 million and ~~$469~~$343 million as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.


B.	~~Fair Values of Financial Instruments~~

UNAUDITED

B.Fair Values of Financial Instruments

In addition to the methods and assumptions we use to record the fair value of financial instruments as discussed in the Fair Value Measurements section above, we ~~used~~use the following methods and assumptions to estimate the fair value of our financial instruments:

Cash and cash equivalents – carrying amount ~~approximated~~approximates fair value.

Restricted cash and cash equivalents – carrying amount approximates fair value.

Finance receivables, net – we estimate fair value ~~was estimated~~ by discounting the future cash flows using current rates representative of receivables with similar remaining maturities.

~~Restricted cash and cash equivalents –~~ ~~carrying amount approximated fair value.~~

Short-term borrowings – carrying amount ~~approximated~~approximates fair value.

Long-term debt – we estimate fair value for fixed and floating-rate debt ~~was estimated~~ based on quoted market prices.

~~Guarantees –~~ fair value of guarantees is based on our estimate of the premium a market participant would require to issue the same guarantee in a stand-alone, arms-length transaction with an unrelated party. If quoted or observable market prices are not available, fair value is based upon internally developed models that utilize current market-based assumptions.

~~Please refer to the table below for the fair~~Fair values of our financial ~~instruments.~~instruments were as follows:


(Millions of dollars)	September 30, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Levels	Reference
Cash and cash equivalents	$	678	$	678	$	690	$	690	1
Restricted cash and cash equivalents(1)	$	4	$	4	$	5	$	5	1
Finance receivables, net (excluding finance leases(2))	$	18,359	$	18,662	$	20,022	$	20,133	3	Note 3
Interest rate contracts:
In a receivable position	$	63	$	63	$	5	$	5	2	Note 4
In a payable position	$	(12)	$	(12)	$	(25)	$	(25)	2	Note 4
Cross currency contracts:
In a receivable position	$	28	$	28	$	72	$	72	2	Note 4
In a payable position	$	(39)	$	(39)	$	(4)	$	(4)	2	Note 4
Foreign exchange contracts:
In a receivable position	$	57	$	57	$	7	$	7	2	Note 4
In a payable position	$	(18)	$	(18)	$	(21)	$	(21)	2	Note 4

Short-term borrowings	$	(2,660)	$	(2,660)	$	(5,161)	$	(5,161)	1
Long-term debt	$	(24,327)	$	(24,982)	$	(23,334)	$	(23,655)	2

(Millions of dollars) September 30, 2019 December 31, 2018

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

Fair Value
Levels
Reference
Cash and cash equivalents $ 1,366
$ 1,366
$ 766
$ 766
1
Restricted cash and cash equivalents⁽²⁾
$ 4
$ 4
$ 7
$ 7
1
Finance receivables, net (excluding finance leases⁽¹⁾)
$ 19,507
$ 19,612
$ 20,451
$ 20,510
3 Note 3
Interest rate contracts:
In a receivable position $ 7
$ 7
$ 4
$ 4
2 Note 5
In a payable position $ (61 ) $ (61 ) $ (40 ) $ (40 ) 2 Note 5
Cross currency contracts:
In a receivable position $ 124
$ 124
$ 93
$ 93
2 Note 5
In a payable position $ (6 ) $ (6 ) $ (11 ) $ (11 ) 2 Note 5
Foreign exchange contracts:
In a receivable position $ 22
$ 22
$ 15
$ 15
2 Note 5
In a payable position $ (14 ) $ (14 ) $ (12 ) $ (12 ) 2 Note 5
Short-term borrowings $ (4,268 ) $ (4,268 ) $ (5,723 ) $ (5,723 ) 1
Long-term debt $ (24,479 ) $ (24,798 ) $ (22,815 ) $ (22,684 ) 2
Guarantees $ —
$ —
$ —
$ —
3 Note 8

⁽¹⁾~~Represents finance leases and failed sale leasebacks of $7.68 billion as of September 30, 2019 and finance leases of$7.47 billion as of December 31, 2018.~~

⁽²⁾Included in Other assets in the Consolidated Statements of Financial Position.

~~UNAUDITED~~(2) Represents finance leases and failed sale leasebacks of $7.66 billion and $7.81 billion as of September 30, 2020 and December 31, 2019, respectively.


~~10.~~	~~Contingencies~~


~~11.~~	~~Income Taxes~~

The provision for income taxes reflected an estimated annual tax rate of 33 percent in the third quarter of 2020, compared with 28 percent in the third quarter of ~~2019, compared with 24 percent in the third quarter of 2018, excluding the discrete item discussed in the following paragraph.~~2019. The increase in the estimated annual tax rate was primarily due to changes in the geographic mix of profits.

A discrete tax benefit of $7 million was recorded in the third quarter of 2018 for the write-down of net deferred tax liabilities resulting from the 2017 tax year return to provision adjustments. The write-down reflected the reduction in the U.S. corporate tax rate from 35 percent to 21 percent beginning January 1, 2018.

UNAUDITED

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited financial statements and related notes included elsewhere in this report and our discussion of significant risks to the company’s business under Part I, Item 1A. Risk Factors of the 2019 Form 10-K as supplemented by Part II, Item 1A. Risk Factors of this report.

OVERVIEW

We reported third-quarter ~~2019~~2020 revenues of ~~$748~~$598 million, ~~an increase~~a decrease of ~~$13~~$150 million, or 220 percent, compared with the third quarter of ~~2018.~~2019. Third-quarter ~~2019~~2020 profit was ~~$129~~$48 million, ~~a $4~~an $81 million, or 363 percent, ~~increase~~decrease from the third quarter of ~~2018.~~2019.

The ~~increase~~decrease in revenues was primarily due to a ~~$29~~$76 million ~~favorable~~unfavorable impact from ~~higher~~lower average financing rates ~~partially offset by~~and a ~~$10~~$40 million unfavorable impact ~~due to the termination of a committed credit facility with Caterpillar.~~from lower average earning assets.

Third-quarter ~~2019~~2020 profit before income taxes was ~~$184~~$96 million, ~~a $21~~an $88 million, or 1348 percent, ~~increase~~decrease from the third quarter of ~~2018.~~2019. The ~~increase~~decrease was primarily due to a ~~$31~~$50 million increase in provision for credit losses, a $29 million decrease in net yield on average earning assets and ~~a $27~~an $18 million ~~decrease in provision for credit losses.~~unfavorable impact from lower average earning assets. These ~~favorable~~unfavorable impacts were partially offset by a ~~$14~~$20 million ~~increase~~decrease in general, operating and administrative expenses primarily due to lower short-term incentive compensation and ~~the $10 million unfavorable impact mentioned above related to the termination of a committed credit facility with Caterpillar.~~employee benefit expenses.

During the third quarter of ~~2019,~~2020, retail new business volume was ~~$2.93~~$2.60 billion, ~~an increase~~a decrease of ~~$51~~$329 million, or 211 percent, from the third quarter of ~~2018.~~2019. The ~~increase~~decrease was ~~primarily~~ driven ~~by higher volume in North America, partially offset~~ by lower volume across all segments with the exception of a slight increase in ~~Caterpillar Power Finance.~~Asia/Pacific.

At the end of the third quarter of ~~2019,~~2020, past dues were ~~3.19~~3.81 percent, compared with ~~3.47~~3.19 percent at the end of the third quarter of ~~2018.~~2019. Past dues increased primarily due to the impact of the COVID-19 pandemic, partially offset by decreases in the Caterpillar Power Finance and Latin American portfolios. Write-offs, net of recoveries, were $125 million for the third quarter of 2020, compared with $103 million for the third quarter of 2019, compared with $40 million for the third quarter of 2018. The increase in write-offs, net of recoveries, was primarily driven by Caterpillar Power Finance, concentrated in the marine portfolio, and EAME, mostly in the Middle East.2019. As of September 30, ~~2019,~~2020, the allowance for credit losses totaled ~~$434~~$460 million, or ~~1.57~~1.74 percent of finance receivables, compared with ~~$523~~$515 million, or ~~1.81~~1.92 percent of finance receivables at June 30, ~~2019.~~2020. The decrease in the allowance for credit losses was primarily driven by write-offs of previously reserved accounts in the Caterpillar Power Finance portfolio. The allowance for credit losses at year-end ~~2018~~2019 was ~~$511~~$424 million, or ~~1.80~~1.50 percent of finance receivables.

Response to COVID-19 and Global Business Conditions

Operational Status

We continue to implement safeguards in our facilities to protect team members, including increased frequency of cleaning and disinfecting, social distancing practices and other measures consistent with specific regulatory requirements and guidance from health authorities.

We continue to monitor the situation closely and focus on portfolio health. We continue to provide qualified customers and dealers with new loans and leases to support their current and future business needs.

UNAUDITED

THIRD QUARTER ~~2019~~2020 COMPARED WITH THIRD QUARTER ~~2018~~2019

Consolidated Total Revenues

_{The chart above graphically illustrates reasons for the change in Consolidated Total Revenues between third quarter 20182019 (at left) and third quarter 20192020 (at right). Items favorably impacting total revenues appear as upward stair steps with corresponding dollar amounts above each bar, while items negatively impacting total revenues appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Management utilizes these charts internally to visually communicate results.}

Retail revenue for the third quarter of ~~2019~~2020 was ~~$346~~$306 million, ~~an increase~~a decrease of ~~$16~~$40 million from the same period in ~~2018~~.2019. The ~~increase~~decrease was due to a ~~$19~~$35 million ~~favorable~~unfavorable impact from ~~higher~~lower interest rates on retail finance receivables ~~partially offset by~~and a $3$5 million unfavorable impact from lower average earning assets. For the quarter ended September 30, ~~2019~~,2020, retail average earning assets were ~~$22.94~~$22.55 billion, a decrease of ~~$175~~$390 million from the same period in ~~2018~~.2019. The annualized average yield was ~~6.03~~5.44 percent for the third quarter of ~~2019~~,2020, compared with ~~5.71~~6.03 percent for the third quarter of ~~2018~~.2019.

Operating lease revenue for the third quarter of ~~2019~~2020 was ~~$262~~$214 million, ~~an increase~~a decrease of $3$48 million from the same period in ~~2018. The increase was due~~2019. During the third quarter of 2020, we updated our accounting convention for recognizing revenue and depreciation on operating leases from a monthly to a $5daily basis. This update resulted in a $29 million unfavorable impact to operating lease revenue which was mostly offset by a $24 million favorable impact ~~from property tax revenues~~to depreciation on ~~operating leases as~~equipment leased to others. Additionally, there was a ~~result of the new lease accounting guidance and a $4~~$13 million ~~favorable~~unfavorable impact from ~~higher~~lower average ~~rental rates on operating leases, partially offset by~~earning assets and a $6 million unfavorable impact from lower average ~~earning assets.~~rental rates on operating leases.

Wholesale revenue for the third quarter of ~~2019~~2020 was ~~$125~~$75 million, ~~an increase~~a decrease of ~~$17~~$50 million from the same period in ~~2018.~~2019. The ~~increase~~decrease was due to ~~an $11~~a $27 million ~~favorable~~unfavorable impact from ~~higher~~lower interest rates on wholesale finance receivables and a $6$23 million ~~favorable~~unfavorable impact from ~~higher~~lower average earning assets. For the quarter ended September 30, ~~2019,~~2020, wholesale average earning assets were ~~$5.33~~$4.27 billion, ~~an increase~~a decrease of ~~$326 million~~$1.05 billion from the same period in ~~2018.~~2019. The annualized average yield was 7.03 percent for the third quarter of 2020, compared with 9.35 percent for the third quarter of ~~2019, compared with 8.63 percent for the third quarter of 2018.~~2019.

Other revenue, net items were as follows:


(Millions of dollars)	Three Months Ended September 30,									(Millions of dollars)	Three Months Ended September 30,
	2019			2018			Change				2020		2019		Change
Finance receivable and operating lease fees (including late charges)	$	16		$	19		$	(3	)	Finance receivable and operating lease fees (including late charges)	$	13	$	16	$	(3)
Fees on committed credit facility extended to Caterpillar	—			10			(10		)

Interest income on Notes receivable from Caterpillar	7			8			(1		)	Interest income on Notes receivable from Caterpillar	3		7		(4)
Net loss on returned or repossessed equipment	(12		)	(7		)	(5		)	Net loss on returned or repossessed equipment	(16)		(12)		(4)
Miscellaneous other revenue, net	4			8			(4		)	Miscellaneous other revenue, net	3		4		(1)
Total Other revenue, net	$	15		$	38		$	(23	)	Total Other revenue, net	$	3	$	15	$	(12)

There was a $6$4 million unfavorable impact from currency on revenues in the third quarter of ~~2019.~~2020. Currency represents the net translation impact resulting from changes in foreign currency exchange rates versus the U.S. dollar and is included in all financial statement line items and each of the items included in the above analysis.

Consolidated Profit Before Income Taxes

_{(1) Analysis excludes $5 million in offsetting revenues and expenses for property taxes on operating leases.}leases for both the third quarter of 2020 and 2019.

_{The chart above graphically illustrates reasons for the change in Consolidated Profit Before Income Taxes between third quarter 20182019 (at left) and third quarter 20192020 (at right). Items favorably impacting profit before income taxes appear as upward stair steps with corresponding dollar amounts above each bar, while items negatively impacting profit before income taxes appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Management utilizes these charts internally to visually communicate results.}

~~Profit~~Third-quarter 2020 profit before income taxes was $96 million, compared with $184 million for the third quarter of ~~2019, compared with $163 million for the third quarter of 2018.~~2019. The ~~increase~~decrease was primarily due to a ~~$31~~$50 million increase in provision for credit losses, a $29 million decrease in net yield on average earning assets and ~~a $27~~an $18 million ~~decrease in provision for credit losses.~~unfavorable impact from lower average earning assets. These ~~favorable~~unfavorable impacts were partially offset by a ~~$14~~$20 million ~~increase~~decrease in general, operating and administrative expenses ~~and a $10 million unfavorable impact~~primarily due to ~~the termination of a committed credit facility with Caterpillar.~~lower short-term incentive compensation and employee benefit expenses.

There was a $3$2 million unfavorable impact from currency on profit before income taxes in the third quarter of ~~2019.~~2020. Currency represents the net translation impact resulting from changes in foreign currency exchange rates versus the U.S. dollar and is included in all financial statement line items and each of the items included in the above analysis.

Provision for Income Taxes

NINE MONTHS ENDED SEPTEMBER 30, ~~2019~~2020 VS. NINE MONTHS ENDED SEPTEMBER 30, ~~2018~~2019

Consolidated Total Revenues

_{The chart above graphically illustrates reasons for the change in Consolidated Total Revenues between September YTD 20182019 (at left) and September YTD 20192020 (at right). Items favorably impacting total revenues appear as upward stair steps with corresponding dollar amounts above each bar, while items negatively impacting total revenues appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Management utilizes these charts internally to visually communicate results.}

Retail revenue for the first nine months of ~~2019~~2020 was ~~$1.03 billion, an increase~~$942 million, a decrease of ~~$56~~$89 million from the same period in ~~2018.~~2019. The ~~increase~~decrease was due to a ~~$66~~$74 million ~~favorable~~unfavorable impact from ~~higher~~lower interest rates on retail finance receivables ~~partially offset by~~and a ~~$10~~$15 million unfavorable impact from lower average earning assets. For the nine months ended September 30, ~~2019,~~2020, retail average earning assets were ~~$22.91~~$22.58 billion, a decrease of ~~$233~~$331 million from the same period in ~~2018.~~2019. The annualized average yield was ~~6.00~~5.56 percent for the first nine months of ~~2019,~~2020, compared with ~~5.62~~6.00 percent for the same period in ~~2018.~~2019.

Operating lease revenue for the first nine months of ~~2019~~2020 was ~~$777~~$718 million, ~~an increase~~a decrease of ~~$17~~$59 million from the same period in ~~2018. The increase was due~~2019. During the third quarter of 2020, we updated our accounting convention for recognizing revenue and depreciation on operating leases from a monthly to a ~~$15~~daily basis. This update resulted in a $29 million unfavorable impact to operating lease revenue which was mostly offset by a $24 million favorable impact ~~from property tax revenues~~to depreciation on ~~operating leases as~~equipment leased to others. Additionally, there was a ~~result of the new lease accounting guidance and a $13 million favorable impact from higher average rental rates on operating leases, partially offset by an $11~~$24 million unfavorable impact from lower average earning ~~assets.~~assets and a $6 million unfavorable impact from lower average rental rates on operating leases.

Wholesale revenue for the first nine months of ~~2019~~2020 was ~~$375~~$258 million, ~~an increase~~a decrease of ~~$71~~$117 million from the same period in ~~2018.~~2019. The ~~increase~~decrease was due to a ~~$48~~$65 million ~~favorable~~unfavorable impact from ~~higher~~lower average earning assets and a ~~$23~~$52 million ~~favorable~~unfavorable impact from ~~higher~~lower interest rates on wholesale finance receivables. For the nine months ended September 30, ~~2019,~~2020, wholesale average earning assets were ~~$5.48~~$4.53 billion, ~~an increase~~a decrease of ~~$745~~$949 million from the same period in ~~2018.~~2019. The annualized average yield was ~~9.11~~7.60 percent for the first nine months of ~~2019,~~2020, compared with ~~8.55~~9.11 percent for the same period in ~~2018.~~2019.

Other revenue, net items were as follows:

(Millions of dollars)

(Millions of dollars)

Nine Months Ended
September 30,
2019 2018 Change
Finance receivable and operating lease fees (including late charges) $ 46
$ 56
$ (10 )
Fees on committed credit facility extended to Caterpillar 5
30
(25 )
Interest income on Notes receivable from Caterpillar 22
22
—
Net loss on returned or repossessed equipment (27 ) (14 ) (13 )
Miscellaneous other revenue, net 12
15
(3 )
Total Other revenue, net $ 58
$ 109
$ (51 )

UNAUDITED

There was a ~~$37~~$21 million unfavorable impact from currency on revenues in the first nine months of ~~2019.~~2020. Currency represents the net translation impact resulting from changes in foreign currency exchange rates versus the U.S. dollar and is included in all financial statement line items and each of the items included in the above analysis.

Consolidated Profit Before Income Taxes

_{(1) Analysis excludes $15 million in offsetting revenues and expenses for property taxes on operating leases.}leases for both September YTD 2020 and 2019.

_{The chart above graphically illustrates reasons for the change in Consolidated Profit Before Income Taxes between September YTD 20182019 (at left) and September YTD 20192020 (at right). Items favorably impacting profit before income taxes appear as upward stair steps with corresponding dollar amounts above each bar, while items negatively impacting profit before income taxes appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Management utilizes these charts internally to visually communicate results.}

Profit before income taxes was ~~$467~~$312 million for the first nine months of ~~2019,~~2020, compared with ~~$387~~$467 million for the same period in ~~2018.~~2019. The ~~increase~~decrease was primarily due to a ~~$74~~$73 million ~~decrease~~increase in provision for credit losses, a $53 million unfavorable impact from lower average earning assets and a ~~$73~~$50 million ~~increase~~decrease in net yield on average earning assets. These ~~favorable~~unfavorable impacts were partially offset by a ~~$37~~$58 million ~~increase~~decrease in general, operating and administrative expenses ~~and a $25 million unfavorable impact~~primarily due to ~~the termination of a committed credit facility with Caterpillar.~~lower short-term incentive compensation and employee benefit expenses.

There was a ~~$15~~$9 million unfavorable impact from currency on profit before income taxes in the first nine months of ~~2019.~~2020. Currency represents the net translation impact resulting from changes in foreign currency exchange rates versus the U.S. dollar and is included in all financial statement line items and each of the items included in the above analysis.

Provision for Income Taxes

The provision for income taxes reflected an estimated annual tax rate of 2833 percent for the first nine months of ~~2019,~~2020, compared with 2428 percent for the same period in ~~2018,~~2019, excluding ~~the~~a discrete ~~items discussed~~item in the ~~following paragraphs.~~first nine months of 2019 of $13 million for a valuation allowance against the deferred tax assets of a non-U.S. subsidiary. The increase in the estimated annual tax rate was primarily due to changes in the geographic mix of profits.

~~The provision for income taxes for the first nine months of 2019 also included a $13 million charge for a valuation allowance against the deferred tax assets of a non-U.S. subsidiary.~~35

A discrete tax benefit of $7 million was recorded in the nine months ended September 30, 2018 for the write-down of net deferred tax liabilities resulting from the 2017 tax year return to provision adjustments. The write-down reflected the reduction in the U.S. corporate tax rate from 35 percent to 21 percent beginning January 1, 2018.

Finance Receivables and Equipment on Operating Leases

(Millions of dollars) Nine Months Ended
September 30,
2019 2018 Change
New retail financing $ 7,499
$ 7,843
$ (344 )
New operating lease activity 1,129
1,132
(3 )
New wholesale financing 33,721
32,817
904
Total $ 42,349
$ 41,792
$ 557

New retail financing decreased ~~primarily~~ due to lower volume across all segments with the exception of slight increases in ~~Asia/Pacific, EAME~~North America and ~~Caterpillar Power Finance, partially offset by higher volume in Mining.~~Asia/Pacific. New operating lease activity (which is substantially related to retail) decreased ~~primarily~~ due to lower rentals of Cat equipment across all segments with the exception of a slight increase in Caterpillar ~~equipment in North America, partially offset by higher rentals in Mining and EAME.~~Power Finance. New wholesale financing ~~increased~~decreased primarily due to ~~higher~~lower purchases of trade receivables from Caterpillar.

Total Managed Portfolio

We define total portfolio as Finance receivables, net plus Equipment on operating leases, net. We also manage and service receivables and leases that have been sold by us to third parties with limited or no recourse in order to mitigate our concentration of credit risk with certain customers. These assets are not available to pay our creditors. Total managed portfolio was as follows:


(Millions of dollars)	September 30, 2020		December 31, 2019		Change
Finance receivables, net	$	26,021	$	27,832	$	(1,811)
Equipment on operating leases, net	3,339		3,583		(244)
Total portfolio	$	29,360	$	31,415	$	(2,055)

Retail loans, net	$	164	$	186	$	(22)
Retail leases, net	65		81		(16)
Operating leases	21		26		(5)
Total off-balance sheet managed assets	$	250	$	293	$	(43)

Total managed portfolio	$	29,610	$	31,708	$	(2,098)

(Millions of dollars)
September 30,
2019 December 31,
2018 Change
Finance receivables, net $ 27,186
$ 27,923
$ (737 )
Equipment on operating leases, net 3,567
3,562
5
Total portfolio $ 30,753
$ 31,485
$ (732 )

Retail loans, net $ 173
$ 130
$ 43
Retail leases, net 87
100
(13 )
Operating leases 16
25
(9 )
Total off-balance sheet managed assets $ 276
$ 255
$ 21

Total managed portfolio $ 31,029
$ 31,740
$ (711 )

Total Portfolio Metrics

As it relates to COVID-19, we provided payment relief through Cat Financial Customer Care Programs launched globally, including account modifications to accommodate customer needs. Generally, the Customer Care Programs provided payment relief for customers that were current in their payment obligations and included payment deferrals of three months, with the option to extend for an additional three months. Additionally, we are continuing to respond to government requirements to adjust the repayment terms for customers. Since the start of the pandemic, modification requests were received from customers representing approximately 25 percent of the customer portfolio. Most customers who have exited the modification period have resumed payments and have not requested additional relief.

Our allowance for credit losses as of September 30, ~~2019~~2020 was ~~$434~~$460 million, or ~~1.57~~1.74 percent of finance receivables, compared with ~~$511~~$424 million, or ~~1.80~~1.50 percent, as of December 31, ~~2018.~~2019. The allowance is subject to an ongoing evaluation based on many quantitative and qualitative factors, including past loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of underlying collateral and ~~current~~ economic ~~conditions.~~forecasts. We believe our allowance is sufficient to provide for losses ~~inherent in~~over the remaining life of our ~~existing~~ finance receivable portfolio as of September 30, ~~2019.~~2020.

Capital resources and liquidity provide us with the ability to meet our financial obligations on a timely basis. Maintaining and managing adequate capital and liquidity resources includes management of funding sources and their utilization based on current, future and contingent needs. Throughout the third quarter of ~~2019,~~2020, we experienced favorable liquidity conditions. We ended the third quarter of ~~2019~~2020 with ~~$1.37 billion~~$678 million of cash, ~~an increase~~a decrease of ~~$600~~$12 million from year-end ~~2018.~~2019. Our cash balances are held in numerous locations throughout the world with approximately ~~$209~~$183 million held by our non-U.S. subsidiaries. Amounts held by non-U.S. subsidiaries are available for general corporate use and could be used in the U.S. without incurring significant additional U.S. taxes. We expect to meet our U.S. funding needs without repatriating undistributed profits that are indefinitely reinvested outside the U.S.

Borrowings consist primarily of medium-term notes and commercial paper, the combination of which is used to manage interest rate risk and funding requirements.

We receive debt ratings from the major credit rating agencies. Moody’s long- and short-term ratings of our debt isare A3 and Prime-2, while Fitch and S&P maintain a ~~“mid-A”~~"mid-A" debt rating. This split rating has not had a material impact on our borrowing costs or our overall financial health. However, a downgrade of our credit ratings by any of the major credit rating agencies would result in increased borrowing costs and could make access to certain credit markets more difficult. In the event economic conditions deteriorate such that access to debt markets becomes unavailable, we would rely on cash flows from our existing portfolio, existing cash balances, access to our ~~revolving~~committed credit facilities and other credit line facilities, commercial paper support facilities sponsored by the U.S. Federal Reserve and the Bank of Canada, and potential borrowings from Caterpillar. In addition, Caterpillar maintains a support agreement with us, which requires Caterpillar to remain our sole owner and may, under certain circumstances, require Caterpillar to make payments to us should we fail to maintain certain financial ratios.

Total borrowings outstanding as of September 30, ~~2019~~2020 were ~~$29.55~~$27.01 billion, a decrease of ~~$511 million~~$2.10 billion over December 31, ~~2018.~~2019 due to lower portfolio funding requirements. Outstanding borrowings were as follows:

(Millions of dollars)
September 30,
2019 December 31,
2018
Medium-term notes, net of unamortized discount and debt issuance costs $ 23,861
$ 22,169
Commercial paper, net of unamortized discount 3,444
4,759
Bank borrowings – long-term 618
646
Bank borrowings – short-term 441
526
Variable denomination floating rate demand notes 383
438
Notes payable to Caterpillar 798
1,518
Total outstanding borrowings $ 29,545
$ 30,056

We issue medium-term unsecured notes through securities dealers or underwriters in the U.S., Canada, Europe, Australia, Japan, Hong Kong, and China to both retail and institutional investors. These notes are offered in several currencies and with a variety of maturities. These notes are senior unsecured obligations of the Company. Medium-term notes issued totaled ~~$5.59~~$7.26 billion and redeemed totaled ~~$3.89~~$6.10 billion for the nine months ended September 30, ~~2019.~~2020. Medium-term notes outstanding as of September 30, ~~2019,~~2020, mature as follows:


(Millions of dollars)
2020	$	1,376
2021	7,523
2022	6,466
2023	4,148
2024	2,653
Thereafter	1,737
Total	$	23,903

(Millions of dollars)
2019 $ 1,696
2020 7,455
2021 6,758
2022 3,814
2023 2,152
Thereafter 1,986
Total $ 23,861

We issue unsecured commercial paper in the U.S., Europe and other international capital markets. These short-term promissory notes are issued on a discounted basis and are payable at maturity. As of September 30, 2020, there was $1.89 billion outstanding in commercial paper.

Revolving credit facilities

~~We have~~As of September 30, 2020, we had three global credit facilities with a syndicate of banks totaling $10.50 billion (Credit Facility) available in the aggregate to both Caterpillar and us for general liquidity purposes. Based on management's allocation decision, which can be revised from time to time, the portion of the Credit Facility available to us as of September 30, ~~2019~~2020 was $7.75 billion. Information on our Credit Facility is as follows:

•In September ~~2019,~~2020, we entered into a new 364-day facility. The 364-day facility of $3.15 billion (of which $2.33 billion is available to us) expires in September ~~2020.~~2021.

~~In September 2019, we~~•The three-year facility, as amended and restated ~~the 2015 three-year facility (as amended and restated, the "three-year facility"). The three-year facility~~in September 2019, of $2.73 billion (of which $2.01 billion is available to us) expires in September 2022.

~~In September 2019, we~~•The five-year facility, as amended and restated ~~the 2015 five-year facility (as amended and restated, the "five-year facility"). The five-year facility~~in September 2019, of $4.62 billion (of which $3.41 billion is available to us) expires in September 2024.

At September 30, ~~2019,~~2020, Caterpillar’s consolidated net worth was ~~$14.98~~$15.02 billion, which was above the $9.00 billion required under the Credit Facility. The consolidated net worth is defined in the Credit Facility as the consolidated shareholders' equity including preferred stock but excluding the pension and other postretirement benefits balance within Accumulated other comprehensive ~~income/~~income (loss).

At September 30, ~~2019,~~2020, our covenant interest coverage ratio was ~~1.62~~1.69 to 1. This iswas above the 1.15 to 1 minimum ratio, calculated as (1) profit excluding income taxes, interest expense and net gain/(loss) from interest rate derivatives to (2) interest expense, calculated at the end of each calendar quarter for the rolling four quarter period then most recently ended, required by the Credit Facility.

In addition, at September 30, ~~2019,~~2020, our six-month covenant leverage ratio was ~~8.01~~6.76 to 1. This iswas below the maximum ratio of debt to net worth of 10 to 1, calculated (1) on a monthly basis as the average of the leverage ratios determined on the last day of each of the six preceding calendar months and (2) at each December 31, required by the Credit Facility.

In the event that either Caterpillar or we do not meet one or more of our respective financial covenants under the Credit Facility in the future (and are unable to obtain a consent or waiver), the syndicate of banks may terminate the commitments allocated to the party that does not meet its covenants. Additionally, in such event, certain of our other lenders under other loan agreements where similar financial covenants or cross default provisions are applicable, may, at their election, choose to pursue remedies under those loan agreements, including accelerating the repayment of outstanding borrowings. At September 30, ~~2019,~~2020, there were no borrowings under the Credit Facility.

Available credit lines with banks as of September 30, ~~2019~~2020 totaled ~~$4.69~~$2.93 billion. These committed and uncommitted credit lines, which may be eligible for renewal at various future dates or have no specified expiration date, are used primarily by our non-U.S. subsidiaries for local funding requirements. As of September 30, ~~2019,~~2020, we had ~~$1.06 billion~~$827 million outstanding against these credit lines and were in compliance with all debt covenants under these credit lines. The remaining available credit commitments may be withdrawn any time at the lenders' discretion.

Variable denomination floating rate demand notes

We obtain funding from the sale of variable denomination floating rate demand notes, which may be redeemed at any time at the option of the holder without any material restriction. We do not hold reserves to fund the payment of the demand notes. The notes are offered on a continuous basis. As of September 30, ~~2019,~~2020, there was ~~$383~~$367 million of variable denomination floating rate demand notes outstanding. The maximum amount of variable denomination floating rate demand notes that we may have outstanding at any time may not exceed $1.25 billion.

Notes receivable from/payable to Caterpillar

Under our variable amount and term lending agreements and other notes receivable with Caterpillar, we may borrow up to ~~$2.60~~$2.39 billion from Caterpillar and Caterpillar may borrow up to ~~$2.05~~$1.74 billion from us. The variable amount lending agreements are in effect for indefinite periods of time and may be changed or terminated by either party with 30 days notice. The term lending agreements have remaining maturities ranging up to ~~nine~~ten years. We had notes payable of ~~$798~~$22 million and notes receivable of ~~$469~~$350 million outstanding under these agreements as of September 30, ~~2019.~~2020.

~~UNAUDITED~~

Impact from COVID-19 on liquidity

Since the outbreak of the COVID-19 global pandemic, we continue to take actions to maintain our strong financial position and increase liquidity. In April 2020, we registered for $4.2 billion in commercial paper support programs now available in the United States and Canada. In addition, we also benefited from the incremental $3.9 billion short-term credit facility that was arranged by Caterpillar which was set to expire on December 31, 2020. Due to our strong liquidity position, the $3.9 billion short-term credit facility was early terminated by Caterpillar on September 2, 2020. We have not made any drawings on our existing global credit facilities nor do we have any outstanding borrowings under either commercial paper support program as of the date of this filing. In addition, during the third quarter of 2020, we issued $3.25 billion of medium-term notes to refinance maturing medium-term notes and supplement our liquidity position.

OFF-BALANCE SHEET ARRANGEMENTS

We have potential payment exposure for guarantees issued to third parties totaling ~~$84~~$37 million as of September 30, ~~2019.~~2020.

Operating cash flow was ~~$954~~$930 million in the first nine months of ~~2019,~~2020, compared with ~~$882~~$954 million for the same period in ~~2018.~~2019. Net cash provided by investing activities was ~~$84 million~~$1.14 billion for the first nine months of ~~2019,~~2020, compared with ~~net cash used for investing activities of $1.77 billion~~$84 million for the same period in ~~2018.~~2019. The change was primarily due to ~~the impact of Caterpillar purchased receivables and~~ higher collections of finance ~~receivables.~~receivables and other portfolio related activity. Net cash used for financing activities was ~~$432 million~~$2.07 billion for the first nine months of ~~2019,~~2020, compared with ~~net cash provided by financing activities of $848~~$432 million for the same period in ~~2018.~~2019. The change was primarily due to lower portfolio funding requirements.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements, see Part I, Item 1. Note 2 - New Accounting Pronouncements.

CRITICAL ACCOUNTING POLICIES



Delaware						37-1105865
(State of incorporation)						(IRS Employer I.D. No.)

2120 West End Ave., Nashville, Tennessee						37203-0001
(Address of principal executive offices)						(Zip Code)



~~ASU~~	~~Description~~
~~2017-12~~	~~Derivatives and hedging - Targeted improvements~~


ASU			Description
2018-13			Fair value measurement
2018-15			Internal-use software
2018-19			Codification improvements - Credit losses
2019-04			Codification improvements - Credit losses, Derivatives & hedging, and Financial instruments
2019-05			Financial instruments - Credit losses
2019-11			Codification improvements - Credit losses
2019-12			Simplifying accounting for income taxes
2020-02			Financial instruments - Credit losses
2020-03			Codification improvements - Financial instruments


	September 30, 2019			December 31, 2018				September 30, 2020		December 31, 2019
Assets:							Assets:
Cash and cash equivalents	$	1,366		$	766		Cash and cash equivalents	$	678	$	690
Finance receivables, net	27,186			27,923
Finance receivables, net of Allowance for credit losses of $460 and $424							Finance receivables, net of Allowance for credit losses of $460 and $424	26,021		27,832
Notes receivable from Caterpillar	469			662			Notes receivable from Caterpillar	350		296
Equipment on operating leases, net	3,567			3,562			Equipment on operating leases, net	3,339		3,583

Other assets	1,319			1,268			Other assets	1,377		1,292
Total assets	$	33,907		$	34,181		Total assets	$	31,765	$	33,693

Liabilities and shareholder’s equity:							Liabilities and shareholder’s equity:
Payable to dealers and others	$	129		$	117		Payable to dealers and others	$	132	$	135
Payable to Caterpillar - borrowings and other	871			1,601			Payable to Caterpillar - borrowings and other	77		693
Accrued expenses	286			259			Accrued expenses	235		241

Short-term borrowings	4,268			5,723			Short-term borrowings	2,660		5,161
Current maturities of long-term debt	8,025			5,820			Current maturities of long-term debt	7,962		6,194
Long-term debt	16,454			16,995			Long-term debt	16,365		17,140
Other liabilities	875			817			Other liabilities	912		893
Total liabilities	30,908			31,332			Total liabilities	28,343		30,457

Commitments and contingent liabilities (Notes 8 and 10)
Commitments and contingent liabilities (Note 7)							Commitments and contingent liabilities (Note 7)

Common stock - $1 par value							Common stock - $1 par value
Authorized: 2,000 shares; Issued and							Authorized: 2,000 shares; Issued and
outstanding: one share (at paid-in amount)	745			745
outstanding: 1 share (at paid-in amount)							outstanding: 1 share (at paid-in amount)	745		745
Additional paid-in capital	2			2			Additional paid-in capital	2		2
Retained earnings	3,083			2,874			Retained earnings	3,346		3,162
Accumulated other comprehensive income/(loss)	(996		)	(925		)
Accumulated other comprehensive income (loss)							Accumulated other comprehensive income (loss)	(859)		(845)
Noncontrolling interests	165			153			Noncontrolling interests	188		172
Total shareholder’s equity	2,999			2,849			Total shareholder’s equity	3,422		3,236

Total liabilities and shareholder’s equity	$	33,907		$	34,181		Total liabilities and shareholder’s equity	$	31,765	$	33,693


Three Months Ended September 30, 2019	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive income (loss)		Noncontrolling interests		Total
Balance at June 30, 2019	$	745	$	2	$	2,954	$	(831)	$	164	$	3,034
Profit of consolidated companies					129				6		135

Foreign currency translation, net of tax							(160)		(5)		(165)
Derivative financial instruments, net of tax							(5)				(5)


Balance at September 30, 2019	$	745	$	2	$	3,083	$	(996)	$	165	$	2,999

Three Months Ended September 30, 2020
Balance at June 30, 2020	$	745	$	2	$	3,298	$	(1,012)	$	179	$	3,212
Profit of consolidated companies					48				4		52

Foreign currency translation, net of tax							145		5		150
Derivative financial instruments, net of tax							8				8


Balance at September 30, 2020	$	745	$	2	$	3,346	$	(859)	$	188	$	3,422

Nine Months Ended September 30, 2019
Balance at December 31, 2018	$	745	$	2	$	2,874	$	(925)	$	153	$	2,849
Profit of consolidated companies					306				17		323

Foreign currency translation, net of tax							(127)		(5)		(132)
Derivative financial instruments, net of tax							(41)				(41)
Adjustment to adopt new accounting guidance(1)					(97)		97				0

Balance at September 30, 2019	$	745	$	2	$	3,083	$	(996)	$	165	$	2,999

Nine Months Ended September 30, 2020
Balance at December 31, 2019	$	745	$	2	$	3,162	$	(845)	$	172	$	3,236
Profit of consolidated companies					197				13		210

Foreign currency translation, net of tax							(35)		3		(32)
Derivative financial instruments, net of tax							21				21
Adjustment to adopt new accounting guidance(2)					(13)						(13)

Balance at September 30, 2020	$	745	$	2	$	3,346	$	(859)	$	188	$	3,422



Three Months Ended September 30, 2018	Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income/(loss)			Noncontrolling interests			Total
Balance at June 30, 2018	$	745	$	2	$	3,131		$	(784	)	$	147		$	3,241
Profit of consolidated companies					125						6			131
Foreign currency translation, net of tax								(44		)	(6		)	(50		)
Derivative financial instruments, net of tax								—						—
Balance at September 30, 2018	$	745	$	2	$	3,256		$	(828	)	$	147		$	3,322

Three Months Ended September 30, 2019
Balance at June 30, 2019	$	745	$	2	$	2,954		$	(831	)	$	164		$	3,034
Profit of consolidated companies					129						6			135
Foreign currency translation, net of tax								(160		)	(5		)	(165		)
Derivative financial instruments, net of tax								(5		)				(5		)
Balance at September 30, 2019	$	745	$	2	$	3,083		$	(996	)	$	165		$	2,999

Nine Months Ended September 30, 2018
Balance at December 31, 2017	$	745	$	2	$	2,969		$	(592	)	$	140		$	3,264
Profit of consolidated companies					287						15			302
Foreign currency translation, net of tax								(233		)	(8		)	(241		)
Derivative financial instruments, net of tax								(3		)				(3		)
Balance at September 30, 2018	$	745	$	2	$	3,256		$	(828	)	$	147		$	3,322

Nine Months Ended September 30, 2019
Balance at December 31, 2018	$	745	$	2	$	2,874		$	(925	)	$	153		$	2,849
Profit of consolidated companies					306						17			323
Foreign currency translation, net of tax								(127		)	(5		)	(132		)
Derivative financial instruments, net of tax								(41		)				(41		)
Adjustment to adopt new accounting guidance⁽¹⁾					(97		)	97						—
Balance at September 30, 2019	$	745	$	2	$	3,083		$	(996	)	$	165		$	2,999



(Millions of dollars)
	September 30, 2019
Allowance for Credit Losses:	Customer			Dealer		Caterpillar Purchased Receivables		Total
Balance at beginning of year	$	486		$	21	$	4	$	511
Receivables written off	(238		)	—		—		(238		)
Recoveries on receivables previously written off	31			—		—		31
Provision for credit losses	120			24		—		144
Adjustment due to sale of receivables	(11		)	—		—		(11		)
Foreign currency translation adjustment	(3		)	—		—		(3		)
Balance at end of period	$	385		$	45	$	4	$	434

Individually evaluated for impairment	$	182		$	39	$	—	$	221
Collectively evaluated for impairment	203			6		4		213
Ending Balance	$	385		$	45	$	4	$	434

Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	665		$	78	$	—	$	743
Collectively evaluated for impairment	18,301			4,401		4,175		26,877
Ending Balance	$	18,966		$	4,479	$	4,175	$	27,620



(Millions of dollars)
	December 31, 2018
Allowance for Credit Losses:	Customer			Dealer		Caterpillar Purchased Receivables		Total
Balance at beginning of year	$	353		$	9	$	3	$	365
Receivables written off	(235		)	—		—		(235		)
Recoveries on receivables previously written off	46			—		—		46
Provision for credit losses	337			12		1		350
Adjustment due to sale of receivables	(7		)	—		—		(7		)
Foreign currency translation adjustment	(8		)	—		—		(8		)
Balance at end of year	$	486		$	21	$	4	$	511

Individually evaluated for impairment	$	288		$	14	$	—	$	302
Collectively evaluated for impairment	198			7		4		209
Ending Balance	$	486		$	21	$	4	$	511

Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	859		$	78	$	—	$	937
Collectively evaluated for impairment	18,724			4,082		4,691		27,497
Ending Balance	$	19,583		$	4,160	$	4,691	$	28,434



(Millions of dollars)
	As of September 30, 2019						As of December 31, 2018
Impaired Finance Receivables With No Allowance Recorded	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
North America	$	9	$	9	$	—	$	10	$	10	$	—
EAME	—		—		—		1		1		—
Asia/Pacific	—		—		—		1		1		—
Mining	23		23		—		33		33		—
Latin America	25		25		—		29		29		—
Caterpillar Power Finance	71		113		—		69		83		—
Total	$	128	$	170	$	—	$	143	$	157	$	—
Impaired Finance Receivables With An Allowance Recorded
North America	$	31	$	30	$	9	$	40	$	41	$	14
EAME	60		60		27		92		92		57
Asia/Pacific	10		10		4		4		4		2
Mining	61		59		18		56		55		26
Latin America	66		64		22		75		75		25
Caterpillar Power Finance	309		322		102		449		455		164
Total	$	537	$	545	$	182	$	716	$	722	$	288
Total Impaired Finance Receivables
North America	$	40	$	39	$	9	$	50	$	51	$	14
EAME	60		60		27		93		93		57
Asia/Pacific	10		10		4		5		5		2
Mining	84		82		18		89		88		26
Latin America	91		89		22		104		104		25
Caterpillar Power Finance	380		435		102		518		538		164
Total	$	665	$	715	$	182	$	859	$	879	$	288



(Millions of dollars)
	Three Months Ended September 30, 2019				Three Months Ended September 30, 2018
Impaired Finance Receivables With No Allowance Recorded	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
North America	$	10	$	—	$	19	$	—
EAME	15		—		4		—
Asia/Pacific	—		—		30		1
Mining	26		—		35		—
Latin America	22		—		37		1
Caterpillar Power Finance	57		1		94		2
Total	$	130	$	1	$	219	$	4
Impaired Finance Receivables With An Allowance Recorded
North America	$	30	$	—	$	47	$	—
EAME	80		1		59		—
Asia/Pacific	12		1		2		—
Mining	65		1		60		1
Latin America	69		1		51		1
Caterpillar Power Finance	376		1		374		4
Total	$	632	$	5	$	593	$	6
Total Impaired Finance Receivables
North America	$	40	$	—	$	66	$	—
EAME	95		1		63		—
Asia/Pacific	12		1		32		1
Mining	91		1		95		1
Latin America	91		1		88		2
Caterpillar Power Finance	433		2		468		6
Total	$	762	$	6	$	812	$	10



(Millions of dollars)
	Nine Months Ended September 30, 2019				Nine Months Ended September 30, 2018
Impaired Finance Receivables With No Allowance Recorded	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
North America	$	10	$	—	$	17	$	1
EAME	7		—		17		—
Asia/Pacific	—		—		31		2
Mining	29		1		65		2
Latin America	22		1		41		2
Caterpillar Power Finance	53		2		149		5
Total	$	121	$	4	$	320	$	12
Impaired Finance Receivables With An Allowance Recorded
North America	$	36	$	1	$	51	$	1
EAME	88		2		41		1
Asia/Pacific	9		1		5		—
Mining	49		2		43		2
Latin America	73		4		69		3
Caterpillar Power Finance	422		8		364		8
Total	$	677	$	18	$	573	$	15
Total Impaired Finance Receivables
North America	$	46	$	1	$	68	$	2
EAME	95		2		58		1
Asia/Pacific	9		1		36		2
Mining	78		3		108		4
Latin America	95		5		110		5
Caterpillar Power Finance	475		10		513		13
Total	$	798	$	22	$	893	$	27



(Millions of dollars)	September 30, 2019
Amounts due in	Retail leases			Wholesale leases			Total
Remaining three months of 2019	$	917		$	3		$	920
2020	2,840			19			2,859
2021	1,766			12			1,778
2022	881			5			886
2023	383			2			385
Thereafter	204			2			206
Total	6,991			43			7,034
Guaranteed residual value	398			26			424
Unguaranteed residual value	825			5			830
Unearned income	(683		)	(4		)	(687		)
Total	$	7,531		$	70		$	7,601



(Millions of dollars)
Remaining Three Months of 2019		2020		2021		2022		2023		Thereafter		Total
$	245	$	758	$	433	$	216	$	96	$	58	$	1,806


1.	~~Basis of Presentation~~


2.	~~New Accounting Pronouncements~~


A.	~~Adoption of New Accounting Standards~~


3.	~~Finance Receivables~~



(Millions of dollars)
	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	6
Right-of-use assets obtained in exchange for operating lease obligations⁽¹⁾	$	24



(Millions of dollars) 2019	External Revenues			Profit before income taxes			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Assets at September 30, 2019			Capital expenditures
North America	$	414		$	127		$	99		$	147	$	3		$	15,764		$	265
EAME	72			14			13			16		6			4,924			21
Asia/Pacific	96			45			26			3		6			4,488			(1		)
Latin America	67			19			25			6		2			2,996			2
Caterpillar Power Finance	23			9			10			1		(3		)	1,766			—
Mining	69			10			14			32		6			2,471			99
Total Segments	741			224			187			205		20			32,409			386
Unallocated	14			(87		)	66			—		—			1,986			2
Timing	(7		)	(4		)	—			—		—			19			—
Methodology	—			51			(55		)	—		—			(144		)	—
Inter-segment Eliminations ⁽¹⁾	—			—			—			—		—			(363		)	—
Total	$	748		$	184		$	198		$	205	$	20		$	33,907		$	388

2018	External Revenues			Profit before income taxes			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Assets at December 31, 2018			Capital expenditures
North America	$	402		$	121		$	94		$	148	$	7		$	15,632		$	204
EAME	69			12			12			17		8			4,862			20
Asia/Pacific	92			44			29			4		—			4,639			3
Latin America	61			15			23			6		6			2,972			1
Caterpillar Power Finance	33			(21		)	13			1		34			2,259			—
Mining	64			19			15			32		(7		)	2,234			67
Total Segments	721			190			186			208		48			32,598			295
Unallocated	23			(72		)	62			—		(1		)	1,957			3
Timing	(9		)	6			—			—		—			55			—
Methodology	—			39			(54		)	—		—			(159		)	—
Inter-segment Eliminations ⁽¹⁾	—			—			—			—		—			(270		)	—
Total	$	735		$	163		$	194		$	208	$	47		$	34,181		$	298



(Millions of dollars)
2019	$	1,696
2020	7,455
2021	6,758
2022	3,814
2023	2,152
Thereafter	1,986
Total	$	23,861


Exhibit No.		Description of Exhibit

~~Exhibit~~ ~~No.~~		~~Description of Exhibit~~

10.1	Credit Agreement ~~(364-Day~~(2020 364-Day Facility), dated as of September ~~5, 2019, among~~3, 2020, a mong the Company, Caterpillar Inc., Caterpillar International Finance Designated Activity Company and Caterpillar Finance Kabushiki Kaisha, certain financial institutions named therein, Citibank, N.A., as Agent, Citibank Europe PLC, UK Branch, as Local Currency Agent, and MUFG Bank, Ltd., as Japan Local Currency Agent (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September ~~10, 2019)~~8, 2020)
10.2		Local Currency Addendum, dated as of September ~~5, 2019,~~3, 2020, to the 2020 364-Day Facility (incorporated by reference from Exhibit 10.2 to the Company's Current Report on Form 8-K filed on September ~~10, 2019)~~8, 2020)
10.3		Japan Local Currency Addendum, dated as of September ~~5, 2019,~~3, 2020, to the 2020 364-Day Facility (incorporated by reference from Exhibit 10.3 to the Company's Current Report on Form 8-K filed on September ~~10, 2019)~~8, 2020)
~~10.4~~31.1		Second Amended and Restated Credit Agreement (3-Year Facility), dated as of September 5, 2019, among the Company, Caterpillar Inc., Caterpillar International Finance Designated Activity Company and Caterpillar Finance Kabushiki Kaisha, certain financial institutions named therein, Citibank, N.A., as Agent, Citibank Europe PLC, UK Branch, as Local Currency Agent, and MUFG Bank, Ltd., as Japan Local Currency Agent (incorporated by reference from Exhibit 10.4 to the Company’s Current Report on Form 8-K filed September 10, 2019)
~~10.5~~	~~Local Currency Addendum, dated as of September 5, 2019, to the 3-Year Facility (incorporated by reference from Exhibit 10.5 to the Company's Current Report on Form 8-K filed on September 10, 2019)~~
~~10.6~~	Japan Local Currency Addendum, dated as of September 5, 2019, to the 3-Year Facility (incorporated by reference from Exhibit 10.6 to the Company's Current Report on Form 8-K filed on September 10, 2019)
~~10.7~~	Second Amended and Restated Credit Agreement (5-Year Facility), dated as of September 5, 2019, among the Company, Caterpillar Inc., Caterpillar International Finance Designated Activity Company and Caterpillar Finance Kabushiki Kaisha, certain financial institutions named therein, Citibank, N.A., as Agent, Citibank Europe PLC, UK Branch, as Local Currency Agent, and MUFG Bank, Ltd., as Japan Local Currency Agent (incorporated by reference from Exhibit 10.7 to the Company’s Current Report on Form 8-K filed September 10, 2019)
~~10.8~~	~~Local Currency Addendum, dated as of September 5, 2019, to the 5-Year Facility (incorporated by reference from Exhibit 10.8 to the Company's Current Report on Form 8-K filed on September 10, 2019)~~
~~10.9~~	Japan Local Currency Addendum, dated as of September 5, 2019, to the 5-Year Facility (incorporated by reference from Exhibit 10.9 to the Company's Current Report on Form 8-K filed on September 10, 2019)
~~31.1~~	Certification of ~~David T. Walton,~~ President, Director and Chief Executive Officer of Caterpillar Financial Services Corporation, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of ~~Patrick T. McCartan,~~ Executive Vice President and Chief Financial Officer of Caterpillar Financial Services Corporation, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		~~Certifications~~Certification of ~~David T. Walton,~~ President, Director and Chief Executive Officer of Caterpillar Financial Services Corporation, and ~~Patrick T. McCartan,~~ Executive Vice President and Chief Financial Officer of Caterpillar Financial Services Corporation, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive File (embedded within the Inline XBRL document and included in Exhibit 101)



		Caterpillar Financial Services Corporation

Date:	~~October 31, 2019~~November 4, 2020	/s/David T. Walton
		David T. Walton, President, Director and Chief Executive Officer



Date:	~~October 31, 2019~~November 4, 2020	/s/Patrick T. McCartan
		Patrick T. McCartan, Executive Vice President and Chief Financial Officer



Date:	~~October 31, 2019~~November 4, 2020	/s/~~Michael G. Sposato~~Jennifer K. Schott
		~~Michael G. Sposato,~~Jennifer K. Schott, Secretary



Date:	~~October 31, 2019~~November 4, 2020	/s/Jeffry D. Everett
		Jeffry D. Everett, Controller