Consolidated Statement of Resul
Consolidated Statement of Results of Operations (USD $) | |||||||||||||||||||
In Millions, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 | ||||||||||||||||
Sales and revenues | |||||||||||||||||||
Sales of Machinery and Engines | $29,540 | $48,044 | $41,962 | ||||||||||||||||
Revenues of Financial Products | 2,856 | 3,280 | 2,996 | ||||||||||||||||
Total sales and revenues | 32,396 | 51,324 | 44,958 | ||||||||||||||||
Operating costs | |||||||||||||||||||
Cost of goods sold | 23,886 | 38,415 | 32,626 | ||||||||||||||||
Selling, general and administrative expenses | 3,645 | 4,399 | 3,821 | ||||||||||||||||
Research and development expenses | 1,421 | 1,728 | 1,404 | ||||||||||||||||
Interest expense of Financial Products | 1,045 | 1,153 | 1,132 | ||||||||||||||||
Other operating (income) expenses | 1,822 | 1,181 | 1,054 | ||||||||||||||||
Total operating costs | 31,819 | 46,876 | 40,037 | ||||||||||||||||
Operating profit | 577 | 4,448 | 4,921 | ||||||||||||||||
Interest expense excluding Financial Products | 389 | 274 | 288 | ||||||||||||||||
Other income (expense) | 381 | 327 | 357 | ||||||||||||||||
Consolidated profit before taxes | 569 | 4,501 | 4,990 | ||||||||||||||||
Provision (benefit) for income taxes | (270) | 953 | 1,485 | ||||||||||||||||
Profit of consolidated companies | 839 | 3,548 | 3,505 | ||||||||||||||||
Equity in profit (loss) of unconsolidated affiliated companies | (12) | 37 | 73 | ||||||||||||||||
Profit of consolidated and affiliated companies | 827 | 3,585 | 3,578 | ||||||||||||||||
Less: Profit (loss) attributable to noncontrolling interests | (68) | 28 | 37 | ||||||||||||||||
Profit | $895 | [2] | $3,557 | [2] | $3,541 | [2] | |||||||||||||
Profit per common share | 1.45 | 5.83 | 5.55 | ||||||||||||||||
Profit per common share - diluted | 1.43 | [1] | 5.66 | [1] | 5.37 | [1] | |||||||||||||
Weighted-average common shares outstanding (millions) | |||||||||||||||||||
Basic | 615.2 | 610.5 | 638.2 | ||||||||||||||||
Diluted | 626 | [1] | 627.9 | [1] | 659.5 | [1] | |||||||||||||
Cash dividends declared per common share | 1.68 | 1.62 | 1.38 | ||||||||||||||||
[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 | Dec. 31, 2009
| Dec. 31, 2008
| Dec. 31, 2007
|
Current assets | |||
Cash and short-term investments | $4,867 | $2,736 | $1,122 |
Receivables - trade and other | 5,611 | 9,397 | 8,249 |
Receivables - finance | 8,301 | 8,731 | 7,503 |
Deferred and refundable income taxes | 1,216 | 1,223 | 816 |
Prepaid expenses and other current assets | 434 | 765 | 583 |
Inventories | 6,360 | 8,781 | 7,204 |
Total current assets | 26,789 | 31,633 | 25,477 |
Property, plant and equipment - net | 12,386 | 12,524 | 9,997 |
Long-term receivables - trade and other | 971 | 1,479 | 685 |
Long-term receivables - finance | 12,279 | 14,264 | 13,462 |
Investments in unconsolidated affiliated companies | 105 | 94 | 598 |
Noncurrent deferred and refundable income taxes | 2,714 | 3,311 | 1,553 |
Intangible assets | 465 | 511 | 475 |
Goodwill | 2,269 | 2,261 | 1,963 |
Other assets | 2,060 | 1,705 | 1,922 |
Total assets | 60,038 | 67,782 | 56,132 |
Short-term borrowings | |||
Machinery and Engines | 433 | 1,632 | 187 |
Financial Products | 3,650 | 5,577 | 5,281 |
Accounts payable | 2,993 | 4,827 | 4,723 |
Accrued expenses | 3,351 | 4,121 | 3,178 |
Accrued wages, salaries and employee benefits | 797 | 1,242 | 1,126 |
Customer advances | 1,217 | 1,898 | 1,442 |
Dividends payable | 262 | 253 | 225 |
Other current liabilities | 888 | 1,027 | 951 |
Long-term debt due within one year: | |||
Machinery and Engines | 302 | 456 | 180 |
Financial Products | 5,399 | 5,036 | 4,952 |
Total current liabilities | 19,292 | 26,069 | 22,245 |
Long-term debt due after one year | |||
Machinery and Engines | 5,652 | 5,736 | 3,639 |
Financial Products | 16,195 | 17,098 | 14,190 |
Liability for postemployment benefits | 7,420 | 9,975 | 5,059 |
Other liabilities | 2,179 | 2,190 | 2,003 |
Total liabilities | 50,738 | 61,068 | 47,136 |
Commitments and contingencies (Notes 22 and 23) | |||
Redeemable noncontrolling interest (Note 26) | 477 | 524 | 0 |
Stockholders' equity | |||
Common stock of $1.00 par (Authorized shares: 900,000,000, Issued shares: (2009, 2008 and 2007 - 814,894,624) at paid-in amount | 3,439 | 3,057 | 2,744 |
Treasury stock (2009 - 190,171,905 shares; 2008 - 213,367,983 shares and 2007 - 190,908,490 shares) at cost | (10,646) | (11,217) | (9,451) |
Profit employed in the business | 19,711 | 19,826 | 17,398 |
Accumulated other comprehensive income (loss) | (3,764) | (5,579) | (1,808) |
Noncontrolling interests | 83 | 103 | 113 |
Total stockholders' equity | 8,823 | 6,190 | 8,996 |
Total liabilities, redeemable noncontrolling interest and stockholders' equity | $60,038 | $67,782 | $56,132 |
Parenthetical Data to The Conso
Parenthetical Data to The Consolidated Statement of Financial Position (USD $) | |||
Dec. 31, 2009
| Dec. 31, 2008
| Dec. 31, 2007
| |
Stockholders' equity | |||
Common stock, par value | $1 | $1 | $1 |
Authorized shares | 900,000,000 | 900,000,000 | 900,000,000 |
Issued shares | 814,894,624 | 814,894,624 | 814,894,624 |
Treasury Stock, Shares | 190,171,905 | 213,367,983 | 190,908,490 |
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, 2006 | $2,465 | ($7,352) | $14,593 | ($2,847) | $78 | $6,937 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||
Adjustment to adopt accounting for uncertainty in income taxes | 141 | [42] | 141 | [43] | |||||||||||||||
Profit of consolidated and affiliated companies | 3,541 | 37 | 3,578 | ||||||||||||||||
Foreign Currency Transalation, net of tax | 278 | 1 | 279 | ||||||||||||||||
Pension & other postretirement benefits: Current year actuarial gain (loss), net of tax | 537 | [32] | 537 | [32] | |||||||||||||||
Pension & other postretirement benefits: Amortization of actuarial (gain) loss, net of tax | 228 | [26] | 228 | [26] | |||||||||||||||
Pension & other postretirement benefits: Current year prior service costs, net of tax | (2) | [9] | (2) | [9] | |||||||||||||||
Pension & other postretirement benefits: Amortization of prior service cost, net of tax | 17 | [23] | 17 | [23] | |||||||||||||||
Pension & other postretirement benefits: Amortization of transition (asset) obligation, net of tax | 2 | [22] | 2 | [22] | |||||||||||||||
Derivative financial instruments: Gains (losses) deferred, net of tax | 48 | [31] | 48 | [31] | |||||||||||||||
Derivative financial instruments: (Gains) losses reclassified to earnings, net of tax | (74) | [17] | (74) | [17] | |||||||||||||||
Retained interest: Gains (losses) deferred, net of tax | 3 | [29] | 3 | [29] | |||||||||||||||
Retained interest: (Gains) losses reclassed to earnings, net of tax | (6) | [16] | (6) | [16] | |||||||||||||||
Available-for-sale securities: Gains (losses) deferred, net of tax | 14 | [38] | 14 | [38] | |||||||||||||||
Available-for-sale securities: (Gains) losses reclassed to earnings, net of tax | (6) | [14] | (6) | [14] | |||||||||||||||
Dividends declared | (877) | (877) | |||||||||||||||||
Distribution to noncontrolling interest | (20) | (20) | |||||||||||||||||
Change in ownership for noncontrolling interests | 17 | 17 | |||||||||||||||||
Common shares issued from treasury stock for stock-based compensation | 22 | [6] | 306 | [6] | 328 | [6] | |||||||||||||
Stock-based compensation expense | 146 | 146 | |||||||||||||||||
Excess tax benefits from stock-based compensation | 167 | 167 | |||||||||||||||||
Shares repurchased at cost | (2,405) | [41] | (2,405) | [41] | |||||||||||||||
Stock repurchase derivative contracts | (56) | (56) | |||||||||||||||||
Ending at Dec. 31, 2007 | 2,744 | (9,451) | 17,398 | (1,808) | [40] | 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 | 3,557 | 28 | 3,585 | ||||||||||||||||
Foreign Currency Transalation, net of tax | (488) | [12] | 23 | (465) | [12] | ||||||||||||||
Pension & other postretirement benefits: Current year actuarial gain (loss), net of tax | (3,415) | [10] | (30) | (3,445) | [10] | ||||||||||||||
Pension & other postretirement benefits: Amortization of actuarial (gain) loss, net of tax | 150 | [39] | 1 | 151 | [39] | ||||||||||||||
Pension & other postretirement benefits: Current year prior service costs, net of tax | (9) | [18] | (9) | [18] | |||||||||||||||
Pension & other postretirement benefits: Amortization of transition (asset) obligation, net of tax | 2 | [22] | 2 | [22] | |||||||||||||||
Derivative financial instruments: Gains (losses) deferred, net of tax | 100 | [37] | 100 | [37] | |||||||||||||||
Derivative financial instruments: (Gains) losses reclassified to earnings, net of tax | (22) | [13] | 2 | (20) | [13] | ||||||||||||||
Retained interest: Gains (losses) deferred, net of tax | (22) | [11] | (22) | [11] | |||||||||||||||
Retained interest: (Gains) losses reclassed to earnings, net of tax | 13 | [38] | 13 | [38] | |||||||||||||||
Available-for-sale securities: Gains (losses) deferred, net of tax | (125) | [19] | (125) | [19] | |||||||||||||||
Available-for-sale securities: (Gains) losses reclassed to earnings, net of tax | 28 | [27] | 28 | [27] | |||||||||||||||
Dividends declared | (981) | (981) | |||||||||||||||||
Distribution to noncontrolling interest | (10) | (10) | |||||||||||||||||
Change in ownership for noncontrolling interests | (26) | (26) | |||||||||||||||||
Common shares issued from treasury stock for stock-based compensation | 7 | [8] | 128 | [8] | 135 | [8] | |||||||||||||
Stock-based compensation expense | 194 | 194 | |||||||||||||||||
Excess tax benefits from stock-based compensation | 56 | 56 | |||||||||||||||||
Shares repurchased at cost | (1,894) | [4] | (1,894) | [4] | |||||||||||||||
Stock repurchase derivative contracts | 56 | 56 | |||||||||||||||||
Cat Japan share redemption | (115) | 2 | (113) | ||||||||||||||||
Ending 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 | 895 | (68) | 827 | ||||||||||||||||
Foreign Currency Transalation, net of tax | 342 | [33] | 21 | 363 | [33] | ||||||||||||||
Pension & other postretirement benefits: Current year actuarial gain (loss), net of tax | 924 | [34] | 1 | 925 | [34] | ||||||||||||||
Pension & other postretirement benefits: Amortization of actuarial (gain) loss, net of tax | 187 | [25] | 187 | [25] | |||||||||||||||
Pension & other postretirement benefits: Current year prior service costs, net of tax | 300 | [30] | 300 | [30] | |||||||||||||||
Pension & other postretirement benefits: Amortization of prior service cost, net of tax | (2) | [20] | (2) | [20] | |||||||||||||||
Pension & other postretirement benefits: Amortization of transition (asset) obligation, net of tax | 1 | [22] | 1 | [22] | |||||||||||||||
Derivative financial instruments: Gains (losses) deferred, net of tax | 19 | [28] | 19 | [28] | |||||||||||||||
Derivative financial instruments: (Gains) losses reclassified to earnings, net of tax | (54) | [15] | (2) | (56) | [15] | ||||||||||||||
Retained interest: Gains (losses) deferred, net of tax | (16) | [21] | (16) | [21] | |||||||||||||||
Retained interest: (Gains) losses reclassed to earnings, net of tax | 20 | [24] | 20 | [24] | |||||||||||||||
Available-for-sale securities: Gains (losses) deferred, net of tax | 86 | [35] | 86 | [35] | |||||||||||||||
Available-for-sale securities: (Gains) losses reclassed to earnings, net of tax | 8 | [36] | 8 | [36] | |||||||||||||||
Dividends declared | (1,038) | (1,038) | |||||||||||||||||
Distribution to noncontrolling interest | (10) | (10) | |||||||||||||||||
Change in ownership for noncontrolling interests | (3) | (15) | (18) | ||||||||||||||||
Common shares issued from treasury stock for stock-based compensation | (14) | [7] | 103 | [7] | 89 | [7] | |||||||||||||
Common shares issued from treasury stock for benefit plans | 250 | [5] | 468 | [5] | 718 | [5] | |||||||||||||
Stock-based compensation expense | 132 | 132 | |||||||||||||||||
Excess tax benefits from stock-based compensation | 17 | 17 | |||||||||||||||||
Cat Japan share redemption | 28 | 53 | 81 | ||||||||||||||||
Ending at Dec. 31, 2009 | $3,439 | ($10,646) | $19,711 | ($3,764) | $83 | $8,823 | |||||||||||||
[1]Adjustments were made on January 1, 2008 to adopt the measurement date provision of the accounting standard on employer's accounting for defined benefits pension and other postretirement plans. Adjustments to Pension and other postemployment benefits in Accumulated other comprehensive income (loss) were net of tax of $9 million. As a result, the balance of Accumulated other comprehensive income (loss) at January 1, 2008 was $(1,791) million. | |||||||||||||||||||
[2]Adjustments were made on January 1, 2008 to adopt the measurement date provision of the accounting standard 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 at January 1, 2008 was $17,365 million. | |||||||||||||||||||
[3]Adjustments were made on January 1, 2008 to adopt the measurement date provision of the accounting standard on employer's accounting for defined benefits pension and other postretirement plans. As a result, the balance of Total stockholders' equity at January 1, 2008 was $8,980 million. | |||||||||||||||||||
[4]Amount consists of $1,800 million of cash-settled purchases and $94 million of derivative contracts. Share repurchased: 27,267,026. | |||||||||||||||||||
[5]Common shares issued from treasury stock for benefit plans: 19,624,810. | |||||||||||||||||||
[6]Common shares issued from treasury stock for stock-based compensation: 11,710,958. | |||||||||||||||||||
[7]Common shares issued from treasury stock for stock-based compensation: 3,571,268. | |||||||||||||||||||
[8]Common shares issued from treasury stock for stock-based compensation: 4,807,533. | |||||||||||||||||||
[9]Net of tax of $(1) million. | |||||||||||||||||||
[10]Net of tax of $(1,854) million. | |||||||||||||||||||
[11]Net of tax of $(13) million. | |||||||||||||||||||
[12]Net of tax of $(133) million. | |||||||||||||||||||
[13]Net of tax of $(14) million. | |||||||||||||||||||
[14]Net of tax of $(3) million. | |||||||||||||||||||
[15]Net of tax of $(36) million. | |||||||||||||||||||
[16]Net of tax of $(4) million. | |||||||||||||||||||
[17]Net of tax of $(41) million. | |||||||||||||||||||
[18]Net of tax of $(5) million. | |||||||||||||||||||
[19]Net of tax of $(67) million. | |||||||||||||||||||
[20]Net of tax of $(8) million. | |||||||||||||||||||
[21]Net of tax of $(9) million. Also includes noncredit component of other-than-temporary impairment losses on retained interest of $(8) million, net of tax of $4 million, for the twelve months ended December 31, 2009. | |||||||||||||||||||
[22]Net of tax of $1 million. | |||||||||||||||||||
[23]Net of tax of $10 million. | |||||||||||||||||||
[24]Net of tax of $11 million. | |||||||||||||||||||
[25]Net of tax of $113 million. | |||||||||||||||||||
[26]Net of tax of $123 million. | |||||||||||||||||||
[27]Net of tax of $15 million. | |||||||||||||||||||
[28]Net of tax of $16 million. | |||||||||||||||||||
[29]Net of tax of $2 milliion. | |||||||||||||||||||
[30]Net of tax of $249 million. | |||||||||||||||||||
[31]Net of tax of $25 million. | |||||||||||||||||||
[32]Net of tax of $271 million. | |||||||||||||||||||
[33]Net of tax of $37 million. | |||||||||||||||||||
[34]Net of tax of $401 million. | |||||||||||||||||||
[35]Net of tax of $47 million. | |||||||||||||||||||
[36]Net of tax of $5 million. | |||||||||||||||||||
[37]Net of tax of $67 million. | |||||||||||||||||||
[38]Net of tax of $8 million. | |||||||||||||||||||
[39]Net of tax of $84 million. | |||||||||||||||||||
[40]Pension and other postretirement benefits include net adjustments for Cat Japan Ltd, while they were an unconsolidated affiliate, of $(9) million in 2007. The ending balance is $(52) million as of December 31, 2007. | |||||||||||||||||||
[41]Shares repurchased: 33,533,000. | |||||||||||||||||||
[42]The adjustment was made on January 1, 2007. As a result, the balance of Profit employed in the business as of January 1, 2007 was $14,734 million. | |||||||||||||||||||
[43]The adjustment was made on January 1, 2007. As a result, the balance of Total stockholders' equity as of January 1, 2007 was $7,078 million. |
Consolidated Statement of Cash
Consolidated Statement of Cash Flow (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Cash flow from operating activities | |||
Profit of consolidated and affiliated companies | $827 | $3,585 | $3,578 |
Adjustments for non-cash items | |||
Depreciation and amortization | 2,336 | 1,980 | 1,797 |
Other | 137 | 355 | 162 |
Changes in assets and liabilities | |||
Receivables - trade and other | 4,014 | (545) | 899 |
Inventories | 2,501 | (833) | (745) |
Accounts payable | (2,034) | (4) | 387 |
Accrued expenses | (505) | 660 | 231 |
Customer advances | (646) | 286 | 576 |
Other assets - net | 235 | (470) | 66 |
Other liabilities - net | (522) | (217) | 1,004 |
Net cash provided by (used for) operating activities | 6,343 | 4,797 | 7,955 |
Cash flow from investing activities | |||
Capital expenditures - excluding equipment leased to others | (1,348) | (2,445) | (1,700) |
Expenditures for equipment leased to others | (968) | (1,566) | (1,340) |
Proceeds from disposals of property, plant and equipment | 1,242 | 982 | 408 |
Additions to finance receivables | (7,107) | (14,031) | (13,946) |
Collections of finance receivables | 9,288 | 9,717 | 10,985 |
Proceeds from sales of finance receivables | 100 | 949 | 866 |
Investments and acquisitions (net of cash acquired) | (19) | (117) | (229) |
Proceeds from release of security deposit | 0 | 0 | 290 |
Proceeds from sale of available-for-sale securities | 291 | 357 | 282 |
Investments in available-for-sale securities | (349) | (339) | (485) |
Other - net | (128) | 197 | 461 |
Net cash provided by (used for) investing activities | 1,002 | (6,296) | (4,408) |
Cash flow from financing activities | |||
Dividends paid | (1,029) | (953) | (845) |
Distribution to noncontrolling interest | (10) | (10) | (20) |
Common stock issued, including treasury shares reissued | 89 | 135 | 328 |
Payment for stock repurchase derivative contracts | 0 | (38) | (56) |
Treasury shares purchased | 0 | (1,800) | (2,405) |
Excess tax benefit from stock-based compensation | 21 | 56 | 155 |
Acquistion of noncontrolling interests | (6) | 0 | 0 |
Proceeds from debt issued (original maturities greater than three months) | |||
Machinery and Engines | 458 | 1,673 | 224 |
Financial Products | 11,833 | 16,257 | 10,815 |
Payments on debt (original maturities greater than three months) | |||
Machinery and Engines | (918) | (296) | (598) |
Financial Products | (11,769) | (14,143) | (10,290) |
Short-term borrowings (original maturities three months or less) - net | (3,884) | 2,074 | (297) |
Net cash provided by (used for) financing activities | (5,215) | 2,955 | (2,989) |
Effect of exchange rate changes on cash | 1 | 158 | 34 |
Increase (decrease) in cash and short-term investments | 2,131 | 1,614 | 592 |
Cash and short-term investments at beginning of period | 2,736 | 1,122 | 530 |
Cash and short-term investments at end of period | $4,867 | $2,736 | $1,122 |
1. Operations and summary of si
1. Operations and summary of significant accounting policies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Operations and summary of significant accounting policies | 1. Operations and summary of significant accounting policies A. 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, 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 21,800 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 Engines operations are highly integrated. Throughout the Notes, Machinery and Engines represents the aggregate total of these principal lines of business. Our products are sold primarily under the brands "Caterpillar," "CAT," design versions of "CAT" and "Caterpillar," "Solar Turbines," MaK," "Perkins," "FG Wilson," "Olympian" and Progress Rail. We conduct operations in our Machinery and Engines lines of business under highly competitive conditions, including intense price competition. We place great emphasis on the high quality and performance of our products and our dealers' service support. Although no one competitor is believed to produce all of the same types of machines and engines that we do, there are numerous companies, large and small, which compete with us in the sale of each of our products. Machines are distributed principally through a worldwide organization of dealers (dealer network), 51 located in the United States and 127 located outside the United States. Worldwide, these dealers serve 182 countries and operate 3,518 places of business, including 1,407 dealer rental outlets.Reciprocating engines are sold principally |
2. Stock-based compensation
2. Stock-based compensation | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Stock-based compensation | 2. Stock-based compensation On January 1, 2006, we adopted accounting guidance for share-based payments using the modified prospective transition method.Under the modified prospective transition method, we were required to record stock-based compensation expense for all awards granted after the date of adoption.Our stock-based compensation plans primarily provide for the granting of stock options, stock-settled stock appreciation rights (SARs) and restricted stock units (RSUs) to Officers and other key employees, as well as non-employee Directors. Stock options permit a holder to buy Caterpillar stock at the stock's price when the option was granted. SARs permit a holder the right to receive the value in shares of the appreciation in Caterpillar stock that occurred from the date the right was granted up to the date of exercise.A restricted stock unit (RSU) is an agreement to issue shares of Caterpillar stock at the time of vesting. 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 awardsincluded 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 June of 2006), the Compensation Committee approved the exercise price methodology to be the closing price of the Company stock on the date of the grant. Common stock issued from Treasury stock under the plans totaled 3,571,268 for 2009, 4,807,533 for 2008 and 11,710,958 for 2007. In 2007, in order to align our stock award program with the overall market, we adjusted our 2007 grant by reducing the overall number of employee awards and utilizing RSUs in addition to the SARs and option awards.The 2009, 2008 and 2007 awards generally vest three years after the date of grant.At grant, SARs and option awards have a term life of ten years.Upon separation from service, if the participant is 55 years of age or older with more than ten years of service, the participant meets the criteria for a Long Service Separation."If the Long Service Separation criteria are met, the vested options/SARs will have a life that is the lesser of 10 years from the original grant date or five years from the separation date. Our stock-based compensation plans allow for the immediate vesting upon separation for employees who meet the criteria for a Long Service Separation and who have fulfilled the requisite service period of six months.With the adoption of guidance on share-based payments, compensation expense is recognized over the period from the grant date to the end date of the requisite service period for employees who meet the immediate vesting upon retirement requirements.For those employees who become eligible |
3. Derivative financial instrum
3. Derivative financial instruments and risk management | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Derivative financial instrucments and risk management | 3. Derivative financial instruments and risk management 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, commodity forward and option contracts, and stock repurchase 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 in Statement 2 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 asset or 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 Statement 2 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 Statement 4.Cash flow from undesignated derivative financial instruments are included in the investing category on Statement 4. 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 in Statement 2 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 values or cash flow of hedged items.When a derivative is determined not to be highly effective as a hedge or the |
4. Other income
4. Other income (expense) | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Other income (expense) | 4. Other income (expense) Years ended December 31, (Millions of dollars) 2009 2008 2007 Investment and interest income $ 98 $ 101 $ 99 Foreign exchange gains (losses)1 184 100 21 License fee income 49 73 66 Gains (losses) on sale of securities and affiliated companies (2 ) 55 70 Impairment of available-for-sale securities (12 ) (37 ) Miscellaneous income (loss) 64 35 101 $ 381 $ 327 $ 357 1 Includes gains (losses) from foreign exchange derivative contracts.See Note 3 for further details. |
5. Income taxes
5. Income taxes | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Income taxes | 5. Income taxes The components of profit (loss) before taxes were: Years ended December 31, (Millions of dollars) 2009 2008 2007 U.S. $ (648 ) $ 2,146 $ 2,155 Non-U.S. 1,217 2,355 2,835 $ 569 $ 4,501 $ 4,990 Profit (loss) before taxes, as shown above, is based on the location of the entity to which such earnings are attributable. Where an entity's earnings are subject to taxation, however, may not correlate solely to where an entity is located.Thus, the income tax provision shown below as U.S. or non-U.S. may not correspond to the earnings shown above. The components of the provision (benefit) for income taxes were: Years ended December 31, (Millions of dollars) 2009 2008 2007 Current tax provision (benefit): U.S. $ (443 ) $ 673 $ 515 Non-U.S. 350 446 464 State (U.S.) (13 ) 41 92 (106 ) 1,160 1,071 Deferred tax provision (benefit): U.S. 1 (335 ) 403 Non-U.S. (149 ) 99 21 State (U.S.) (16 ) 29 (10 ) (164 ) (207 ) 414 Total provision (benefit) for income taxes $ (270 ) $ 953 $ 1,485 We received net income tax and related interest refunds of $136 million in 2009 compared to income taxes paid of $1,318 million and $821 million in 2008 and 2007, respectively. Reconciliation of the U.S. federal statutory rate to effective rate: Years ended December 31, 2009 2008 2007 Taxes at U.S. statutory rate $ 199 35.0 % $ 1,575 35.0 % $ 1,747 35.0 % (Decreases) increases in taxes resulting from: Non-U.S. subsidiaries taxed at other than 35% (261 ) (46.0 ) % (124 ) (2.8 ) % (248 ) (4.9 ) % State and local taxes, net of federal (19 ) (3.3 ) % 46 1.0 % 53 1.0 % Interest and penalties, net of tax 20 3.5 % 11 0.2 % 24 0.5 % U.S. tax credits (47 ) (8.2 ) % (40 ) (0.8 ) % (37 ) (0.7 ) % Othernet (29 ) (5.1 ) % (59 ) (1.3 ) % (54 ) (1.1 ) % (137 ) (24.1 ) % 1,409 31.3 % 1,485 29.8 % Prior year tax and interest adjustments (133 ) (23.4 ) % Non-U.S. earnings reinvestment changes (456 ) (10.1 ) % Provision (benefit) for income taxes $ (270 |
6. Sales and servicing of trade
6. Sales and servicing of trade receivables | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Sales and servicing of trade receivables | 6. Sales and servicing of trade receivables Our Machinery and Engines operations generate trade receivables from the sale of inventory to dealers and customers. Certain of these receivables are sold to Cat Financial. Cat Financial has sold interests in a certain pool of trade receivables through a revolving structure to third-party commercial paper conduits, which are asset-backed commercial paper issuers that are special purpose entities (SPEs) of the sponsor bank and are not consolidated by Cat Financial.Cat Financial services the sold trade receivables and receives an annual servicing fee of approximately 0.5% of the average outstanding principal balance. Consolidated expenses of $4 million, $10 million and $15million related to the sale of trade receivables were recognized during 2009, 2008 and 2007, respectively, and are included in Other income (expense) in Statement 1. As of December 31, 2009, there were no trade receivables sold to the third-party commercial paper conduits.As of December 31, 2008 and 2007, the outstanding principal balance of the sold trade receivables was $240 million. Cat Financial's remaining interest in the pool of trade receivables as of December31, 2008 and 2007 of $1,432 million and $1,233 million, respectively, is included in Receivables-trade and other in Statement 2. The cash collections from this pool of trade receivables are first applied to satisfy any obligations of Cat Financial to the third-party commercial paper conduits. The third-party commercial paper conduits have no recourse to Cat Financial's assets, other than the remaining interest, for failure of debtors to pay when due. Cash flows from sale of trade receivables: Years ended December 31, (Millions of dollars) 2009 2008 2007 Cash proceeds from sales of receivables to the conduits $ 887 $ 1,510 $ 1,512 Servicing fees received $ 1 $ 1 $ 1 Cash flows received on the interests that continue to be held $ 7,548 $ 11,270 $ 13,680 |
7. Wholesale inventory receivab
7. Wholesale inventory receivables | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Wholesale inventory receivables | 7. Wholesale inventory receivables Wholesale inventory receivables are receivables of Cat Financial that arise when Cat Financial provides financing for a dealer's purchase of inventory. These receivables are included in Receivablestrade and other and Long-term receivablestrade and other in Statement2 and were $937 million, $1,555 million, and $1,496million at December31, 2009, 2008 and 2007, respectively. Please refer to Note19 and TableIV for fair value information. Contractual maturities of outstanding wholesale inventory receivables: (Millions of dollars) December 31, 2009 Amounts Due In Wholesale Installment Contracts Wholesale Finance Leases Wholesale Notes Total 2010 $ 170 $ 87 $ 236 $ 493 2011 15 52 159 226 2012 10 28 65 103 2013 8 9 5 22 2014 7 2 9 Thereafter 1 1 2 203 184 468 855 Guaranteed residual value 119 119 Less: Unearned income (7 ) (26 ) (4 ) (37 ) Total $ 196 $ 277 $ 464 $ 937 |
8. Finance receivables
8. Finance receivables | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Finance receivables | 8. Finance receivables Finance receivables are receivables of Cat Financial, which generally can be repaid or refinanced without penalty prior to contractual maturity. Total finance receivables reported in Statement2 are net of an allowance for credit losses. We consider an account past due if any portion of an installment is due and unpaid for more than 30days.Recognition of income is suspended when management determines that collection of future income is not probable (generally after 120days past due). Accrual is resumed, and previously suspended income is recognized, when the receivable becomes contractually current and/or collection doubts are removed. Cash receipts on impaired loans or finance leases are recorded against the receivable and then to any unrecognized income. Investment in loans/finance leases on nonaccrual status were $678 million, $422 million and $232million and past due over 90days and still accruing were $134 million, $119 million and $47 million as of December31, 2009, 2008 and 2007, respectively. Cat Financial provides financing only when acceptable criteria are met. Credit decisions are based on, among other things, the customer's credit history, financial strength and intended use of equipment. Cat Financial typically maintains a security interest in retail financed equipment and requires physical damage insurance coverage on financed equipment. Please refer to Table III for additional finance receivables information and Note19 and TableIV for fair value information. 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 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 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.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 Statement 2 at |
9. Inventories
9. Inventories | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Inventories | 9. Inventories Inventories (principally using the LIFO method) are comprised of the following: December 31, (Millions of dollars) 2009 2008 2007 Raw materials $ 1,979 $ 2,678 $ 2,240 Work-in-process 656 1,508 1,206 Finished goods 3,465 4,316 3,512 Supplies 260 279 246 Total inventories $ 6,360 $ 8,781 $ 7,204 We had long-term material purchase obligations of approximately $299million at December31, 2009. During 2009 inventory quantitieswere reduced.This reduction resulted in a liquidation of LIFO inventory layers carried at lower costs prevailing in prior years as compared with current costs.In 2009, the effect of this reduction of inventory decreased Cost of goods sold in Statement 1 by approximately $300 million and increased Profit by approximately $240 million or $0.39 per share. |
10. Property, plant and equipme
10. Property, plant and equipment | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Property, plant and equipment | 10. Property, plant and equipment December 31, (Millions of dollars) Useful Lives (Years) 2009 2008 2007 Land $ 639 $ 575 $ 189 Buildings and land improvements 20-45 4,914 4,647 3,625 Machinery, equipment and other 3-10 12,917 12,173 9,756 Equipment leased to others 1-10 4,717 4,561 4,556 Construction-in-process 1,034 1,531 1,082 Total property, plant and equipment, at cost 24,221 23,487 19,208 Less: Accumulated depreciation (11,835 ) (10,963 ) (9,211 ) Property, plant and equipmentnet $ 12,386 $ 12,524 $ 9,997 We had commitments for the purchase or construction of capital assets of approximately $459million at December31, 2009. Assets recorded under capital leases 1: December 31, (Millions of dollars) 2009 2008 2007 Gross capital leases 2, 3 $ 493 $ 565 $ 96 Less: Accumulated depreciation 3 (258 ) (221 ) (75 ) Net capital leases $ 235 $ 344 $ 21 1 Included in Property, plant and equipment table above. 2 Consists primarily of machinery and equipment. 3 Increase in 2008 due to consolidation of Cat Japan. See Note 25 for additional details. At December31, 2009, scheduled minimum rental payments on assets recorded under capital leases were: (Millions of dollars) 2010 2011 2012 2013 2014 Thereafter $ 128 $ 94 $ 32 $ 37 $ 8 $ 40 Equipment leased to others (primarily by Cat Financial): December 31, (Millions of dollars) 2009 2008 2007 Equipment leased to othersat original cost $ 4,717 $ 4,561 $ 4,556 Less: Accumulated depreciation (1,616 ) (1,416 ) (1,487 ) Equipment leased to othersnet $ 3,101 $ 3,145 $ 3,069 At December31, 2009, scheduled minimum rental payments to be received for equipment leased to others were: (Millions of dollars) 2010 2011 2012 2013 2014 Thereafter $ 801 $ 498 $ 319 $ 172 $ 59 $ 30 |
11. Investments in unconsolidat
11. Investments in unconsolidated affiliated companies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Investments in unconsolidated affiliated companies | 11. 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 25 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, recognized in Other income (expense) in Statement 1.Accordingly, the December 31, 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 3 months or less) was as follows: Results of Operations of unconsolidated affiliated companies: Years ended December 31, (Millions of dollars) 2009 2008 2007 Results of Operations: Sales $ 569 $ 3,727 $ 4,007 Cost of sales 434 3,082 3,210 Gross profit $ 135 $ 645 $ 797 Profit (loss) $ (39 ) $ 55 $ 157 Sales from SCM, while an unconsolidated affiliate, to Caterpillar of approximately $1.67 billion in both 2008 and 2007, are included in the affiliated company sales.In addition, SCM purchases of Caterpillar product, while an unconsolidated affiliate, were $353 million and $268 million in 2008 and 2007, respectively. Financial Position of unconsolidated affiliated companies: December 31, (Millions of dollars) 2009 2008 2007 Financial Position: Assets: Current assets $ 223 $ 209 $ 2,062 Property, plant and equipmentnet 219 227 1,286 Other assets 5 26 173 447 462 3,521 Liabilities: Current liabilities 250 173 1,546 Long-term debt due after one year 41 110 269 Other liabilities 17 35 393 308 318 2,208 Equity $ 139 $ 144 $ 1,313 Caterpillar's investments in unconsolidated affiliated companies: December 31, (Millions of dollars) 2009 2008 2007 Investments in equity method companies $ 70 $ 66 $ 582 Plus: Investments in cost method companies 35 28 16 Total investments in unconsolidated affiliated companies $ 105 $ 94 $ 598 At December31, 2009, consolidated Pro |
12. Intangible assets and goodw
12. Intangible assets and goodwill | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Intangible assets and goodwill | 12. Intangible assets and goodwill A. Intangible assets Intangible assets are comprised of the following: Weighted Amortizable Life (Years) December 31, 2009 (Millions of dollars) Gross Carrying Amount Accumulated Amortization Net Customer relationships 18 $ 396 $ (75 ) $ 321 Intellectual property 10 211 (143 ) 68 Other 11 130 (54 ) 76 Total intangible assets 15 $ 737 $ (272 ) $ 465 Weighted Amortizable Life (Years) December 31, 2008 Gross Carrying Amount Accumulated Amortization Net Customer relationships 18 $ 388 $ (50 ) $ 338 Intellectual property 10 210 (122 ) 88 Other 11 122 (37 ) 85 Total intangible assets 15 $ 720 $ (209 ) $ 511 Weighted Amortizable Life (Years) December 31, 2007 Gross Carrying Amount Accumulated Amortization Net Customer relationships 19 $ 356 $ (27 ) $ 329 Intellectual property 10 195 (120 ) 75 Other 12 92 (21 ) 71 Total intangible assets 16 $ 643 $ (168 ) $ 475 During 2008, the Cat Japan share redemption resulted in additional finite-lived intangible assets of $54 million.In 2008, we acquired finite-lived intangible assets of $17 million due to the purchase of Lovat Inc.See Note 25 for details on these business combinations.Also in 2008, we acquired finite-lived intangible assets of $32 million from other acquisitions. During 2007, we acquired finite-lived intangible assets of $89 million as part of the purchase of Franklin Power Products.In 2007, we also acquired finite-lived intangible assets of $24 million due to the purchase of the Forestry Division of Blount International, Inc.See Note 25 for details on the acquisition of these assets. Amortization expense related to intangible assets was $61 million, $61 million and $52 million for 2009, 2008 and 2007, respectively. Amortization expense related to intangible assets is expected to be: (Millions of dollars) 2010 2011 2012 2013 2014 Thereafter $ 60 $ 52 $ 46 $ 40 $ 37 $ 230 B. Goodwill During 2008, the Cat Japan share redemption resulted in $206 million of goodwill.In 2008, we acquired net assets with related goodwill of $41 million as part of the purchase of Gremada Industries, Inc.In 2008, we also acquired net assets with related goodwill of $22 million as part of the purchase of Lovat Inc.See Note 25 for details on these business combinations.Also during 2008, we acquired net assets with relat |
13. Available-for-sale securiti
13. Available-for-sale securities | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Available-for-sale securities | 13. 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 primarily included in Other assets in Statement 2.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 Statement 2).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 Statement 1. Effective April 1, 2009, we adopted the new accounting and disclosure requirements regarding recognition and presentation of other-than-temporary impairments.See Note 1K for additional information. December 31, 2009 December 31, 2008 December 31, 2007 (Millions of dollars) Cost Basis Unrealized Pretax Net Gains (Losses) Fair Value Cost Basis Unrealized Pretax Net Gains (Losses) Fair Value Cost Basis Unrealized Pretax Net Gains (Losses) Fair Value Government debt U.S. treasury bonds $ 14 $ $ 14 $ 14 $ 1 $ 15 $ 10 $ $ 10 Other U.S. and non-U.S. government bonds 65 65 15 (1 ) 14 37 37 Corporate bonds Corporate bonds 455 20 475 343 (22 ) 321 356 356 Asset-backed securities 141 (7 ) 134 165 (27 ) 138 177 (2) 175 Mortgage-backed debt securities U.S. governmental agency mortgage-backed securities 295 13 308 319 5 324 272 1 273 Residential mortgage-backed securities 61 (10 ) 51 79 (19 ) 60 92 (2) 90 Commercial mortgage-backed securities 175 (13 ) 162 176 (47 ) 129 150 150 Equity securities Large capitalization value 76 13 89 126 (13 ) 113 150 24 174 Smaller company growth 19 5 24 20 (2 ) 18 18 4 22 Total $ 1,301 $ |
14. Postemployment benefit plan
14. Postemployment benefit plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Postemployment benefit plans | 14. Postemployment benefit plans We have both U.S. and non-U.S. pension plans covering substantially all of our U.S. employees and a portion of our non-U.S. employees, primarily in our European and Japanese facilities. Our defined benefit plans provide a benefit based on years of service and/or the employee's average earnings near retirement. Our defined contribution plans allow employees to contribute a portion of their salary to help save for retirement, and in certain cases, we provide a matching contribution. We also have defined-benefit retirement health care and life insurance plans covering substantially all of our U.S. employees. As discussed in Note 1K, we adopted the balance sheet recognition provisions of the guidance on employers' accounting for defined benefit pension and other postretirement plans 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 provisions are applied is allocated proportionately between amounts to be recognized as an adjustment of Profit employed in the business 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.Year-end asset and obligation amounts are disclosed as of the plan measurement dates. As discussed in Note 27, during 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 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 and December 31, 2009, resulting in net curtailment losses of $47 million to pension and $10 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 and December 31, 2009, resulting in pension settlement losses of $34 million, special termination benefits of $2 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 d |
15. Short-term borrowings
15. Short-term borrowings | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Short-term borrowings | 15. Short-term borrowings December 31, (Millions of dollars) 2009 2008 2007 Machinery and Engines: Notes payable to banks1 $ 260 $ 668 $ 187 Commercial paper 173 964 433 1,632 187 Financial Products: Notes payable to banks 793 817 550 Commercial paper 2,162 4,217 4,032 Demand notes 695 543 699 3,650 5,577 5,281 Total short-term borrowings $ 4,083 $ 7,209 $ 5,468 1 Increase due to the consolidation of Cat Japan. See Note 25 for additional details. The weighted-average interest rates on short-term borrowings outstanding were: December 31, 2009 2008 2007 Notes payable to banks 4.6 % 5.5 % 7.0 % Commercial paper 1.2 % 2.0 % 4.3 % Demand notes 2.0 % 3.6 % 5.1 % Please refer to Note19 and Table IV for fair value information on short-term borrowings. |
16. Long-term debt
16. Long-term debt | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Long-term debt | 16. Long-term debt December 31, (Millions of dollars) 2009 2008 2007 Machinery and Engines: Notes6.550% due 2011 $ 251 $ 250 $ 250 Notes5.700% due 2016 515 517 510 Debentures7.250% due 2009 305 Debentures9.375% due 2011 123 123 123 Debentures7.000% due 2013 350 350 Debentures7.900% due 2018 899 898 Debentures9.375% due 2021 120 120 120 Debentures8.000% due 2023 82 82 82 Debentures6.625% due 2028 299 299 299 Debentures7.300% due 2031 349 349 348 Debentures5.300% due 2035 2 204 203 202 Debentures6.050% due 2036 748 748 748 Debentures8.250% due 2038 248 248 Debentures6.950% due 2042 249 249 249 Debentures7.375% due 2097 297 297 297 Capital lease obligations 211 293 68 Other1 707 710 38 Total Machinery and Engines 5,652 5,736 3,639 Financial Products: Commercial paper 71 1,500 903 Medium-term notes 15,363 15,073 12,678 Deposit obligations 232 Other 761 525 377 Total Financial Products 16,195 17,098 14,190 Total long-term debt due after one year $ 21,847 $ 22,834 $ 17,829 1 Increase due to the consolidation of Cat Japan. See Note 25 for additional details. 2 Debentures due in 2035 have an effective yield to maturity of 8.55%. All outstanding notes and debentures are unsecured.The deposit obligations have a corresponding security deposit that relates to a finance arrangement, which provides us a return. This finance arrangement requires that we commit to certain long-term obligations and provide a security deposit, which will fulfill these obligations when they become due.In 2007, the security deposit associated with the outstanding deposit obligations for Financial Products was included in Other assets in Statement 2.In 2008, this security deposit was included in Prepaid expenses and other current assets and the deposit obligations were included in long-term debt due within one year.During 2009, the deposit obligation was fulfilled by the related security deposit. On December 3, 2008, Caterpillar issued $350 million of 7.00% debentures due in 2013, $900 million of 7.90% debentures due in 2018 and $250 million of 8.25% debentures due in 2038. We may redeem the 6.55% and 5.70% notes and the 7.25%, 6.625%, 7.30%, 5.30%, 6.05%, 6.95% and 7.375% debentures in whole or in part at our option at any time at a redemption price equal to the greater of 100% of the principal amount of the debentures to be redeemed or the sum of the presen |
17. Credit commitments
17. Credit commitments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Credit commitments | 17. Credit commitments December 31, 2009 (Millions of dollars) Consolidated Machinery and Engines Financial Products Credit lines available: Global credit facilities $ 8,363 $ 2,875 1 $ 5,488 Other external 4,726 1,187 3,539 Total credit lines available 13,089 4,062 9,027 Less: Global credit facilities supporting commercial paper (2,233 ) (2,233 ) Less: Utilized credit (2,414 ) (367 ) (2,047 ) Available credit $ 8,442 $ 3,695 $ 4,747 1 Includes $1.37 billion from Credit Facility 2. We have three global credit facilities with a syndicate of banks totaling $6.99 billion (Credit Facility 1) available in the aggregate to both Caterpillar and Cat Financial to support their commercial paper programs in the event those programs become unavailable and for general liquidity purposes.Based on management's allocation decision, which can be revised from time to time, the portion of the Credit Facility 1 available to Cat Financial as of December 31, 2009 was $5.49 billion. The five-year facility of $1.62 billion expires in September 2012. The five-year facility of $2.98 billion expires in September 2011. In September 2009, we renewed the 364-day facility. The amount was increased from $2.25 billion to $2.39 billion and expires in September 2010. We also have a 364-day revolving credit facility (Credit Facility 2) with a syndicate of banks totaling $1.37 billion, which expires in March 2010 and is jointly available to both Caterpillar and Cat Financial. Consolidated credit lines with banks as of December 31, 2009 total $4.73 billion. These credit lines, which are eligible for renewal at various future dates or have no specified expiration date, are used primarily by our subsidiaries for local funding requirements.Caterpillar or Cat Financial generally guarantees subsidiary borrowings under these lines. During 2009, certain of the covenants applicable to Caterpillar or Cat Financial under Credit Facility 1 and Credit Facility 2 (the Credit Facilities) were revised.The revisions, among other things, modified the consolidated net worth definition for Caterpillar's covenant to exclude pension and other post-retirement benefits as a part of Accumulated other comprehensive income (loss).In addition, Cat Financial's interest coverage ratio covenant was modified to exclude the impact of interest rate derivatives and to calculate the ratio over a rolling four-quarter period. At December 31, 2009, Caterpillar's consolidated net worth was $13.26 billion, which was above the $9.00 billion required under the Credit Facilities.The consolidated net worth is defined as the consolidated stockholder's equity including preferred stock but excluding the pension and other post-retirement benefits balance within Accumulated other comprehensive income (loss). At December 31, 2009, Cat Financial's interest coverage ratio was 1.26 to 1.This is above the 1.15 to 1 minimum ratio of (1) |
18. Profit per share
18. Profit per share | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Profit per share | 18. Profit per share Computations of profit per share: (Dollars in millions except per share data) 2009 2008 2007 Profit for the period (A) 1 $ 895 $ 3,557 $ 3,541 Determination of shares (in millions): Weighted average number of common shares outstanding (B) 615.2 610.5 638.2 Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price 10.8 17.4 21.3 Average common shares outstanding for fully diluted computation (C) 626.0 627.9 659.5 Profit per share of common stock: Assuming no dilution (A/B) $ 1.45 $ 5.83 $ 5.55 Assuming full dilution (A/C) $ 1.43 $ 5.66 $ 5.37 Shares outstanding as of December 31 (in millions) 624.7 601.5 624.0 1 Profit attributable to common stockholders. SARs and stock options to purchase 18,577,553, 5,468,512 and 543,971 and common shares were outstanding in 2009, 2008 and 2007, respectively, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive. |
19. Fair value disclosures
19. Fair value disclosures | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Fair value disclosures | 19. Fair value disclosures A. Fair value measurements As discussed in Note 1K, we adopted the accounting guidance on fair value measurements as of January 1, 2008.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 13 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 sales, risk- |
20. Concentration of credit ris
20. Concentration of credit risk | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Concentration of credit risk | 20. Concentration of credit risk Financial instruments with potential credit risk consist primarily of trade and finance receivables and short-term and long-term investments. Additionally, to a lesser extent, we have a potential credit risk associated with counterparties to derivative contracts. Trade receivables are primarily short-term receivables from independently owned and operated dealers and customers which arise in the normal course of business. We perform regular credit evaluations of our dealers and customers. Collateral generally is not required, and the majority of our trade receivables are unsecured. We do, however, when deemed necessary, make use of various devices such as security agreements and letters of credit to protect our interests. No single dealer or customer represents a significant concentration of credit risk. Finance receivables and wholesale inventory receivables primarily represent receivables under installment sales contracts, receivables arising from leasing transactions and notes receivable. We generally maintain a secured interest in the equipment financed. No single customer or dealer represents a significant concentration of credit risk. Short-term and long-term investments are held with high quality institutions and, by policy, the amount of credit exposure to any one institution is limited. Long-term investments, primarily included in Other assets in Statement 2, are comprised primarily of available for sale securities at Cat Insurance. For derivative contracts, collateral is generally not required of the counterparties or of our company.The company generally enters into International Swaps and Derivatives Association (ISDA) master netting agreements which permit the net settlement of amounts owed.Our exposure to credit loss in the event of nonperformance by the counterparties is limited to only those gains that we have recorded, but for which we have not yet received cash payment. The master netting agreements reduce the amount of loss the company would incur should the counterparties fail to meet their obligations.At December 31, 2009, 2008 and 2007, the maximum exposure to credit loss was $514 million, $1,051 million and $204 million, respectively, before the application of any master netting agreements.Please refer to Note 19 and Table IV above for fair value information. |
21. Operating leases
21. Operating leases | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Operating leases | 21. Operating leases We lease certain computer and communications equipment, transportation equipment and other property through operating leases. Total rental expense for operating leases was $381 million, $402 million, and $362 million for 2009, 2008 and 2007, respectively. Minimum payments for operating leases having initial or remaining non-cancelable terms in excess of one year are: Years ended December 31, (Millions of dollars) 2010 2011 2012 2013 2014 Thereafter Total $ 247 $ 193 $ 152 $ 120 $ 106 $ 438 $ 1,256 |
22. Guarantees and product warr
22. Guarantees and product warranty | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Guarantees and product warranty | 22. 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 dealers.We also provided guarantees to a third party related to the performance of contractual obligations by certain Caterpillar dealers. The guarantees cover potential financial losses incurred by the third party resulting from the dealers' nonperformance. 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 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 these guarantees. At December31, 2009, 2008 and 2007, the related liability was $17 million, $14 million and $12 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 at December31 are as follows: (Millions of dollars) 2009 2008 2007 Caterpillar dealer guarantees $ 313 $ 375 $ 638 Customer guarantees 226 136 53 Limited indemnity 20 25 30 Other guarantees 64 43 39 Total guarantees $ 623 $ 579 $ 760 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 guarantees 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 December 31, 2009 and 2008, the Trust's assets of $231 million and $477 million, respectively, are primarily comprised of loans to dealers and the Trust's liabilities of $231 million and $477 million, respectively are primarily comprised of commercial p |
23. Environmental and legal mat
23. Environmental and legal matters | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Environmental and legal matters | 23. 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 Statement 2. 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. We have disclosed certain individual legal proceedings in this filing.Additionally, we are involved in other unresolved legal actions that arise in the normal course of business. The most prevalent of these unresolved actions involve disputes related to product design, manufacture and performance liability (including claimed asbestos and welding fumes exposure), contracts, employment issues or intellectual property rights.Although it is not possible to predict with certainty the outcome of these unresolved legal actions, we believe that these actions will not individually or in the aggregate have a material adverse effect on our consolidated results of operations, financial position or liquidity. 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 wa |
24. Segment information
24. Segment information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Segment information | 24. 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 and Product S |
25. Business combinations and a
25. Business combinations and alliances | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Business combinations and alliances | 25. 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, the Indian subcontinent, Myanmar (Burma) and Malaysia.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 $19 million during 2009.In addition, each is committed to provide the joint venture with up to an additional $113 million of required funding over the following three years. Our investment in NC2, accounted for by the equity method, is included in Investments in unconsolidated affiliated companies in Statement 2. Lovat Inc. In April 2008, we acquired 100 percent of the equity in privately held Lovat Inc. (Lovat) for approximately $49 million.Based in Toronto, Canada, Lovat is a leading manufacturer of tunnel boring machines used globally in the construction of subway, railway, road, sewer, water main, mine access and high voltage cable and telecommunications tunnels.Expansion into the tunnel boring business is a strong fit with our strategic direction and the customers we serve around the world. The transaction was financed with available cash and commercial paper borrowings.Net tangible assets acquired and liabilities assumed of $10 million were recorded at their fair values.Finite-lived intangible assets acquired of $17 million related to customer relationships, intellectual property and trade names are being amortized on a straight-line basis over a weighted-average amortization period of approximately 6 years.Goodwill of $22 million, non-deductible for income tax purposes, represents the excess of cost over the fair value of net tangible and finite-lived intangible assets acquired.The results of the acquired business for the period from the acquisition date are included in the accompanying consolidated financial statements and reported in the Mining segment in Note 24.Assuming this transaction had been made at the beginning of any period presented, the consolidated pro forma results would not be materially different from reported results. Gremada Industries Inc. In July 2008, we acquired certain assets and assumed certain liabilities of Gremada Industries, Inc. (Gremada), a supplier to our remanufacturing business.The cost of the acquisition was $62 million, consisting of $60 million paid at closing and an additional $2 million post-closing adjustment paid in August 2008.Gremada is a remanufacturer of transmissions, torque converters, final drives and related components.This acquisition increases our product and service offerings for our existing customers, while providing a platform for further growth opportunities. This transaction was financed with available cash |
26. Redeemable Noncontrolling I
26. Redeemable Noncontrolling Interest - Caterpillar Japan Ltd. | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Redeemable Noncontrolling Interest - Caterpillar Japan Ltd. | 26. Redeemable Noncontrolling Interest Caterpillar Japan Ltd. On August 1, 2008, 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 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.See Note 25 for additional information. 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 Statement 2. 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 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 $81 million due to these adjustments. There was no change to the estimated redemption value in 2008.As of December 31, 2009 and 2008, 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 must be reported at its estimated future redemption value, the impact from attributing the comprehens |
27. Employee separation charges
27. Employee separation charges | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Employee separation charges | 27. Employee separation charges In 2008, we recognized employee separation charges of $30 million in Other operating (income) expenses in Statement 1 related to various voluntary and involuntary separation programs.These programs, impacting 3,085 employees worldwide, were in response to a sharp decline in sales volume due to the global recession. In 2009, continued cost reduction efforts worldwide resulted in additional separation charges of $481 million, recognized in Other operating (income) expenses in Statement 1.These efforts 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 2009, 2,182 employees accepted the program, all of which were separated from Caterpillar by the end of 2009. Other U.S. Separation Programs During 2009, we initiated plans to reduce U.S. based positions through a variety of programs.These programs represent both voluntary and involuntary separation plans.During 2009, 6,611 employees accepted or were subject to these programs. Non-U.S. Separation Programs - During 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.During 2009, 7,075 employees accepted or were subject to the various programs. Our accounting for separations is dependent upon how the particular program is designed.For voluntary programs, eligible separation costs are recognized at the time of employee acceptance.For involuntary programs, eligible costs are recognized when management has approved the program, the affected employees have been properly identified and the costs are estimable. The following table summarizes the 2008 and 2009 separation charges by geographic region: Machinery and Engines Financial Products1 (Millions of dollars) North America EAME Latin America Asia/ Pacific Total 2008 Separation charges $ 4 $ 17 $ 9 $ $ $ 30 2008 Benefit payments and other adjustments (12 ) (7 ) (19 ) Liability balance at December 31, 2008 $ 4 $ 5 $ 2 $ $ $ 11 2009 Separation charges $ 323 $ 102 $ 15 $ 31 $ 10 $ 481 2009 Benefit payments and other adjustments (313 ) (78 ) (17 ) (25 ) (10 ) (443 ) Liability balance at December 31, 2009 $ 14 $ 29 $ $ 6 $ $ 49 1 Includes $8 million for Nor |
28. Selected quarterly financia
28. Selected quarterly financial results (unaudited) | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Selected quarterly financial results (unaudited) | 28. Selected quarterly financial results (unaudited) 2009 Quarter (Dollars in millions except per share data) 1st 2nd 3rd 4th Sales and revenues $ 9,225 $ 7,975 $ 7,298 $ 7,898 Less: Revenues (715 ) (721 ) (715 ) (705 ) Sales 8,510 7,254 6,583 7,193 Cost of goods sold 7,027 5,752 5,255 5,852 Gross margin 1,483 1,502 1,328 1,341 Profit (loss) 1 $ (112 ) $ 371 $ 404 $ 232 Profit (loss) per common share $ (0.19 ) $ 0.61 $ 0.65 $ 0.37 Profit (loss) per common sharediluted 2,3 $ (0.19 ) $ 0.60 $ 0.64 $ 0.36 2008 Quarter 1st 2nd 3rd 4th Sales and revenues $ 11,796 $ 13,624 $ 12,981 $ 12,923 Less: Revenues (817 ) (827 ) (833 ) (803 ) Sales 10,979 12,797 12,148 12,120 Cost of goods sold 8,609 10,036 9,704 10,066 Gross margin 2,370 2,761 2,444 2,054 Profit (loss) 1 $ 922 $ 1,106 $ 868 $ 661 Profit (loss) per common share $ 1.49 $ 1.80 $ 1.43 $ 1.10 Profit (loss) per common sharediluted 2 $ 1.45 $ 1.74 $ 1.39 $ 1.08 1 Profit (loss) attributable to common stockholders. 2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method. 3 In the first quarter 2009, the assumed exercise of stock-based compensation awards was not considered because the impact would be anti-dilutive. |
Document Information
Document Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-K |
Amendment Flag | false |
Document Period End Date | 2009-12-31 |
Entity Information
Entity Information (USD $) | |
12 Months Ended
Dec. 31, 2009 | |
Entity [Text Block] | |
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 | $35,200,000,000 |
Entity Common Stock, Shares Outstanding | 624,722,719 |