Consolidated Statement of Resul
Consolidated Statement of Results of Operations (USD $) | |||||||||||||||||||
In Millions, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 | |||||||||||||||
Sales and revenues | |||||||||||||||||||
Sales of Machinery and Engines | $6,583 | $12,148 | $22,347 | $35,924 | |||||||||||||||
Revenues of Financial Products | 715 | 833 | 2,151 | 2,477 | |||||||||||||||
Total sales and revenues | 7,298 | 12,981 | 24,498 | 38,401 | |||||||||||||||
Operating costs | |||||||||||||||||||
Cost of goods sold | 5,255 | 9,704 | 18,034 | 28,349 | |||||||||||||||
Selling, general and administrative expenses | 907 | 1,061 | 2,703 | 3,094 | |||||||||||||||
Research and development expenses | 327 | 437 | 1,066 | 1,221 | |||||||||||||||
Interest expense of Financial Products | 256 | 291 | 807 | 854 | |||||||||||||||
Other operating (income) expense | 276 | 315 | 1,439 | 892 | |||||||||||||||
Total operating costs | 7,021 | 11,808 | 24,049 | 34,410 | |||||||||||||||
Operating profit | 277 | 1,173 | 449 | 3,991 | |||||||||||||||
Interest expense excluding Financial Products | 91 | 59 | 301 | 203 | |||||||||||||||
Other income (expense) | 66 | 146 | 293 | 351 | |||||||||||||||
Consolidated profit before taxes | 252 | 1,260 | 441 | 4,139 | |||||||||||||||
Provision (benefit) for income taxes | (139) | 395 | (179) | 1,249 | |||||||||||||||
Profit of consolidated companies | 391 | 865 | 620 | 2,890 | |||||||||||||||
Equity in profit (loss) of unconsolidated affiliated companies | 1 | 11 | 1 | 32 | |||||||||||||||
Profit of consolidated and affiliated companies | 392 | 876 | 621 | 2,922 | |||||||||||||||
Less: Profit (loss) attributable to noncontrolling interests | (12) | 8 | (42) | 26 | |||||||||||||||
Profit | $404 | [2] | $868 | [2] | $663 | [2] | $2,896 | [2] | |||||||||||
Profit per common share | 0.65 | 1.43 | 1.08 | 4.72 | |||||||||||||||
Profit per common share - diluted | 0.64 | [1] | 1.39 | [1] | 1.07 | [1] | 4.57 | [1] | |||||||||||
Weighted-average common shares outstanding (millions) | |||||||||||||||||||
Basic | 622.4 | 607 | 612.1 | 613.2 | |||||||||||||||
Diluted | 635.5 | [1] | 624.8 | [1] | 620.6 | [1] | 633.2 | [1] | |||||||||||
Cash dividends declared per common share | $0 | $0 | 0.84 | 0.78 | |||||||||||||||
[1]Diluted by assumed exercise of stock-based compensation awards using the treasury stock method. | |||||||||||||||||||
[2]Profit attributable to common stockholders. |
Consolidated Statement of Finan
Consolidated Statement of Financial Position (USD $) | ||
In Millions | Sep. 30, 2009
| Dec. 31, 2008
|
Current assets | ||
Cash and short-term investments | $4,188 | $2,736 |
Receivables - trade and other | 5,733 | 9,397 |
Receivables - finance | 7,791 | 8,731 |
Deferred and refundable income taxes | 1,248 | 1,223 |
Prepaid expenses and other current assets | 448 | 765 |
Inventories | 6,815 | 8,781 |
Total current assets | 26,223 | 31,633 |
Property, plant and equipment - net | 12,250 | 12,524 |
Long-term receivables - trade and other | 867 | 1,479 |
Long-term receivables - finance | 13,240 | 14,264 |
Investments in unconsolidated affiliated companies | 101 | 94 |
Noncurrent deferred and refundable income taxes | 3,298 | 3,311 |
Intangible assets | 474 | 511 |
Goodwill | 2,272 | 2,261 |
Other assets | 2,113 | 1,705 |
Total assets | 60,838 | 67,782 |
Short-term borrowings | ||
Machinery and Engines | 554 | 1,632 |
Financial Products | 3,969 | 5,577 |
Accounts payable | 2,714 | 4,827 |
Accrued expenses | 3,360 | 4,121 |
Accrued wages, salaries and employee benefits | 761 | 1,242 |
Customer advances | 1,283 | 1,898 |
Dividends payable | 0 | 253 |
Other current liabilities | 792 | 1,027 |
Long-term debt due within one year: | ||
Machinery and Engines | 193 | 456 |
Financial Products | 4,331 | 5,036 |
Total current liabilities | 17,957 | 26,069 |
Long-term debt due after one year | ||
Machinery and Engines | 5,709 | 5,736 |
Financial Products | 17,360 | 17,098 |
Liability for postemployment benefits | 9,039 | 9,975 |
Other liabilities | 2,260 | 2,190 |
Total liabilities | 52,325 | 61,068 |
Commitments and contingencies (Notes 10 and 12) | ||
Redeemable noncontrolling interest | 431 | 524 |
Stockholders' equity | ||
Common stock of $1.00 par value (Authorized shares: 900,000,000, Issued shares 9/30/09 and 12/31/08 - 814,894,624) at paid-in amount: | 3,392 | 3,057 |
Treasury stock (9/30/09 - 192,167,067; 12/31/08 - 213,367,983) at cost | (10,702) | (11,217) |
Profit employed in the business | 20,026 | 19,826 |
Accumulated other comprehensive income (loss) | (4,740) | (5,579) |
Noncontrolling interests | 106 | 103 |
Total stockholders' equity | 8,082 | 6,190 |
Total liabilities, redeemable noncontrolling interest and stockholders' equity | $60,838 | $67,782 |
ParentheticalDataToTheConsolida
ParentheticalDataToTheConsolidatedStatementOfFinancialPosition (USD $) | ||
Sep. 30, 2009
| Dec. 31, 2008
| |
Stockholders' equity | ||
Common stock, par value | $1 | $1 |
Authorized shares | 900,000,000 | 900,000,000 |
Issued shares | 814,894,624 | 814,894,624 |
Treasury Stock, Shares | 192,167,067 | 213,367,983 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (USD $) | |||||||||||||||||||
In Millions | Common Stock at Paid-in Amount [Member]
| Treasury Stock [Member]
| Profit Employed in the Business [Member]
| Accumulated Other Comprehensive Income [Member]
| Noncontrolling Interest [Member]
| Total
| |||||||||||||
Beginning at Dec. 31, 2007 | $2,744 | ($9,451) | $17,398 | ($1,808) | $113 | $8,996 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||
Adjustment to adopt postretirement benefit measurement date provisions, net of tax | (33) | [2] | 17 | [1] | (16) | [3] | |||||||||||||
Profit of consolidated and affiliated companies | 2,896 | 26 | 2,922 | ||||||||||||||||
Foreign Currency Transalation, net of tax | (237) | [11] | (1) | (238) | [11] | ||||||||||||||
Pension & other postretirement benefits: Amortization of actuarial (gain) loss, net of tax | 113 | [24] | 113 | [24] | |||||||||||||||
Pension & other postretirement benefits: Amortization of prior service cost, net of tax | 1 | [16] | 1 | [16] | |||||||||||||||
Pension & other postretirement benefits: Amortization of transition asset/obligation, net of tax | 1 | [17] | 1 | [17] | |||||||||||||||
Derivative financial instruments: Gains (losses) deferred, net of tax | 102 | [25] | 102 | [25] | |||||||||||||||
Derivative financial instrumentss: (Gains) losses reclassified to earnings, net of tax | (22) | [12] | (22) | [12] | |||||||||||||||
Retained interest: Gains (losses) deferred, net of tax | (12) | [15] | (12) | [15] | |||||||||||||||
Retained interest: (Gains) losses reclassed to earnings, net of tax | 4 | [20] | 4 | [20] | |||||||||||||||
Available-for-sale securities: Gains (losses) deferred, net of tax | (72) | [14] | (72) | [14] | |||||||||||||||
Available-for-sale securities: (Gains) losses reclassed to earnings, net of tax | 1 | [17] | 1 | [17] | |||||||||||||||
Change in ownership for noncontrolling interests | (13) | (13) | |||||||||||||||||
Dividends declared | (475) | (10) | (485) | ||||||||||||||||
Common shares issued from treasury stock for stock-based compensation at cost | 8 | [8] | 120 | [8] | 128 | [8] | |||||||||||||
Stock-based compensation expense | 163 | 163 | |||||||||||||||||
Tax benefits from stock-based compensation | 54 | 54 | |||||||||||||||||
Shares repurchased at cost | (1,778) | [28] | (1,778) | [28] | |||||||||||||||
Stock repurchase derivative contracts | 24 | 24 | |||||||||||||||||
Cat Japan share redemption | (113) | (113) | |||||||||||||||||
Ending at Sep. 30, 2008 | 2,993 | (11,109) | 19,673 | (1,912) | [27] | 115 | 9,760 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||
Beginning at Dec. 31, 2008 | 3,057 | (11,217) | 19,826 | (5,579) | 103 | 6,190 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||
Profit of consolidated and affiliated companies | 663 | (42) | 621 | ||||||||||||||||
Foreign Currency Transalation, net of tax | 324 | [22] | 10 | 334 | [22] | ||||||||||||||
Pension & other postretirement benefits: Current year actuarial (gain) loss, net of tax | 55 | [5] | 55 | [5] | |||||||||||||||
Pension & other postretirement benefits: Amortization of actuarial (gain) loss, net of tax | 140 | [26] | 1 | 141 | [26] | ||||||||||||||
Pension & other postretirement benefits: Current year prior service costs, net of tax | 235 | [4] | 235 | [4] | |||||||||||||||
Pension & other postretirement benefits: Amortization of prior service cost, net of tax | (2) | [9] | (2) | [9] | |||||||||||||||
Pension & other postretirement benefits: Amortization of transition asset/obligation, net of tax | 1 | [17] | 1 | [17] | |||||||||||||||
Derivative financial instruments: Gains (losses) deferred, net of tax | 27 | [19] | (1) | 26 | [19] | ||||||||||||||
Derivative financial instrumentss: (Gains) losses reclassified to earnings, net of tax | (33) | [13] | (33) | [13] | |||||||||||||||
Retained interest: Gains (losses) deferred, net of tax | (18) | [10] | (18) | [10] | |||||||||||||||
Retained interest: (Gains) losses reclassed to earnings, net of tax | 20 | [18] | 20 | [18] | |||||||||||||||
Available-for-sale securities: Gains (losses) deferred, net of tax | 78 | [21] | 78 | [21] | |||||||||||||||
Available-for-sale securities: (Gains) losses reclassed to earnings, net of tax | 12 | [23] | 12 | [23] | |||||||||||||||
Change in ownership for noncontrolling interests | (6) | (6) | |||||||||||||||||
Dividends declared | (513) | (513) | |||||||||||||||||
Common shares issued from treasury stock for stock-based compensation at cost | (12) | [7] | 62 | [7] | 50 | [7] | |||||||||||||
Common shares issued from treasury stock for benefit plans | 235 | [6] | 453 | [6] | 688 | [6] | |||||||||||||
Stock-based compensation expense | 108 | 108 | |||||||||||||||||
Tax benefits from stock-based compensation | 4 | 4 | |||||||||||||||||
Cat Japan share redemption | 50 | 41 | 91 | ||||||||||||||||
Ending at Sep. 30, 2009 | $3,392 | ($10,702) | $20,026 | ($4,740) | $106 | $8,082 | |||||||||||||
[1]Adjustments were made on January 1, 2008 to adopt the measurement date provision of the guidance on employer's accounting for defined benefits pension and other postretirement plans. Adjustments to pension and other postretirement benefits were net of tax of $9 million. As a result, the balance of Accumulated other comprehensive income (loss) as of January 1, 2008 was $(1,791) million. | |||||||||||||||||||
[2]Adjustments were made on January 1, 2008 to adopt the measurement date provision of the guidance on employer's accounting for defined benefits pension and other postretirement plans. Adjustments to profit employed in the business were net of tax of ($17) million. As a result, the balance of Profit employed in the business as of January 1, 2008 is $17,365 million. | |||||||||||||||||||
[3]Adjustments were made on January 1, 2008 to adopt the measurement date provision of the guidance on employer's accounting for defined benefits pension and other postretirement plans. As a result, the balance of total stockholders' equity as of January 1, 2008 was $8,980 million. | |||||||||||||||||||
[4]Amounts due to plan re-measurements and were net of tax of $197 million. | |||||||||||||||||||
[5]Amounts due to plan re-measurements and were net of tax of $80 million. | |||||||||||||||||||
[6]Common shares issued from treasury stock for benefits plans: 19,091,230. | |||||||||||||||||||
[7]Common shares issued from treasury stock for stock-based compensation: 2,109,686 | |||||||||||||||||||
[8]Common shares issued from treasury stock for stock-based compensation: 4,514,729. | |||||||||||||||||||
[9]Net of tax of $(1) million. | |||||||||||||||||||
[10]Net of tax of $(10) milion and includes noncredit component of other-than-temporary impairment losses on securitized retained interest of ($8) million, net of tax of $5 million, for the nine months ended September 30, 2009. | |||||||||||||||||||
[11]Net of tax of $(107) million. | |||||||||||||||||||
[12]Net of tax of $(18) million. | |||||||||||||||||||
[13]Net of tax of $(22) million. | |||||||||||||||||||
[14]Net of tax of $(39) million. | |||||||||||||||||||
[15]Net of tax of $(6) million. | |||||||||||||||||||
[16]Net of tax of $0 million. | |||||||||||||||||||
[17]Net of tax of $1 million. | |||||||||||||||||||
[18]Net of tax of $11 million. | |||||||||||||||||||
[19]Net of tax of $19 million. | |||||||||||||||||||
[20]Net of tax of $2 million. | |||||||||||||||||||
[21]Net of tax of $42 million. | |||||||||||||||||||
[22]Net of tax of $52 million. | |||||||||||||||||||
[23]Net of tax of $6 million. | |||||||||||||||||||
[24]Net of tax of $61 million. | |||||||||||||||||||
[25]Net of tax of $69 million. | |||||||||||||||||||
[26]Net of tax of $76 million. | |||||||||||||||||||
[27]Pension and other postretirement benefits include net adjustments for Cat Japan, while they were an unconsolidated affiliate, of ($1) million for the nine months ended September 30, 2008. The ending balance was ($53) million at September 30, 2008. | |||||||||||||||||||
[28]Shares repurchased: 25,267,026. |
Consolidated Statement of Cash
Consolidated Statement of Cash Flow (USD $) | |||||||||||||||||||
In Millions | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 | |||||||||||||||
Cash flow from operating activities | |||||||||||||||||||
Profit of consolidated and affiliated companies | $392 | $876 | $621 | $2,922 | |||||||||||||||
Adjustments for non-cash items | |||||||||||||||||||
Depreciation and amortization | 1,633 | 1,453 | |||||||||||||||||
Other | 62 | 58 | |||||||||||||||||
Changes in assets and liabilities | |||||||||||||||||||
Receivables - trade and other | 3,964 | (676) | |||||||||||||||||
Inventories | 1,985 | (1,380) | |||||||||||||||||
Accounts payable and accrued expenses | (2,872) | 790 | |||||||||||||||||
Customer advances | (606) | 321 | |||||||||||||||||
Other assets - net | 102 | 154 | |||||||||||||||||
Other liabilities - net | (371) | (362) | |||||||||||||||||
Net cash provided by (used for) operating activities | 4,518 | 3,280 | |||||||||||||||||
Cash flow from investing activities | |||||||||||||||||||
Capital expenditures - excluding equipment leased to others | (751) | (1,362) | |||||||||||||||||
Expenditures for equipment leased to others | (747) | (1,082) | |||||||||||||||||
Proceeds from disposals of property, plant and equipment | 799 | 754 | |||||||||||||||||
Additions to finance receivables | (5,255) | (11,168) | |||||||||||||||||
Collections of finance receivables | 7,343 | 7,402 | |||||||||||||||||
Proceeds from sales of finance receivables | 69 | 710 | |||||||||||||||||
Investments and acquisitions (net of cash acquired) | (9) | (139) | |||||||||||||||||
Proceeds from available-for-sale securities | 232 | 292 | |||||||||||||||||
Investments in available-for-sale securities | (312) | (270) | |||||||||||||||||
Other - net | (89) | 116 | |||||||||||||||||
Net cash provided by (used for) investing activities | 1,280 | (4,747) | |||||||||||||||||
Cash flow from financing activities | |||||||||||||||||||
Dividends paid | (766) | (700) | |||||||||||||||||
Distribution to noncontrolling interest | 0 | (10) | |||||||||||||||||
Common stock issued, including treasury shares reissued | 50 | 128 | |||||||||||||||||
Payment for stock repurchase derivative contracts | 0 | (38) | |||||||||||||||||
Treasury shares purchased | 0 | (1,716) | |||||||||||||||||
Excess tax benefit from stock-based compensation | 8 | 55 | |||||||||||||||||
Acquistion of noncontrolling interests | (6) | 0 | |||||||||||||||||
Proceeds from debt issued (original maturities greater than three months) | |||||||||||||||||||
Machinery and Engines | 1,036 | 49 | |||||||||||||||||
Financial Products | 9,833 | 13,971 | |||||||||||||||||
Payments on debt (original maturities greater than three months) | |||||||||||||||||||
Machinery and Engines | (1,396) | (173) | |||||||||||||||||
Financial Products | (9,420) | (10,715) | |||||||||||||||||
Short-term borrowings (original maturities three months or less) - net | (3,686) | 1,646 | |||||||||||||||||
Net cash provided by (used for) financing activities | (4,347) | 2,497 | |||||||||||||||||
Effect of exchange rate changes on cash | 1 | (14) | |||||||||||||||||
Increase (decrease) in cash and short-term investments | 1,452 | 1,016 | |||||||||||||||||
Cash and short-term investments at beginning of period | 2,736 | [1] | 1,122 | [1] | |||||||||||||||
Cash and short-term investments at end of period | $4,188 | [1] | $2,138 | [1] | $4,188 | [1] | $2,138 | [1] | |||||||||||
[1]All short-term investments, which consist primarily of highly liquid investments with original maturities of three months or less, are considered to be cash equivalents. |
Basis of Presentation and Natur
Basis of Presentation and Nature of Operations | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | |
Nature of Operations | 1. B.Nature of Operations We operate in three principal lines of business: (1) Machinery - A principal line of business which includes the design, manufacture, marketing and sales of construction, mining and forestry machinerytrack and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment and related parts. Also includes logistics services for other companies and the design, manufacture, remanufacture, maintenance and services of rail-related products. (2) Engines -A principal line of business including the design, manufacture, marketing and sales of engines for Caterpillar machinery; electric power generation systems; on-highway vehicles and locomotives; marine, petroleum, construction, industrial, agricultural and other applications; and related parts.Also includes remanufacturing of Caterpillar engines and a variety of Caterpillar machine and engine components and remanufacturing services for other companies.Reciprocating engines meet power needs ranging from 10 to 21,700 horsepower (8 to over 16 000 kilowatts).Turbines range from 1,600 to 30,000 horsepower (1 200 to 22 000 kilowatts). (3) Financial Products - A principal line of business consisting primarily of Caterpillar Financial Services Corporation (Cat Financial), Caterpillar Insurance Holdings, Inc. (Cat Insurance) and their respective subsidiaries.Cat Financial provides a wide range of financing alternatives to customers and dealers for Caterpillar machinery and engines, Solar gas turbines as well as other equipment and marine vessels.Cat Financial also extends loans to customers and dealers.Cat Insurance provides various forms of insurance to customers and dealers to help support the purchase and lease of our equipment. Our Machinery and Enginesoperations are highly integrated.Throughout the Notes, Machinery and Engines represents the aggregate total of these principal lines of business. |
Basis of Accounting [Text Block] | 1. A.Basis of Presentation In the opinion of management, the accompanying financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of (a) the consolidated results of operations for the three and nine month periods ended September 30, 2009 and 2008, (b) the consolidated financial position at September 30, 2009 and December 31, 2008, (c) the consolidated changes in stockholders' equity for the nine month periods ended September 30, 2009 and 2008, and (d) the consolidated statement of cash flow for the nine month periods ended September 30, 2009 and 2008.The financial statements have been prepared 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).Certain amounts for prior periods have been reclassified to conform to the current period financial statement presentation. 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 financial statements and notes thereto included in our Company's annual report on Form 10-K for the year ended December 31, 2008, as supplemented by the Company's current report on Form 8-K filed on May 14, 2009 (2008 Form 10-K) to reflect certain retrospective adjustments relating to the adoption of accounting guidance on noncontrolling interests and the change in our reportable segments as discussed in Note 14. Comprehensive income (loss) is comprised of Profit of consolidated and affiliated companies, as well as adjustments for foreign currency translation, derivative instruments designated as cash flow hedges, available-for-sale securities, pension and other postretirement benefits and retained interests.Total Comprehensive income for the three months ended September 30, 2009 and 2008 was $565 million and $579 million, respectively.Total Comprehensive income for the nine months ended September 30, 2009 and 2008 was $1,470 million and $2,800 million, respectively. The December 31, 2008 financial position data included herein is derived from the audited consolidated financial statements included in the 2008 Form 10-K but does not include all disclosures required by U.S. GAAP. We have performed a review of subsequent events through October 30, 2009, the date the financial statements were issued, and concluded there were no events or transactions occurring during this period that required recognition or disclosure in our financial statements. |
New Accounting Guidance
New Accounting Guidance | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
New Accounting Pronouncements | |
New Accounting Guidance | 2. New Accounting Guidance Fair value measurements - In September 2006, the Financial Accounting Standards Board (FASB) issued accounting guidance on fair value measurements, which provides a common definition of fair value and a framework for measuring assets and liabilities at fair values when a particular standard prescribes it. In addition, this guidance expands disclosures about fair value measurements. In February 2008, the FASB issued additional guidance that (1) deferred the effective date of the original guidance for one year for certain nonfinancial assets and nonfinancial liabilitiesand (2) removed certain leasing transactions from the scope of the original guidance.We applied this new guidance to all other fair value measurements effective January 1, 2008. The adoption of this guidance did not have a material impact on our financial statements. See Note 17 for additional information. Employers' accounting for defined benefit pension and other postretirement plans - In September 2006, the FASB issued accounting guidance on employers' accounting for defined benefits pension and other postretirement plans.This guidance requires recognition of the overfunded or underfunded status of pension and other postretirement benefit plans on the balance sheet.Also, the measurement date - the date at which the benefit obligation and plan assets are measured - is required to be the company's fiscal year-end.We adopted the balance sheet recognition provision at December 31, 2006, and adopted the year-end measurement date effective January 1, 2008 using the "one measurement" approach.Under the one measurement approach, net periodic benefit cost for the period between any early measurement date and the end of the fiscal year that the measurement provision is applied are allocated proportionately between amounts to be recognized as an adjustment of retained earnings and net periodic benefit cost for the fiscal year.Previously, we used a November 30th measurement date for our U.S. pension and other postretirement benefit plans and September 30th for our non-U.S. plans.The following summarizes the effect of adopting the year-end measurement date provision as of January 1, 2008.See Note 9 for additional information. Adoption of postretirement benefit year-end measurement date provision January 1, 2008 January 1, 2008 Prior to adoption Adjustment Post adoption (Millions of dollars) Noncurrent deferred and refundable income taxes $ 1,553 $ 8 $ 1,561 Liability for postemployment benefits 5,059 24 5,083 Accumulated other comprehensive income (1,808 ) 17 (1,791 ) Profit employed in the business 17,398 (33 ) 17,365 Business combinations and noncontrolling interests in consolidated financial statements - In December 2007, the FASB issued accounting guidance on business combinations and noncontrolling interests in consolidated financial statements.The guidance on business combinations requires the acquiring entity in a business combination to recogn |
Stock-Based Compensation
Stock-Based Compensation | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Stock-Based Compensation | |
Disclosure of Compensation Related Costs, Share-based Payments | 3. Stock-Based Compensation Accounting for stock-based compensation requires that the cost resulting from all stock-based payments be recognized in the financial statements based on the grant date fair value of the award.Stock-based compensation primarily consists of stock-settled stock appreciation rights (SARs), restricted stock units (RSUs) and stock options.We recognized pretax stock-based compensation cost in the amount of $34 million and $108 million for the three and nine months ended September 30, 2009, respectively; and $56 million and $163 million for the three and nine months ended September 30, 2008, respectively. The following table illustrates the type and fair value of the stock-based compensation awards granted during the nine month periods ended September 30, 2009 and 2008, respectively: 2009 2008 # Granted Fair Value Per Award # Granted Fair Value Per Award SARs 6,260,647 $ 7.10 4,476,095 $ 22.32 RSUs 2,185,674 20.22 1,511,523 69.17 Stock options 562,580 7.10 410,506 22.32 The stock price on the date of grant was $22.17 and $73.20 for 2009 and 2008, respectively. The following table provides the assumptions used in determining the fair value of the stock-based awards for the nine month periods ended September 30, 2009 and 2008, respectively: Grant Year 2009 2008 Weighted-average dividend yield 3.07% 1.89% Weighted-average volatility 36.02% 27.14% Range of volatilities 35.75-61.02% 27.13-28.99% Range of risk-free interest rates 0.17-2.99% 1.60-3.64% Weighted-average expected lives 8 years 8 years As of September 30, 2009, the total remaining unrecognized compensation cost related to nonvested stock-based compensation awards was $117 million, which will be amortized over the weighted-average remaining requisite service periods of approximately 1.7 years. Our long-standing practices and policies specify all stock-based compensation awards are approved by the Compensation Committee (the Committee) of the Board of Directors on the date of grant.The stock-based award approval process specifies the number of awards granted, the terms of the award and the grant date.The same terms and conditions are consistently applied to all employee grants, including Officers. The Committee approves all individual Officer grants.The number of stock-based compensation awards included in an individual's award is determined based on the methodology approved by the Committee.In 2007, under the terms of the Caterpillar Inc. 2006 Long-Term Incentive Plan (approved by stockholders in September of 2006), theCommittee approved the exercise price methodology to be the closing price of the Company stock on the date of grant. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Derivative Instruments and Hedging Activities | |
Derivative Instruments and Hedging Activities Disclosure | 4. Derivative Instruments and Hedging Activities Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates, interest rates and commodity prices.In addition, the amount of Caterpillar stock that can be repurchased under our stock repurchase program is impacted by movements in the price of the stock.Our Risk Management Policy (policy) allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate, interest rate, commodity price and Caterpillar stock price exposures.Our policy specifies that derivatives are not to be used for speculative purposes.Derivatives that we use are primarily foreign currency forward and option contracts, interest rate swaps and commodity forward and option 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 to the Audit Committee of the Board of Directors at least annually. All derivatives are recognized on the Consolidated Statement of Financial Position at their fair value. On the date the derivative contract is entered, we designate the derivative as (1) a hedge of the fair value of a recognized asset or liability ("fair value" hedge), (2) a hedge of a forecasted transaction or the variability of cash flow to be paid ("cash flow" hedge), or (3) an "undesignated" instrument. 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 liability that is attributable to the hedged risk, are recorded in current earnings. 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 (AOCI) in the Consolidated Statement of Financial Position until they are reclassified to earnings in the same period or periods during which the hedged transaction affects earnings.Changes in the fair value of undesignated derivative instruments and the ineffective portion of designated derivative instruments are reported in current earnings. Cash flow from designated derivative financial instruments are classified within the same category as the item being hedged on the Consolidated Statement of Cash Flow.Cash flow from undesignated derivative financial instruments are included in the investing category on the Consolidated Statement of Cash Flow. 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 Statement 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 |
Inventories
Inventories | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Inventories | |
Inventory Disclosure | 5. Inventories Inventories (principally using the "last-in, first-out" (LIFO) method) are comprised of the following: (Millions of dollars) September 30, December 31, 2009 2008 Raw materials $ 2,152 $ 2,678 Work-in-process 865 1,508 Finished goods 3,534 4,316 Supplies 264 279 Total inventories $ 6,815 $ 8,781 Inventory quantities have been further reduced during the three and nine months ended September 30, 2009.This reduction resulted in a liquidation of LIFO inventory layers carried at lower costs prevailing in prior years as compared with current costs.The effect of this reduction of inventory that is not expected to be replaced by the end of 2009 decreased Cost of goods sold in the Consolidated Results of Operations by approximately $120 million and increased Profit by approximately $100 million or $0.16 per share for the three months ended September 30, 2009.For the nine months ended September 30, 2009, LIFO liquidations decreased Cost of goods sold by approximately $230 million and increased Profit by approximately $185 million or $0.30 per share.Additional LIFO liquidations may occur during the fourth quarter of 2009. |
Investments in Unconsolidated A
Investments in Unconsolidated Affiliated Companies | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Investments in Unconsolidated Affiliated Companies | |
Investment to unconsolidated affiliated companies | 6. Investments in Unconsolidated Affiliated Companies Our investments in affiliated companies accounted for by the equity method have historically consisted primarily of a 50 percent interest in Shin Caterpillar Mitsubishi Ltd. (SCM) located in Japan.On August 1, 2008, SCM redeemed half of Mitsubishi Heavy Industries Ltd.'s (MHI's) shares in SCM.As a result, Caterpillar now owns 67 percent of the renamed entity, Caterpillar Japan Ltd. (Cat Japan) and consolidates its financial statements.See Note 16 for additional information. In February 2008, we sold our 23 percent equity investment in A.S.V. Inc. (ASV) resulting in a $60 million pretax gain.Accordingly, the September 30, 2009 and December 31, 2008 financial position and equity investment amounts noted below do not include ASV or Cat Japan. Combined financial information of the unconsolidated affiliated companies accounted for by the equity method (generally on a lag of three months or less) was as follows: Results of Operations of unconsolidated affiliated companies: Three Months Ended Nine Months Ended September 30, September 30, (Millions of dollars) 2009 2008 2009 2008 Sales $ 133 $ 1,285 $ 400 $ 3,455 Cost of sales 99 1,063 299 2,863 Gross profit $ 34 $ 222 $ 101 $ 592 Profit (loss) $ (1 ) $ 16 $ (9 ) $ 53 Prior to consolidation of Cat Japan, sales from SCM to Caterpillar for the three months ended September 30, 2008 of $437 million and for the nine months ended September 30, 2008 of $1,669 million are included in the affiliated company sales.In addition, SCM purchases of Caterpillar products were $95 million for the three months ended September 30, 2008 and $353 million for the nine months ended September 30, 2008. Financial Position of unconsolidated affiliated companies: September 30, December 31, (Millions of dollars) 2009 2008 Assets: Current assets $ 227 $ 209 Property, plant and equipment net 222 227 Other assets 9 26 458 462 Liabilities: Current liabilities 250 173 Long-term debt due after one year 44 110 Other liabilities 16 35 310 318 Equity $ 148 $ 144 Caterpillar's investments in unconsolidated affiliated companies: (Millions of dollars) Investments in equity method companies $ 74 $ 66 Plus: Investments in cost method companies 27 28 Total investments in unconsolidated affiliated companies $ 101 $ 94 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Intangible Assets and Goodwill | |
Goodwill and Intangible Assets Disclosure | 7. Intangible Assets and Goodwill A.Intangible assets Intangible assets are comprised of the following: (Dollars in millions) Weighted Amortizable Life (Years) September 30, 2009 December 31, 2008 Customer relationships 18 $ 403 $ 397 Intellectual property 10 212 211 Other 11 115 112 Total finite-lived intangible assets gross 15 730 720 Less: Accumulated amortization (256 ) (209 ) Intangible assets net $ 474 $ 511 Amortization expense for the three and nine months ended September 30, 2009 was $15 million and $46 million, respectively.Amortization expense for the three and nine months ended September 30, 2008 was $12 million and $44 million, respectively.Amortization expense related to intangible assets is expected to be: (Millions of dollars) 2009 2010 2011 2012 2013 Thereafter $ 62 $ 58 $ 51 $ 42 $ 38 $ 269 B.Goodwill We test goodwill annually and whenever events or circumstances make it more likely than not that an impairment may have occurred. We perform our annual goodwill impairment test as of October 1 and monitor for interim triggering events on an ongoing basis. No goodwill was impaired or disposed of during the nine months ended September 30, 2009 or 2008.The carrying amount of goodwill by reportable segment as of September 30, 2009 and December 31, 2008 was as follows: (Millions of dollars) September 30, 2009 December 31, 2008 Building Construction Products $ 26 $ 26 Cat Japan 1 238 233 Earthmoving 43 43 Electric Power 203 203 Excavation 39 39 Large Power Systems 569 569 Marine Petroleum Power 60 60 Mining 1 30 27 All Other 1,2 1,064 1,061 Total $ 2,272 $ 2,261 1 Change from December 31, 2008 due to foreign currency translation. 2 Includes all other operating segments (See Note 14). As discussed in Note 14, our reportable segments were changed in the first quarter 2009.As a result of these changes, the newly formed Earthmoving, Excavation and Mining reportable segments have been allocated goodwill of $43 million, $39 million and $30 million, respectively.The goodwill was reallocated primarily from the former reportable segments of EAME Operations, Heavy Construction Mining and Infrastructure Development.Additionally, goodwill of $22 million was reallocated to Building Construction Products from the All Other category, while goodwill of $478 million was reallocated to the All Other category from the former Industrial Power Systems reportable segment.Goodwill associated with the newly formed Cat Japan reportable segment was previously included in the All Other category. |
Available-For-Sale Securities
Available-For-Sale Securities | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Available-for-sale Securities | |
Available-for-sale Securities | 8. Available-For-Sale Securities We have investments in certain debt and equity securities, primarily at Cat Insurance, that have been classified as available-for-sale and recorded at fair value based upon quoted market prices. These fair values are included in Other assets in the Consolidated Statement of Financial Position. Unrealized gains and losses arising from the revaluation of available-for-sale securities are included, net of applicable deferred income taxes, in equity (Accumulated other comprehensive income (loss) in the Consolidated Statement of Financial Position).Realized gains and losses on sales of investments are generally determined using the FIFO ("first-in, first-out") method for debt instruments and the specific identification method for equity securities.Realized gains and losses are included in Other income (expense) in the Consolidated Statement of Results of Operations. Effective April 1, 2009, we adopted the new accounting and disclosure requirements regarding recognition and presentation of other-than-temporary impairments.See Note 2 for additional information. September 30, 2009 December 31, 2008 Unrealized Unrealized Pretax Net Pretax Net (Millions of dollars) Cost Basis Gains (Losses) Fair Value Cost Basis Gains (Losses) Fair Value Government debt U.S. treasury bonds $ 14 $ $ 14 $ 14 $ 1 $ 15 Other U.S. and non-U.S. government bonds 59 1 60 15 (1 ) 14 Corporate bonds Corporate bonds 444 19 463 343 (22 ) 321 Asset-backed securities 147 (11 ) 136 165 (27 ) 138 Mortgage-backed debt securities U.S. governmental agency mortgage-backed securities 306 14 320 319 5 324 Residential mortgage-backed securities 65 (12 ) 53 79 (19 ) 60 Commercial mortgage-backed securities 179 (17 ) 162 176 (47 ) 129 Equity securities Large capitalization value 86 14 100 126 (13 ) 113 Smaller company growth 18 5 23 20 (2 ) 18 Total $ 1,318 $ 13 $ 1,331 $ 1,257 $ (125 ) $ 1,132 In first quarter 2009, we recognized pretax charges for "other-than-temporary" declines in the market values of equities securities in the Cat Insurance investment portfolios of $11 million.These charges were accounted for as a realized loss and were included in Other income (expense |
Postretirement Benefits
Postretirement Benefits | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Postretirement Benefits | |
Postemployment Benefit Plans | 9. Postretirement Benefits A.Pension and postretirement benefit plan costs As discussed in Note 18, first quarter 2009 voluntary and involuntary separation programs impacted employees participating in certain U.S. and non-U.S. pension and other postretirement benefit plans.Due to the significance of these events, certain plans were re-measured as of January 31, 2009 and March 31, 2009 as follows: U.S. Voluntary Separation Program Plan re-measurements as of January 31, 2009 resulted in curtailment losses to the U.S. support and management pension and other postretirement benefit plans of $80 million and $45 million, respectively. Other U.S. Separation Programs Certain plans were re-measured as of March 31, 2009, resulting in net curtailment losses of $44 million to pension and $16 million to other postretirement benefit plans.Early retirement pension benefit costs of $6 million were also recognized. Non-U.S. Separation Programs Certain plans were re-measured as of March 31, 2009, resulting in settlement losses of $9 million to pension and curtailment losses of $1 million to other postretirement benefit plans. In March 2009, we amended our U.S. support and management other postretirement benefit plan.Beginning in 2010, certain retirees age 65 and older will enroll in individual health plans that work with Medicare and will no longer participate in a Caterpillar-sponsored group health plan.In addition, Caterpillar will fund a tax-advantaged Health Reimbursement Arrangement (HRA) to assist the retirees with medical expenses.The plan amendment required a plan re-measurement as of March 31, 2009, which resulted in a decrease in our Liability for postretirement benefits of $432 million and an increase in Accumulated other comprehensive income of $272 million after-tax.The decrease will be amortized into earnings on a straight-line basis over approximately 7 years, the average remaining service period of active employees in the plan.The amendment reduced other postretirement benefits expense by approximately $20 million and $40 million for the three and nine months ended September 30, 2009. The re-measurements did not have a material impact on our benefit obligations, plan assets or funded status. (Millions of dollars) U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits September 30, September 30, September 30, 2009 2008 2009 2008 2009 2008 For the three months ended: Components of net periodic benefit cost: Service cost $ 42 $ 49 $ 21 $ 22 $ 17 $ 22 Interest cost 173 157 34 40 68 76 Expected return on plan assets (193 ) (220 ) (43 ) (50 ) (26 ) (34 ) Amortization of: Transition obligation / (asset) 1 Prior |
Guarantees and Product Warranty
Guarantees and Product Warranty | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Guarantees and Product Warranty | |
Garantees and Product Warranty Disclosure | 10. Guarantees and Product Warranty We have provided an indemnity to a third-party insurance company for potential losses related to performance bonds issued on behalf of Caterpillar dealers.The bonds are issued to insure governmental agencies against nonperformance by certain Caterpillar dealers. 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. In addition, Cat Financial participates in standby letters of credit issued to third parties on behalf of their customers. These standby letters of credit have varying terms and beneficiaries and are secured by customer assets. Cat Financial has provided a limited indemnity to a third-party bank for $22 million resulting from the assignment of certain leases to that bank. The indemnity is for the possibility that the insurers of these leases would become insolvent. The indemnity expires December 15, 2012 and is unsecured. No loss has been experienced or is anticipated under any of the guarantees noted above.At September 30, 2009 and December 31, 2008, the related liability was $15 million and $14 million, respectively. 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 are as follows: (Millions of dollars) September 30, December 31, 2009 2008 Guarantees with Caterpillar dealers $ 89 $ 100 Guarantees with customers 248 136 Limited indemnity 22 25 Guarantees other 64 43 Total guarantees $ 423 $ 304 We provide guarantees to repurchase certain loans of Caterpillar dealers from a financial trust ("Trust") that qualifies as a variable interest entity. The purpose of the Trust is to provide short-term working capital loans to Caterpillar dealers.This Trust issues commercial paper and uses the proceeds to fund its loan program.We have a loan purchase agreement with the Trust 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 Trust. At December 31, 2008, we determined that we were the primary beneficiary of the Trust as our guarantee would require us to absorb a majority of the entity's expected losses, and therefore consolidated the financial position of the Trust in the Consolidated Statement of Financial Position.As of September 30, 2009, the Trust's assets of $261 million are primarily comprised of loans to dealers and the liabilities of $261 million are primarily comprised of commercial paper.No loss has been experienced or is anticipated under this loan purchase agreement. Our assets are not available to pay creditors of the Trust, except to the extent we may be obligated to perform under the guarantee, and assets of the Trust are not available to pay our creditors. Our product warranty liability is determined by appl |
Computations of Profit Per Shar
Computations of Profit Per Share | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Computations of Profit Per Share | |
Profit per share disclosure | 11. Computations of Profit Per Share Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions except per share data) 2009 2008 2009 2008 I. Profit for the period (A) 1: $ 404 $ 868 $ 663 $ 2,896 II. Determination of shares (in millions): Weighted-average number of common shares outstanding (B) 622.4 607.0 612.1 613.2 Shares issuable on exercise of stock awards, net of shares assumedto be purchased out of proceeds at average market price 13.1 17.8 8.5 20.0 Average common shares outstanding for fully diluted computation (C) 635.5 624.8 620.6 633.2 III. Profit per share of common stock: Assuming no dilution (A/B) $ 0.65 $ 1.43 $ 1.08 $ 4.72 Assuming full dilution (A/C) $ 0.64 $ 1.39 $ 1.07 $ 4.57 1 Profit attributable to common stockholders. For the three and nine months ended September 30, 2009, there were outstanding SARs and stock options to purchase 18,596,141 and 29,017,743 common shares, respectively, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive.SARs and stock options to purchase 4,857,021 common shares were outstanding for both the three and nine months ended September 30, 2008, which were antidilutive. |
Environmental and Legal Matters
Environmental and Legal Matters | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Environmental, Legal and Tax Matters | |
Environmental and Legal Matters | 12. Environmental and Legal Matters The company is regulated by federal, state and international environmental laws governing our use, transport and disposal of substances and control of emissions. In addition to governing our manufacturing and other operations, these laws often impact the development of our products, including, but not limited to, required compliance with air emissions standards applicable to internal combustion engines. Compliance with these existing laws has not had a material impact on our capital expenditures, earnings or global competitive position. We are engaged in remedial activities at a number of locations, often with other companies, pursuant to federal and state laws.When it is probable we will pay remedial costs at a site and those costs can be reasonably estimated, the costs are charged against our earnings.In formulating that estimate, we do not consider amounts expected to be recovered from insurance companies or others.The amount recorded for environmental remediation is not material and is included in Accrued expenses in the Consolidated Statement of Financial Position. We cannot reasonably estimate costs at sites in the very early stages of remediation.Currently, we have a few sites in the very early stages of remediation, and there is no more than a remote chance that a material amount for remedial activities at any individual site, or at all sites in the aggregate, will be required. On May 14, 2007, the U.S. Environmental Protection Agency (EPA) issued a Notice of Violation to Caterpillar Inc., alleging various violations of Clean Air Act Sections 203, 206 and 207.EPA claims that Caterpillar violated such sections by shipping engines and catalytic converter after-treatment devices separately, introducing into commerce a number of uncertified and/or misbuilt engines, and failing to timely report emissions-related defects.Caterpillar is currently engaging in negotiations with EPA to resolve these issues, but it is too early in the process to place precise estimates on the potential exposure to penalties.However, Caterpillar is cooperating with EPA and, based upon initial discussions, and although penalties could potentially exceed $100,000, management does not believe that this issue will have a material adverse impact on our consolidated results of operations, financial position or liquidity. On February 8, 2009, an incident at Caterpillar's Joliet, Illinois facility resulted in the release of approximately 3,000 gallons of wastewater into the Des Plaines River. In coordination with state and federal authorities, appropriate remediation measures have been taken. On February 23, the Illinois Attorney General filed a Complaint in Will County Circuit Court containing seven Counts of violations of state environmental laws and regulations.Each Count seeks injunctive relief, as well as statutory penalties of $50,000 per violation and $10,000 per day of violation. In addition, on March 5, the U.S. EPA served Caterpillar with a Notice of Intent to file a Civil Administrative Action, indicating EPA's intent to seek civil penalties for violations of the Clean Water Act and Oil Pollut |
Income Taxes
Income Taxes | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Income Tax Disclosure | |
Income Taxes | 13. Income Taxes The Provision (benefit) for income taxesin the first nine months of 2009 reflects a discrete period effective tax rate of -40.6 percent.The -40.6 percent tax rate for 2009 is primarily attributable to tax benefits related to prior year tax returns of $129 million, along with a more favorable geographic mix of profits and losses from a tax perspective and a larger percentage benefit from U.S. permanent differences and credits including the research and development tax credit.The prior year tax benefits primarily resulted from the U.S. settlement of tax years 1995 to 1999 and the true-up of estimated amounts used in the 2008 tax provision to the U.S. tax return as filed.The settlement with the U.S. Internal Revenue Service (IRS) for tax years 1995 through 1999 resulted in a $46 million tax benefit related primarily to the true-up of estimated credits, a $14 million tax benefit to remeasure previously unrecognized tax benefits related to foreign sales corporation (FSC) commissions, and a $22 million benefit to adjust related estimated interest, net of tax.A discrete calculation was used to report the tax provision for the first nine months of 2009 rather than an estimated annual tax rate as the estimated range of annual profit before tax produces significant variability and makes it difficult to reasonably estimate the annual effective tax rate. For the first nine months of 2008, the provision reflected an estimated annual tax rate of 31.3 percent, excluding discrete benefits of $47 million. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits is as follows: (Millions of dollars) 20091 Unrecognized tax benefits, January 1 $ 803 Additions for tax positions related to current year 36 Additions for tax positions related to prior years 42 Reductions for tax positions related to prior years (42 ) Reductions for settlements2 (61 ) Reductions for expiration of statute of limitations (11 ) Unrecognized tax benefits, September 30 $ 767 (Millions of dollars) 20081 Unrecognized tax benefits, January 1 $ 703 Additions for tax positions related to current year 126 Additions for tax positions related to prior years 38 Reductions for tax positions related to prior years (48 ) Reductions for settlements2 (4 ) Reductions for expiration of statute of limitations (12 ) Unrecognized tax benefits, December 31 $ 803 1 Foreign currency translation amounts are included within each line as applicable. 2 Includes cash payment or other reduction of assets to settle liability. The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at September 30, 2009 and December 31, 2008 were $584 million and $646 million, respectively. We classify interest and penalties on income taxes as a component of the Provision (benefit) for income taxes. We recognized interest and pena |
Segment Information
Segment Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Segment Information | |
Segment Reporting Disclosure | 14. Segment Information A. Basis for segment information Caterpillar is organized based on a decentralized structure that has established responsibilities to continually improve business focus and increase our ability to react quickly to changes in the global business cycle, customer needs and competitors' actions. Our current structure uses a matrix organization comprised of multiple profit and cost center divisions. In the first quarter of 2009, our organizational responsibilities were changed significantly to align the machine product, manufacturing and marketing organizations.The new divisional structure and revised set of responsibilities are as follows: Machine business divisions are profit centers primarily responsible for product management, development, marketing, sales and product support.Machine business divisions also have select manufacturing responsibilities.These activities were previously included within product and component divisions, manufacturing divisions and machinery marketing divisions.Inter-segment sales of components may also be a source of revenue for these divisions. Engine business divisions are profit centers primarily responsible for product management, development, manufacturing, marketing, sales and product support.Inter-segment sales of engines and/or components may also be a source of revenue for these divisions. Component business divisions are profit centers primarily responsible for product management, development, manufacturing, marketing and product support for internal and external customers.Some of these activities were previously included within product and manufacturing divisions.Inter-segment sales of components are a source of revenue for these divisions. Service business divisions are profit centers primarily responsible for various services and service-related products to customers including financial, logistics, remanufacturing and rail services.Inter-segment sales of services and service-related products are a source of revenue for some of these divisions. Manufacturing services divisions are cost centers primarily responsible for the manufacture of products and/or components within the geographic regions of the Americas and EAME. Previously manufacturing divisions were profit centers with inter-segment sales of components, machines and/or engines to product divisions as the primary sources of revenue. Corporate services divisions are cost centers primarily responsible for the performance of certain support functions globally (e.g., Finance, Human Resources, Information Technology, Legal and Purchasing) and to provide centralized services. Regional distribution services divisions are cost centers primarily responsible for the total portfolio of business with each dealer, the dealer relationship, dealer development and ensuring the most efficient and effective distribution of machines, engines and parts.Previously these functions were primarily performed by machinery marketing divisions. Centers of excellence divisions are cost centers primarily responsible for Caterpillar's most critical/differentiating processes in the areas of Marketing |
Securitizations
Securitizations | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Securitizations | |
Transfers and Servicing of Financial Assets | 15. Securitizations Cat Financial sells certain finance receivables relating to retail installment sale contracts and finance leases as part of their asset-backed securitization program.In addition, Cat Financial has sold interests in wholesale receivables to third-party commercial paper conduits.These transactions provide a source of liquidity and allow for better management of Cat Financial's balance sheet capacity. Securitized Retail Installment Sale Contracts and Finance Leases Cat Financial periodically sells certain finance receivables relating to retail installment sale contracts and finance leases to special-purpose entities (SPEs) as part of their asset-backed securitization program.The SPEs have limited purposes and generally are only permitted to purchase the finance receivables, issue asset-backed securities and make payments on the securities.The SPEs only issue a single series of securities and generally are dissolved when those securities have been paid in full.The SPEs, typically trusts, are considered to be qualifying special-purpose entities (QSPEs) and thus, in accordance with accounting for transfers and servicing of financial assets, are not consolidated.The QSPEs issue debt to pay for the finance receivables they acquire from Cat Financial.The primary source for repayment of the debt is the cash flows generated from the finance receivables owned by the QSPEs.The assets of the QSPEs are legally isolated and are not available to pay the creditors of Cat Financial or any other of their affiliates.For bankruptcy analysis purposes, Cat Financial has sold the finance receivables to the QSPEs in a true sale and the QSPEs are separate legal entities.The investors and the securitization trusts have no recourse to any of Cat Financial's other assets for failure of debtors to pay when due. Cat Financial retains interests in the retail finance receivables that are sold through their asset-backed securitization program.Retained interests include subordinated certificates, an interest in future cash flows (excess) and reserve accounts.Retained interests in securitized assets are classified as available-for-sale securities and are included in Other assets in the Consolidated Statement of Financial Position at fair value.Cat Financial estimates fair value and cash flows using a valuation model and key assumptions for credit losses, prepayment rates and discount rates.These assumptions are based on historical experience, market trends and anticipated performance relative to the particular assets securitized. Cat Financial periodically evaluates for impairment and recognizes the credit component of an other-than-temporary impairment in Profit and the noncredit component in Accumulated other comprehensive income (loss) for those retained interests in which Cat Financial does not intend to sell and it is not likely that they will be required to sell prior to recovery. During the second quarter of 2008, Cat Financial sold certain finance receivables relating to retail installment sale contracts and finance leases to a SPE as part of Cat Financial's asset-backed securitization program. Net cash proceeds recei |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interest - Caterpillar Japan Ltd. | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Redeemable Noncontrolling Interest - Caterpillar Japan Ltd | |
Redeemable non-controlling interest Disclosure | 16. Redeemable Noncontrolling Interest Caterpillar Japan Ltd. On August 1, 2008, Shin Caterpillar Mitsubishi Ltd. (SCM) completed the first phase of a share redemption plan whereby SCM redeemed half of MHI's shares in SCM.This resulted in Caterpillar owning 67 percent of the outstanding shares of SCM and MHI owning the remaining 33 percent.As part of the share redemption, SCM was renamed Caterpillar Japan Ltd. (Cat Japan).Both Cat Japan and MHI have options, exercisable after five years, to require the redemption of the remaining shares owned by MHI, which if exercised, would make Caterpillar the sole owner of Cat Japan. The remaining 33 percent of Cat Japan owned by MHI has been reported as redeemable noncontrolling interest and classified as mezzanine equity (temporary equity) in the Consolidated Statement of Financial Position. The redeemable noncontrolling interest is reported at its estimated redemption value.Any adjustment to the redemption value impacts Profit employed in the business, but does not impact Profit.If the fair value of the redeemable noncontrolling interest falls below the redemption value, profit available to common stockholders would be reduced by the difference between the redemption value and the fair value.This would result in lower profit in the profit per common share computation in that period.Reductions impacting the profit per common share computation may be partially or fully reversed in subsequent periods if the fair value of the redeemable noncontrolling interest increases relative to the redemption value.Such increases in profit per common share would be limited to cumulative prior reductions.During the second and third quarters of 2009, the estimated redemption value decreased, resulting in adjustments to the carrying value of the redeemable noncontrolling interest. Profit employed in the business increased by $37 million in the second quarter and increased by $54 million in the third quarter due to these adjustments.As of September 30, 2009, the fair value of the redeemable noncontrolling interest remained greater than the estimated redemption value. We estimate the fair value of the redeemable noncontrolling interest using a discounted five year forecasted cash flow with a year-five residual value.If worldwide economic conditions deteriorate and Cat Japan's business forecast is negatively impacted, it is reasonably possible that the fair value of the redeemable noncontrolling interest may fall below the estimated redemption value in the near term.Should this occur, profit would be reduced in the profit per common share computation by the difference between the redemption value and the fair value.Lower long-term growth rates, reduced long-term profitability as well as changes in interest rates, costs, pricing, capital expenditures and general market conditions may reduce the fair value of the redeemable noncontrolling interest. With the consolidation of Cat Japan's results of operations, 33 percent of Cat Japan's comprehensive income or loss is attributed to the redeemable noncontrolling interest, impacting its carrying value.Because the redeemable noncontrolling interest m |
Fair Value Disclosures
Fair Value Disclosures | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Fair Value Disclosures | |
Fair Value, by Balance Sheet Grouping | 17. Fair Value Disclosures A. Fair value measurements We adopted the accounting guidance on fair value measurements as of January 1, 2008.See Note 2 for additional information.This guidance 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 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. The guidance on fair value measurements expanded the definition of fair value to include the consideration of nonperformance risk.Nonperformance risk refers to the risk that an obligation (either by a counterparty or Caterpillar) will not be fulfilled.For our financial assets traded in an active market (Level 1 and certain Level 2), 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. Available-for-sale securities Our available-for-sale securities, primarily at Cat Insurance, include a mix of equity and debt instruments (see Note 8 for additional information).Fair values for our U.S. treasury bonds and equity securities are based upon valuations for identical instruments in active markets.Fair values for other government bonds, corporate bonds and mortgage-backed debt securities are based upon models that take into consideration such market-based factors as recent |
Employee Separation Charges
Employee Separation Charges | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Employee separation charges | |
Restructuring And Related Activities Disclosure | 18. Employee Separation Charges During the fourth quarter 2008, we recognized employee separation charges of $30 million in Other operating (income) expenses in the Consolidated Statement of Results of Operations related to various voluntary and involuntary separation programs.These programs, impacting 3,085 production and support and management employees worldwide, were in response to a sharp decline in sales volume due to the global recession. During the first quarter 2009, continued cost reduction efforts in various locations around the world resulted in additional separation charges of $357 million, recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations, related to the following separation programs: U.S. Voluntary Separation Program - During December 2008, we announced a voluntary separation program for certain support and management employees based in the United States.Eligible employees had until January 12, 2009 to sign up for the program, and generally until January 31, 2009 to make a final decision.Participating employees received severance pay based on current salary level and years of service.During first quarter 2009, 2,213 employees accepted the program, the majority of which separated from Caterpillar by March 31, 2009. Other U.S. Separation Programs - During the first quarter 2009, we initiated plans to reduce U.S. based production and support and management positions through a variety of programs.For support and management employees, these included involuntary separation programs.For production employees, these included both voluntary and involuntary separation programs.During the first quarter 2009, 6,870 employees accepted or were subject to these programs. Non-U.S. Separation Programs - During the first quarter 2009, we initiated several other separation programs outside the U.S.These programs, designed specific to the laws and regulations of the individual countries, represent voluntary and involuntary plans for production and support and management employees.During the first quarter 2009, 3,957 employees accepted or were subject to the various programs. During the second quarter 2009, on-going cost reduction efforts worldwide resulted in additional separation charges of $85 million, recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations.These efforts, impacting production and support and management positions, related to new and previously initiated U.S. and non-U.S. voluntary and involuntary separation programs.During the second quarter 2009, 1,820 employees accepted or were subject to these programs. During the third quarter 2009, on-going cost reduction efforts and adjustments to existing programs resulted in a net benefit of $2 million, recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations.These activities, impacting production and support and management positions worldwide, resulted in net additional employee separations of 265. Our accounting for separations is dependent upon how the particular p |
Business Combinations and Allia
Business Combinations and Alliances | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Business Combinations Abstract | |
Business Combinations | 19. Business Combinations and Alliances NC2 Joint Venture In September 2009, we entered into a joint venture with Navistar International Corporation (Navistar), resulting in a new company, NC2 Global LLC (NC2).NC2 will develop, manufacture, market, distribute and provide product support for heavy and medium duty trucks outside of North America and the Indian subcontinent.Initially, NC2 will focus its activities in Australia, Brazil, China, Russia, South Africa, and Turkey.NC2's product line will feature both conventional and cab-over truck designs and will be sold under both the Caterpillar and International brands. Under the joint venture operating agreement, Caterpillar and Navistar have each contributed $9 million as an initial capital contribution.In addition, each is committed to provide the joint venture with up to an additional $123 million of required funding over the following three years. |
Document Information
Document Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | 2009-09-30 |
Entity Information
Entity Information (USD $) | |
9 Months Ended
Sep. 30, 2009 | |
Entity Information [Line Items] | |
Entity Registrant Name | Caterpillar Inc. |
Entity Central Index Key | 0000018230 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Public Float | $31,964,605,501 |
Entity Common Stock, Shares Outstanding | 622,727,557 |