10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to

Commission File Number:  1-768

CATERPILLAR INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)	37-0602744 (IRS Employer I.D. No.)
100 NE Adams Street, Peoria, Illinois (Address of principal executive offices)	61629 (Zip Code)

Registrant’s telephone number, including area code:

(309) 675-1000

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x   No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

At September 30, 2013, 636,355,991 shares of common stock of the registrant were outstanding.

Table of Contents

Part I. Financial Information
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	57
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	91
Item 4.	Controls and Procedures	91
Part II. Other Information
Item 1.	Legal Proceedings	92
Item 1A.	Risk Factors	*
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	92
Item 3.	Defaults Upon Senior Securities	*
Item 4.	Mine Safety Disclosures	93
Item 5.	Other Information	*
Item 6.	Exhibits	93

* Item omitted because no answer is called for or item is not applicable.

2

Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

Caterpillar Inc.

Consolidated Statement of Results of Operations

(Unaudited)

(Dollars in millions except per share data)

	Three Months Ended September 30,
	2013			2012
Sales and revenues:
Sales of Machinery and Power Systems	$	12,678		$	15,739
Revenues of Financial Products	745			706
Total sales and revenues	13,423			16,445
Operating costs:
Cost of goods sold	9,774			11,639
Selling, general and administrative expenses	1,319			1,471
Research and development expenses	469			634
Interest expense of Financial Products	178			197
Other operating (income) expenses	282			(92		)
Total operating costs	12,022			13,849
Operating profit	1,401			2,596
Interest expense excluding Financial Products	116			129
Other income (expense)	(24		)	(17		)
Consolidated profit before taxes	1,261			2,450
Provision (benefit) for income taxes	310			753
Profit of consolidated companies	951			1,697
Equity in profit (loss) of unconsolidated affiliated companies	(1		)	5
Profit of consolidated and affiliated companies	950			1,702
Less: Profit (loss) attributable to noncontrolling interests	4			3
Profit1	$	946		$	1,699
Profit per common share	$	1.48		$	2.60
Profit per common share – diluted2	$	1.45		$	2.54
Weighted-average common shares outstanding (millions)
– Basic	639.3			653.6
– Diluted 2	651.9			668.7
Cash dividends declared per common share	$	—		$	—

¹    Profit attributable to common stockholders.

²   Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

See accompanying notes to Consolidated Financial Statements.

3

Caterpillar Inc.

Consolidated Statement of Comprehensive Income

(Unaudited)

(Dollars in millions)

	Three Months Ended September 30,
	2013			2012
Profit of consolidated and affiliated companies	$	950		$	1,702
Other comprehensive income (loss), net of tax:
Foreign currency translation, net of tax (provision)/benefit of: 2013 - $33; 2012 - $11	291			193
Pension and other postretirement benefits:
Current year actuarial gain (loss), net of tax (provision)/benefit of: 2013 - $2; 2012 - $91	(3		)	(155		)
Amortization of actuarial (gain) loss, net of tax (provision)/benefit of: 2013 - $(67); 2012 - $(61)	129			114
Current year prior service credit (cost), net of tax (provision)/benefit of: 2013 - $0; 2012 - $(3)	—			4
Amortization of prior service (credit) cost, net of tax (provision)/benefit of: 2013 - $5; 2012 - $4	(9		)	(8		)
Amortization of transition (asset) obligation, net of tax (provision)/benefit of: 2013 - $(1); 2012 - $0	—			1
Derivative financial instruments:
Gains (losses) deferred, net of tax (provision)/benefit of: 2013 - $(15); 2012 - $5	26			(7		)
(Gains) losses reclassified to earnings, net of tax (provision)/benefit of: 2013 - $(5); 2012 - $(5)	9			9
Available-for-sale securities:
Gains (losses) deferred, net of tax (provision)/benefit of: 2013 - $(6); 2012 - $(8)	9			12
(Gains) losses reclassified to earnings, net of tax (provision)/benefit of: 2013 - $0; 2012 - $0	(1		)	(1		)
Total other comprehensive income (loss), net of tax	451			162
Comprehensive income	1,401			1,864
Less: comprehensive income attributable to the noncontrolling interests	(4		)	(3		)
Comprehensive income attributable to stockholders	$	1,397		$	1,861

See accompanying notes to Consolidated Financial Statements.

4

Caterpillar Inc.

Consolidated Statement of Results of Operations

(Unaudited)

(Dollars in millions except per share data)

	Nine Months Ended September 30,
	2013			2012
Sales and revenues:
Sales of Machinery and Power Systems	$	39,048		$	47,711
Revenues of Financial Products	2,206			2,089
Total sales and revenues	41,254			49,800
Operating costs:
Cost of goods sold	30,186			35,156
Selling, general and administrative expenses	4,130			4,328
Research and development expenses	1,579			1,853
Interest expense of Financial Products	552			599
Other operating (income) expenses	631			329
Total operating costs	37,078			42,265
Operating profit	4,176			7,535
Interest expense excluding Financial Products	356			352
Other income (expense)	(79		)	141
Consolidated profit before taxes	3,741			7,324
Provision (benefit) for income taxes	943			2,314
Profit of consolidated companies	2,798			5,010
Equity in profit (loss) of unconsolidated affiliated companies	(1		)	12
Profit of consolidated and affiliated companies	2,797			5,022
Less: Profit (loss) attributable to noncontrolling interests	11			38
Profit1	$	2,786		$	4,984
Profit per common share	$	4.30		$	7.64
Profit per common share – diluted2	$	4.21		$	7.44
Weighted-average common shares outstanding (millions)
– Basic	647.6			652.0
– Diluted 2	661.3			669.7
Cash dividends declared per common share	$	1.12		$	0.98

¹    Profit attributable to common stockholders.

²   Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

See accompanying notes to Consolidated Financial Statements.

5

Caterpillar Inc.

Consolidated Statement of Comprehensive Income

(Unaudited)

(Dollars in millions)

	Nine Months Ended September 30,
	2013			2012
Profit of consolidated and affiliated companies	$	2,797		$	5,022
Other comprehensive income (loss), net of tax:
Foreign currency translation, net of tax (provision)/benefit of: 2013 - $41; 2012 - $(5)	(255		)	35
Pension and other postretirement benefits:
Current year actuarial gain (loss), net of tax (provision)/benefit of: 2013 - $(14); 2012 - $83	24			(140		)
Amortization of actuarial (gain) loss, net of tax (provision)/benefit of: 2013 - $(201); 2012 - $(181)	388			340
Current year prior service credit (cost), net of tax (provision)/benefit of: 2013 - $0; 2012 - $(1)	—			1
Amortization of prior service (credit) cost, net of tax (provision)/benefit of: 2013 - $14; 2012 - $12	(27		)	(23		)
Amortization of transition (asset) obligation, net of tax (provision)/benefit of: 2013 - $(1); 2012 - $0	1			2
Derivative financial instruments:
Gains (losses) deferred, net of tax (provision)/benefit of: 2013 - $(2); 2012 - $21	2			(35		)
(Gains) losses reclassified to earnings, net of tax (provision)/benefit of: 2013 - $(24); 2012 - $(6)	42			10
Available-for-sale securities:
Gains (losses) deferred, net of tax (provision)/benefit of: 2013 - $(8); 2012 - $(13)	14			28
(Gains) losses reclassified to earnings, net of tax (provision)/benefit of: 2013 - $0; 2012 - $0	(1		)	(3		)
Total other comprehensive income (loss), net of tax	188			215
Comprehensive income	2,985			5,237
Less: comprehensive income attributable to the noncontrolling interests	(13		)	(20		)
Comprehensive income attributable to stockholders	$	2,972		$	5,217

See accompanying notes to Consolidated Financial Statements.

6

Caterpillar Inc.

Consolidated Statement of Financial Position

(Unaudited)

(Dollars in millions)

	September 30, 2013			December 31, 2012
Assets
Current assets:
Cash and short-term investments	$	6,357		$	5,490
Receivables – trade and other	8,649			10,092
Receivables – finance	9,161			8,860
Deferred and refundable income taxes	1,541			1,547
Prepaid expenses and other current assets	988			988
Inventories	13,392			15,547
Total current assets	40,088			42,524
Property, plant and equipment – net	16,588			16,461
Long-term receivables – trade and other	1,329			1,316
Long-term receivables – finance	14,585			14,029
Investments in unconsolidated affiliated companies	278			272
Noncurrent deferred and refundable income taxes	1,985			2,011
Intangible assets	3,718			4,016
Goodwill	6,968			6,942
Other assets	1,733			1,785
Total assets	$	87,272		$	89,356
Liabilities
Current liabilities:
Short-term borrowings:
Machinery and Power Systems	$	290		$	636
Financial Products	5,557			4,651
Accounts payable	6,280			6,753
Accrued expenses	3,373			3,667
Accrued wages, salaries and employee benefits	1,391			1,911
Customer advances	2,699			2,978
Other current liabilities	1,854			2,055
Long-term debt due within one year:
Machinery and Power Systems	1,110			1,113
Financial Products	6,565			5,991
Total current liabilities	29,119			29,755
Long-term debt due after one year:
Machinery and Power Systems	7,951			8,666
Financial Products	18,064			19,086
Liability for postemployment benefits	10,785			11,085
Other liabilities	3,176			3,182
Total liabilities	69,095			71,774
Commitments and contingencies (Notes 10 and 13)
Stockholders’ equity
Common stock of $1.00 par value:
Authorized shares: 2,000,000,000 Issued shares: (9/30/13 and 12/31/12 – 814,894,624) at paid-in amount	4,657			4,481
Treasury stock (9/30/13 – 178,538,633 shares; 12/31/12 – 159,846,131 shares) at cost	(11,914		)	(10,074		)
Profit employed in the business	31,614			29,558
Accumulated other comprehensive income (loss)	(6,247		)	(6,433		)
Noncontrolling interests	67			50
Total stockholders’ equity	18,177			17,582
Total liabilities and stockholders’ equity	$	87,272		$	89,356

See accompanying notes to Consolidated Financial Statements.

7

Caterpillar Inc.

Consolidated Statement of Changes in Stockholders’ Equity

(Unaudited)

(Dollars in millions)

	Common stock			Treasury stock			Profit employed in the business			Accumulated other comprehensive income (loss)			Noncontrolling interests			Total
Nine Months Ended September 30, 2012
Balance at December 31, 2011	$	4,273		$	(10,281	)	$	25,219		$	(6,328	)	$	46		$	12,929
Profit of consolidated and affiliated companies	—			—			4,984			—			38			5,022
Foreign currency translation, net of tax	—			—			—			59			(24		)	35
Pension and other postretirement benefits, net of tax	—			—			—			175			5			180
Derivative financial instruments, net of tax	—			—			—			(25		)	—			(25		)
Available-for-sale securities, net of tax	—			—			—			24			1			25
Change in ownership from noncontrolling interests	—			—			—			—			1			1
Dividends declared	—			—			(639		)	—			—			(639		)
Distribution to noncontrolling interests	—			—			—			—			(5		)	(5		)
Common shares issued from treasury stock for stock-based compensation:  6,400,328	(122		)	163			—			—			—			41
Stock-based compensation expense	208			—			—			—			—			208
Net excess tax benefits from stock-based compensation	164			—			—			—			—			164
Cat Japan share redemption 1	(74		)	—			(23		)	107			(10		)	—
Balance at September 30, 2012	$	4,449		$	(10,118	)	$	29,541		$	(5,988	)	$	52		$	17,936
Nine Months Ended September 30, 2013
Balance at December 31, 2012	$	4,481		$	(10,074	)	$	29,558		$	(6,433	)	$	50		$	17,582
Profit of consolidated and affiliated companies	—			—			2,786			—			11			2,797
Foreign currency translation, net of tax	—			—			—			(257		)	2			(255		)
Pension and other postretirement benefits, net of tax	—			—			—			386			—			386
Derivative financial instruments, net of tax	—			—			—			44			—			44
Available-for-sale securities, net of tax	—			—			—			13			—			13
Change in ownership from noncontrolling interests	(6		)	—			—			—			14			8
Dividends declared	—			—			(730		)	—			—			(730		)
Distribution to noncontrolling interests	—			—			—			—			(10		)	(10		)
Common shares issued from treasury stock for stock-based compensation: 4,792,341	(83		)	160			—			—			—			77
Stock-based compensation expense	196			—			—			—			—			196
Net excess tax benefits from stock-based compensation	69			—			—			—			—			69
Common shares repurchased: 23,484,843 2	—			(2,000		)	—			—			—			(2,000		)
Balance at September 30, 2013	$	4,657		$	(11,914	)	$	31,614		$	(6,247	)	$	67		$	18,177

¹  See Notes 12 and 17 regarding the Cat Japan share redemption.

²  See Note 11 regarding shares repurchased.

See accompanying notes to Consolidated Financial Statements.

8

Caterpillar Inc.

Consolidated Statement of Cash Flow

(Unaudited)

(Millions of dollars)

	Nine Months Ended September 30,
	2013			2012
Cash flow from operating activities:
Profit of consolidated and affiliated companies	$	2,797		$	5,022
Adjustments for non-cash items:
Depreciation and amortization	2,263			2,070
Other	377			(267		)
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other	1,165			136
Inventories	1,911			(3,118		)
Accounts payable	41			(334		)
Accrued expenses	(227		)	32
Accrued wages, salaries and employee benefits	(500		)	(643		)
Customer advances	(287		)	306
Other assets – net	(74		)	(20		)
Other liabilities – net	145			34
Net cash provided by (used for) operating activities	7,611			3,218
Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others	(1,862		)	(2,270		)
Expenditures for equipment leased to others	(1,301		)	(1,256		)
Proceeds from disposals of leased assets and property, plant and equipment	593			840
Additions to finance receivables	(8,339		)	(8,835		)
Collections of finance receivables	6,790			6,567
Proceeds from sale of finance receivables	110			109
Investments and acquisitions (net of cash acquired)	(193		)	(542		)
Proceeds from sale of businesses and investments (net of cash sold)	168			1,009
Proceeds from sale of available-for-sale securities	297			243
Investments in available-for-sale securities	(312		)	(299		)
Other – net	(29		)	82
Net cash provided by (used for) investing activities	(4,078		)	(4,352		)
Cash flow from financing activities:
Dividends paid	(730		)	(937		)
Distribution to noncontrolling interests	(10		)	(5		)
Common stock issued, including treasury shares reissued	77			41
Treasury shares purchased	(2,000		)	—
Excess tax benefit from stock-based compensation	70			165
Acquisitions of redeemable noncontrolling interests	—			(444		)
Proceeds from debt issued (original maturities greater than three months):
Machinery and Power Systems	145			2,015
Financial Products	6,854			9,617
Payments on debt (original maturities greater than three months):
Machinery and Power Systems	(1,134		)	(485		)
Financial Products	(7,636		)	(6,242		)
Short-term borrowings – net (original maturities three months or less)	1,736			166
Net cash provided by (used for) financing activities	(2,628		)	3,891
Effect of exchange rate changes on cash	(38		)	(125		)
Increase (decrease) in cash and short-term investments	867			2,632
Cash and short-term investments at beginning of period	5,490			3,057
Cash and short-term investments at end of period	$	6,357		$	5,689

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.

Non-cash activities: In 2012, $1,325 million of debentures with varying interest rates and maturity dates were exchanged for $1,722 million of 3.803% debentures due in 2042 and $179 million of cash. The $179 million of cash paid is included in Other liabilities - net in the operating activities section of the Consolidated Statement of Cash Flow.

See accompanying notes to Consolidated Financial Statements.

9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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, 2013 and 2012, (b) the consolidated comprehensive income for the three and nine month periods ended September 30, 2013 and 2012, (c) the consolidated financial position at September 30, 2013 and December 31, 2012, (d) the consolidated changes in stockholders’ equity for the nine month periods ended September 30, 2013 and 2012, and (e) the consolidated cash flow for the nine month periods ended September 30, 2013 and 2012.  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.  Certain amounts for prior periods have been reclassified to conform to the current period financial statement presentation.

We have revised previously reported cash flows from operating and financing activities for the nine month period ended September 30, 2012 to correct for the impact of interest payments on certain Cat Financial bank borrowings. Cash provided by operating activities decreased from the amounts previously reported by $44 million for the nine month period ended September 30, 2012, and cash provided by financing activities increased by the same amount. Revisions will be made to previously reported amounts in future filings. Cash provided by operating activities will decrease by $57 million and $53 million for the years ended December 31, 2012 and 2011, respectively. Cash provided by financing activities will increase by the same amounts for the respective periods. Management has concluded that the impact was not material to any quarterly or annual period.

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, 2012 (2012 Form 10-K).

The December 31, 2012 financial position data included herein is derived from the audited consolidated financial statements included in the 2012 Form 10-K but does not include all disclosures required by U.S. GAAP.

B.  Nature of Operations

Information in our financial statements and related commentary are presented in the following categories:

Machinery and Power Systems – Represents the aggregate total of Construction Industries, Resource Industries, Power Systems, and All Other segments and related corporate items and eliminations.

Financial Products – Primarily includes the company’s Financial Products Segment.  This category includes Caterpillar Financial Services Corporation (Cat Financial), Caterpillar Insurance Holdings Inc. (Cat Insurance) and their respective subsidiaries. 

2.New Accounting Guidance

Disclosures about offsetting assets and liabilities – In December 2011, the Financial Accounting Standards Board (FASB) issued accounting guidance on disclosures about offsetting assets and liabilities. The guidance requires entities to disclose both gross and net information about instruments and transactions that are offset in the statement of financial position, as well as instruments and transactions that are subject to an enforceable master netting arrangement or similar agreement. In January 2013, the FASB issued guidance clarifying the scope of the disclosures to apply only to derivatives, including bifurcated embedded derivatives, repurchase and reverse repurchase agreements, and securities lending and securities borrowing transactions. This guidance was effective January 1, 2013, with retrospective application required. The guidance did not have a material impact on our financial statements. See Note 4 for additional information.

Indefinite-lived intangible assets impairment testing– In July 2012, the FASB issued accounting guidance on the testing of indefinite-lived intangible assets for impairment. The guidance allows entities to first perform a qualitative assessment to determine the likelihood of an impairment for an indefinite-lived intangible asset and whether it is necessary to perform the quantitative impairment assessment currently required. This guidance was effective January 1, 2013 and did not have a material impact on our financial statements.

10

Reporting of amounts reclassified out of accumulated other comprehensive income – In February 2013, the FASB issued accounting guidance on the reporting of reclassifications out of accumulated other comprehensive income. The guidance requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income if the amount is reclassified to net income in its entirety in the same reporting period. For other amounts not required to be reclassified in their entirety to net income in the same reporting period, a cross reference to other disclosures that provide additional detail about the reclassification amounts is required. This guidance was effective January 1, 2013 and did not have a material impact on our financial statements. See Note 12 for additional information.

Joint and several liability arrangements – In February 2013,the FASB issued accounting guidance on the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements. The guidance requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The entity is also required to disclose the nature and amount of the obligation as well as any other information about those obligations. This guidance is effective January 1, 2014, with retrospective application required. We do not expect the adoption to have a material impact on our financial statements.

Parent's accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity – In March 2013, the FASB issued accounting guidance on the parent's accounting for the cumulative translation adjustment (CTA) upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. The new standard clarifies existing guidance regarding when the CTA should be released into earnings upon various deconsolidation and consolidation transactions. This guidance is effective January 1, 2014. We do not expect the adoption to have a material impact on our financial statements.

Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists – In July 2013, the FASB issued accounting guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward in the financial statements if available under the applicable tax jurisdiction. The guidance is effective January 1, 2014. We do not expect the adoption to have a material impact on our financial statements.

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 options, restricted stock units (RSUs) and stock-settled stock appreciation rights (SARs).  We recognized pretax stock-based compensation cost in the amount of $64 million and $196 million for the three and nine months ended September 30, 2013, respectively; and $69 million and $204 million for the three and nine months ended September 30, 2012, 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, 2013 and 2012, respectively:

	2013			2012
	Shares Granted	Fair Value Per Award		Shares Granted	Fair Value Per Award
Stock options	4,276,060	$	28.34	3,224,203	$	39.20
RSUs	1,614,870	$	84.05	1,429,939	$	104.61

The stock price on the date of grant was $89.75 and $110.09 for 2013 and 2012, 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, 2013 and 2012, respectively:

11

	Grant Year
	2013	2012
Weighted-average dividend yield	2.13%	2.16%
Weighted-average volatility	30.6%	35.0%
Range of volatilities	23.4-40.6%	33.3-40.4%
Range of risk-free interest rates	0.16-1.88%	0.17-2.00%
Weighted-average expected lives	8 years	7 years

As of September 30, 2013, the total remaining unrecognized compensation cost related to nonvested stock-based compensation awards was $232 million, which will be amortized over the weighted-average remaining requisite service periods of approximately 1.9 years.

4.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.  Our Risk Management Policy (policy) allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate, interest rate and commodity price exposures.  Our policy specifies that derivatives are not to be used for speculative purposes.  Derivatives that we use are primarily foreign currency forward, option, and cross currency contracts, 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 into, 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 recognized 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 (loss) (AOCI), to the extent effective, on 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 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 underlying hedged transaction is no longer probable, we discontinue hedge accounting prospectively, in accordance with the derecognition criteria for hedge accounting.

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of sales made and costs incurred in foreign currencies. Movements in foreign currency rates also affect our competitive position as these changes may affect business practices and/or pricing strategies of non-U.S.-based competitors. Additionally, we have balance sheet positions denominated in foreign currencies, thereby creating exposure to movements in exchange rates.

Our Machinery and Power Systems operations purchase, manufacture and sell products in many locations around the world. As we have a diversified revenue and cost base, we manage our future foreign currency cash flow exposure on a

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net basis. We use foreign currency forward and option contracts to manage unmatched foreign currency cash inflow and outflow. Our objective is to minimize the risk of exchange rate movements that would reduce the U.S. dollar value of our foreign currency cash flow. Our policy allows for managing anticipated foreign currency cash flow for up to five years.

We generally designate as cash flow hedges at inception of the contract any Australian dollar, Brazilian real, British pound, Canadian dollar, Chinese yuan, euro, Indian rupee, Japanese yen, Mexican peso, Singapore dollar or Swiss franc forward or option contracts that meet the requirements for hedge accounting and the maturity extends beyond the current quarter-end. Designation is performed on a specific exposure basis to support hedge accounting. The remainder of Machinery and Power Systems foreign currency contracts are undesignated, including any hedges designed to protect our competitive exposure.  

As of September 30, 2013, $15 million of deferred net gains, net of tax, included in equity (AOCI in the Consolidated Statement of Financial Position), are expected to be reclassified to current earnings (Other income (expense) in the Consolidated Statement of Results of Operations) over the next twelve months when earnings are affected by the hedged transactions.  The actual amount recorded in Other income (expense) will vary based on exchange rates at the time the hedged transactions impact earnings.

In managing foreign currency risk for our Financial Products operations, our objective is to minimize earnings volatility resulting from conversion and the remeasurement of net foreign currency balance sheet positions, and future transactions denominated in foreign currencies. Our policy allows the use of foreign currency forward, option and cross currency contracts to offset the risk of currency mismatch between our receivables and debt, and exchange rate risk associated with future transactions denominated in foreign currencies. Substantially all such foreign currency forward, option and cross currency contracts are undesignated.

Interest Rate Risk

Interest rate movements create a degree of risk by affecting the amount of our interest payments and the value of our fixed-rate debt. Our practice is to use interest rate derivatives to manage our exposure to interest rate changes and, in some cases, lower the cost of borrowed funds.

Our Machinery and Power Systems operations generally use fixed-rate debt as a source of funding.  Our objective is to minimize the cost of borrowed funds.  Our policy allows us to enter into fixed-to-floating interest rate swaps and forward rate agreements to meet that objective with the intent to designate as fair value hedges at inception of the contract all fixed-to-floating interest rate swaps.  Designation as a hedge of the fair value of our fixed-rate debt is performed to support hedge accounting.

Financial Products operations has a match-funding policy that addresses interest rate risk by aligning the interest rate profile (fixed or floating rate) of Cat Financial’s debt portfolio with the interest rate profile of their receivables portfolio within predetermined ranges on an ongoing basis. In connection with that policy, we use interest rate derivative instruments to modify the debt structure to match assets within the receivables portfolio. This matched funding reduces the volatility of margins between interest-bearing assets and interest-bearing liabilities, regardless of which direction interest rates move.

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

As of September 30, 2013, $3 million of deferred net losses, net of tax, included in equity (AOCI in the Consolidated Statement of Financial Position), related to Financial Products floating-to-fixed interest rate swaps, are expected to be reclassified to current earnings (Interest expense of Financial Products in the Consolidated Statement of Results of Operations) over the next twelve months.  The actual amount recorded in Interest expense of Financial Products will vary based on interest rates at the time the hedged transactions impact earnings.

We have, at certain times, liquidated fixed-to-floating and floating-to-fixed interest rate swaps at both Machinery and Power Systems and Financial Products.  The gains or losses associated with these swaps at the time of liquidation are amortized into earnings over the original term of the previously designated hedged item.

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Commodity Price Risk

Commodity price movements create a degree of risk by affecting the price we must pay for certain raw material. Our policy is to use commodity forward and option contracts to manage the commodity risk and reduce the cost of purchased materials.

Our Machinery and Power Systems operations purchase base and precious metals embedded in the components we purchase from suppliers.  Our suppliers pass on to us price changes in the commodity portion of the component cost. In addition, we are subject to price changes on energy products such as natural gas and diesel fuel purchased for operational use.

Our objective is to minimize volatility in the price of these commodities. Our policy allows us to enter into commodity forward and option contracts to lock in the purchase price of a portion of these commodities within a five-year horizon. All such commodity forward and option contracts are undesignated.

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

(Millions of dollars)
	Consolidated Statement of Financial	Asset (Liability) Fair Value
	Position Location	September 30, 2013			December 31, 2012
Designated derivatives
Foreign exchange contracts
Machinery and Power Systems	Receivables – trade and other	$	49		$	28
Machinery and Power Systems	Long-term receivables – trade and other	1			—
Machinery and Power Systems	Accrued expenses	(24		)	(66		)
Interest rate contracts
Financial Products	Receivables – trade and other	12			17
Financial Products	Long-term receivables – trade and other	130			209
Financial Products	Accrued expenses	(6		)	(8		)
		$	162		$	180
Undesignated derivatives
Foreign exchange contracts
Machinery and Power Systems	Receivables – trade and other	$	42		$	31
Machinery and Power Systems	Accrued expenses	(31		)	(63		)
Financial Products	Receivables – trade and other	13			10
Financial Products	Long-term receivables – trade and other	8			—
Financial Products	Accrued expenses	(7		)	(6		)
Interest rate contracts
Financial Products	Receivables – trade and other	—			2
Financial Products	Accrued expenses	—			(1		)
Commodity contracts
Machinery and Power Systems	Receivables – trade and other	—			1
Machinery and Power Systems	Accrued expenses	(1		)	—
		$	24		$	(26	)

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The effect of derivatives designated as hedging instruments on the Consolidated Statement of Results of Operations is as follows: 

Fair Value Hedges (Millions of dollars)
		Three Months Ended September 30, 2013					Three Months Ended September 30, 2012
	Classification	Gains (Losses) on Derivatives			Gains (Losses) on Borrowings		Gains (Losses) on Derivatives		Gains (Losses) on Borrowings
Interest rate contracts
Financial Products	Other income (expense)	$	(9	)	$	12	$	7	$	(3	)
		$	(9	)	$	12	$	7	$	(3	)
		Nine Months Ended September 30, 2013					Nine Months Ended September 30, 2012
	Classification	Gains (Losses) on Derivatives			Gains (Losses) on Borrowings		Gains (Losses) on Derivatives		Gains (Losses) on Borrowings
Interest rate contracts
Financial Products	Other income (expense)	$	(87	)	$	92	$	4	$	7
		$	(87	)	$	92	$	4	$	7

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Cash Flow Hedges (Millions of dollars)
	Three Months Ended September 30, 2013
				Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI (Effective Portion)			Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI to Earnings			Recognized in Earnings (Ineffective Portion)
Foreign exchange contracts
Machinery and Power Systems	$	44		Other income (expense)	$	(12	)	$	—
Interest rate contracts
Machinery and Power Systems	—			Other income (expense)	(1		)	—
Financial Products	(3		)	Interest expense of Financial Products	(1		)	—
	$	41			$	(14	)	$	—

	Three Months Ended September 30, 2012
				Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI (Effective Portion)			Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI to Earnings			Recognized in Earnings (Ineffective Portion)
Foreign exchange contracts
Machinery and Power Systems	$	(6	)	Other income (expense)	$	(14	)	$	—
Interest rate contracts
Machinery and Power Systems	—			Other income (expense)	1			—
Financial Products	(6		)	Interest expense of Financial Products	(1		)	—
	$	(12	)		$	(14	)	$	—

	Nine Months Ended September 30, 2013
				Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI (Effective Portion)			Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI to Earnings				Recognized in Earnings (Ineffective Portion)
Foreign exchange contracts
Machinery and Power Systems	$	4		Other income (expense)	$	(60	)	2	$	—
Interest rate contracts
Machinery and Power Systems	—			Other income (expense)	(2		)		—
Financial Products	—			Interest expense of Financial Products	(4		)		—
	$	4			$	(66	)		$	—
	Nine Months Ended September 30, 2012
				Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI (Effective Portion)			Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI to Earnings				Recognized in Earnings (Ineffective Portion)
Foreign exchange contracts
Machinery and Power Systems	$	(48	)	Other income (expense)	$	(13	)		$	—
Interest rate contracts
Financial Products	(8		)	Interest expense of Financial Products	(3		)		(1		)	1
	$	(56	)		$	(16	)		$	(1	)

¹  The ineffective portion recognized in earnings is included in Other income (expense).

²  Includes $3 million loss reclassified from AOCI to Other income (expense) in 2013 as certain derivatives were dedesignated as the related transactions are no longer probable to occur.

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The effect of derivatives not designated as hedging instruments on the Consolidated Statement of Results of Operations is as follows: 

(Millions of dollars)
	Classification of Gains (Losses)	Three Months Ended September 30, 2013			Three Months Ended September 30, 2012
Foreign exchange contracts
Machinery and Power Systems	Other income (expense)	$	15		$	(9	)
Financial Products	Other income (expense)	3			5
Interest rate contracts
Financial Products	Other income (expense)	(1		)	—
Commodity contracts
Machinery and Power Systems	Other income (expense)	2			3
		$	19		$	(1	)
	Classification of Gains (Losses)	Nine Months Ended September 30, 2013			Nine Months Ended September 30, 2012
Foreign exchange contracts
Machinery and Power Systems	Other income (expense)	$	7		$	21
Financial Products	Other income (expense)	4			7
Interest rate contracts
Financial Products	Other income (expense)	(1		)	—
Commodity contracts
Machinery and Power Systems	Other income (expense)	(2		)	3
		$	8		$	31

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

Collateral is generally not required of the counterparties or of our company under the master netting agreements. As of September 30, 2013 and December 31, 2012, no cash collateral was received or pledged under the master netting agreements.

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

September 30, 2013							Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amount of Assets Presented in the Statement of Financial Position		Financial Instruments			Cash Collateral Received		Net Amount of Assets
Derivatives
Machinery & Power Systems	$	92	$	—	$	92	$	(52	)	$	—	$	40
Financial Products	163		—		163		(9		)	—		154
Total	$	255	$	—	$	255	$	(61	)	$	—	$	194

September 30, 2013									Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position		Net Amount of Liabilities Presented in the Statement of Financial Position			Financial Instruments		Cash Collateral Pledged		Net Amount of Liabilities
Derivatives
Machinery & Power Systems	$	(56	)	$	—	$	(56	)	$	52	$	—	$	(4	)
Financial Products	(13		)	—		(13		)	9		—		(4		)
Total	$	(69	)	$	—	$	(69	)	$	61	$	—	$	(8	)

December 31, 2012							Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amount of Assets Presented in the Statement of Financial Position		Financial Instruments			Cash Collateral Received		Net Amount of Assets
Derivatives
Machinery & Power Systems	$	60	$	—	$	60	$	(59	)	$	—	$	1
Financial Products	238		—		238		(12		)	—		226
Total	$	298	$	—	$	298	$	(71	)	$	—	$	227

December 31, 2012									Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position		Net Amount of Liabilities Presented in the Statement of Financial Position			Financial Instruments		Cash Collateral Pledged		Net Amount of Liabilities
Derivatives
Machinery & Power Systems	$	(129	)	$	—	$	(129	)	$	59	$	—	$	(70	)
Financial Products	(15		)	—		(15		)	12		—		(3		)
Total	$	(144	)	$	—	$	(144	)	$	71	$	—	$	(73	)

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5.Inventories

Inventories (principally using the last-in, first-out (LIFO) method) are comprised of the following:

(Millions of dollars)	September 30, 2013		December 31, 2012
Raw materials	$	3,138	$	3,573
Work-in-process	2,749		2,920
Finished goods	7,221		8,767
Supplies	284		287
Total inventories	$	13,392	$	15,547

6.Investments in Unconsolidated Affiliated Companies

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: (Millions of dollars)	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013			2012
Sales	$	349		$	253	$	916		$	625
Cost of sales	284			206		722			492
Gross profit	$	65		$	47	$	194		$	133
Profit (loss)	$	(6	)	$	17	$	(31	)	$	39

Financial Position of unconsolidated affiliated companies: (Millions of dollars)	September 30, 2013		December 31, 2012
Assets:
Current assets	$	707	$	715
Property, plant and equipment – net	714		529
Other assets	498		616
	1,919		1,860
Liabilities:
Current liabilities	450		443
Long-term debt due after one year	887		708
Other liabilities	167		170
	1,504		1,321
Equity	$	415	$	539

Caterpillar’s investments in unconsolidated affiliated companies: (Millions of dollars)	September 30, 2013		December 31, 2012
Investments in equity method companies	$	268	$	256
Plus: Investments in cost method companies	10		16
Total investments in unconsolidated affiliated companies	$	278	$	272

The change in the results of operations amounts for the three and nine months ended September 30, 2013 as compared to September 30, 2012 primarily relates to the third party logistics business, in which Caterpillar sold a majority interest on July 31, 2012. Under the terms of the agreement, Caterpillar retained a 35 percent equity interest.

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7.Intangible Assets and Goodwill

A.  Intangible assets

Intangible assets are comprised of the following:

		September 30, 2013
(Millions of dollars)	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	15	$	2,685	$	(497	)	$	2,188
Intellectual property	11	1,816		(455		)	1,361
Other	10	282		(131		)	151
Total finite-lived intangible assets	13	4,783		(1,083		)	3,700
Indefinite-lived intangible assets - In-process research & development		18		—			18
Total intangible assets		$	4,801	$	(1,083	)	$	3,718

		December 31, 2012
	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	15	$	2,756	$	(377	)	$	2,379
Intellectual property	12	1,767		(342		)	1,425
Other	10	299		(105		)	194
Total finite-lived intangible assets	13	4,822		(824		)	3,998
Indefinite-lived intangible assets - In-process research & development		18		—			18
Total intangible assets		$	4,840	$	(824	)	$	4,016

During the third quarter of 2013, we acquired finite-lived intangible assets of $66 million due to the purchase of Johan Walter Berg AB. See Note 19 for details on this business combination.

Gross customer relationship intangibles of $123 million and related accumulated amortization of $17 million were reclassified from Intangible assets to assets held for sale and/or divested during the nine months ended September 30, 2013, and are not included in the September 30, 2013 balances in the table above. These transactions were related to the divestiture of portions of the Bucyrus distribution business. See Note 20 for additional information on divestitures and assets held for sale.

Amortization expense for the three and nine months ended September 30, 2013 was $91 million and $276 million, respectively. Amortization expense for the three and nine months ended September 30, 2012 was $101 million and $294 million, respectively. Amortization expense related to intangible assets is expected to be:

(Millions of dollars)
2013	2014	2015	2016	2017	Thereafter
$369	$374	$372	$360	$358	$2,161

B.  Goodwill

During the third quarter of 2013, we recorded goodwill of $109 million related to the acquisition of Johan Walter Berg AB. See Note 19 for details on this business combination.

Goodwill of $47 million was reclassified to assets held for sale and/or divested during the nine months ended September 30, 2013, and is not included in the September 30, 2013 balance in the table below. These transactions were related to the divestiture of portions of the Bucyrus distribution business and the sale of certain Power Systems assets that were accounted for as a business. See Note 20 for additional information on divestitures and assets held for sale.

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We test goodwill for impairment 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. Goodwill is reviewed for impairment utilizing a qualitative assessment or a two-step process. We have an option to make a qualitative assessment of a reporting unit's goodwill for impairment. If we choose to perform a qualitative assessment and determine the fair value more likely than not exceeds the carrying value, no further evaluation is necessary. For reporting units where we perform the two-step process, the first step requires us to compare the fair value of each reporting unit, which we primarily determine using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value is higher than the fair value, there is an indication that an impairment may exist and the second step is required. In step two, the implied fair value of goodwill is calculated as the excess of the fair value of a reporting unit over the fair values assigned to its assets and liabilities. If the implied fair value of goodwill is less than the carrying value of the reporting unit's goodwill, the difference is recognized as an impairment loss. No goodwill for reporting units was impaired during the three and nine months ended September 30, 2013 or 2012.

The changes in the carrying amount of the goodwill by reportable segment for the nine months ended September 30, 2013 were as follows: 

(Millions of dollars)
	December 31, 2012			Acquisitions 1		Held for Sale and Business Divestitures 2			Other Adjustments 3			September 30, 2013
Construction Industries
Goodwill	$	382		$	—	$	—		$	(46	)	$	336
Resource Industries
Goodwill	4,559			—		(37		)	1			4,523
Impairments	(602		)	—		—			—			(602		)
Net goodwill	3,957			—		(37		)	1			3,921
Power Systems
Goodwill	2,486			109		(10		)	9			2,594
All Other 4
Goodwill	117			—		—			—			117
Consolidated total
Goodwill	7,544			109		(47		)	(36		)	7,570
Impairments	(602		)	—		—			—			(602		)
Net goodwill	$	6,942		$	109	$	(47	)	$	(36	)	$	6,968

¹See Note 19 for additional details.

²See Note 20 for additional details.

³ Other adjustments are comprised primarily of foreign currency translation.

⁴Includes All Other operating segment (See Note 15).

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 investments are primarily 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.

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	September 30, 2013						December 31, 2012
(Millions of dollars)	Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value		Cost Basis		Unrealized Pretax Net Gains (Losses)			Fair Value
Government debt
U.S. treasury bonds	$	11	$	—	$	11	$	10	$	—		$	10
Other U.S. and non-U.S. government bonds	125		1		126		144		2			146
Corporate bonds
Corporate bonds	648		24		672		626		38			664
Asset-backed securities	75		—		75		96		—			96
Mortgage-backed debt securities
U.S. governmental agency	336		1		337		291		8			299
Residential	21		—		21		26		(1		)	25
Commercial	87		6		93		117		10			127
Equity securities
Large capitalization value	158		73		231		147		38			185
Smaller company growth	22		23		45		22		12			34
Total	$	1,483	$	128	$	1,611	$	1,479	$	107		$	1,586

During the three months ended September 30, 2013 and 2012, there were no charges for other-than-temporary declines in the market values of securities. During the nine months ended September 30, 2013 and 2012, charges for other-than-temporary declines in the market values of securities were $1 million. These charges were accounted for as realized losses and were included in Other income (expense) in the Consolidated Statement of Results of Operations. The cost basis for the impacted securities was adjusted to reflect these charges.

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Investments in an unrealized loss position that are not other-than-temporarily impaired:
	September 30, 2013
	Less than 12 months1				12 months or more1				Total
(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate bonds
Corporate bonds	$	174	$	2	$	—	$	—	$	174	$	2
Asset-backed securities	4		—		20		2		24		2
Mortgage-backed debt securities
U.S. governmental agency	145		4		56		1		201		5
Equity securities
Large capitalization value	15		1		2		—		17		1
Total	$	338	$	7	$	78	$	3	$	416	$	10

	December 31, 2012
	Less than 12 months1				12 months or more1				Total
(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate bonds
Asset-backed securities	$	—	$	—	$	20	$	3	$	20	$	3
Mortgage-backed debt securities
U.S. governmental agency	84		1		15		—		99		1
Residential	—		—		14		1		14		1
Equity securities
Large capitalization value	25		2		10		1		35		3
Total	$	109	$	3	$	59	$	5	$	168	$	8

¹  Indicates length of time that individual securities have been in a continuous unrealized loss position.

Corporate Bonds.  The unrealized losses on our investments in corporate bonds and asset-backed securities relate to changes in interest rates and credit-related yield spreads since time of purchase.  We do not intend to sell the investments and it is not likely that we will be required to sell the investments before recovery of their amortized cost basis.  We do not consider these investments to be other-than-temporarily impaired as of September 30, 2013.

Mortgage-Backed Debt Securities.  The unrealized losses on our investments in mortgage-backed securities and mortgage-related asset-backed securities relate mainly to the continuation of elevated housing delinquencies, default rates and higher market yields since the time of purchase.  We do not intend to sell the investments and it is not likely that we will be required to sell these investments before recovery of their amortized cost basis.  We do not consider these investments to be other-than-temporarily impaired as of September 30, 2013.

Equity Securities.  Cat Insurance maintains a well-diversified equity portfolio consisting of two specific mandates:  large capitalization value stocks and smaller company growth stocks.  U.S. equity valuations were generally higher during the third quarter of 2013 on generally favorable employment and housing data.  The unrealized losses on investments in equity securities relate to uneven sector participation in the market recovery. We do not consider these investments to be other-than-temporarily impaired as of September 30, 2013.

The cost basis and fair value of the available-for-sale debt securities at September 30, 2013, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay and creditors may have the right to call obligations.

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	September 30, 2013
(Millions of dollars)	Cost Basis		Fair Value
Due in one year or less	$	211	$	214
Due after one year through five years	589		611
Due after five years through ten years	28		29
Due after ten years	31		30
U.S. governmental agency mortgage-backed securities	336		337
Residential mortgage-backed securities	21		21
Commercial mortgage-backed securities	87		93
Total debt securities – available-for-sale	$	1,303	$	1,335

Sales of Securities:
	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2013		2012		2013		2012
Proceeds from the sale of available-for-sale securities	$	90	$	66	$	297	$	243
Gross gains from the sale of available-for-sale securities	$	2	$	1	$	4	$	4
Gross losses from the sale of available-for-sale securities	$	1	$	—	$	2	$	—

9.Postretirement Benefits

A.  Pension and postretirement benefit costs

In February 2012, we announced the closure of the Electro-Motive Diesel facility located in London, Ontario. As a result of the closure, we recognized a $37 million other postretirement benefits curtailment gain. This excludes a $21 million loss of a third-party receivable for other postretirement benefits that was eliminated due to the closure. In addition, a $10 million special termination benefit expense was recognized related to statutory pension benefits required to be paid to certain affected employees. As a result, a net gain of $6 million related to the facility closure was recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations for the nine months ended September 30, 2012.

In August 2012, we announced changes to our U.S. hourly pension plan, which impacted certain hourly employees. For the impacted employees, pension benefit accruals were frozen on January 1, 2013 or will freeze on January 1, 2016, at which time employees will become eligible for various provisions of company sponsored 401(k) plans including a matching contribution and an annual employer contribution. The plan changes resulted in a curtailment and required a remeasurement as of August 31, 2012. The curtailment and the remeasurement resulted in a net increase in our Liability for postemployment benefits of $243 million and a net loss of $153 million, net of tax, recognized in Accumulated other comprehensive income (loss). The increase in the liability was primarily due to a decline in the discount rate. Also, the curtailment resulted in expense of $7 million which was recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations for the three and nine months ended September 30, 2012.

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(Millions of dollars)	U.S. Pension Benefits						Non-U.S. Pension Benefits						Other Postretirement Benefits
	September 30,						September 30,						September 30,
	2013			2012			2013			2012			2013			2012
For the three months ended:
Components of net periodic benefit cost:
Service cost	$	49		$	46		$	31		$	26		$	24		$	23
Interest cost	147			152			43			44			48			55
Expected return on plan assets	(208		)	(204		)	(59		)	(53		)	(14		)	(15		)
Amortization of:
Transition obligation (asset)	—			—			—			—			1			1
Prior service cost (credit) 1	4			5			—			1			(18		)	(18		)
Net actuarial loss (gain) 1	136			126			33			24			27			25
Net periodic benefit cost	128			125			48			42			68			71
Adjustment for subsidiary pension plan 2	31			—			—			—			—			—
Curtailments, settlements and special termination benefits 3	—			7			—			6			—			—
Total cost included in operating profit	$	159		$	132		$	48		$	48		$	68		$	71
For the nine months ended:
Components of net periodic benefit cost:
Service cost	$	147		$	138		$	93		$	82		$	79		$	69
Interest cost	436			460			128			135			146			166
Expected return on plan assets	(624		)	(610		)	(176		)	(160		)	(42		)	(47		)
Amortization of:
Transition obligation (asset)	—			—			—			—			2			2
Prior service cost (credit)1	13			15			1			1			(55		)	(51		)
Net actuarial loss (gain) 1	409			374			99			72			81			75
Net periodic benefit cost	381			377			145			130			211			214
Adjustment for subsidiary pension plan 2	31			—			—			—			—			—
Curtailments, settlements and special termination benefits 3	—			7			3			28			—			(40		)
Total cost included in operating profit	$	412		$	384		$	148		$	158		$	211		$	174
Weighted-average assumptions used to determine net cost:
Discount rate	3.7		%	4.3		%	3.7		%	4.3		%	3.7		%	4.3		%
Expected return on plan assets	7.8		%	8.0		%	6.7		%	7.1		%	7.8		%	8.0		%
Rate of compensation increase	4.5		%	4.5		%	3.9		%	3.9		%	4.4		%	4.4		%

¹  Prior service cost (credit) and net actuarial loss (gain) for both pension and other postretirement benefits are generally amortized using the straight-line method over the average remaining service period to the full retirement eligibility date of employees expected to receive benefits from the plan. For pension plans in which all or almost all of the plan's participants are inactive and other postretirement benefit plans in which all or almost all of the plan's participants are fully eligible for benefits under the plan, prior service cost (credit) and net actuarial loss (gain) are amortized using the straight-line method over the remaining life expectancy of those participants.

²  Charge to recognize a previously unrecorded liability related to a subsidiary's pension plans.

³  Curtailments, settlements and special termination benefits were recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations.

We made $118 million and $398 million of contributions to our pension plans during the three and nine months ended September 30, 2013, respectively. We currently anticipate full-year 2013 contributions of approximately $500 million, all of which are required. We made $195 million and $488 million of contributions to our pension plans during the three and nine months ended September 30, 2012, respectively.

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B.  Defined contribution benefit costs

Total company costs related to our defined contribution plans were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2013		2012		2013		2012
U.S. Plans	$	74	$	62	$	218	$	196
Non-U.S. Plans	16		15		47		46
	$	90	$	77	$	265	$	242

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 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 being financed. 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.

We have provided a guarantee to one of our customers in Brazil related to the performance of contractual obligations by a supplier consortium to which one of our Caterpillar subsidiaries is a member. The guarantees cover potential damages (some of them capped) incurred by the customer resulting from the supplier consortium’s non-performance. The guarantee will expire when the supplier consortium performs all its contractual obligations, which is expected to be completed in 2022.

We have provided guarantees to third-party lessors for certain properties leased by Cat Logistics Services, LLC, in which we sold a 65 percent equity interest in the third quarter of 2012. The guarantees are for the possibility that the third party logistics business would default on real estate lease payments. The guarantees were granted at lease inception, which was prior to the divestiture, and generally will expire at the end of the lease terms.

No loss has been experienced or is anticipated under any of these guarantees.  At September 30, 2013 and December 31, 2012, 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, 2013		December 31, 2012
Caterpillar dealer guarantees	$	201	$	180
Customer guarantees	53		77
Customer guarantees – supplier consortium	359		—
Third party logistics business guarantees	156		176
Other guarantees	35		53
Total guarantees	$	804	$	486

Cat Financial provides guarantees to repurchase certain loans of Caterpillar dealers from a special-purpose corporation (SPC) that qualifies as a variable interest entity.  The purpose of the SPC is to provide short-term working capital loans to Caterpillar dealers.  This SPC issues commercial paper and uses the proceeds to fund its loan program.  Cat Financial has a loan purchase agreement with the SPC that obligates Cat Financial to purchase certain loans that are not paid at maturity.  Cat Financial receives a fee for providing this guarantee, which provides a source of liquidity for the SPC.  Cat Financial is the primary beneficiary of the SPC as their guarantees result in Cat Financial having both the power to direct

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the activities that most significantly impact the SPC’s economic performance and the obligation to absorb losses, and therefore Cat Financial has consolidated the financial statements of the SPC.  As of September 30, 2013 and December 31, 2012, the SPC’s assets of $1,044 million and $927 million, respectively, are primarily comprised of loans to dealers and the SPC’s liabilities of $1,043 million and $927 million, respectively, are primarily comprised of commercial paper.  The assets of the SPC are not available to pay Cat Financial's creditors. Cat Financial may be obligated to perform under the guarantee if the SPC experiences losses. No loss has been experienced or is anticipated under this loan purchase agreement.

Our product warranty liability is determined by applying historical claim rate experience to the current field population and dealer inventory.  Generally, historical claim rates are based on actual warranty experience for each product by machine model/engine size by customer or dealer location (inside or outside North America).  Specific rates are developed for each product shipment month and are updated monthly based on actual warranty claim experience.  

(Millions of dollars)	2013
Warranty liability, January 1	$	1,477
Reduction in liability (payments)	(677		)
Increase in liability (new warranties)	570
Warranty liability, September 30	$	1,370

(Millions of dollars)	2012
Warranty liability, January 1	$	1,308
Reduction in liability (payments)	(920		)
Increase in liability (new warranties)	1,089
Warranty liability, December 31	$	1,477

11.Profit Per Share

Computations of profit per share:	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions except per share data)	2013		2012		2013		2012
Profit for the period (A) 1:	$	946	$	1,699	$	2,786	$	4,984
Determination of shares (in millions):
Weighted-average number of common shares outstanding (B)	639.3		653.6		647.6		652.0
Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price	12.6		15.1		13.7		17.7
Average common shares outstanding for fully diluted computation (C) 2	651.9		668.7		661.3		669.7
Profit per share of common stock:
Assuming no dilution (A/B)	$	1.48	$	2.60	$	4.30	$	7.64
Assuming full dilution (A/C) 2	$	1.45	$	2.54	$	4.21	$	7.44
Shares outstanding as of September 30 (in millions)					636.4		653.9

¹  Profit attributable to common stockholders.

²  Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

SARs and stock options to purchase 10,285,409 and 10,191,424 common shares were outstanding for the three and nine months ended September 30, 2013, respectively, which were not included in the computation of diluted earnings per share because the effect would have been antidilutive. For the three and nine months ended September 30, 2012, there were outstanding SARs and stock options to purchase 6,073,271 common shares which were antidilutive.

In February 2007, the Board of Directors authorized the repurchase of $7.5 billion of Caterpillar stock, and in December 2011, the authorization was extended through December 31, 2015. In April 2013, we entered into a definitive agreement with Citibank, N.A. to purchase shares of our common stock under an accelerated stock repurchase transaction (April

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ASR Agreement), which was completed in June 2013. In accordance with the terms of the April ASR Agreement, a total of 11.5 million shares of our common stock were repurchased at an aggregate cost to Caterpillar of $1.0 billion.

In July 2013, we entered into a definitive agreement with Société Générale to purchase shares of our common stock under an accelerated stock repurchase transaction (July ASR Agreement), which was completed in September 2013. In accordance with the terms of the July ASR Agreement, a total of 11.9 million shares of our common stock were repurchased at an aggregate cost to Caterpillar of $1.0 billion. Through the end of the third quarter of 2013, $5.8 billion of the $7.5 billion authorization was spent.

12. Accumulated Other Comprehensive Income (Loss)

Comprehensive income and its components are presented in the Consolidated Statement of Comprehensive Income. Changes in Accumulated other comprehensive income (loss), net of tax, included in the Consolidated Statement of Changes in Stockholders’ Equity, consisted of the following:

(Millions of dollars)	Foreign currency translation			Pension and other postretirement benefits			Derivative financial instruments			Available-for-sale securities			Total
Balance at September 30, 2012 1	$	432		$	(6,454	)	$	(35	)	$	69		$	(5,988	)
Three Months Ended September 30, 2013
Balance at June 30, 2013	$	(92	)	$	(6,645	)	$	(33	)	$	72		$	(6,698	)
Other comprehensive income (loss) before reclassifications	291			(3		)	26			9			323
Amounts reclassified from accumulated other comprehensive (income) loss	—			120			9			(1		)	128
Other comprehensive income (loss)	291			117			35			8			451
Balance at September 30, 2013	$	199		$	(6,528	)	$	2		$	80		$	(6,247	)
Nine Months Ended September 30, 2013
Balance at December 31, 2012	$	456		$	(6,914	)	$	(42	)	$	67		$	(6,433	)
Other comprehensive income (loss) before reclassifications	(257		)	24			2			14			(217		)
Amounts reclassified from accumulated other comprehensive (income) loss	—			362			42			(1		)	403
Other comprehensive income (loss)	(257		)	386			44			13			186
Balance at September 30, 2013	$	199		$	(6,528	)	$	2		$	80		$	(6,247	)

¹  In conjunction with the Cat Japan share redemption, to reflect the increase in our ownership interest in Cat Japan from 67 percent to 100 percent, $107 million was reclassified to Accumulated other comprehensive income (loss) from other components of stockholders' equity and was not included in Comprehensive income during the second quarter of 2012. The amount was comprised of foreign currency translation of $167 million, pension and other postretirement benefits of $(61) million and available-for-sale securities of $1 million.

The effect of the reclassifications out of Accumulated other comprehensive income (loss) on the Consolidated Statement of Results of Operations is as follows:

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(Millions of dollars)	Classification of income (expense)	Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
Pension and other postretirement benefits:
Amortization of actuarial gain (loss)	Note 9 1	$	(196	)	$	(589	)
Amortization of prior service credit (cost)	Note 9 1	14			41
Amortization of transition asset (obligation)	Note 9 1	(1		)	(2		)
Reclassifications before tax		(183		)	(550		)
Tax (provision) benefit		63			188
Reclassifications net of tax		$	(120	)	$	(362	)
Derivative financial instruments:
Foreign exchange contracts	Other income (expense)	$	(12	)	$	(60	)
Interest rate contracts	Other income (expense)	(1		)	(2		)
Interest rate contracts	Interest expense of Financial Products	(1		)	(4		)
Reclassifications before tax		(14		)	(66		)
Tax (provision) benefit		5			24
Reclassifications net of tax		$	(9	)	$	(42	)
Available-for-sale securities:
Realized gain (loss)	Other income (expense)	$	1		$	1
Tax (provision) benefit		—			—
Reclassifications net of tax		$	1		$	1
Total reclassifications from Accumulated other comprehensive income (loss)		$	(128	)	$	(403	)

¹    Amounts are included in the calculation of net periodic benefit cost. See Note 9 for additional information.

13.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. We have made, and will continue to make, significant research and development and capital expenditures to comply with these emissions standards.

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 accrued 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 October 24, 2013, Progress Rail Services Corporation (Progress Rail), a wholly-owned indirect subsidiary of Caterpillar Inc., received a grand jury subpoena from the U.S. District Court for the Central District of California. The subpoena requests documents and information from Progress Rail, United Industries Corporation, a wholly-owned subsidiary of Progress Rail, and Caterpillar Inc. relating to allegations that Progress Rail conducted improper or unnecessary railcar inspections and repairs and improperly disposed of parts, equipment, tools and other items. In connection with this subpoena, Progress Rail was informed by the U.S. Attorney for the Central District of California that it is a target of a criminal investigation into potential violations of environmental laws and alleged improper business practices. The Company is cooperating with the authorities. Because of the recent timing of the subpoena, the Company is unable to

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predict the outcome or reasonably estimate the potential loss; however, we currently believe that this matter will not have a material adverse effect on the Company's consolidated results of operation, financial position or liquidity.

We are also involved in 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, environmental matters or intellectual property rights.  The aggregate range of reasonably possible losses in excess of accrued liabilities, if any, associated with these unresolved legal actions is not material.  In some cases, we cannot reasonably estimate a range of loss because there is insufficient information regarding the matter.  However, there is no more than a remote chance that any liability arising from these matters would be material.  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.

14.Income Taxes

The provision for income taxes for the first nine months of 2013 reflects an estimated annual effective tax rate of29 percent compared with 30.5 percent for 2012, excluding the items discussed below. The decrease is primarily due to the U.S. research and development tax credit that was expired in 2012, along with expected changes in our geographic mix of profits from a tax perspective.

The 2013 tax provision also includes a benefit of $87 million primarily related to the research and development tax credit that was retroactively extended for 2012 and a benefit of $55 million resulting from true-up of estimated amounts used in the tax provision to the 2012 U.S. tax return as filed in September 2013. This compares to an $81 million negative impact related to nondeductible goodwill in the first nine months of 2012.

15.Segment Information

A. Basis for segment information

Our Executive Office is comprised of five Group Presidents, a Senior Vice President and a CEO. Group Presidents are accountable for a related set of end-to-end businesses that they manage.  The Senior Vice President leads the Caterpillar Enterprise System Group, which was formed during the second quarter of 2013 with the goal of improving our manufacturing and supply chain capabilities, driving sustained improvements in customer deliveries, improving operational efficiencies and building on recent product quality improvements. The CEO allocates resources and manages performance at the Group President level.  As such, the CEO serves as our Chief Operating Decision Maker and operating segments are primarily based on the Group President reporting structure.

Three of our operating segments, Construction Industries, Resource Industries and Power Systems, are led by Group Presidents.  One operating segment, Financial Products, is led by a Group President who has responsibility for Corporate Services.  Corporate Services is a cost center primarily responsible for the performance of certain support functions globally and to provide centralized services; it does not meet the definition of an operating segment.  The Caterpillar Enterprise System Group is also a cost center and does not meet the definition of an operating segment. One Group President leads a smaller operating segment that is included in the All Other operating segment. 

B. Description of segments

We have five operating segments, of which four are reportable segments.  Following is a brief description of our reportable segments and the business activities included in the All Other operating segment:

Construction Industries:  A segment primarily responsible for supporting customers using machinery in infrastructure and building construction applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing, and sales and product support. The product portfolio includes backhoe loaders, small wheel loaders, small track-type tractors, skid steer loaders, multi-terrain loaders, mini excavators, compact wheel loaders, select work tools, small, medium and large track excavators, wheel excavators, medium wheel loaders, medium track-type tractors, track-type loaders, motor graders and pipe layers. In addition, Construction Industries has responsibility for Power Systems and three wholly-owned dealers in Japan and an integrated manufacturing cost center. Inter-segment sales are a source of revenue for this segment.

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Resource Industries: A segment primarily responsible for supporting customers using machinery in mining and quarrying applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes large track-type tractors, large mining trucks, underground mining equipment, electric rope shovels, draglines, hydraulic shovels, drills, highwall miners, tunnel boring equipment, large wheel loaders, off-highway trucks, articulated trucks, wheel tractor scrapers, wheel dozers, select work tools, forestry products, paving products, industrial and waste products, machinery components and electronics and control systems. Resource Industries also manages areas that provide services to other parts of the company, including integrated manufacturing and research and development. In addition, segment profit includes the impact from divestiture of portions of the Bucyrus distribution business and the acquisition of ERA Mining Machinery Limited, including its wholly-owned subsidiary Zhengzhou Siwei Mechanical & Electrical Manufacturing Co., Ltd., commonly known as Siwei, which was completed during the second quarter of 2012. Siwei primarily designs, manufactures, sells and supports underground coal mining equipment in China. Inter-segment sales are a source of revenue for this segment.

Power Systems:  A segment primarily responsible for supporting customers using reciprocating engines, turbines and related parts across industries serving electric power, industrial, petroleum and marine applications as well as rail-related businesses. Responsibilities include business strategy, product design, product management, development, manufacturing, marketing, sales and product support of reciprocating engine powered generator sets, integrated systems used in the electric power generation industry, reciprocating engines and integrated systems and solutions for the marine and petroleum industries; reciprocating engines supplied to the industrial industry as well as Caterpillar machinery; the business strategy, product design, product management, development, manufacturing, marketing, sales and product support of turbines and turbine-related services; the development, manufacturing, remanufacturing, maintenance, leasing and service of diesel-electric locomotives and components and other rail-related products and services. Inter-segment sales are a source of revenue for this segment.

Financial Products Segment:  Provides financing to customers and dealers for the purchase and lease of Caterpillar and other equipment, as well as some financing for Caterpillar sales to dealers.  Financing plans include operating and finance leases, installment sale contracts, working capital loans and wholesale financing plans. The segment also provides various forms of insurance to customers and dealers to help support the purchase and lease of our equipment.

All Other: Primarily includes activities such as: the remanufacturing of Cat® engines and components and remanufacturing services for other companies as well as the product management, development, manufacturing, marketing and product support of undercarriage, specialty products, hardened bar stock components and ground engaging tools primarily for Caterpillar products; logistics services; the product management, development, marketing, sales and product support of on-highway vocational trucks for North America; distribution services responsible for dealer development and administration, dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts. On July 31, 2012, we sold a majority interest in Caterpillar's third party logistics business. Inter-segment sales are a source of revenue for this segment. Results for the All Other operating segment are included as a reconciling item between reportable segments and consolidated external reporting.

C. Segment measurement and reconciliations

There are several methodology differences between our segment reporting and our external reporting.  The following is a list of the more significant methodology differences:

• Machinery and Power Systems segment net assets generally include inventories, receivables, property, plant and equipment, goodwill, intangibles, accounts payable, and customer advances.  Liabilities other than accounts payable and customer advances are generally managed at the corporate level and are not included in segment operations.  Financial Products Segment assets generally include all categories of assets.

• Segment inventories and cost of sales are valued using a current cost methodology.

• Goodwill allocated to segments is amortized using a fixed amount based on a 20 year useful life.  This methodology difference only impacts segment assets; no goodwill amortization expense is included in segment profit. In addition, only a portion of goodwill for certain acquisitions made in 2011 or later has been allocated to segments.

• The present value of future lease payments for certain Machinery and Power Systems operating leases is included in segment assets.  The estimated financing component of the lease payments is excluded.

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• Currency exposures for Machinery and Power Systems are generally managed at the corporate level and the effects of changes in exchange rates on results of operations within the year are not included in segment profit.  The net difference created in the translation of revenues and costs between exchange rates used for U.S. GAAP reporting and exchange rates used for segment reporting are recorded as a methodology difference.

• Postretirement benefit expenses are split; segments are generally responsible for service and prior service costs, with the remaining elements of net periodic benefit cost included as a methodology difference.

• Machinery and Power Systems segment profit is determined on a pretax basis and excludes interest expense, gains and losses on interest rate swaps and other income/expense items.  Financial Products Segment profit is determined on a pretax basis and includes other income/expense items.

Reconciling items are created based on accounting differences between segment reporting and our consolidated external reporting. Please refer to pages 34 to 39 for financial information regarding significant reconciling items.  Most of our reconciling items are self-explanatory given the above explanations.  For the reconciliation of profit, we have grouped the reconciling items as follows:

• Corporate costs:  These costs are related to corporate requirements and strategies that are considered to be for the benefit of the entire organization.

• Methodology differences:  See previous discussion of significant accounting differences between segment reporting and consolidated external reporting.

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

Reportable Segments
Three Months Ended September 30,
(Millions of dollars)
	2013
	External sales and revenues		Inter- segment sales and revenues		Total sales and revenues		Depreciation and amortization		Segment profit		Segment assets at September 30		Capital expenditures
Construction Industries	$	4,547	$	68	$	4,615	$	145	$	262	$	8,489	$	143
Resource Industries	3,004		208		3,212		192		409		11,703		106
Power Systems	4,922		471		5,393		161		883		9,013		125
Machinery and Power Systems	$	12,473	$	747	$	13,220	$	498	$	1,554	$	29,205	$	374
Financial Products Segment	807		—		807		203		218		37,239		473
Total	$	13,280	$	747	$	14,027	$	701	$	1,772	$	66,444	$	847
	2012
	External sales and revenues		Inter- segment sales and revenues		Total sales and revenues		Depreciation and amortization		Segment profit		Segment assets at December 31		Capital expenditures
Construction Industries	$	4,904	$	102	$	5,006	$	144	$	459	$	10,393	$	247
Resource Industries	5,214		253		5,467		179		1,113		13,455		229
Power Systems	5,317		597		5,914		157		943		9,323		244
Machinery and Power Systems	$	15,435	$	952	$	16,387	$	480	$	2,515	$	33,171	$	720
Financial Products Segment	776		—		776		179		190		36,563		432
Total	$	16,211	$	952	$	17,163	$	659	$	2,705	$	69,734	$	1,152

32

Reportable Segments
Nine Months Ended September 30,
(Millions of dollars)
	2013
	External sales and revenues		Inter- segment sales and revenues		Total sales and revenues		Depreciation and amortization		Segment profit		Segment assets at September 30		Capital expenditures
Construction Industries	$	13,594	$	262	$	13,856	$	426	$	863	$	8,489	$	403
Resource Industries	10,251		661		10,912		558		1,436		11,703		358
Power Systems	14,590		1,328		15,918		468		2,436		9,013		390
Machinery and Power Systems	$	38,435	$	2,251	$	40,686	$	1,452	$	4,735	$	29,205	$	1,151
Financial Products Segment	2,408		—		2,408		571		724		37,239		1,244
Total	$	40,843	$	2,251	$	43,094	$	2,023	$	5,459	$	66,444	$	2,395
	2012
	External sales and revenues		Inter- segment sales and revenues		Total sales and revenues		Depreciation and amortization		Segment profit		Segment assets at December 31		Capital expenditures
Construction Industries	$	15,306	$	355	$	15,661	$	414	$	1,763	$	10,393	$	597
Resource Industries	15,382		909		16,291		510		3,707		13,455		603
Power Systems	15,815		1,952		17,767		442		2,737		9,323		610
Machinery and Power Systems	$	46,503	$	3,216	$	49,719	$	1,366	$	8,207	$	33,171	$	1,810
Financial Products Segment	2,301		—		2,301		530		583		36,563		1,232
Total	$	48,804	$	3,216	$	52,020	$	1,896	$	8,790	$	69,734	$	3,042

33

Reconciliation of Sales and revenues:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidating Adjustments				Consolidated Total
Three Months Ended September 30, 2013
Total external sales and revenues from reportable segments	$	12,473		$	807	$	—			$	13,280
All Other operating segment	219			—		—				219
Other	(14		)	18		(80		)	1	(76		)
Total sales and revenues	$	12,678		$	825	$	(80	)		$	13,423
Three Months Ended September 30, 2012
Total external sales and revenues from reportable segments	$	15,435		$	776	$	—			$	16,211
All Other operating segment	318			—		—				318
Other	(14		)	20		(90		)	1	(84		)
Total sales and revenues	$	15,739		$	796	$	(90	)		$	16,445
1  Elimination of Financial Products revenues from Machinery and Power Systems.

Reconciliation of Sales and revenues:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidating Adjustments				Consolidated Total
Nine Months Ended September 30, 2013
Total external sales and revenues from reportable segments	$	38,435		$	2,408	$	—			$	40,843
All Other operating segment	647			—		—				647
Other	(34		)	54		(256		)	1	(236		)
Total sales and revenues	$	39,048		$	2,462	$	(256	)		$	41,254
Nine Months Ended September 30, 2012
Total external sales and revenues from reportable segments	$	46,503		$	2,301	$	—			$	48,804
All Other operating segment	1,246			—		—				1,246
Other	(38		)	52		(264		)	1	(250		)
Total sales and revenues	$	47,711		$	2,353	$	(264	)		$	49,800
1  Elimination of Financial Products revenues from Machinery and Power Systems.

34

Reconciliation of Consolidated profit before taxes:
(Millions of dollars)	Machinery and Power Systems			Financial Products			Consolidated Total
Three Months Ended September 30, 2013
Total profit from reportable segments	$	1,554		$	218		$	1,772
All Other operating segment	170			—			170
Cost centers	42			—			42
Corporate costs	(376		)	—			(376		)
Timing	77			—			77
Methodology differences:
Inventory/cost of sales	(36		)	—			(36		)
Postretirement benefit expense	(174		)	—			(174		)
Financing costs	(120		)	—			(120		)
Equity in (profit) loss of unconsolidated affiliated companies	1			—			1
Currency	(32		)	—			(32		)
Other income/expense methodology differences	(58		)	—			(58		)
Other methodology differences	(1		)	(4		)	(5		)
Total consolidated profit before taxes	$	1,047		$	214		$	1,261
Three Months Ended September 30, 2012
Total profit from reportable segments	$	2,515		$	190		$	2,705
All Other operating segment	482			—			482
Cost centers	9			—			9
Corporate costs	(366		)	—			(366		)
Timing	(30		)	—			(30		)
Methodology differences:
Inventory/cost of sales	9			—			9
Postretirement benefit expense	(177		)	—			(177		)
Financing costs	(130		)	—			(130		)
Equity in (profit) loss of unconsolidated affiliated companies	(5		)	—			(5		)
Currency	20			—			20
Interest rate swaps	2			—			2
Other income/expense methodology differences	(64		)	—			(64		)
Other methodology differences	(9		)	4			(5		)
Total consolidated profit before taxes	$	2,256		$	194		$	2,450

35

Reconciliation of Consolidated profit before taxes:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidated Total
Nine Months Ended September 30, 2013
Total profit from reportable segments	$	4,735		$	724	$	5,459
All Other operating segment	547			—		547
Cost centers	100			—		100
Corporate costs	(1,160		)	—		(1,160		)
Timing	58			—		58
Methodology differences:
Inventory/cost of sales	(139		)	—		(139		)
Postretirement benefit expense	(505		)	—		(505		)
Financing costs	(361		)	—		(361		)
Equity in (profit) loss of unconsolidated affiliated companies	1			—		1
Currency	(71		)	—		(71		)
Other income/expense methodology differences	(178		)	—		(178		)
Other methodology differences	(20		)	10		(10		)
Total consolidated profit before taxes	$	3,007		$	734	$	3,741
Nine Months Ended September 30, 2012
Total profit from reportable segments	$	8,207		$	583	$	8,790
All Other operating segment	888			—		888
Cost centers	32			—		32
Corporate costs	(1,126		)	—		(1,126		)
Timing	(318		)	—		(318		)
Methodology differences:
Inventory/cost of sales	(26		)	—		(26		)
Postretirement benefit expense	(508		)	—		(508		)
Financing costs	(357		)	—		(357		)
Equity in (profit) loss of unconsolidated affiliated companies	(12		)	—		(12		)
Currency	160			—		160
Interest rate swaps	2			—		2
Other income/expense methodology differences	(199		)	—		(199		)
Other methodology differences	(3		)	1		(2		)
Total consolidated profit before taxes	$	6,740		$	584	$	7,324

36

Reconciliation of Assets:
(Millions of dollars)	Machinery and Power Systems			Financial Products			Consolidating Adjustments			Consolidated Total
September 30, 2013
Total assets from reportable segments	$	29,205		$	37,239		$	—		$	66,444
All Other operating segment	1,442			—			—			1,442
Items not included in segment assets:
Cash and short-term investments	4,108			—			—			4,108
Intercompany receivables	243			—			(243		)	—
Investment in Financial Products	4,769			—			(4,769		)	—
Deferred income taxes	3,883			—			(490		)	3,393
Goodwill and intangible assets	3,567			—			—			3,567
Property, plant and equipment – net and other assets	1,057			—			—			1,057
Operating lease methodology difference	(287		)	—			—			(287		)
Liabilities included in segment assets	10,504			—			—			10,504
Inventory methodology differences	(2,610		)	—			—			(2,610		)
Other	(132		)	(151		)	(63		)	(346		)
Total assets	$	55,749		$	37,088		$	(5,565	)	$	87,272
December 31, 2012
Total assets from reportable segments	$	33,171		$	36,563		$	—		$	69,734
All Other operating segment	1,499			—			—			1,499
Items not included in segment assets:
Cash and short-term investments	3,306			—			—			3,306
Intercompany receivables	303			—			(303		)	—
Investment in Financial Products	4,433			—			(4,433		)	—
Deferred income taxes	3,926			—			(516		)	3,410
Goodwill and intangible assets	3,145			—			—			3,145
Property, plant and equipment – net and other assets	668			—			—			668
Operating lease methodology difference	(329		)	—			—			(329		)
Liabilities included in segment assets	11,293			—			—			11,293
Inventory methodology differences	(2,949		)	—			—			(2,949		)
Other	(182		)	(107		)	(132		)	(421		)
Total assets	$	58,284		$	36,456		$	(5,384	)	$	89,356

37

Reconciliations of Depreciation and amortization:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidated Total
Three Months Ended September 30, 2013
Total depreciation and amortization from reportable segments	$	498		$	203	$	701
Items not included in segment depreciation and amortization:
All Other operating segment	43			—		43
Cost centers	36			—		36
Other	(7		)	6		(1		)
Total depreciation and amortization	$	570		$	209	$	779
Three Months Ended September 30, 2012
Total depreciation and amortization from reportable segments	$	480		$	179	$	659
Items not included in segment depreciation and amortization:
All Other operating segment	41			—		41
Cost centers	23			—		23
Other	(9		)	6		(3		)
Total depreciation and amortization	$	535		$	185	$	720

Reconciliations of Depreciation and amortization:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidated Total
Nine Months Ended September 30, 2013
Total depreciation and amortization from reportable segments	$	1,452		$	571	$	2,023
Items not included in segment depreciation and amortization:
All Other operating segment	127			—		127
Cost centers	104			—		104
Other	(9		)	18		9
Total depreciation and amortization	$	1,674		$	589	$	2,263
Nine Months Ended September 30, 2012
Total depreciation and amortization from reportable segments	$	1,366		$	530	$	1,896
Items not included in segment depreciation and amortization:
All Other operating segment	125			—		125
Cost centers	64			—		64
Other	(32		)	17		(15		)
Total depreciation and amortization	$	1,523		$	547	$	2,070

38

Reconciliations of Capital expenditures:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidating Adjustments			Consolidated Total
Three Months Ended September 30, 2013
Total capital expenditures from reportable segments	$	374		$	473	$	—		$	847
Items not included in segment capital expenditures:
All Other operating segment	88			—		—			88
Cost centers	41			—		—			41
Timing	5			—		—			5
Other	(18		)	18		(15		)	(15		)
Total capital expenditures	$	490		$	491	$	(15	)	$	966
Three Months Ended September 30, 2012
Total capital expenditures from reportable segments	$	720		$	432	$	—		$	1,152
Items not included in segment capital expenditures:
All Other operating segment	75			—		—			75
Cost centers	16			—		—			16
Timing	(40		)	—		—			(40		)
Other	8			35		(15		)	28
Total capital expenditures	$	779		$	467	$	(15	)	$	1,231

Reconciliations of Capital expenditures:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidating Adjustments			Consolidated Total
Nine Months Ended September 30, 2013
Total capital expenditures from reportable segments	$	1,151		$	1,244	$	—		$	2,395
Items not included in segment capital expenditures:
All Other operating segment	200			—		—			200
Cost centers	115			—		—			115
Timing	531			—		—			531
Other	(94		)	66		(50		)	(78		)
Total capital expenditures	$	1,903		$	1,310	$	(50	)	$	3,163
Nine Months Ended September 30, 2012
Total capital expenditures from reportable segments	$	1,810		$	1,232	$	—		$	3,042
Items not included in segment capital expenditures:
All Other operating segment	229			—		—			229
Cost centers	119			—		—			119
Timing	281			—		—			281
Other	(115		)	109		(139		)	(145		)
Total capital expenditures	$	2,324		$	1,341	$	(139	)	$	3,526

39

16.Cat Financial Financing Activities

Credit quality of financing receivables and allowance for credit losses

Cat Financial applies a systematic methodology to determine the allowance for credit losses for finance receivables.  Based upon Cat Financial’s analysis of credit losses and risk factors, portfolio segments are as follows:

• Customer – Finance receivables with retail customers.

• Dealer – Finance receivables with Caterpillar dealers.

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

• North America – Finance receivables originated in the United States or Canada.

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

• Asia Pacific – Finance receivables originated in Australia, New Zealand, China, Japan, South Korea and Southeast Asia.

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

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

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

Impaired loans and finance leases

For all classes, a loan or finance lease is considered impaired, based on current information and events, if it is probable that Cat Financial will be unable to collect all amounts due according to the contractual terms of the loan or finance lease.  Loans and finance leases reviewed for impairment include loans and finance leases that are past due, non-performing or in bankruptcy. Recognition of income is suspended and the loan or finance lease is placed on non-accrual status when management determines that collection of future income is not probable (generally after 120 days past due except in locations where local regulatory requirements dictate a different method, or in instances in which relevant information is known that warrants placing the loan or finance lease on non-accrual status).  Accrual is resumed, and previously suspended income is recognized, when the loan or finance lease 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.

During the second quarter of 2013, Cat Financial changed the classification of certain loans and finance leases previously reported as impaired. While these loans and finance leases had been incorrectly reported as impaired, the related allowance for these loans and finance leases was appropriately measured; therefore, this change had no impact on the allowance for credit losses. The impact of incorrectly reporting these loans and finance leases as impaired was not considered material to previously issued financial statements; however, prior period impaired loan and finance lease balances have been revised throughout Notes 16 and 18.

There were no impaired loans or finance leases as of September 30, 2013 or December 31, 2012, for the Dealer portfolio segment.  The average recorded investment for impaired loans and finance leases for the Dealer portfolio segment was zero for the three and nine months ended September 30, 2013 and 2012.

Individually impaired loans and finance leases for the Customer portfolio segment were as follows: 

40

	September 30, 2013						December 31, 2012
(Millions of dollars)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Impaired Loans and Finance Leases With No Allowance Recorded
Customer
North America	$	20	$	19	$	—	$	28	$	27	$	—
Europe	53		52		—		45		45		—
Asia Pacific	2		2		—		2		2		—
Mining	127		127		—		1		1		—
Latin America	16		16		—		7		7		—
Caterpillar Power Finance	305		304		—		295		295		—
Total	$	523	$	520	$	—	$	378	$	377	$	—
Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	16	$	14	$	4	$	25	$	23	$	7
Europe	19		15		7		28		26		11
Asia Pacific	22		22		6		19		19		4
Mining	—		—		—		—		—		—
Latin America	62		62		18		30		30		8
Caterpillar Power Finance	94		89		25		113		109		24
Total	$	213	$	202	$	60	$	215	$	207	$	54
Total Impaired Loans and Finance Leases
Customer
North America	$	36	$	33	$	4	$	53	$	50	$	7
Europe	72		67		7		73		71		11
Asia Pacific	24		24		6		21		21		4
Mining	127		127		—		1		1		—
Latin America	78		78		18		37		37		8
Caterpillar Power Finance	399		393		25		408		404		24
Total	$	736	$	722	$	60	$	593	$	584	$	54

41

	Three Months Ended September 30, 2013				Three Months Ended September 30, 2012
(Millions of dollars)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Impaired Loans and Finance Leases With No Allowance Recorded
Customer
North America	$	23	$	—	$	41	$	1
Europe	52		—		45		—
Asia Pacific	3		—		3		—
Mining	96		2		9		1
Latin America	14		—		6		—
Caterpillar Power Finance	280		1		219		—
Total	$	468	$	3	$	323	$	2
Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	14	$	—	$	25	$	—
Europe	21		—		27		1
Asia Pacific	18		—		15		—
Mining	—		—		—		—
Latin America	53		1		37		1
Caterpillar Power Finance	156		1		106		—
Total	$	262	$	2	$	210	$	2
Total Impaired Loans and Finance Leases
Customer
North America	$	37	$	—	$	66	$	1
Europe	73		—		72		1
Asia Pacific	21		—		18		—
Mining	96		2		9		1
Latin America	67		1		43		1
Caterpillar Power Finance	436		2		325		—
Total	$	730	$	5	$	533	$	4

42

	Nine Months Ended September 30, 2013				Nine Months Ended September 30, 2012
(Millions of dollars)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Impaired Loans and Finance Leases With No Allowance Recorded
Customer
North America	$	26	$	3	$	56	$	2
Europe	48		—		45		—
Asia Pacific	4		—		4		—
Mining	40		2		8		1
Latin America	11		—		6		—
Caterpillar Power Finance	285		2		204		2
Total	$	414	$	7	$	323	$	5
Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	18	$	—	$	25	$	—
Europe	23		1		26		1
Asia Pacific	18		1		13		1
Mining	1		—		—		—
Latin America	44		2		26		1
Caterpillar Power Finance	143		1		87		—
Total	$	247	$	5	$	177	$	3
Total Impaired Loans and Finance Leases
Customer
North America	$	44	$	3	$	81	$	2
Europe	71		1		71		1
Asia Pacific	22		1		17		1
Mining	41		2		8		1
Latin America	55		2		32		1
Caterpillar Power Finance	428		3		291		2
Total	$	661	$	12	$	500	$	8

Non-accrual and past due loans and finance leases

For all classes, Cat Financial considers a loan or finance lease past due if any portion of a contractual payment is due and unpaid for more than 30 days.  Recognition of income is suspended and the loan or finance lease is placed on non-accrual status when management determines that collection of future income is not probable (generally after 120 days past due except in locations where local regulatory requirements dictate a different method, or in instances in which relevant information is known that warrants placing the loan or finance lease on non-accrual status).  Accrual is resumed, and previously suspended income is recognized, when the loan or finance lease becomes contractually current and/or collection doubts are removed.

As of September 30, 2013 and December 31, 2012, there were no loans or finance leases on non-accrual status for the Dealer portfolio segment.

The investment in customer loans and finance leases on non-accrual status was as follows:

43

(Millions of dollars)
	September 30, 2013		December 31, 2012
Customer
North America	$	39	$	59
Europe	41		38
Asia Pacific	51		36
Mining	31		12
Latin America	194		148
Caterpillar Power Finance	141		220
Total	$	497	$	513

Aging related to loans and finance leases was as follows:

(Millions of dollars)
	September 30, 2013
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	33	$	9	$	29	$	71	$	6,256	$	6,327	$	—
Europe	32		16		36		84		2,682		2,766		8
Asia Pacific	65		42		60		167		2,826		2,993		16
Mining	—		—		12		12		2,281		2,293		—
Latin America	63		34		189		286		2,491		2,777		5
Caterpillar Power Finance	7		18		69		94		3,025		3,119		1
Dealer
North America	—		—		—		—		2,349		2,349		—
Europe	—		—		—		—		176		176		—
Asia Pacific	—		—		—		—		565		565		—
Mining	—		—		—		—		1		1		—
Latin America	—		—		1		1		778		779		1
Total	$	200	$	119	$	396	$	715	$	23,430	$	24,145	$	31

(Millions of dollars)
	December 31, 2012
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	35	$	8	$	52	$	95	$	5,872	$	5,967	$	—
Europe	23		9		36		68		2,487		2,555		6
Asia Pacific	53		19		54		126		2,912		3,038		18
Mining	—		1		12		13		1,960		1,973		—
Latin America	62		19		138		219		2,500		2,719		—
Caterpillar Power Finance	15		14		126		155		3,017		3,172		4
Dealer
North America	—		—		—		—		2,063		2,063		—
Europe	—		—		—		—		185		185		—
Asia Pacific	—		—		—		—		751		751		—
Mining	—		—		—		—		1		1		—
Latin America	—		—		—		—		884		884		—
Total	$	188	$	70	$	418	$	676	$	22,632	$	23,308	$	28

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Allowance for credit loss activity

In estimating the allowance for credit losses, Cat Financial reviews loans and finance leases that are past due, non-performing or in bankruptcy. An analysis of the allowance for credit losses was as follows:

(Millions of dollars)
	September 30, 2013
Allowance for Credit Losses:	Customer			Dealer		Total
Balance at beginning of year	$	414		$	9	$	423
Receivables written off	(133		)	—		(133		)
Recoveries on receivables previously written off	38			—		38
Provision for credit losses	76			2		78
Other	(5		)	—		(5		)
Balance at end of period	$	390		$	11	$	401
Individually evaluated for impairment	$	60		$	—	$	60
Collectively evaluated for impairment	330			11		341
Ending Balance	$	390		$	11	$	401
Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	736		$	—	$	736
Collectively evaluated for impairment	19,539			3,870		23,409
Ending Balance	$	20,275		$	3,870	$	24,145

(Millions of dollars)
	December 31, 2012
Allowance for Credit Losses:	Customer			Dealer		Total
Balance at beginning of year	$	360		$	6	$	366
Receivables written off	(149		)	—		(149		)
Recoveries on receivables previously written off	47			—		47
Provision for credit losses	157			3		160
Other	(1		)	—		(1		)
Balance at end of year	$	414		$	9	$	423
Individually evaluated for impairment	$	54		$	—	$	54
Collectively evaluated for impairment	360			9		369
Ending Balance	$	414		$	9	$	423
Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	593		$	—	$	593
Collectively evaluated for impairment	18,831			3,884		22,715
Ending Balance	$	19,424		$	3,884	$	23,308

Credit quality of finance receivables

The credit quality of finance receivables is reviewed on a monthly basis.  Credit quality indicators include performing and non-performing.  Non-performing is defined as finance receivables currently over 120 days past due and/or on non-accrual status or in bankruptcy.  Finance receivables not meeting the criteria listed above are considered performing.  Non-performing receivables have the highest probability for credit loss.  The allowance for credit losses attributable to non-performing receivables is based on the most probable source of repayment, which is normally the liquidation of collateral.  In determining collateral value, Cat Financial estimates the current fair market value of the collateral. In addition, Cat Financial considers credit enhancements such as additional collateral and contractual third-party guarantees in determining the allowance for credit losses attributable to non-performing receivables.

The recorded investment in performing and non-performing finance receivables was as follows: 

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(Millions of dollars)
	September 30, 2013						December 31, 2012
	Customer		Dealer		Total		Customer		Dealer		Total
Performing
North America	$	6,288	$	2,349	$	8,637	$	5,908	$	2,063	$	7,971
Europe	2,725		176		2,901		2,517		185		2,702
Asia Pacific	2,942		565		3,507		3,002		751		3,753
Mining	2,262		1		2,263		1,961		1		1,962
Latin America	2,583		779		3,362		2,571		884		3,455
Caterpillar Power Finance	2,978		—		2,978		2,952		—		2,952
Total Performing	$	19,778	$	3,870	$	23,648	$	18,911	$	3,884	$	22,795
Non-Performing
North America	$	39	$	—	$	39	$	59	$	—	$	59
Europe	41		—		41		38		—		38
Asia Pacific	51		—		51		36		—		36
Mining	31		—		31		12		—		12
Latin America	194		—		194		148		—		148
Caterpillar Power Finance	141		—		141		220		—		220
Total Non-Performing	$	497	$	—	$	497	$	513	$	—	$	513
Performing & Non-Performing
North America	$	6,327	$	2,349	$	8,676	$	5,967	$	2,063	$	8,030
Europe	2,766		176		2,942		2,555		185		2,740
Asia Pacific	2,993		565		3,558		3,038		751		3,789
Mining	2,293		1		2,294		1,973		1		1,974
Latin America	2,777		779		3,556		2,719		884		3,603
Caterpillar Power Finance	3,119		—		3,119		3,172		—		3,172
Total	$	20,275	$	3,870	$	24,145	$	19,424	$	3,884	$	23,308

Troubled Debt Restructurings

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

TDRs are reviewed along with other receivables as part of management’s ongoing evaluation of the adequacy of the allowance for credit losses.  The allowance for credit losses attributable to TDRs is based on the most probable source of repayment, which is normally the liquidation of collateral.  In determining collateral value, Cat Financial estimates the current fair market value of the collateral. In addition, Cat Financial factors in credit enhancements such as additional collateral and contractual third-party guarantees in determining the allowance for credit losses attributable to TDRs.

There were no loans or finance lease receivables modified as TDRs during the three and nine months ended September 30, 2013 or 2012 for the Dealer portfolio segment.

Loan and finance lease receivables in the Customer portfolio segment modified as TDRs during the three and nine months ended September 30, 2013 and 2012, were as follows:

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(Dollars in millions)
	Three Months Ended September 30, 2013					Three Months Ended September 30, 2012
	Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment		Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment
Customer
North America	14	$	1	$	—	17	$	4	$	4
Europe	7	5		5		14	1		1
Asia Pacific	—	—		—		12	3		3
Mining	45	123		123		—	—		—
Latin America	10	1		1		—	—		—
Caterpillar Power Finance 1	6	65		67		15	151		151
Total 2	82	$	195	$	196	58	$	159	$	159

	Nine Months Ended September 30, 2013					Nine Months Ended September 30, 2012
	Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment		Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment
Customer
North America	46	$	5	$	5	58	$	8	$	8
Europe	15	6		6		21	8		8
Asia Pacific	—	—		—		12	3		3
Mining	45	123		123		—	—		—
Latin America	16	2		2		—	—		—
Caterpillar Power Finance 1	10	101		104		20	183		183
Total 2	132	$	237	$	240	111	$	202	$	202

¹  During the three and nine months ended September 30, 2013, $13 million and $25 million, respectively, of additional funds were subsequently loaned to a borrower whose terms had been modified in a TDR.  The $13 million and $25 million of additional funds are not reflected in the table above as no incremental modifications have been made with the borrower during the period presented.  At September 30, 2013, remaining commitments to lend additional funds to a borrower whose terms have been modified in a TDR were $4 million.

²  Modifications include extended contract maturities, inclusion of interest only periods, below market interest rates, and extended skip payment periods.

TDRs in the Customer portfolio segment with a payment default during the three and nine months ended September 30, 2013 and 2012, which had been modified within twelve months prior to the default date, were as follows: 

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(Dollars in millions)	Three Months Ended September 30, 2013			Three Months Ended September 30, 2012
	Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment
Customer
North America	5	$	1	8	$	1
Europe	5	—		—	—
Asia Pacific	—	—		2	1
Total	10	$	1	10	$	2

	Nine Months Ended September 30, 2013			Nine Months Ended September 30, 2012
	Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment
Customer
North America	18	$	4	39	$	3
Europe	5	—		—	—
Asia Pacific	—	—		2	1
Caterpillar Power Finance	2	3		16	21
Total	25	$	7	57	$	25

17.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 Mitsubishi Heavy Industries' (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) and we consolidated its financial statements.  On April 2, 2012, we redeemed the remaining 33 percent interest at its carrying amount, resulting in Caterpillar becoming the sole owner of Cat Japan. Caterpillar paid $444 million (36.5 billion Japanese Yen) to acquire the remaining equity interest held in Cat Japan by MHI. 

18.Fair Value Measurements

A.Fair value measurements

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

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

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

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

When available, we use quoted market prices to determine fair value, and we classify such measurements within Level 1.  In some cases where market prices are not available, we make use of observable market based inputs to calculate fair value, in which case the measurements are classified within Level 2.  If quoted or observable market prices are not available, fair value is based upon 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.

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

Fair value measurement includes the consideration of nonperformance risk.  Nonperformance risk refers to the risk that an obligation (either by a counterparty or Caterpillar) will not be fulfilled.  For 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 (certain Level 2 and Level 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 sales, risk-free yield curves and prices of similarly rated bonds.

Derivative financial instruments

The fair value of interest rate swap derivatives is primarily based on models that utilize the appropriate market-based forward swap curves and zero-coupon interest rates to determine discounted cash flows.  The fair value of foreign currency and commodity forward, option and cross currency contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward rate.

Guarantees

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

Assets and liabilities measured on a recurring basis at fair value, primarily related to Financial Products, included in our Consolidated Statement of Financial Position as of September 30, 2013 and December 31, 2012 are summarized below:

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(Millions of dollars)	September 30, 2013
	Level 1		Level 2		Level 3		Total Assets / Liabilities, at Fair Value
Assets
Available-for-sale securities
Government debt
U.S. treasury bonds	$	11	$	—	$	—	$	11
Other U.S. and non-U.S. government bonds	—		126		—		126
Corporate bonds
Corporate bonds	—		672		—		672
Asset-backed securities	—		75		—		75
Mortgage-backed debt securities
U.S. governmental agency	—		337		—		337
Residential	—		21		—		21
Commercial	—		93		—		93
Equity securities
Large capitalization value	231		—		—		231
Smaller company growth	45		—		—		45
Total available-for-sale securities	287		1,324		—		1,611
Derivative financial instruments, net	—		186		—		186
Total Assets	$	287	$	1,510	$	—	$	1,797
Liabilities
Guarantees	$	—	$	—	$	15	$	15
Total Liabilities	$	—	$	—	$	15	$	15

(Millions of dollars)	December 31, 2012
	Level 1		Level 2		Level 3		Total Assets / Liabilities, at Fair Value
Assets
Available-for-sale securities
Government debt
U.S. treasury bonds	$	10	$	—	$	—	$	10
Other U.S. and non-U.S. government bonds	—		146		—		146
Corporate bonds
Corporate bonds	—		664		—		664
Asset-backed securities	—		96		—		96
Mortgage-backed debt securities
U.S. governmental agency	—		299		—		299
Residential	—		25		—		25
Commercial	—		127		—		127
Equity securities
Large capitalization value	185		—		—		185
Smaller company growth	34		—		—		34
Total available-for-sale securities	229		1,357		—		1,586
Derivative financial instruments, net	—		154		—		154
Total Assets	$	229	$	1,511	$	—	$	1,740
Liabilities
Guarantees	$	—	$	—	$	14	$	14
Total Liabilities	$	—	$	—	$	14	$	14

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Below are roll-forwards of liabilities measured at fair value using Level 3 inputs for the nine months ended September 30, 2013 and 2012.  These instruments were valued using pricing models that, in management’s judgment, reflect the assumptions of a marketplace participant.

(Millions of dollars)	Guarantees
Balance at December 31, 2012	$	14
Issuance of guarantees	6
Expiration of guarantees	(5		)
Balance at September 30, 2013	$	15
Balance at December 31, 2011	$	7
Acquisitions	6
Issuance of guarantees	7
Expiration of guarantees	(3		)
Balance at September 30, 2012	$	17

In addition to the amounts above, Cat Financial impaired loans are subject to measurement at fair value on a nonrecurring basis. A loan is considered impaired when management determines that collection of contractual amounts due is not probable.  In these cases, an allowance for credit losses may be established based primarily on the fair value of associated collateral.  As the collateral’s fair value is based on observable market prices and/or current appraised values, the impaired loans are classified as Level 2 measurements. Cat Financial had impaired loans with a fair value of $109 million and $117 million as of September 30, 2013 and December 31, 2012, respectively.  

B.Fair values of financial instruments

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

Cash and short-term investments

Carrying amount approximated fair value.

Restricted cash and short-term investments

Carrying amount approximated fair value.  Restricted cash and short-term investments are included in Prepaid expenses and other current assets in the Consolidated Statement of Financial Position.

Finance receivables

Fair value was estimated by discounting the future cash flows using current rates, representative of receivables with similar remaining maturities.

Wholesale inventory receivables

Fair value was estimated by discounting the future cash flows using current rates, representative of receivables with similar remaining maturities.

Short-term borrowings

Carrying amount approximated fair value.

Long-term debt

Fair value for fixed and floating rate debt was estimated based on quoted market prices.

Please refer to the table below for the fair values of our financial instruments.

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Fair Value of Financial Instruments
	September 30, 2013				December 31, 2012
(Millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Levels	Reference
Assets
Cash and short-term investments	$	6,357	$	6,357	$	5,490	$	5,490	1
Restricted cash and short-term investments	50		50		53		53		1
Available-for-sale securities	1,611		1,611		1,586		1,586		1 & 2	Note 8
Finance receivables – net (excluding finance leases 1)	16,077		15,952		15,404		15,359		2	Note 16
Wholesale inventory receivables – net (excluding finance leases 1)	1,616		1,542		1,674		1,609		2	Note 16
Foreign currency contracts – net	51		51		—		—		2	Note 4
Interest rate swaps – net	136		136		219		219		2	Note 4
Commodity contracts – net	—		—		1		1		2	Note 4
Liabilities
Short-term borrowings	5,847		5,847		5,287		5,287		1
Long-term debt (including amounts due within one year)
Machinery and Power Systems	9,061		10,337		9,779		11,969		2
Financial Products	24,629		25,239		25,077		26,063		2
Foreign currency contracts – net	—		—		66		66		2	Note 4
Commodity contracts – net	1		1		—		—		2	Note 4
Guarantees	15		15		14		14		3	Note 10

¹  Total excluded items have a net carrying value at September 30, 2013 and December 31, 2012 of $8,132 million and $7,959 million, respectively.

19. Acquisitions

Johan Walter Berg AB

In September 2013, we acquired 100 percent of the stock of Johan Walter Berg AB (Berg). Berg is a leading manufacturer of mechanically and electrically driven propulsion systems and marine controls for ships. Headquartered in Öckerö Islands, Sweden, Berg has designed and manufactured heavy-duty marine thrusters and controllable pitch propellers since 1929. Its proprietary systems are employed in maritime applications throughout the world that require precise maneuvering and positioning. With the acquisition, Caterpillar will transition from selling only engines and generators to providing complete marine propulsion package systems. The purchase price, net of $9 million of acquired cash, was approximately $166 million. The purchase price includes contingent consideration, payable in 2016, with a fair value of approximately $7 million. The contingent consideration will be based on the revenues achieved by Berg in the period from January 1, 2013 to December 31, 2015 and is capped at €30 million. The contingent consideration will be remeasured each reporting period at its estimated fair value with any adjustment included in Other operating (income) expenses in the Consolidated Statement of Results of Operations.

The transaction was financed with available cash. Tangible assets as of the acquisition date were $83 million, recorded at their fair values, and primarily included cash of $9 million, receivables of $13 million, inventories of $33 million and property, plant and equipment of $28 million. Finite-lived intangible assets acquired of $66 million included developed technology, customer relationships, and trade names. The finite lived intangible assets are being amortized on a straight-line basis over a weighted-average amortization period of approximately 10 years. Liabilities assumed as of the acquisition date were $83 million, recorded at their fair values, and primarily included accounts payable of $19 million, advance payments of $33 million and net deferred tax liabilities of $13 million. Goodwill of $109 million, non-deductible for income tax purposes, represented the excess of the consideration transferred over the net assets recognized and represented the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Factors that contributed to a purchase price resulting in the recognition of goodwill include Berg’s

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strategic fit into our product portfolio, the opportunity to provide worldwide support to marine operators for a complete, optimized propulsion package, and the acquired assembled workforce. These values represent a preliminary allocation of purchase price subject to finalization of post-closing procedures. Berg will be reported in the Power Systems segment in Note 15. 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.

ERA Mining Machinery Limited (Siwei)

During the second quarter of 2012, Caterpillar, through its wholly-owned subsidiary Caterpillar (Luxembourg) Investment Co. S.A. (CAT Lux), completed a tender offer to acquire the issued shares of ERA Mining Machinery Limited (Siwei), including its wholly-owned subsidiary Zhengzhou Siwei Mechanical Manufacturing Co., Ltd. Substantially all of the issued shares of Siwei, a public company listed on the Hong Kong Exchange, were acquired at the end of May 2012. In October 2012, the remaining shares of Siwei common stock were acquired for approximately $7 million in cash. Siwei primarily designs, manufactures, sells and supports underground coal mining equipment in mainland China and is known for its expertise in manufacturing mining roof support equipment. The acquisition supports Caterpillar's long-term commitment to invest in China in order to support our growing base of Chinese customers and will further expand our underground mining business both inside and outside of China.

The tender offer allowed Siwei shareholders to choose between two types of consideration in exchange for their shares. The alternatives were either cash consideration of HK$0.88 or a HK$1.00 loan note issued by CAT Lux to the former shareholders of Siwei that provided, subject to its terms, for the holder to receive on redemption a minimum of HK$0.75 up to a maximum of HK$1.15 depending on Siwei's consolidated gross profit for 2012 and 2013. Approximately 4 billion Siwei shares were tendered for the cash alternative and approximately 1.6 billion Siwei shares were tendered for the loan note alternative. The purchase price of approximately $677 million was comprised of net cash paid of approximately $444 million ($475 million in cash paid for shares and to cancel share options less cash acquired of $31 million), the fair value of the loan notes of $152 million, approximately $168 million of assumed third-party short term borrowings and notes payable, a loan and interest payable to Caterpillar from Siwei of $51 million, less restricted cash acquired of approximately $138 million. The noncontrolling interest for the outstanding shares not tendered was approximately $7 million.

The transaction was financed with available cash and included the issuance of loan notes to certain former shareholders of Siwei, which had a debt component and a portion that was contingent consideration. The $152 million fair value represented the minimum redemption amount of the debt component payable in April 2013.

Tangible assets as of the acquisition date and after giving effect to the adjustments described below were $598 million, recorded at their fair values, and primarily included cash of $31 million, restricted cash of $138 million, receivables of $184 million, inventories of $77 million and property, plant and equipment of $94 million. Finite-lived intangible assets acquired of $112 million were primarily related to customer relationships and also included trade names. The finite-lived intangible assets are being amortized on a straight-line basis over a weighted average amortization period of approximately 14 years. Liabilities assumed as of the acquisition date and after giving effect to the adjustments described below were $626 million, recorded at their fair values, and primarily included accounts payable of $352 million, third-party short term borrowings and notes payable of $168 million and accrued expenses of $37 million. Additionally, deferred tax liabilities were $25 million. Goodwill of $625 million, substantially all of which is non-deductible for income tax purposes, represented the excess of the consideration transferred over the net assets recognized and represented the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill will not be amortized, but will be tested for impairment at least annually. Factors that contributed to a purchase price resulting in the recognition of goodwill include expected cost savings primarily from increased purchasing power for raw materials, improved working capital management, expanded underground mining equipment sales opportunities in China and internationally, along with the acquired assembled workforce. The results of the acquired business for the period from the acquisition date are included in the accompanying consolidated financial statements and are reported in the Resource Industries segment in Note 15. 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.

In November 2012, Caterpillar became aware of inventory accounting discrepancies at Siwei which led to an internal investigation. Caterpillar's investigation determined that Siwei had engaged in accounting misconduct prior to Caterpillar's acquisition of Siwei in mid-2012. The accounting misconduct included inappropriate accounting practices involving improper cost allocation that resulted in overstated profit and improper revenue recognition practices involving early and, at times unsupported, revenue recognition. Due to the identified accounting misconduct that occurred before the

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acquisition, measurement period adjustments were made to the fair value of the acquired assets and assumed liabilities during the fourth quarter of 2012. The fair values presented above are a final allocation of the purchase price and reflect these changes, which are primarily comprised of a decrease in finite-lived intangible assets of $82 million, a decrease in receivables of $29 million, a decrease in inventory of $17 million and a net increase in liabilities of $23 million, resulting in an increase in goodwill of $149 million.

Because of the accounting misconduct identified in the fourth quarter of 2012, Siwei's goodwill was tested for impairment as of November 30, 2012. We determined the carrying value of Siwei, which is a separate reporting unit, exceeded its fair value at the measurement date, requiring step two in the impairment test process.  The fair value of the Siwei reporting unit was determined primarily using an income approach based on the present value of discounted cash flows. We assigned the fair value to the reporting unit's assets and liabilities and determined the implied fair value of goodwill was substantially below the carrying value of the reporting unit's goodwill.  Accordingly, we recognized a $580 million goodwill impairment charge, which resulted in goodwill of approximately $45 million remaining for Siwei. The goodwill impairment was a result of changes in the assumptions used to determine the fair value resulting from the accounting misconduct that occurred before the acquisition. There was no tax benefit associated with this impairment charge. The Siwei goodwill impairment charge was reported in the fourth quarter of 2012 in the Resource Industries segment.

In May 2013, Caterpillar and its wholly-owned subsidiaries CAT Lux and Siwei entered into a settlement agreement with two former directors of Siwei and two other parties with an interest in the settlement, including Mining Machinery Limited (MML). The agreement settles the dispute between the parties which arose from Caterpillar's determination that Siwei senior managers had engaged in accounting misconduct for several years prior to Caterpillar's announcement of the completion of its tender offer for Siwei in the second quarter of 2012.

Under the terms of the settlement agreement, the parties agreed that (i) the loan notes issued by CAT Lux (and guaranteed by Caterpillar) as a portion of the Siwei purchase price and held by MML and (ii) loans made by the two former Siwei directors to Siwei prior to its acquisition by Caterpillar would all be canceled and discharged in exchange for payments by CAT Lux to MML and the two former directors in an aggregate amount of approximately $30 million. As of the settlement in May 2013, the loan notes had a book value of approximately $152 million and the obligation related to the loans by the two former directors was approximately $13 million. The settlement agreement contains a mutual release and discharge of the parties' respective claims with respect to the dispute and contains an agreement by Caterpillar and CAT Lux not to pursue any such claims against either the auditors or former directors of Siwei. The settlement and discharge of the loan obligations resulted in the recognition of a gain of approximately $135 million reported in Other operating (income) expenses in the Consolidated Statement of Results of Operations and is included in the Resource Industries segment.

20.Divestitures and Assets Held for Sale

Bucyrus Distribution Business Divestiture

In conjunction with our acquisition of Bucyrus in July 2011, we announced our intention to sell the Bucyrus distribution business to Caterpillar dealers that support mining customers around the world in a series of individual transactions.  Bucyrus predominantly employed a direct to end customer model to sell and support products.  The intention is for all Bucyrus products to be sold and serviced by Caterpillar dealers, consistent with our long-held distribution strategy.  These transitions are occurring in phases based on the mining business opportunity within each dealer territory.

As portions of the Bucyrus distribution business are sold or classified as held for sale, they will not qualify as discontinued operations because Caterpillar expects significant continuing direct cash flows from the Caterpillar dealers after the divestitures. The gain or loss on disposal, along with the continuing operations of these disposal groups, will be reported in the Resource Industries segment. Goodwill will be allocated to each disposal group using the relative fair value method. The value of the customer relationship intangibles related to each portion of the Bucyrus distribution business to be sold will be included in the disposal groups. The disposal groups will be recorded at the lower of their carrying value or fair value less cost to sell. The portions of the distribution business that were sold were not material to our results of operations, financial position or cash flow.

We completed two sale transactions during the first quarter, one during the second quarter and three during the third quarter of 2013 whereby we sold portions of the Bucyrus distribution business to Caterpillar dealers for an aggregate price of $199 million. For the first nine months of 2013, after-tax profit was unfavorably impacted by $44 million as a result of the Bucyrus distribution divestiture activities. This is comprised of $64 million of gains related to the sales transactions, a $34 million unfavorable adjustment due to a change in estimate to increase the reserve for parts returns

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related to prior sale transactions (both included in Other operating (income) expenses) and costs incurred related to the Bucyrus distribution divestiture activities of $85 million (included in Selling, general and administrative expenses), offset by an income tax benefit of $11 million.

Assets sold in the first nine months of 2013 primarily consisted of customer relationship intangibles of $31 million, allocated goodwill of $24 million, inventory of $20 million and fixed assets of $8 million related to the divested portions of the Bucyrus distribution business.

As of September 30, 2013, nine divestiture transactions were classified as held for sale and are expected to close in 2013 and 2014. Current assets held for sale were included in Prepaid expenses and other current assets and non-current assets held for sale were included in Other assets in the Consolidated Statement of Financial Position.

The major classes of assets held for sale for a portion of the Bucyrus distribution business were as follows:

(Millions of dollars)	September 30, 2013		December 31, 2012
Inventories	$	63	$	30
Current assets	$	63	$	30
Property, plant and equipment – net	$	3	$	—
Intangible assets	101		32
Goodwill	64		52
Non-current assets	$	168	$	84

Third Party Logistics Business Divestiture

On July 31, 2012 Platinum Equity acquired a 65 percent equity interest in Caterpillar Logistics Services LLC, the third party logistics division of our wholly owned subsidiary, Caterpillar Logistics Inc., for $567 million subject to certain working capital adjustments. The purchase price of $567 million was comprised of a $107 million equity contribution from Platinum Equity to, and third party debt raised by, Caterpillar Logistics Services LLC. The sale of the third party logistics business supports Caterpillar's increased focus on the continuing growth opportunities in its core businesses. Under the terms of the agreement, Caterpillar retained a 35 percent equity interest.

As a result of the divestiture, we recorded a pretax gain of $276 million (included in Other operating (income) expenses). In addition, we recognized $8 million of incremental incentive compensation expense. The fair value of our retained noncontrolling interest was $58 million, as determined by the $107 million equity contribution from Platinum Equity, and was included in Investments in unconsolidated affiliated companies in the Consolidated Statement of Financial Position. The disposal did not qualify as discontinued operations because Caterpillar has significant continuing involvement through its noncontrolling interest. The financial impact of the disposal was reported in the All Other operating segment. Results for our remaining interest are recorded in Equity in profit (loss) of unconsolidated affiliated companies and are reported in the All Other operating segment.

The controlling financial interest in Caterpillar Logistics Services LLC was not material to our results of operations, financial position or cash flow.

21.Employee Separation Charges

In 2012, we reported employee separation charges of $94 million in Other operating (income) expenses in the Consolidated Statement of Results of Operations primarily related to the closure of the Electro-Motive Diesel facility located in London, Ontario and separation programs in Europe. The majority of the charges were related to the Power Systems segment.

For the three and nine months ended September 30, 2013, we recognized employee separation charges of $34 million and $57 million, respectively, in Other operating (income) expenses in the Consolidated Statement of Results of Operations primarily related to separation programs in North America and Europe. The charges were related primarily to the Resource Industries and Construction Industries segments.

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Our accounting for separations was dependent upon how the particular program was designed. For voluntary programs, eligible separation costs were recognized at the time of employee acceptance. For involuntary programs, eligible costs were recognized when management had approved the program, the affected employees had been properly notified and the costs were estimable.

The following table summarizes the 2012 and 2013 separation activity:

(Millions of dollars)
	Total
Liability balance at December 31, 2011	$	90
Increase in liability (separation charges)	94
Reduction in liability (payments and other adjustments)	(155		)
Liability balance at December 31, 2012	$	29
Increase in liability (separation charges)	57
Reduction in liability (payments and other adjustments)	(43		)
Liability balance at September 30, 2013	$	43

The remaining liability balances as of September 30, 2013 represent costs for employees that have either not yet separated from the Company or their full severance has not yet been paid. The majority of these remaining costs are expected to be paid in 2013 and 2014.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We reported third-quarter 2013 sales and revenues of $13.423 billion, an 18 percent decrease from third-quarter 2012 sales and revenues of $16.445 billion. Profit per share for the third quarter of 2013 was $1.45, a 43 percent decrease from third-quarter 2012 profit per share of $2.54. Profit was $946 million in the quarter, a decrease of 44 percent from $1.699 billion in the third quarter of 2012.

Sales and revenues for the nine months ended September 30, 2013 were $41.254 billion, down $8.546 billion, or 17 percent, from $49.800 billion for the nine months ended September 30, 2012. Profit per share for the nine months ended September 30, 2013 was $4.21, a 43 percent decrease from the nine months ended September 30, 2012 profit per share of $7.44. Profit was $2.786 billion in the nine months ended September 30, 2013, a decrease of 44 percent from $4.984 billion for the nine months ended September 30, 2012.

 Highlights for the third quarter of 2013 include:

• Nearly 80 percent of the decline in third-quarter sales volume was in Resource Industries resulting from changes in dealer inventories and lower deliveries to end users as customers in all geographic regions have reduced capital expenditures across the mining industry. While Resource Industries’ sales are very low, sales in Power Systems and Construction Industries have been more stable. The diversity of these businesses and the industries we serve, along with the continued strong performance of our Financial Products segment has provided a balance to our overall results.

• The decline in profit per share of $1.09 from the third quarter of 2012 is primarily a result of the $3 billion drop in sales and revenues and the absence of last year’s gain from the sale of a majority interest in our third-party logistics business.

• The impact of lower sales volume in the third quarter of 2013 was partially offset by aggressive cost cutting measures including temporary plant shutdowns, significant workforce reductions, temporary layoffs for thousands of salaried management employees and general austerity measures across the company.

• Our inventory continued to decline in the third quarter of 2013, which was positive to operating cash flow but unfavorable to profit. Inventory was about $500 million below the end of the second quarter of 2013 and about $2.2 billion below year-end 2012.

• Machinery and Power Systems (M&PS) operating cash flow was $2.109 billion in the third quarter of 2013, compared with $994 million in the third quarter of 2012. The improvement was the result of favorable changes in working capital, primarily inventory and accounts payable, partially offset by lower profit.

• M&PS debt-to-capital ratio was 34.1 percent, down from 34.9 percent at the end of the second quarter of 2013.

• We repurchased $1 billion of stock in the third quarter of 2013 in addition to the $1 billion repurchased in the second quarter of 2013.

Notes:

• Glossary of terms is included on pages 71-73; first occurrence of terms shown in bold italics.

• Information on non-GAAP financial measures is included on page 82.

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Consolidated Results of Operations

THREE MONTHS ENDED SEPTEMBER 30, 2013 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2012

CONSOLIDATED SALES AND REVENUES

The chart above graphically illustrates reasons for the change in Consolidated Sales and Revenues between the third quarter of 2012 (at left) and the third quarter of 2013 (at right). Items favorably impacting sales and revenues appear as upward stair steps with the corresponding dollar amounts above each bar, while items negatively impacting sales and revenues appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Caterpillar management utilizes these charts internally to visually communicate with the company's Board of Directors and employees.

Sales and Revenues

Total sales and revenues were $13.423 billion in the third quarter of 2013, a decrease of $3.022 billion, or 18 percent, from the third quarter of 2012. When reviewing the change in sales and revenues, we focus on the following perspectives:

• Reasons for the change: Sales volume decreased $2.729 billion with nearly 80 percent of the decline in Resource Industries. More than half of the total volume decrease was related to changes in dealer machine and engine inventories and the remainder was primarily a result of lower dealer deliveries to end users, primarily in Resource Industries. During the third quarter of 2012, dealers increased machine and engine inventories by about $800 million, and during the third quarter of 2013, dealers reduced machine and engine inventories by about $800 million. Most of the change in both periods was in Resource Industries related to mining. During the third quarter of 2012, dealers received products that they had previously ordered in anticipation of higher demand. During the third quarter of 2013, most of the decline was related to dealers adjusting inventory levels in response to lower end-user demand resulting primarily from mining companies reducing their capital expenditures. We expect another substantial decline in dealer inventories in the fourth quarter.

Dealers are independent and there could be many reasons for changes in their inventory levels. In general, dealers adjust inventory based on their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers. In addition, dealers are utilizing inventory from our product distribution centers at a higher rate to meet end-user demand, primarily for Construction Industries’ products.

In addition, currency was unfavorable $188 million primarily due to the weaker Japanese yen, as sales in yen translated into fewer U.S. dollars. The net impact of acquisitions and divestitures was unfavorable $87 million, with more than half of the decline due to the absence of our third party logistics business. Price realization was unfavorable $57 million mainly due to continuing sales from a large government order in Brazil and an increasingly competitive pricing environment primarily within Construction Industries which we expect to continue. We expect continuing machine sales in 2014 pursuant to an additional government order in Brazil, although not to the same extent as the current order. The increasingly competitive pricing

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environment is attributable to a number of factors including excess industry capacity caused by weaker than expected economic conditions. These decreases were partially offset by increased Financial Products’ revenues of $39 million.

While almost all of the decline in sales was related to new equipment, aftermarket parts sales declined slightly.

• Sales by geographic region: While sales declined in all geographic regions, the most significant reduction was in Asia/Pacific. The Asia/Pacific decline was primarily related to lower sales in Australia where the most significant decrease was in mining sales, due to continued low demand. While sales in Asia/Pacific declined overall, sales in China increased as we focused on improving our competitive position through building out the Caterpillar business model, the key elements of which focus on increasing field population, improving customer loyalty and providing superior customer support in conjunction with our independent dealers. Our total company sales and revenues in China were about $800 million in the third quarter 2013 as compared with about $600 million in the third quarter of 2012. This represents an increase of about 30 percent from the third quarter of 2012 and was primarily related to sales in Construction Industries. Sales and revenues in China represented about 6 percent of total company sales and revenues in the third quarter of 2013. The declines in North America and EAME were primarily due to unfavorable changes in dealer inventories.

• Sales by segment: Sales decreased in all segments. The most significant was a 42-percent decline in Resource Industries resulting primarily from changes in dealer inventories and weaker demand in mining primarily due to mining companies reducing their capital expenditures. Power Systems’ sales and Construction Industries’ sales both decreased 7 percent. Financial Products segment revenues were up 4 percent.

CONSOLIDATED OPERATING PROFIT

The chart above graphically illustrates reasons for the change in Consolidated Operating Profit between the third quarter of 2012 (at left) and the third quarter of 2013 (at right). Items favorably impacting operating profitappear as upward stair steps with the corresponding dollar amounts above each bar, while items negatively impacting operating profit appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Caterpillar management utilizes these charts internally to visually communicate with the company's Board of Directors and employees. The bar entitled Other includes consolidating adjustments and Machinery and Power Systems other operating (income) expenses.

Operating profit for the third quarter of 2013 was $1.401 billion, a decline of $1.195 billion, or 46 percent, from the third quarter of 2012. The decrease was primarily the result of lower sales volume, which included an unfavorable mix of products. The unfavorable mix was primarily due to a more significant decline in Resource Industries’ sales than sales for other segments. Acquisitions and divestitures negatively impacted operating profit by $268 million primarily due to the absence of a gain from the sale of a majority interest in our external logistics business during the third quarter of 2012. Price realization was unfavorable mainly due to continuing sales from a large government order in Brazil and an increasingly competitive pricing environment primarily within Construction Industries which we expect will continue. These unfavorable impacts were partially offset by decreases in SG&A and R&D expenses, a favorable impact from currency and lower manufacturing costs.

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Decreases in SG&A and R&D expenses were primarily due to lower discretionary and program spending driven by cost reduction measures implemented in response to lower volumes. The favorable impact of currency was mostly due to the Japanese yen. We have a sizable manufacturing presence in Japan, and while some of this production is sold in Japan, we are a net exporter, and therefore, a weaker yen provides a cost benefit.

Manufacturing costs decreased $102 million. The decrease was primarily due to lower material costs and warranty expense, partially offset by unfavorable changes in cost absorption resulting from a decrease in inventory during the third quarter of 2013 and an increase in inventory during the third quarter of 2012.

The reduction in Caterpillar inventory was about $500 million in the third quarter of 2013. The reduction was primarily in finished goods, including inventory held at our product distribution centers. We are working throughout the company to improve our supply chain and inventory performance. We are not expecting a significant change in our inventory in the fourth quarter.

Volume adjusted costs (manufacturing costs and SG&A and R&D expenses) for Machinery & Power Systems were down over $350 million in the third quarter of 2013 as compared with the third quarter of 2012. Excluding the impact of cost absorption resulting from changes in inventory, volume adjusted costs were down over $450 million.

Despite the significant reduction in sales volume, manufacturing efficiencies were about flat due to cost reduction initiatives including temporary factory shutdowns, rolling layoffs throughout much of the company and reductions in our workforce. We are evaluating a wide range of actions throughout our business to improve our cost structure and anticipated changes may include rationalization of some products, shifting production between certain facilities, rationalization of some of our smaller facilities, workforce reductions and the consolidation of functions within our management structure.

The third-quarter short term incentive compensation expense related to 2013 was about $100 million, and we expect the full year will be about $460 million. Short term incentive compensation expense in the third quarter of 2012 was about $130 million, and full-year 2012 was about $825 million.

Other Profit/Loss Items

• Interest expense excluding Financial Products decreased $13 million compared with the third quarter of 2012.

• Other income/expense was expense of$24 million compared with expense of $17 million in the third quarter of 2012. Both periods include unfavorable impacts from currency translation and hedging.

• The provision for income taxes in the third quarter of 2013 reflects an estimated annual effective tax rate of 29 percent compared with 30.5 percent for 2012, excluding the items discussed below. The decrease is primarily due to the U.S. research and development tax credit that was expired in 2012, along with expected changes in our geographic mix of profits from a tax perspective.

The tax provision for the third quarter of 2013 also includes a benefit of $55 million resulting from true-up of estimated amounts used in the tax provision to the 2012 U.S. tax return as filed in September 2013. The tax provision for the third quarter of 2012 included a negative impact of $6 million from nondeductible goodwill.

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Segment Information

Sales and Revenues by Geographic Region

(Millions of dollars)	Total			% Change		North America			% Change		Latin America			% Change		EAME			% Change		Asia/ Pacific			% Change
Third Quarter 2013
Construction Industries 1	$	4,547		(7	)%	$	1,743		(9	)%	$	707		12	%	$	989		(17	)%	$	1,108		(6	)%
Resource Industries 2	3,004			(42	)%	1,028			(28	)%	585			(42	)%	713			(24	)%	678			(63	)%
Power Systems 3	4,922			(7	)%	1,905			(12	)%	608			12	%	1,450			(7	)%	959			(7	)%
All Other Segment 4	219			(31	)%	148			(19	)%	13			18	%	35			(49	)%	23			(60	)%
Corporate Items and Eliminations	(14		)	—		(13		)			—					—					(1		)
Machinery & Power Systems Sales	12,678			(19	)%	4,811			(15	)%	1,913			(12	)%	3,187			(15	)%	2,767			(33	)%
Financial Products Segment	807			4	%	431			7	%	105			2	%	127			11	%	144			(8	)%
Corporate Items and Eliminations	(62		)			(36		)			(8		)			(7		)			(11		)
Financial Products Revenues	745			6	%	395			11	%	97			1	%	120			11	%	133			(8	)%
Consolidated Sales and Revenues	$	13,423		(18	)%	$	5,206		(14	)%	$	2,010		(12	)%	$	3,307		(14	)%	$	2,900		(32	)%
Third Quarter 2012
Construction Industries 1	$	4,904				$	1,910				$	629				$	1,186				$	1,179
Resource Industries 2	5,214					1,421					1,001					936					1,856
Power Systems 3	5,317					2,175					543					1,564					1,035
All Other Segment 4	318					182					11					68					57
Corporate Items and Eliminations	(14		)			(14		)			—					—					—
Machinery & Power Systems Sales	15,739					5,674					2,184					3,754					4,127
Financial Products Segment	776					403					103					114					156
Corporate Items and Eliminations	(70		)			(46		)			(7		)			(6		)			(11		)
Financial Products Revenues	706					357					96					108					145
Consolidated Sales and Revenues	$	16,445				$	6,031				$	2,280				$	3,862				$	4,272

¹  Does not include inter-segment sales of $68 million and $102 million in third quarter 2013 and 2012, respectively.

²  Does not include inter-segment sales of $208 million and $253 million in third quarter 2013 and 2012, respectively.

³  Does not include inter-segment sales of $471 million and $597 million in third quarter 2013 and 2012, respectively.

⁴  Does not include inter-segment sales of $778 million and $885 million in third quarter 2013 and 2012, respectively.

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Sales and Revenues by Segment
(Millions of dollars)	Third Quarter 2012			Sales Volume			Price Realization			Currency			Acquisitions/Divestitures			Other		Third Quarter 2013			$ Change			% Change
Construction Industries	$	4,904		$	(119	)	$	(84	)	$	(154	)	$	—		$	—	$	4,547		$	(357	)	(7	)%
Resource Industries	5,214			(2,144		)	(3		)	(29		)	(34		)	—		3,004			(2,210		)	(42	)%
Power Systems	5,317			(420		)	30			(5		)	—			—		4,922			(395		)	(7	)%
All Other Segment	318			(45		)	(1		)	—			(53		)	—		219			(99		)	(31	)%
Corporate Items and Eliminations	(14		)	(1		)	1			—			—			—		(14		)	—
Machinery & Power Systems Sales	15,739			(2,729		)	(57		)	(188		)	(87		)	—		12,678			(3,061		)	(19	)%
Financial Products Segment	776			—			—			—			—			31		807			31			4	%
Corporate Items and Eliminations	(70		)	—			—			—			—			8		(62		)	8
Financial Products Revenues	706			—			—			—			—			39		745			39			6	%
Consolidated Sales and Revenues	$	16,445		$	(2,729	)	$	(57	)	$	(188	)	$	(87	)	$	39	$	13,423		$	(3,022	)	(18	)%

Operating Profit by Segment
(Millions of dollars)	Third Quarter 2013			Third Quarter 2012			$ Change			% Change
Construction Industries	$	262		$	459		$	(197	)	(43	)%
Resource Industries	409			1,113			(704		)	(63	)%
Power Systems	883			943			(60		)	(6	)%
All Other Segment	170			482			(312		)	(65	)%
Corporate Items and Eliminations	(469		)	(512		)	43
Machinery & Power Systems	1,255			2,485			(1,230		)	(49	)%
Financial Products Segment	218			190			28			15	%
Corporate Items and Eliminations	(8		)	(9		)	1
Financial Products	210			181			29			16	%
Consolidating Adjustments	(64		)	(70		)	6
Consolidated Operating Profit	$	1,401		$	2,596		$	(1,195	)	(46	)%

Construction Industries

Construction Industries’ sales were $4.547 billion in the third quarter of 2013, a decrease of $357 million, or 7 percent, from the third quarter of 2012. The sales decrease was due to the unfavorable impact of currency, lower sales volume and unfavorable price realization. Sales of new equipment declined, and sales of aftermarket parts were about flat.

• The unfavorable currency impact was primarily from a weaker Japanese yen, as sales in yen translated into fewer U.S. dollars.

• The decline in sales volume was primarily related to changes in dealer inventories which more than offset improvements in deliveries to end users in North America and Latin America.

• Price realization was unfavorable primarily due to continuing sales from a large government order in Brazil and an increasingly competitive pricing environment.

Sales declined in all geographic regions except Latin America.

• The increase in Latin America was primarily due to continuing sales from a large government order in Brazil.

• In EAME, end-user demand declined as a result of continuing economic weakness in Europe, dealer inventory changes were negative and price realization was unfavorable, due to an increasingly competitive pricing environment.

• In North America, end-user demand increased, but was more than offset by the negative impact of dealer inventory changes. The increase in end-user demand resulted primarily from construction-related spending in the United States. Although still below prior peaks, the housing industry has improved and many state and local government budgets are showing signs of improvement which we expect to favorably impact construction spending.

• In Asia/Pacific, higher sales in China were more than offset by negative currency impacts primarily from the weaker Japanese yen and lower sales in other countries due to slower economic growth. We believe higher sales in China, particularly with

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respect to hydraulic excavators, were due primarily to an increase in our competitive position through building out the Caterpillar business model, the key elements of which focus on increasing field population, improving customer loyalty and providing superior customer support in conjunction with our independent dealers.

During the third quarter of 2013, dealers utilized inventory from our product distribution centers at a higher rate to meet end-user demand. We expect production levels to increase in the fourth quarter of 2013.

Construction Industries’ profit was $262 million in the third quarter of 2013, compared with $459 million in the third quarter of 2012. The decrease in profit was primarily due to unfavorable price realization, lower sales volume, which included an unfavorable mix of products, and the absence of a gain on sale of land from the third quarter of 2012. The unfavorable mix of products is primarily attributable to relatively higher sales of small and mid-size machines which generally have lower margins than larger size machines which are also sold into mining applications.

Resource Industries

Resource Industries’ sales were $3.004 billion in the third quarter of 2013, a decrease of $2.210 billion, or 42 percent, from the third quarter of 2012, almost all from lower sales volume. Although production of most mined commodities is near or above a year ago, after several years of increasing capital expenditures, mining customers in all geographic regions have reduced spending across the mining industry. As a result, we believe that mining companies are increasing productivity at existing mines rather than investing in expansions or new mine openings which results in lower demand for our mining products. As a result, end-user demand was lower, and new orders for mining equipment continued to be weak in the quarter.

About half of the decline in sales volume was due to changes in dealer machine inventory. Dealers continued to significantly reduce machine inventory during the third quarter of 2013 to better align inventory levels with demand. This compares with an increase in dealer machine inventory during the third quarter of 2012. Demand was also lower as dealer deliveries to end users declined resulting from mining companies reducing their capital expenditures. Almost all of the sales decline was related to new equipment. Aftermarket part sales also declined as some companies are delaying maintenance and rebuild activities.

Sales were lower in every region of the world, with the most significant decline in Asia/Pacific, where about half of the worldwide dealer inventory impacts occurred.

Resource Industries’ profit was $409 million in the third quarter of 2013 compared with $1.113 billion in the third quarter of 2012. The decrease was primarily the result of lower sales volume, partially offset by lower SG&A and R&D expenses and decreased manufacturing costs.

SG&A and R&D expenses were lower primarily due to decreased spending for new product introduction programs and other cost cutting measures in response to lower volumes. The decrease in manufacturing costs was driven by lower period manufacturing expenses due to cost reduction measures and lower material costs. These favorable impacts were partially offset by unfavorable changes in cost absorption resulting from a decrease in inventory during the third quarter of 2013 and an increase in inventory during the third quarter of 2012.

We are expecting lower mining sales in 2014 and are continuing our efforts to lower structural costs. In order to be well-positioned when the industry improves, we are working to reduce costs, but are not expecting to make substantial changes in physical capacity.

Power Systems

Power Systems’ sales were $4.922 billion in the third quarter of 2013, a decrease of $395 million, or 7 percent, from the third quarter of 2012. The decrease was primarily a result of lower volume for electric power applications. In addition, sales for rail and petroleum applications were lower. Sales declines in electric power and petroleum applications were driven by dealers reducing their inventory levels in the third quarter of 2013, compared with dealers increasing inventory levels in the third quarter of 2012. Turbine-related sales, which are sold directly to end users and are not affected by dealer inventory, were about flat. Decreases in rail were driven by a reduction in services and timing of shipments of locomotives.

Sales decreased in all regions except Latin America.

• In North America, the sales decrease was due to declines in end-user demand, primarily in petroleum applications and rail services. For petroleum, lower demand was due to an oversupply of equipment used in drilling and well servicing applications. For rail services, declines in railway coal traffic resulted in lower maintenance and repair needs. In addition, changes in dealer inventories were unfavorable for electric power applications as dealers increased inventories in anticipation of higher demand during the third quarter of 2012, and reduced their inventories during the third quarter of 2013.

• In EAME, the sales decrease was primarily due to the impact of dealer inventory changes for electric power applications. During the third quarter of 2012, dealers increased inventories in anticipation of higher demand and reduced their inventories during the third quarter of 2013.

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• In Asia/Pacific, the decline in sales was due to unfavorable changes in dealer inventories. During the third quarter of 2012, dealers increased inventories in anticipation of higher demand and reduced their inventories during the third quarter of 2013. Those negative impacts were partially offset by higher end-user demand across most applications.

• The improvement in Latin America was primarily due to the completion of two large turbine projects.

Power Systems’ profit was $883 million in the third quarter of 2013 compared with $943 million in the third quarter of 2012. The decrease was primarily due to lower sales volume, partially offset by lower manufacturing costs, decreased SG&A and R&D expenses and favorable price realization.

The decrease in manufacturing costs was driven by lower material costs and a favorable change in cost absorption resulting from an increase in inventory during the third quarter of 2013 and a decrease in inventory during the third quarter of 2012. SG&A and R&D expenses were favorable primarily due to lower program costs.

Financial Products Segment

Financial Products’ revenues were $807 million, an increase of $31 million, or 4 percent, from the third quarter of 2012. The increase was primarily due to the favorable impact from higher average earning assets across all geographic regions except Asia/Pacific and an increase in Cat Insurance revenues in North America partially offset by declines in EAME and Latin America. These increases were partially offset by the unfavorable impact from lower average financing rates on new and existing finance receivables and operating leases across all geographic regions.

Financial Products’ profit was $218 million in the third quarter of 2013, compared with $190 million in the third quarter of 2012. The increase was primarily due to an $18 million favorable impact from higher average earning assets and a $17 million favorable impact from lower claims experience at Cat Insurance.

At the end of the third quarter of 2013, past dues at Cat Financial were 2.45 percent compared with 2.64 percent at the end of the second quarter of 2013, 2.26 percent at the end of 2012 and 2.80 percent at the end of the third quarter of 2012. Write-offs, net of recoveries, were $58 million for the third quarter of 2013, up from $29 million for the third quarter of 2012. The increase in write-offs was primarily related to Cat Financial’s European marine portfolio and was previously provided for in the allowance for credit losses.

As of September 30, 2013, Cat Financial's allowance for credit losses totaled $404 million or 1.40 percent of net finance receivables, compared with $426 million or 1.49 percent of net finance receivables at year-end 2012. The allowance for credit losses as of September 30, 2012, was $404 million or 1.47 percent of net finance receivables.

All Other Segment

All Other Segment includes groups that provide services such as component manufacturing, remanufacturing and logistics.

The decrease in sales was primarily due to the absence of our third party logistics business, which was sold in the third quarter of 2012. Lower profit was primarily due to the absence of the gain on the sale of our third party logistics business.

Corporate Items and Eliminations

Expense for corporate items and eliminations was $477 million in the third quarter of 2013, a decrease of $44 million from the third quarter of 2012. Corporate items and eliminations include: corporate-level expenses; timing differences, as some expenses are reported in segment profit on a cash basis; retirement benefit costs other than service cost; currency differences for M&PS, as segment profit is reported using annual fixed exchange rates; and inter-segment eliminations.

The decrease in expense from the third quarter of 2012 was primarily due to favorable impacts from timing differences, partially offset by unfavorable impacts from currency. Segment profit for 2013 is based on fixed exchange rates set at the beginning of 2013, while segment profit for 2012 is based on fixed exchange rates set at the beginning of 2012. The difference in actual exchange rates compared with fixed exchange rates is included in corporate items and eliminations and is not reflected in segment profit.

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NINE MONTHS ENDED SEPTEMBER 30, 2013 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2012

CONSOLIDATED SALES AND REVENUES

The chart above graphically illustrates reasons for the change in Consolidated Sales and Revenues between the nine months ended September 30, 2012 (at left) and the nine months ended September 30, 2013 (at right). Items favorably impacting sales and revenues appear as upward stair steps with the corresponding dollar amounts above each bar, while items negatively impacting sales and revenues appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Caterpillar management utilizes these charts internally to visually communicate with the company's Board of Directors and employees.

Total sales and revenues were $41.254 billion for the nine months ended September 30, 2013, a decrease of $8.546 billion, or 17 percent, from the nine months ended September 30, 2012. When reviewing the change in sales and revenues, we focus on the following perspectives:

• Reasons for the change: Sales volume decreased $7.945 billion with the most significant decline in Resource Industries. More than half of the total volume decrease was related to changes in dealer machine and engine inventories and the remainder was primarily due to lower dealer deliveries to end users, primarily in Resource Industries. During the nine months ended September 30, 2012, dealers increased machine and engine inventories by about $2.3 billion. During the nine months ended September 30, 2013, dealers reduced their machine and engine inventories by about $2.6 billion. Most of the change in both periods was in Resource Industries related to mining. During the nine months ended September 30, 2012, dealers received products that they had previously ordered in anticipation of higher demand. During the nine months ended September 30, 2013, most of the decline was related to dealers adjusting inventory levels in response to lower end-user demand resulting primarily from mining companies reducing their capital expenditures. We expect another substantial decline in dealer inventories in the fourth quarter.

Dealers are independent, and there could be many reasons for changes in their inventory levels. In general, dealers adjust inventory based on their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers. In addition, dealers are utilizing inventory from our product distribution centers at a higher rate to meet end-user demand, primarily for Construction Industries’ products.

In addition, the impact of currency was unfavorable $399 million primarily due to the weakening of the Japanese yen, as sales in yen translated into fewer U.S. dollars. The net impact of acquisitions and divestitures was unfavorable $398 million mainly due to the absence of our third party logistics business. These decreases were partially offset by increased Financial Products' revenues of $117 million and favorable price realization of $79 million.

While almost all of the decline in sales was related to new equipment, aftermarket parts sales declined slightly.

• Sales by geographic region: Sales declined in all geographic regions. The decline in Asia/Pacific was primarily related to lower sales in Australia where the most significant decrease was in mining sales, due to continued low demand. While sales

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in Asia/Pacific declined overall, sales in China increased as we focused on improving our competitive position through building out the Caterpillar business model, the key elements of which focus on increasing field population, improving customer loyalty and providing superior customer support in conjunction with our independent dealers. Our total company sales and revenues in China for the nine months ended September 30, 2013 were about $2.5 billion compared with about $2.1 billion for the same period a year ago, with over half of the increase in Construction Industries. Sales were lower in North America and EAME primarily due to changes in dealer inventories and lower dealer deliveries to end users. In Latin America, the sales decline was primarily due to changes in dealer inventories, partially offset by increases in deliveries to end users.

• Sales by segment: Sales decreased in all segments. The most significant decrease was in Resource Industries, with sales down 33 percent primarily from dealer inventory changes and weaker demand in mining. Construction Industries' sales decreased 11 percent, and Power Systems' sales were 8 percent lower. Financial Products' segment revenues were up 5 percent.

CONSOLIDATED OPERATING PROFIT

The chart above graphically illustrates reasons for the change in Consolidated Operating Profit between the nine months ended September 30, 2012 (at left) and the nine months ended September 30, 2013 (at right). Items favorably impacting operating profitappear as upward stair steps with the corresponding dollar amounts above each bar, while items negatively impacting operating profit appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Caterpillar management utilizes these charts internally to visually communicate with the company's Board of Directors and employees. The bar entitled Other includes consolidating adjustments and Machinery and Power Systems other operating (income) expenses.

Operating profit for the nine months ended September 30, 2013 was $4.176 billion compared with $7.535 billion for the nine months ended September 30, 2012, a 45 percent decrease. The decrease was primarily the result of lower sales volume, which included an unfavorable mix of products. The unfavorable mix was primarily due to a more significant decline in Resource Industries’ sales than sales for other segments. The impact of acquisitions and divestitures and increased manufacturing costs were also unfavorable to operating profit.

Acquisitions and divestitures negatively impacted operating profit by $461 million primarily due to the absence of a gain from the sale of a majority interest in our external logistics business during the third quarter of 2012. Additionally, the nine months ended September 30, 2012 included substantial pre-tax gains on the sale of portions of the Bucyrus distribution business, while the impact on the nine months ended September 30, 2013 was negative. The $135 million favorable impact from the settlement with the previous owners of our Siwei acquisition was partially offset by other operating losses at Siwei.

Manufacturing costs increased $313 million. The increase was primarily due to unfavorable changes in cost absorption resulting from a decrease in inventory during the nine months ended September 30, 2013 and an increase in inventory during the nine months ended September 30, 2012. This unfavorable impact was partially offset by lower material costs.

We reduced inventory both in the fourth quarter of 2012 and the first nine months of 2013. The groundwork for these reductions began in mid-2012 as order rates declined and actions were needed to bring inventory levels in line with expected demand. Based on dealers’ expectation of future demand, macro-economic conditions and the amount of finished goods we had available in our product distribution centers, dealers also took action to lower their inventories. As a result, new orders from dealers declined

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sharply in the third quarter of 2012, and we began lowering production schedules and incoming material purchases from suppliers around the world. While production schedules began to decline in the third quarter of 2012, the most significant impacts on production and inventory, including rolling plant shutdowns at a number of facilities, occurred in the fourth quarter of 2012 and continued throughout the first nine months of 2013. The inventory decline during the nine months ended September 30, 2013 was primarily in Construction Industries and Resource Industries.

We are evaluating a wide range of actions throughout our business to improve our cost structure and anticipated changes may include rationalization of some products, shifting production between certain facilities, rationalization of some of our smaller facilities, workforce reductions and the consolidation of functions within our management structure.

The decline in SG&A and R&D expenses was positive to operating profit by $363 million, primarily due to lower discretionary and program spending driven by cost reduction measures implemented in response to lower volumes and decreased incentive compensation expense, partially offset by higher wage and benefit inflation.

Short term incentive compensation expense related to the nine months ended September 30, 2013 was about $350 million, compared with about $625 million for the nine months ended September 30, 2012. We expect short-term incentive compensation expense for the full year of 2013 to be about $460 million compared with about $825 million for the full year of 2012.

Currency favorably impacted operating profit by $285 million, mostly due to the Japanese yen. We have a sizable manufacturing presence in Japan, and while some of this production is sold in Japan, we are a net exporter, and therefore, a weaker yen provides a cost benefit. Financial Products' operating profit increased $174 million.

Volume adjusted costs (manufacturing costs and SG&A and R&D expenses) for Machinery & Power Systems were down about $700 million in the nine months ended September 30, 2013, excluding about $650 million unfavorable cost absorption resulting from changes in inventory, as compared with the nine months ended September 30, 2012.

Other Profit/Loss Items

• Other income/expense was expense of$79 million compared with income of $141 million in the nine months ended September 30, 2012. The change was primarily due to the unfavorable impact of currency translation and hedging gains and losses. Translation and hedging losses in the nine months ended September 30, 2013 totaled $230 million, primarily due to translation losses. Most of the impact in the nine months ended September 30, 2013 was a result of our net asset/liability positions and exchange rate movements and hedging primarily for Japanese yen and Brazilian real. In the nine months ended September 30, 2012, we had translation and hedging losses of $46 million.

• The provision for income taxesfor the first nine months of 2013 reflects an estimated annual effective tax rate of 29 percent compared with 30.5 percent for 2012, excluding the items discussed below. The decrease is primarily due to the U.S. research and development tax credit that was expired in 2012, along with expected changes in our geographic mix of profits from a tax perspective.

The 2013 tax provision also includes a benefit of $87 million primarily related to the research and development tax credit that was retroactively extended for 2012 and a benefit of $55 million resulting from true-up of estimated amounts used in the tax provision to the 2012 U.S. tax return as filed in September 2013. This compares to an $81 million negative impact related to nondeductible goodwill in the first nine months of 2012.

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Segment Information

Sales and Revenues by Geographic Region

(Millions of dollars)	Total			% Change		North America			% Change		Latin America			% Change		EAME			% Change		Asia/ Pacific			% Change
Nine Months Ended September 30, 2013
Construction Industries 1	$	13,594		(11	)%	$	5,257		(7	)%	$	2,003		(2	)%	$	2,986		(20	)%	$	3,348		(13	)%
Resource Industries 2	10,251			(33	)%	3,259			(29	)%	1,974			(23	)%	2,515			(19	)%	2,503			(51	)%
Power Systems 3	14,590			(8	)%	5,935			(12	)%	1,601			(3	)%	4,038			(9	)%	3,016			—	%
All Other Segment 4	647			(48	)%	441			(29	)%	27			(45	)%	103			(70	)%	76			(66	)%
Corporate Items and Eliminations	(34		)			(38		)			1					2					1
Machinery & Power Systems Sales	39,048			(18	)%	14,854			(15	)%	5,606			(11	)%	9,644			(17	)%	8,944			(27	)%
Financial Products Segment	2,408			5	%	1,252			3	%	324			8	%	372			9	%	460			2	%
Corporate Items and Eliminations	(202		)			(114		)			(24		)			(21		)			(43		)
Financial Products Revenues	2,206			6	%	1,138			6	%	300			8	%	351			10	%	417			(1	)%
Consolidated Sales and Revenues	$	41,254		(17	)%	$	15,992		(14	)%	$	5,906		(10	)%	$	9,995		(16	)%	$	9,361		(26	)%
Nine Months Ended September 30, 2012
Construction Industries 1	$	15,306				$	5,656				$	2,050				$	3,751				$	3,849
Resource Industries 2	15,382					4,570					2,567					3,108					5,137
Power Systems 3	15,815					6,726					1,652					4,415					3,022
All Other Segment 4	1,246					624					49					347					226
Corporate Items and Eliminations	(38		)			(38		)			—					—					—
Machinery & Power Systems Sales	47,711					17,538					6,318					11,621					12,234
Financial Products Segment	2,301					1,210					300					341					450
Corporate Items and Eliminations	(212		)			(140		)			(22		)			(21		)			(29		)
Financial Products Revenues	2,089					1,070					278					320					421
Consolidated Sales and Revenues	$	49,800				$	18,608				$	6,596				$	11,941				$	12,655

¹ Does not include inter-segment sales of $262 million and $355 million for the nine months ended September 30, 2013 and 2012, respectively.

²  Does not include inter-segment sales of $661 million and $909 million for the nine months ended September 30, 2013 and 2012, respectively.

³  Does not include inter-segment sales of $1,328 million and $1,952 million for the nine months ended September 30, 2013 and 2012, respectively.

⁴ Does not include inter-segment sales of $2,356 million and $2,719 million for the nine months ended September 30, 2013 and 2012, respectively.

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Sales and Revenues by Segment
(Millions of dollars)	Nine Months Ended Sept. 30, 2012			Sales Volume			Price Realization			Currency			Acquisitions/Divestitures			Other		Nine Months Ended Sept. 30, 2013			$ Change			% Change
Construction Industries	$	15,306		$	(1,312	)	$	(88	)	$	(312	)	$	—		$	—	$	13,594		$	(1,712	)	(11	)%
Resource Industries	15,382			(5,087		)	32			(60		)	(16		)	—		10,251			(5,131		)	(33	)%
Power Systems	15,815			(1,336		)	136			(25		)	—			—		14,590			(1,225		)	(8	)%
All Other Segment	1,246			(215		)	(1		)	(1		)	(382		)	—		647			(599		)	(48	)%
Corporate Items and Eliminations	(38		)	5			—			(1		)	—			—		(34		)	4
Machinery & Power Systems Sales	47,711			(7,945		)	79			(399		)	(398		)	—		39,048			(8,663		)	(18	)%
Financial Products Segment	2,301			—			—			—			—			107		2,408			107			5	%
Corporate Items and Eliminations	(212		)	—			—			—			—			10		(202		)	10
Financial Products Revenues	2,089			—			—			—			—			117		2,206			117			6	%
Consolidated Sales and Revenues	$	49,800		$	(7,945	)	$	79		$	(399	)	$	(398	)	$	117	$	41,254		$	(8,546	)	(17	)%

Operating Profit by Segment
(Millions of dollars)	Nine Months Ended September 30, 2013			Nine Months Ended September 30, 2012			$ Change			% Change
Construction Industries	$	863		$	1,763		$	(900	)	(51	)%
Resource Industries	1,436			3,707			(2,271		)	(61	)%
Power Systems	2,436			2,737			(301		)	(11	)%
All Other Segment	547			888			(341		)	(38	)%
Corporate Items and Eliminations	(1,637		)	(1,907		)	270
Machinery & Power Systems	3,645			7,188			(3,543		)	(49	)%
Financial Products Segment	724			583			141			24	%
Corporate Items and Eliminations	9			(24		)	33
Financial Products	733			559			174			31	%
Consolidating Adjustments	(202		)	(212		)	10
Consolidated Operating Profit	$	4,176		$	7,535		$	(3,359	)	(45	)%

Construction Industries

Construction Industries' sales were $13.594 billion for the nine months ended September 30, 2013, a decrease of $1.712 billion, or 11 percent, from the nine months ended September 30, 2012. Although the worldwide construction industry is showing some signs of improvement and order rates are improving, it remains relatively depressed from a historical standpoint, which is negative for the construction equipment industry. The sales decrease was mainly due to lower volume resulting primarily from changes in dealer machine inventory. Dealer-reported machine inventory decreased in the nine months ended September 30, 2013 and increased in the nine months ended September 30, 2012. Throughout 2013 dealers have been utilizing inventory from our product distribution centers at a higher rate to meet end-user demand. Continued reductions in dealer machine inventory are expected during the fourth quarter of 2013.

The impact of currency was unfavorable to sales, primarily from a weaker Japanese yen, as sales in yen translated into fewer U.S. dollars. Most of the $88 million unfavorable impact from price realization was due to sales from a large government order in Brazil. We expect continuing machine sales in 2014 pursuant to an additional government order in Brazil, although not to the same extent as the current order. In addition, there was an unfavorable impact on price realization from an increasingly competitive pricing environment, which we expect to continue. The increasingly competitive pricing environment is attributable to a number of factors including excess industry capacity caused by weaker than expected economic conditions. Sales of new equipment declined, and sales of aftermarket parts were about flat.

Sales declined in EAME, Asia/Pacific and North America and were about flat in Latin America. The lower sales in EAME were primarily due to changes in dealer inventory, and construction activity in Europe remains low as economic weakness continues.

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In Asia/Pacific, higher sales in China were more than offset by negative currency impacts primarily from the weaker Japanese yen and lower sales in other countries due to slower economic growth. We believe higher sales in China, particularly with respect to hydraulic excavators, were due primarily to an increase in our competitive position through building out the Caterpillar business model. In North America, lower sales were due to changes in dealer inventories, partially offset by increased dealer deliveries to end users. The increase in end-user demand resulted primarily from construction-related spending in the United States. Although still below prior peaks, the housing industry has improved, and many state and local government budgets are showing signs of improvement which we expect to favorably impact construction spending.

Construction Industries' profit was $863 million for the nine months ended September 30, 2013 compared with $1.763 billion for the nine months ended September 30, 2012. The decrease in profit was primarily due to lower sales volume, including an unfavorable mix of products, increased manufacturing costs and unfavorable price realization. The unfavorable mix of products is primarily attributable to relatively higher sales of small and mid-size machines which generally have lower margins than larger size machines which are also sold into mining applications. Higher manufacturing costs were driven primarily by unfavorable changes in cost absorption resulting from a decrease in inventory during the nine months ended September 30, 2013 and an increase in inventory during the nine months ended September 30, 2012, partially offset by lower material costs.

Resource Industries

Resource Industries' sales were $10.251 billion for the nine months ended September 30, 2013, a decrease of $5.131 billion, or 33 percent, from the nine months ended September 30, 2012, almost all from lower sales volume. Although production of most mined commodities is near or above a year ago, after several years of increasing capital expenditures, mining customers in all geographic regions have reduced spending across the mining industry. As a result, we believe that mining companies are increasing productivity at existing mines rather than investing in expansions or new mine openings which results in lower demand for our mining products. As a result, end-user demand was lower, and new orders for mining equipment continued to be weak during the first nine months of 2013. The decline in sales volume was primarily due to changes in dealer machine inventory and lower deliveries to end users. While dealer deliveries to end users have declined, we believe sales of our equipment are doing better than the equipment industry overall. Sales decreased in every region of the world. The most significant decline was in Asia/Pacific, where nearly half of the worldwide dealer inventory impacts occurred.

Dealers reduced machine inventory during the nine months ended September 30, 2013 to better align their inventory levels with expected demand. This compares with an increase in dealer machine inventory during the nine months ended September 30, 2012. Continued reductions in dealer machine inventory are expected during the fourth quarter of 2013.

Almost all of the sales decline was related to new equipment. Aftermarket part sales also declined as some companies are delaying maintenance and rebuild activities.

Resource Industries' profit was $1.436 billion for the nine months ended September 30, 2013 compared with $3.707 billion for the nine months ended September 30, 2012. The decrease was primarily the result of lower sales volume, the unfavorable impact of acquisitions and divestitures and increased manufacturing costs, partially offset by lower SG&A and R&D expenses.

Acquisitions and divestitures negatively impacted profit by $109 million. The nine months ended September 30, 2012 included substantial pre-tax gains on the sale of portions of the Bucyrus distribution business, while the impact on the nine months ended September 30, 2013 was negative. The $135 million favorable impact from the settlement with the previous owners of our Siwei acquisition was partially offset by other operating losses at Siwei.

The increase in manufacturing costs was primarily driven by unfavorable changes in cost absorption resulting from a decrease in inventory during the nine months ended September 30, 2013 and an increase in inventory during the nine months ended September 30, 2012. This increase was partially offset by lower material costs.

Decreases in SG&A and R&D expenses were driven by cost-reduction measures implemented in response to lower volumes.

We are expecting lower mining sales in 2014 and are continuing our efforts to lower structural costs. In order to be well-positioned when the industry improves, we are working to reduce costs, but are not expecting to make substantial changes in capacity.

Power Systems

Power Systems' sales were $14.590 billion for the nine months ended September 30, 2013, a decrease of $1.225 billion, or 8 percent, compared with the nine months ended September 30, 2012. The decrease was primarily the result of lower volume, primarily for electric power, petroleum and rail applications, partially offset by higher price realization.

Sales declines in electric power applications were primarily driven by dealers reducing their inventory levels for the nine months ended September 30, 2013, compared with dealers increasing inventory levels for the nine months ended September 30, 2012.

The decline in petroleum application sales was due to the impact of changes in dealer inventory and decreases in dealer deliveries to end users. The decrease in dealer deliveries to end users for petroleum applications was primarily for drilling and well servicing due to an oversupply of equipment.

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Turbine-related sales, which are sold directly to end users and are not affected by dealer inventory, were slightly higher primarily for petroleum production and gas compression applications due to continued strong demand for oil and natural gas.

Decreases in rail were driven by a reduction in services as declines in railway coal traffic resulted in lower maintenance and repair needs partially offset by higher locomotive sales as we continue to implement the Caterpillar business model.

Sales decreased in North America and EAME and were about flat in Latin America and Asia/Pacific. In North America, the sales decrease was primarily due to declines in dealer deliveries to end users with the largest decline in petroleum drilling and well servicing applications, partially offset by higher sales into gas compression applications. Decreases in rail were driven by a reduction in services partially offset by higher locomotive sales. For rail services, declines in railway coal traffic resulted in lower maintenance and repair needs. In addition, changes in dealer inventories were unfavorable for electric power applications as dealers increased inventories in anticipation of higher demand during the first nine months of 2012, and reduced their inventories during the first nine months of 2013.

In EAME, the sales decrease was primarily due to the impact of dealer inventory changes for electric power applications. During the first nine months of 2012, dealers increased inventories in anticipation of higher demand and reduced their inventories during the first nine months of 2013.

Power Systems' profit was $2.436 billion for the nine months ended September 30, 2013 compared with $2.737 billion for the nine months ended September 30, 2012. The decrease resulted primarily from lower sales volume, partially offset by decreased costs and favorable price realization. Costs were lower primarily due to lower incentive compensation expense, material costs and program-related costs.

Financial Products Segment

Financial Products’ revenues were $2.408 billion for the first nine months of 2013, an increase of $107 million, or 5 percent, from the first nine months of 2012. The increase was primarily due to the favorable impact from higher average earning assets across all geographic regions and an increase in Cat Insurance revenues, primarily in North America. These increases were partially offset by the unfavorable impact from lower average financing rates on new and existing finance receivables and operating leases across all geographic regions.

Financial Products’ profit was $724 million for the first nine months of 2013, compared with $583 million for the first nine months of 2012. The increase was primarily due to a $97 million favorable impact from lower claims experience at Cat Insurance, which includes favorable reserve adjustments, and an $83 million favorable impact from higher average earning assets. These increases were partially offset by a $24 million unfavorable impact from currency gains and losses.

All Other Segment

All Other Segment includes groups that provide services such as component manufacturing, remanufacturing and logistics.

The decrease in sales was primarily due to the absence of our third party logistics business, which was sold in the third quarter of 2012. Lower profit was primarily due to the absence of the gain on the sale of our third party logistics business.

Corporate Items and Eliminations

Expense for corporate items and eliminations was $1.628 billion in the nine months ended September 30, 2013, a decrease of $303 million from the nine months ended September 30, 2012. Corporate items and eliminations include: corporate-level expenses; timing differences, as some expenses are reported in segment profit on a cash basis; retirement benefit costs other than service cost; currency differences for M&PS, as segment profit is reported using annual fixed exchange rates; and inter-segment eliminations.

The decrease in expense from the nine months ended September 30, 2012 was primarily due to timing differences.

GLOSSARY OF TERMS

1. All Other Segment - Primarily includes activities such as: the remanufacturing of Cat® engines and components and remanufacturing services for other companies as well as the product management, development, manufacturing, marketing and product support of undercarriage, specialty products, hardened bar stock components and ground engaging tools primarily for Caterpillar products; logistics services; the product management, development, marketing, sales and product support of on-highway vocational trucks for North America; distribution services responsible for dealer development and administration, dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts. On July 31, 2012, we sold a majority interest in Caterpillar’s third party logistics business.

2. Consolidating Adjustments - Eliminations of transactions between Machinery and Power Systems and Financial Products.

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3. Construction Industries - A segment primarily responsible for supporting customers using machinery in infrastructure and building construction applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing, and sales and product support. The product portfolio includes backhoe loaders, small wheel loaders, small track-type tractors, skid steer loaders, multi-terrain loaders, mini excavators, compact wheel loaders, select work tools, small, medium and large track excavators, wheel excavators, medium wheel loaders, medium track-type tractors, track-type loaders, motor graders and pipe layers. In addition, Construction Industries has responsibility for Power Systems and three wholly-owned dealers in Japan and an integrated manufacturing cost center.

4. Currency - With respect to sales and revenues, currency represents the translation impact on sales resulting from changes in foreign currency exchange rates versus the U.S. dollar. With respect to operating profit, currency represents the net translation impact on sales and operating costs resulting from changes in foreign currency exchange rates versus the U.S. dollar. Currency includes the impact on sales and operating profit for the Machinery and Power Systems lines of business only; currency impacts on Financial Products revenues and operating profit are included in the Financial Products portions of the respective analyses. With respect to other income/expense, currency represents the effects of forward and option contracts entered into by the company to reduce the risk of fluctuations in exchange rates and the net effect of changes in foreign currency exchange rates on our foreign currency assets and liabilities for consolidated results.

5. Debt-to-Capital Ratio - A key measure of Machinery and Power Systems’ financial strength used by both management and our credit rating agencies. The metric is defined as Machinery and Power Systems’ short-term borrowings, long-term debt due within one year and long-term debt due after one year (debt) divided by the sum of Machinery and Power Systems’ debt and stockholders’ equity. Debt also includes Machinery and Power Systems’ borrowings from Financial Products.

6. EAME - A geographic region including Europe, Africa, the Middle East and the Commonwealth of Independent States (CIS).

7. Earning Assets - Assets consisting primarily of total finance receivables net of unearned income, plus equipment on operating leases, less accumulated depreciation at Cat Financial.

8. Financial Products Segment -Provides financing to customers and dealers for the purchase and lease of Caterpillar and other equipment, as well as some financing for Caterpillar sales to dealers. Financing plans include operating and finance leases, installment sale contracts, working capital loans and wholesale financing plans. The segment also provides various forms of insurance to customers and dealers to help support the purchase and lease of our equipment.

9. Latin America - Geographic region including Central and South American countries and Mexico.

10. Machinery and Power Systems (M&PS) - Represents the aggregate total of Construction Industries, Resource Industries, Power Systems and All Other Segment and related corporate items and eliminations.

11. Machinery and Power Systems Other Operating (Income) Expenses - Comprised primarily of gains/losses on disposal of long-lived assets, long-lived asset impairment charges, pension curtailment charges and employee redundancy costs.

12. Manufacturing Costs - Manufacturing costs exclude the impacts of currency and represent the volume-adjusted change for variable costs and the absolute dollar change for period manufacturing costs. Variable manufacturing costs are defined as having a direct relationship with the volume of production. This includes material costs, direct labor and other costs that vary directly with production volume such as freight, power to operate machines and supplies that are consumed in the manufacturing process. Period manufacturing costs support production but are defined as generally not having a direct relationship to short-term changes in volume. Examples include machinery and equipment repair, depreciation on manufacturing assets, facility support, procurement, factory scheduling, manufacturing planning and operations management.

13. Power Systems - A segment primarily responsible for supporting customers using reciprocating engines, turbines and related parts across industries serving electric power, industrial, petroleum and marine applications as well as rail-related businesses. Responsibilities include business strategy, product design, product management, development, manufacturing, marketing, sales and product support of reciprocating engine powered generator sets, integrated systems used in the electric power generation industry, reciprocating engines and integrated systems and solutions for the marine and petroleum industries; reciprocating engines supplied to the industrial industry as well as Caterpillar machinery; the business strategy, product design, product management, development, manufacturing, marketing, sales and product support of turbines and turbine-related services; the development, manufacturing, remanufacturing, maintenance, leasing, and service of diesel-electric locomotives and components and other rail-related products and services.

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14. Price Realization - The impact of net price changes excluding currency and new product introductions. Consolidated price realization includes the impact of changes in the relative weighting of sales between geographic regions.

15. Resource Industries - A segment primarily responsible for supporting customers using machinery in mining and quarrying applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes large track-type tractors, large mining trucks, underground mining equipment, electric rope shovels, draglines, hydraulic shovels, drills, highwall miners, tunnel boring equipment, large wheel loaders, off-highway trucks, articulated trucks, wheel tractor scrapers, wheel dozers, select work tools, forestry products, paving products, industrial and waste products, machinery components and electronics and control systems. Resource Industries also manages areas that provide services to other parts of the company, including integrated manufacturing and research and development. In addition, segment profit includes the impact from divestiture of portions of the Bucyrus distribution business and the acquisition of Siwei.

16. Sales Volume - With respect to sales and revenues, sales volume represents the impact of changes in the quantities sold for Machinery and Power Systems as well as the incremental revenue impact of new product introductions, including emissions-related product updates. With respect to operating profit, sales volume represents the impact of changes in the quantities sold for Machinery and Power Systems combined with product mix as well as the net operating profit impact of new product introductions, including emissions-related product updates. Product mix represents the net operating profit impact of changes in the relative weighting of Machinery and Power Systems sales with respect to total sales.

17. Siwei - ERA Mining Machinery Limited, including its wholly-owned subsidiary Zhengzhou Siwei Mechanical & Electrical Manufacturing Co., Ltd., commonly known as Siwei, which was acquired during the second quarter of 2012. Siwei primarily designs, manufactures, sells and supports underground coal mining equipment in China and is included in our Resource Industries segment.

LIQUIDITY AND CAPITAL RESOURCES

Sources of funds

We generate significant capital resources from operating activities, which are the primary source of funding for our Machinery and Power Systems' operations. Funding for these businesses is also provided by commercial paper and long-term debt issuances. Financial Products' operations are funded primarily from commercial paper, term debt issuances and collections from the existing portfolio. Throughout the third quarter of 2013, we experienced favorable liquidity conditions globally in both our Machinery and Power Systems and Financial Products' operations. On a consolidated basis, we ended the third quarter of 2013 with $6.36 billion of cash, an increase of $867 million from year-end 2012. Given the uncertainty in the global economy, we intend to maintain a strong cash and liquidity position. Our cash balances are held in numerous locations throughout the world with approximately $3.5 billion held by our non-U.S. subsidiaries. Amounts held outside the United States are available for general corporate use and could be used in the United States without incurring significant additional U.S. taxes.

Consolidated operating cash flow for the first nine months of 2013 was $7.61 billion, up from $3.22 billion for the same period a year ago. The increase was primarily due to changes in inventory. In the first nine months of 2013, inventory decreased significantly, whereas during the same period of 2012, there was a significant increase in inventory. In mid-2012, as order rates declined, we started lowering production schedules and incoming material purchases from suppliers around the world to bring inventory levels in line with expected demand. While production schedules began to decline in the third quarter of 2012, the most significant impacts on inventory occurred in the fourth quarter of 2012 and continued into 2013. In addition, changes in receivables had a positive impact on operating cash flow in 2013. These favorable items were partially offset by lower profit. See further discussion of operating cash flow under Machinery and Power Systems and Financial Products.

Total debt as of September 30, 2013 was $39.54 billion, a decrease of $606 million from year-end 2012. Debt related to Financial Products increased $458 million, primarily at Cat Financial, reflecting increasing portfolio balances. Debt related to Machinery and Power Systems decreased $1.06 billion from year-end 2012, primarily due to payments on matured long-term debt.

We have three global credit facilities with a syndicate of banks totaling $10.00 billion (Credit Facility) available in the aggregate to both Caterpillar and Cat Financial for general liquidity purposes.  Based on management's allocation decision, which can be revised from time to time, the portion of the Credit Facility available to Machinery and Power Systems as of September 30, 2013 was $2.75 billion.

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• In September 2013, we renewed the 364-day facility. The 364-day facility of $3.00 billion (of which $0.82 billion is available to Machinery and Power Systems) now expires in September 2014.

• In September 2013, we amended and extended the 2010 four-year facility. The 2010 four-year facility, as amended, of $2.60 billion (of which $0.72 billion is available to Machinery and Power Systems) now expires in September 2016.

• In September 2013, we amended and extended the 2011 five-year facility. The 2011 five-year facility, as amended, of $4.40 billion (of which $1.21 billion is available to Machinery and Power Systems) now expires in September 2018.

At September 30, 2013, Caterpillar's consolidated net worth was $24.71 billion, which was above the $9.00 billion required under the Credit Facility.  The consolidated net worth is defined as the consolidated stockholders' equity including preferred stock but excluding the pension and other postretirement benefits balance within Accumulated other comprehensive income (loss).

At September 30, 2013, Cat Financial's covenant interest coverage ratio was 1.81 to 1.  This is above the 1.15 to 1 minimum ratio calculated as (1) profit excluding income taxes, interest expense and net gain/(loss) from interest rate derivatives to (2) interest expense calculated at the end of each calendar quarter for the rolling four quarter period then most recently ended, required by the Credit Facility.

In addition, at September 30, 2013, Cat Financial's covenant leverage ratio was 8.27 to 1. This is below the maximum ratio of debt to net worth of 10 to 1, calculated (1) on a monthly basis as the average of the leverage ratios determined on the last day of each of the six preceding calendar months and (2) at each December 31, required by the Credit Facility.

In the event Caterpillar or Cat Financial does not meet one or more of their respective financial covenants under the Credit Facility in the future (and are unable to obtain a consent or waiver), the bank group may terminate the commitments allocated to the party that does not meet its covenants.  Additionally, in such event, certain of Cat Financial's other lenders under other loan agreements where similar financial covenants or cross default provisions are applicable, may, at their election, choose to pursue remedies under those loan agreements, including accelerating the repayment of outstanding borrowings.  At September 30, 2013, there were no borrowings under the Credit Facility.

Our total credit commitments as of September 30, 2013 were:

	September 30, 2013
(Millions of dollars)	Consolidated			Machinery and Power Systems			Financial Products
Credit lines available:
Global credit facilities	$	10,000		$	2,750		$	7,250
Other external	5,031			508			4,523
Total credit lines available	15,031			3,258			11,773
Less: Commercial paper outstanding	(4,249		)	—			(4,249		)
Less: Utilized credit	(2,310		)	(290		)	(2,020		)
Available credit	$	8,472		$	2,968		$	5,504

Other consolidated credit lines with banks as of September 30, 2013 totaled $5.03 billion. These committed and uncommitted credit lines, which may be eligible for renewal at various future dates or have no specified expiration date, are used primarily by our subsidiaries for local funding requirements. Caterpillar or Cat Financial may guarantee subsidiary borrowings under these lines.

In the event that Caterpillar or Cat Financial, or any of their debt securities, experiences a credit rating downgrade, it would likely result in an increase in our borrowing costs and make access to certain credit markets more difficult. In the event economic conditions deteriorate such that access to debt markets becomes unavailable, our Machinery and Power Systems' operations would rely on cash flow from operations, use of existing cash balances, borrowings from Cat Financial and access to our Credit Facility. Our Financial Products' operations would rely on cash flow from its existing portfolio, utilization of existing cash balances, access to our Credit Facility and other credit line facilities of Cat Financial and potential borrowings from Caterpillar. In addition, we maintain a support agreement with Cat Financial, which requires Caterpillar to remain the sole owner of Cat Financial and which may, under certain circumstances, require Caterpillar to make payments to Cat Financial should Cat Financial fail to maintain certain financial ratios.

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Machinery and Power Systems

Net cash provided by operating activities was $6.25 billion in the first nine months of 2013, compared with $2.51 billion for the same period in 2012. The increase was primarily due to changes in inventory. In the first nine months of 2013, inventory decreased significantly, whereas during the same period of 2012, there was a significant increase in inventory. In mid-2012, as order rates declined, we started lowering production schedules and incoming material purchases from suppliers around the world to bring inventory levels in line with expected demand. While production schedules began to decline in the third quarter of 2012, the most significant impacts on inventory occurred in the fourth quarter of 2012 and continued into 2013. In addition, changes in receivables and payables had a positive impact on operating cash flow. These favorable items were partially offset by lower profit and customer advances.

Net cash used for investing activities in the first nine months of 2013 was $1.81 billion, compared with $1.32 billion for the same period in 2012. The change was primarily due to the absence of the cash proceeds received from the sale of a majority interest in our third party logistics business during the third quarter of 2012. In addition, cash proceeds from the sale of portions of the Bucyrus distribution business were lower during the first nine months of 2013 as compared with the same period a year ago. Partially offsetting these items were lower capital expenditures and lower cash paid for investments and acquisitions. During 2013 capital expenditures were reduced in response to lower sales and revenues. Cash paid for investments and acquisitions was higher in 2012 primarily due to the acquisition of Siwei.

Net cash used for financing activities in the first nine months of 2013 was $3.62 billion, compared with net cash provided by financing activities of $371 million in the first nine months of 2012. The change was primarily due to the repurchase of $2 billion of stock as well as the net payment of long-term debt in the first nine months of 2013 as compared with the net issuance of long-term debt in the first nine months of 2012.

Our priorities for the use of cash are maintaining a strong financial position that helps maintain our credit rating, providing capital to support growth, appropriately funding employee benefit plans, paying dividends and repurchasing common stock with excess cash.

Strong financial position – A key measure of Machinery and Power Systems' financial strength used by both management and our credit rating agencies is Machinery and Power Systems' debt-to-capital ratio. Debt-to-capital is defined as short-term borrowings, long-term debt due within one year and long-term debt due after one year (debt) divided by the sum of debt and stockholders' equity. Debt also includes Machinery and Power Systems borrowings from Financial Products. The debt-to-capital ratio for Machinery and Power Systems was 34.1 percent at September 30, 2013, within our target range of 30 to 45 percent, and represents a substantial improvement over the past five years from the 57.5 percent debt-to-capital ratio at the end of 2008. The Machinery and Power Systems' debt-to-capital ratio was 37.4 percent at December 31, 2012. Payments on debt during the first nine months of 2013 were the primary contributor to the reduction in the debt-to-capital ratio.

Capital to support growth – Capital expenditures were $1.9 billion during the first nine months of 2013, compared to $2.32 billion for the same period in 2012. The reduction in capital expenditures was in response to lower sales and revenues. We expect capital expenditures for 2013 to be less than $3 billion.

Appropriately funded employee benefit plans – We made $398 million of contributions to our pension plans during the nine months ended September 30, 2013. We currently anticipate full-year 2013 contributions of approximately $500 million, all of which are required. We made $488 million of contributions to our pension plans during the nine months ended September 30, 2012.

Paying dividends – Dividends paid totaled $730 million in the second and third quarters of 2013, representing 52 cents per share paid in the second quarter and 60 cents per share in the third quarter. During the first quarter of 2013, there was no dividend payment, as it was accelerated into the fourth quarter of 2012. Each quarter, our Board of Directors reviews the company's dividend for the applicable quarter. The Board evaluates the financial condition of the company and considers the economic outlook, corporate cash flow, the company's liquidity needs and the health and stability of global credit markets to determine whether to maintain or change the quarterly dividend.

Common stock repurchases – In February 2007, the Board of Directors authorized the repurchase of $7.5 billion of Caterpillar stock, and in December 2011, the authorization was extended through December 2015. We repurchased $1 billion in stock in both the second and third quarters of 2013. Through the end of the third quarter of 2013, we have repurchased $5.8 billion of Caterpillar stock, leaving $1.7 billion in the authorization. With our M&PS debt-to-capital ratio well within our target range and strong cash flow, there is potential to complete the remaining $1.7 billion of the authorization before it expires at the end of 2015. Basic shares outstanding as of September 30, 2013 were 636 million.

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Financial Products

Financial Products' operating cash flow was $919 million in the first nine months of 2013, compared with $854 million for the same period a year ago.  Net cash used for investing activities was $1.64 billion for the first nine months of 2013, compared with $3.12 billion for the same period in 2012. The change was primarily due to less net cash used for finance receivables due to slower growth in Cat Financial's portfolio. Net cash provided by financing activities was $803 million for the first nine months of 2013, compared with $3.46 billion for the same period in 2012. The change was primarily due to lower debt issuances needed to maintain Cat Financial's desired cash position and lower funding requirements for investing activities.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts. The more significant estimates include: residual values for leased assets, fair values for goodwill impairment tests, impairment of available-for-sale securities, warranty liability, stock-based compensation, reserves for product liability and insurance losses, postretirement benefits, post-sale discounts, credit losses and income taxes. We have incorporated many years of data into the determination of each of these estimates and we have not historically experienced significant adjustments. These assumptions are reviewed at least annually with the Audit Committee of the Board of Directors.  Following are the methods and assumptions used in determining our estimates and an indication of the risks inherent in each.

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

During the term of the leases, residual amounts are monitored.  If estimated market values reflect a non-temporary impairment due to economic factors, obsolescence or other adverse circumstances, the residuals are adjusted to the lower estimated values by a charge to earnings.  For equipment on operating leases, the charge is recognized through depreciation expense.  For finance leases, it is recognized through a reduction of finance revenue.

Fair values for goodwill impairment tests – We test goodwill for impairment annually, at the reporting unit level, and whenever events or circumstances make it likely that an impairment may have occurred, such as a significant adverse change in the business climate or a decision to sell all or a portion of a reporting unit.  We perform our annual goodwill impairment test as of October 1 and monitor for interim triggering events on an ongoing basis.

Goodwill is reviewed for impairment utilizing a qualitative assessment or a two-step process.  We have an option to make a qualitative assessment of a reporting unit's goodwill for impairment.  If we choose to perform a qualitative assessment and determine the fair value more likely than not exceeds the carrying value, no further evaluation is necessary.  For reporting units where we perform the two-step process, the first step requires us to compare the fair value of each reporting unit, which we primarily determine using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill.  If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired.  If the carrying value is higher than the fair value, there is an indication that an impairment may exist and the second step is required.  In step two, the implied fair value of goodwill is calculated as the excess of the fair value of a reporting unit over the fair values assigned to its assets and liabilities.  If the implied fair value of goodwill is less than the carrying value of the reporting unit's goodwill, the difference is recognized as an impairment loss.

The impairment test process requires valuation of the respective reporting unit, which we primarily determine using an income approach based on a discounted five year forecasted cash flow with a year-five residual value. The residual value is computed using the constant growth method, which values the forecasted cash flows in perpetuity. The income approach is supported by a reconciliation of our calculated fair value for Caterpillar to the company's market capitalization. The assumptions about future cash flows and growth rates are based on each reporting unit's long-term forecast and are subject to review and approval by senior

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management. The discount rate is a risk-adjusted weighted average cost of capital, which we believe approximates the rate from a market participant's perspective. The estimated fair value could be impacted by changes in market conditions, interest rates, growth rates, tax rates, costs, pricing and capital expenditures.

A prolonged economic downturn resulting in lower long-term growth rates and reduced long-term profitability may reduce the fair value of our reporting units. Industry specific events or circumstances that have a negative impact to the valuation assumptions may also reduce the fair value of our reporting units.  Should such events occur and it becomes more likely than not that a reporting unit's fair value has fallen below its carrying value, we will perform an interim goodwill impairment test(s), in addition to the annual impairment test.  Future impairment tests may result in a goodwill impairment, depending on the outcome of both step one and step two of the impairment review process.  A goodwill impairment would be reported as a non-cash charge to earnings.

Impairment of available-for-sale securities –Available-for-sale securities, primarily at Cat Insurance, are reviewed at least quarterly to identify fair values below cost which may indicate that a security is impaired and should be written down to fair value.

For debt securities, once a security’s fair value is below cost we utilize data gathered by investment managers, external sources and internal research to monitor the performance of the security to determine whether an other-than-temporary impairment has occurred.  These reviews, which include an analysis of whether it is more likely than not that we will be required to sell the security before its anticipated recovery, consist of both quantitative and qualitative analysis and require a degree of management judgment.  Securities in a loss position are monitored and assessed at least quarterly based on severity and timing of loss and may be deemed other-than-temporarily impaired at any time.  Once a security’s fair value has been 20 percent or more below its original cost for six consecutive months, the security will be other-than-temporarily impaired unless there are sufficient facts and circumstances supporting otherwise.

For equity securities in a loss position, determining whether a security is other-than-temporarily impaired requires an analysis of that security's historical sector return as well as the volatility of that return. This information is utilized to estimate a security’s future fair value and to assess whether the security has the ability to recover to its original cost over a reasonable period of time. Both historical annualized sector returns and the volatility of those returns are considered over a two year period to arrive at these estimates.

For both debt and equity securities, qualitative factors are also considered in determining whether a security is other-than-temporarily impaired. These include reviews of the following:  significant changes in the regulatory, economic or technological environment of the investee, significant changes in the general market condition of either the geographic area or the industry in which the investee operates, and length of time and the extent to which the fair value has been less than cost.  These qualitative factors are subjective and require a degree of management judgment.

Warranty liability – At the time a sale is recognized, we record estimated future warranty costs.  The warranty liability is determined by applying historical claim rate experience to the current field population and dealer inventory.  Generally, historical claim rates are based on actual warranty experience for each product by machine model/engine size by customer or dealer location (inside or outside North America).  Specific rates are developed for each product shipment month and are updated monthly based on actual warranty claim experience.  Warranty costs may differ from those estimated if actual claim rates are higher or lower than our historical rates.

Stock-based compensation – We use a lattice-based option-pricing model to calculate the fair value of our stock options and SARs.  The calculation of the fair value of the awards using the lattice-based option-pricing model is affected by our stock price on the date of grant as well as assumptions regarding the following:

• Volatility is a measure of the amount by which the stock price is expected to fluctuate each year during the expected term of the award and is based on historical Caterpillar stock price movement and current implied volatilities from traded options on Caterpillar stock. The implied volatilities from traded options are impacted by changes in market conditions.  An increase in the volatility would result in an increase in our expense.

• The expected term represents the period of time that awards granted are expected to be outstanding and is an output of the lattice-based option-pricing model. In determining the expected term of the award, future exercise and forfeiture patterns are estimated from Caterpillar employee historical exercise behavior.  These patterns are also affected by the vesting conditions of the award.  Changes in the future exercise behavior of employees or in the vesting period of the award could result in a change in the expected term.  An increase in the expected term would result in an increase to our expense.

• The weighted-average dividend yield is based on Caterpillar’s historical dividend yields.  As holders of stock-based awards do not receive dividend payments, this could result in employees retaining the award for a longer period of time

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if dividend yields decrease or exercising the award sooner if dividend yields increase.  A decrease in the dividend yield would result in an increase in our expense.

• The risk-free interest rate is based on the U.S. Treasury yield curve in effect at time of grant.  As the risk-free interest rate increases, the expected term increases, resulting in an increase in our expense.

The fair value of our RSUs is determined by reducing the stock price on the date of grant by the present value of the estimated dividends to be paid during the vesting period. The estimated dividends are based on Caterpillar’s weighted-average dividend yields. A decrease in the dividend yield would result in an increase in our expense.

Stock-based compensation expense recognized during the period is based on the value of the number of awards that are expected to vest.  In determining the stock-based compensation expense to be recognized, a forfeiture rate is applied to the fair value of the award.  This rate represents the number of awards that are expected to be forfeited prior to vesting and is based on Caterpillar employee historical behavior.  Changes in the future behavior of employees could impact this rate.  A decrease in this rate would result in an increase in our expense.

Product liability and insurance loss reserve – We determine these reserves based upon reported claims in process of settlement and actuarial estimates for losses incurred but not reported. Loss reserves, including incurred but not reported reserves, are based on estimates and ultimate settlements may vary significantly from such estimates due to increased claims frequency or severity over historical levels.

Postretirement benefits – Primary actuarial assumptions were determined as follows:

• The U.S. expected long-term rate of return on plan assets is based on our estimate of long-term passive returns for equities and fixed income securities weighted by the allocation of our plan assets.  Based on historical performance, we increase the passive returns due to our active management of the plan assets.  A similar process is used to determine the rate for our non-U.S. pension plans.  This rate is impacted by changes in general market conditions, but because it represents a long-term rate, it is not significantly impacted by short-term market swings.  Changes in our allocation of plan assets would also impact this rate.  For example, a shift to more fixed income securities would lower the rate. A decrease in the rate would increase our expense.

• The assumed discount rate is used to discount future benefit obligations back to today’s dollars.  The U.S. discount rate is based on a benefit cash flow-matching approach and represents the rate at which our benefit obligations could effectively be settled as of our measurement date, December 31.  The benefit cash flow-matching approach involves analyzing Caterpillar’s projected cash flows against a high quality bond yield curve, calculated using a wide population of corporate Aa bonds available on the measurement date.  The very highest and lowest yielding bonds (top and bottom 10 percent) are excluded from the analysis.  A similar approach is used to determine the assumed discount rate for our most significant non-U.S. plans. This rate is sensitive to changes in interest rates.  A decrease in the discount rate would increase our obligation and future expense.

• The expected rate of compensation increase is used to develop benefit obligations using projected pay at retirement. It represents average long-term salary increases. This rate is influenced by our long-term compensation policies.  An increase in the rate would increase our obligation and expense.

• The assumed health care trend rate represents the rate at which health care costs are assumed to increase and is based on historical and expected experience.  Changes in our projections of future health care costs due to general economic conditions and those specific to health care (e.g., technology driven cost changes) will impact this trend rate.  An increase in the trend rate would increase our obligation and expense.

Post-sale discount reserve – We provide discounts to dealers through merchandising programs.  We have numerous programs that are designed to promote the sale of our products.  The most common dealer programs provide a discount when the dealer sells a product to a targeted end user.  The amount of accrued post-sale discounts was $1.07 billion as of September 30, 2013 and December 31, 2012, respectively.  The reserve represents discounts that we expect to pay on previously sold units and is reviewed at least quarterly.  The reserve is adjusted if discounts paid differ from those estimated.  Historically, those adjustments have not been material.

Credit loss reserve – Management's ongoing evaluation of the adequacy of the allowance for credit losses considers both impaired and unimpaired finance receivables and takes into consideration past loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of underlying collateral and current economic conditions. In estimating probable credit losses, we review accounts that are past due, non-performing, in bankruptcy or otherwise identified as at risk for potential credit loss including accounts which have been modified.  Accounts are identified as at risk for

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potential credit loss using information available about the customer, such as financial statements, news reports and published credit ratings, as well as general information regarding industry trends and the economic environment in which our customers operate.

The allowance for credit losses attributable to specific accounts is based on the most probable source of repayment, which is normally the liquidation of collateral. In determining collateral value, we estimate the current fair market value of the collateral. In addition, consideration is given to credit enhancements such as additional collateral and contractual third-party guarantees in determining the allowance for credit losses attributable to non-performing receivables. The allowance for credit losses attributable to the remaining accounts is a general allowance based upon the risk in the portfolio, primarily using probabilities of default and an estimate of associated losses. In addition, qualitative factors not able to be fully captured in previous analysis including industry trends, macroeconomic factors and model imprecision are considered in the evaluation of the adequacy of the allowance for credit losses. These qualitative factors are subjective and require a degree of management judgment.

While management believes it has exercised prudent judgment and applied reasonable assumptions, there can be no assurance that in the future, changes in economic conditions or other factors would not cause changes in the financial health of our customers. If the financial health of our customer deteriorates, the timing and level of payments received could be impacted and therefore, could result in a change to our estimated losses.

Income tax reserve – We are subject to the income tax laws of the many jurisdictions in which we operate.  These tax laws are complex, and the manner in which they apply to our facts is sometimes open to interpretation.  In establishing the provision for income taxes, we must make judgments about the application of these inherently complex tax laws.

Despite our belief that our tax return positions are consistent with applicable tax laws, we believe that taxing authorities could challenge certain positions. Settlement of any challenge can result in no change, a complete disallowance, or some partial adjustment reached through negotiations or litigation. We record tax benefits for uncertain tax positions based upon management’s evaluation of the information available at the reporting date.  To be recognized in the financial statements, a tax benefit must be at least more likely than not of being sustained based on technical merits.  The benefit for positions meeting the recognition threshold is measured as the largest benefit more likely than not of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.  Significant judgment is required in making these determinations and adjustments to unrecognized tax benefits may be necessary to reflect actual taxes payable upon settlement.  Adjustments related to positions impacting the effective tax rate affect the provision for income taxes.  Adjustments related to positions impacting the timing of deductions impact deferred tax assets and liabilities.

Our income tax positions and analysis are based on currently enacted tax law.  Future changes in tax law could significantly impact the provision for income taxes, the amount of taxes payable, and the deferred tax asset and liability balances.  Deferred tax assets generally represent tax benefits for tax deductions or credits available in future tax returns.  Certain estimates and assumptions are required to determine whether it is more likely than not that all or some portion of the benefit of a deferred tax asset will not be realized.  In making this assessment, management analyzes and estimates the impact of future taxable income, reversing temporary differences and available prudent and feasible tax planning strategies.  Should a change in facts or circumstances lead to a change in judgment about the ultimate realizability of a deferred tax asset, we record or adjust the related valuation allowance in the period that the change in facts and circumstances occurs, along with a corresponding increase or decrease in the provision for income taxes.

A provision for U.S. income taxes has not been recorded on undistributed profits of our non-U.S. subsidiaries that we have determined to be indefinitely reinvested outside the U.S.  If management intentions or U.S. tax law changes in the future, there may be a significant negative impact on the provision for income taxes to record an incremental tax liability in the period the change occurs. A deferred tax asset is recognized only if we have definite plans to generate a U.S. tax benefit by repatriating earnings in the foreseeable future.

GLOBAL WORKFORCE

Caterpillar worldwide full-time employment was 121,506 at the end of the third quarter of 2013 compared with 129,113 at the end of the third quarter of 2012, a decrease of 7,607 full-time employees. The flexible workforce decreased 6,054 for a total decrease in the global workforce of 13,661.

The decrease was primarily the result of lower production volume.

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OTHER MATTERS

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. We have made, and will continue to make, significant research and development and capital expenditures to comply with these emissions standards.

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 accrued 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 October 24, 2013, Progress Rail Services Corporation (Progress Rail), a wholly-owned indirect subsidiary of Caterpillar Inc., received a grand jury subpoena from the U.S. District Court for the Central District of California. The subpoena requests documents and information from Progress Rail, United Industries Corporation, a wholly-owned subsidiary of Progress Rail, and Caterpillar Inc. relating to allegations that Progress Rail conducted improper or unnecessary railcar inspections and repairs and improperly disposed of parts, equipment, tools and other items. In connection with this subpoena, Progress Rail was informed by the U.S. Attorney for the Central District of California that it is a target of a criminal investigation into potential violations of environmental laws and alleged improper business practices. The Company is cooperating with the authorities. Because of the recent timing of the subpoena, the Company is unable to predict the outcome or reasonably estimate the potential loss; however, we currently believe that this matter will not have a material adverse effect on the Company's consolidated results of operation, financial position or liquidity.

We are also involved in 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, environmental matters or intellectual property rights.  The aggregate range of reasonably possible losses in excess of accrued liabilities, if any, associated with these unresolved legal actions is not material.  In some cases, we cannot reasonably estimate a range of loss because there is insufficient information regarding the matter.  However, there is no more than a remote chance that any liability arising from these matters would be material.  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.

Retirement Benefits

We recognized pension expense of $207 million and $560 million for the three and nine months ended September 30, 2013, respectively, as compared to $180 million and $542 million for the three and nine months ended September 30, 2012, respectively. The increase in expense for the nine months ended September 30, 2013, is primarily due to higher amortization of net actuarial losses primarily due to lower discount rates at the end of 2012 and a $31 million charge to recognize a previously unrecorded liability related to a subsidiary's pension plans. The increase in expense was partially offset by lower interest costs, higher expected return on plan assets due to higher asset levels, $10 million of special termination benefits related to the closure of the Electro-Motive Diesel facility (discussed below) recognized in the first quarter 2012 and $7 million of curtailment expense due to changes in our hourly U.S. pension plan (discussed below) and $6 million of settlement losses due to the disposal of the third party logistics business recognized in the third quarter 2012. Accounting guidance on retirement benefits requires companies to discount future benefit obligations back to today's dollars using a discount rate that is based on high-quality fixed-income investments. A decrease in the discount rate increases the pension benefit obligation, while an increase in the discount rate decreases the pension benefit obligation.  This increase or decrease in the pension benefit obligation is recognized in Accumulated other comprehensive income (loss) and subsequently amortized into earnings as an actuarial gain or loss.  The guidance also requires companies to use an expected long-term rate of return on plan assets for computing current year pension expense. Differences between the actual and expected returns are also recognized in Accumulated other comprehensive income (loss) and subsequently amortized into earnings as actuarial gains and losses.  As of September 30, 2013, total actuarial losses, recognized in Accumulated other comprehensive

80

income (loss), related to pensions were $8.65 billion.  The majority of the actuarial losses are due to lower discount rates, plan asset losses and losses from other demographic and economic assumptions over the past several years.

Other postretirement benefit expense was $68 million and $211 million for the three and nine months ended September 30, 2013, respectively, as compared to $71 million and $174 million for the three and nine months ended September 30, 2012, respectively.  The increase in expense for the nine months ended September 30, 2013, was primarily the result of $40 million of curtailment gains recognized in the first quarter 2012, of which $37 million is related to the closure of the Electro-Motive Diesel facility discussed below.  Actuarial losses that were recognized in Accumulated other comprehensive income (loss) for other postretirement benefit plans were $1.45 billion at September 30, 2013. These losses reflect several years of declining discount rates, changes in our health care trend assumption and plan asset losses, partially offset by gains from lower than expected health care costs. 

Actuarial losses for both pensions and other postretirement benefits will be impacted in future periods by actual asset returns, actual health care inflation, discount rate changes, actual demographic experience and other factors that impact these expenses. These losses, reported in Accumulated other comprehensive income (loss), will generally be amortized as a component of net periodic benefit cost on a straight-line basis over the average remaining service period of active employees expected to receive benefits under the plans. For pension plans in which all or almost all of the plan's participants are inactive and other postretirement benefit plans in which all or almost all of the plan's participants are fully eligible for benefits under the plan, prior service cost (credit) and net actuarial loss (gain) are amortized using the straight-line method over the remaining life expectancy of those participants. At the end of 2012, the average remaining service period of active employees or life expectancy for fully eligible or inactive participants was 11 years for our U.S. and non-U.S. pension plans and 10 years for other postretirement benefit plans. We expect our total amortization of net actuarial losses to increase approximately $90 million in 2013 as compared to 2012, primarily due to a decrease in discount rates during 2012 and plan asset losses during 2011, partially offset by higher amortization of plan asset gains from 2010 and 2012.

In February 2012, we announced the closure of the Electro-Motive Diesel facility located in London, Ontario. As a result of the closure, we recognized a $37 million other postretirement benefits curtailment gain. This excludes a $21 million loss of a third-party receivable for other postretirement benefits that was eliminated due to the closure. In addition, a $10 million special termination benefit expense was recognized related to statutory pension benefits required to be paid to certain affected employees. As a result, a net gain of $6 million related to the facility closure was recognized in Other operating (income) expenses for the nine months ended September 30, 2012.

In August 2012, we announced changes to our U.S. hourly pension plan, which impacted certain hourly employees. For the impacted employees, pension benefit accruals were frozen on January 1, 2013 or will freeze on January 1, 2016, at which time employees will become eligible for various provisions of company sponsored 401(k) plans including a matching contribution and an annual employer contribution. The plan changes resulted in a curtailment and required a remeasurement as of August 31, 2012. The curtailment and the remeasurement resulted in a net increase in our Liability for postemployment benefits of $243 million and a net loss of $153 million, net of tax, recognized in Accumulated other comprehensive income (loss). The increase in the liability was primarily due to a decline in the discount rate. Also, the curtailment resulted in expense of $7 million which was recognized in Other operating (income) expenses for the three and nine months ended September 30, 2012.

Accounting guidance requires recognition of the overfunded or underfunded status of pension and other postretirement benefit plans on the balance sheet. Based on September 30, 2013 discount rates (approximately 4.6 percent for our U.S. plans) which are higher than the discount rates used at December 31, 2012, we would be required to recognize a decrease in our underfunded status of approximately $2.6 billion at December 31, 2013. This would result in a decrease in our Liability for postemployment benefits of approximately $2.6 billion and an increase in Accumulated other comprehensive income (loss) of approximately $1.7 billion, net of tax. It is difficult to predict the adjustment amount, as it is dependent on several factors including the discount rate, actual returns on plan assets and other actuarial assumptions. Final determination will only be known on the measurement date, which is December 31, 2013.

We made $118 million and $398 million of contributions to our pension plans during the three and nine months ended September 30, 2013, respectively. We currently anticipate full-year 2013 contributions of approximately $500 million, all of which are required. We made $195 million and $488 million of contributions to our pension plans during the three and nine months ended September 30, 2012, respectively.

81

Order Backlog

The dollar amount of backlog believed to be firm was approximately $19.1 billion at September 30, 2013 and June 30, 2013.  Continuing decreases for Resource Industries were offset by increases for Construction Industries. Compared to the end of the third quarter of 2012, the order backlog declined significantly, primarily due to a substantial reduction in mining-related products within Resource Industries. This decline was partially offset by an increase for Construction Industries. The dollar amount of backlog believed to be firm was approximately $20.2 billion at December 31, 2012. Of the total backlog, approximately $3.9 billion at September 30, 2013, $4.0 billion at June 30, 2013, and $4.5 billion at December 31, 2012 was not expected to be filled in the following twelve months.

NON-GAAP FINANCIAL MEASURES

The following definitions are provided for “non-GAAP financial measures” in connection with Item 10(e) of Regulation S-K issued by the Securities and Exchange Commission.   These non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP and therefore are unlikely to be comparable to the calculation of similar measures for other companies.  Management does not intend these items to be considered in isolation or substituted for the related GAAP measures.

Supplemental Consolidating Data

We are providing supplemental consolidating data for the purpose of additional analysis.  The data has been grouped as follows:

Consolidated – Caterpillar Inc. and its subsidiaries.

Machinery and Power Systems – Caterpillar defines Machinery and Power Systems as it is presented in the supplemental data as Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.  Machinery and Power Systems information relates to the design, manufacture and marketing of our products.  Financial Products information relates to the financing to customers and dealers for the purchase and lease of Caterpillar and other equipment.  The nature of these businesses is different especially with regard to the financial position and cash flow items.  Caterpillar management utilizes this presentation internally to highlight these differences.  We also believe this presentation will assist readers in understanding our business.

Financial Products – Our finance and insurance subsidiaries, primarily Cat Financial and Cat Insurance.

Consolidating Adjustments – Eliminations of transactions between Machinery and Power Systems and Financial Products.

Pages 83 to 90 reconcile Machinery and Power Systems with Financial Products on the equity basis to Caterpillar Inc. consolidated financial information.

82

Caterpillar Inc.

Supplemental Data for Results of Operations

For The Three Months Ended September 30, 2013

(Unaudited)

(Millions of dollars)

				Supplemental Consolidating Data
	Consolidated			Machinery and Power Systems 1			Financial Products		Consolidating Adjustments
Sales and revenues:
Sales of Machinery and Power Systems	$	12,678		$	12,678		$	—	$	—
Revenues of Financial Products	745			—			825		(80		)	2
Total sales and revenues	13,423			12,678			825		(80		)
Operating costs:
Cost of goods sold	9,774			9,774			—		—
Selling, general and administrative expenses	1,319			1,168			156		(5		)	3
Research and development expenses	469			469			—		—
Interest expense of Financial Products	178			—			179		(1		)	4
Other operating (income) expenses	282			12			280		(10		)	3
Total operating costs	12,022			11,423			615		(16		)
Operating profit	1,401			1,255			210		(64		)
Interest expense excluding Financial Products	116			127			—		(11		)	4
Other income (expense)	(24		)	(81		)	4		53			5
Consolidated profit before taxes	1,261			1,047			214		—
Provision (benefit) for income taxes	310			248			62		—
Profit of consolidated companies	951			799			152		—
Equity in profit (loss) of unconsolidated affiliated companies	(1		)	(1		)	—		—
Equity in profit of Financial Products’ subsidiaries	—			149			—		(149		)	6
Profit of consolidated and affiliated companies	950			947			152		(149		)
Less: Profit (loss) attributable to noncontrolling interests	4			1			3		—
Profit7	$	946		$	946		$	149	$	(149	)

¹  Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.

²  Elimination of Financial Products’ revenues earned from Machinery and Power Systems.

³  Elimination of net expenses recorded by Machinery and Power Systems paid to Financial Products.

⁴  Elimination of interest expense recorded between Financial Products and Machinery and Power Systems.

⁵  Elimination of discount recorded by Machinery and Power Systems on receivables sold to Financial Products and of interest earned between Machinery and Power Systems and Financial Products.

⁶  Elimination of Financial Products’ profit due to equity method of accounting.

⁷  Profit attributable to common stockholders.

83

Caterpillar Inc.

Supplemental Data for Results of Operations

For The Nine Months Ended September 30, 2013

(Unaudited)

(Millions of dollars)

				Supplemental Consolidating Data
	Consolidated			Machinery and Power Systems 1			Financial Products		Consolidating Adjustments
Sales and revenues:
Sales of Machinery and Power Systems	$	39,048		$	39,048		$	—	$	—
Revenues of Financial Products	2,206			—			2,462		(256		)	2
Total sales and revenues	41,254			39,048			2,462		(256		)
Operating costs:
Cost of goods sold	30,186			30,186			—		—
Selling, general and administrative expenses	4,130			3,721			435		(26		)	3
Research and development expenses	1,579			1,579			—		—
Interest expense of Financial Products	552			—			557		(5		)	4
Other operating (income) expenses	631			(83		)	737		(23		)	3
Total operating costs	37,078			35,403			1,729		(54		)
Operating profit	4,176			3,645			733		(202		)
Interest expense excluding Financial Products	356			388			—		(32		)	4
Other income (expense)	(79		)	(250		)	1		170			5
Consolidated profit before taxes	3,741			3,007			734		—
Provision (benefit) for income taxes	943			733			210		—
Profit of consolidated companies	2,798			2,274			524		—
Equity in profit (loss) of unconsolidated affiliated companies	(1		)	(1		)	—		—
Equity in profit of Financial Products’ subsidiaries	—			515			—		(515		)	6
Profit of consolidated and affiliated companies	2,797			2,788			524		(515		)
Less: Profit (loss) attributable to noncontrolling interests	11			2			9		—
Profit7	$	2,786		$	2,786		$	515	$	(515	)

¹ Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.

² Elimination of Financial Products’ revenues earned from Machinery and Power Systems.

³ Elimination of net expenses recorded by Machinery and Power Systems paid to Financial Products.

⁴ Elimination of interest expense recorded between Financial Products and Machinery and Power Systems.

⁵ Elimination of discount recorded by Machinery and Power Systems on receivables sold to Financial Products and of interest earned between Machinery and Power Systems and Financial Products.

⁶ Elimination of Financial Products’ profit due to equity method of accounting.

⁷ Profit attributable to common stockholders.

84

Caterpillar Inc.

Supplemental Data for Results of Operations

For The Three Months Ended September 30, 2012

(Unaudited)

(Millions of dollars)

				Supplemental Consolidating Data
	Consolidated			Machinery and Power Systems 1			Financial Products		Consolidating Adjustments
Sales and revenues:
Sales of Machinery and Power Systems	$	15,739		$	15,739		$	—	$	—
Revenues of Financial Products	706			—			796		(90		)	2
Total sales and revenues	16,445			15,739			796		(90		)
Operating costs:
Cost of goods sold	11,639			11,639			—		—
Selling, general and administrative expenses	1,471			1,325			153		(7		)	3
Research and development expenses	634			634			—		—
Interest expense of Financial Products	197			—			200		(3		)	4
Other operating (income) expenses	(92		)	(344		)	262		(10		)	3
Total operating costs	13,849			13,254			615		(20		)
Operating profit	2,596			2,485			181		(70		)
Interest expense excluding Financial Products	129			140			—		(11		)	4
Other income (expense)	(17		)	(89		)	13		59			5
Consolidated profit before taxes	2,450			2,256			194		—
Provision (benefit) for income taxes	753			697			56		—
Profit of consolidated companies	1,697			1,559			138		—
Equity in profit (loss) of unconsolidated affiliated companies	5			5			—		—
Equity in profit of Financial Products’ subsidiaries	—			135			—		(135		)	6
Profit of consolidated and affiliated companies	1,702			1,699			138		(135		)
Less: Profit (loss) attributable to noncontrolling interests	3			—			3		—
Profit7	$	1,699		$	1,699		$	135	$	(135	)

¹  Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.

²  Elimination of Financial Products’ revenues earned from Machinery and Power Systems.

³  Elimination of net expenses recorded by Machinery and Power Systems paid to Financial Products.

⁴  Elimination of interest expense recorded between Financial Products and Machinery and Power Systems.

⁵  Elimination of discount recorded by Machinery and Power Systems on receivables sold to Financial Products and of interest earned between Machinery and Power Systems and Financial Products.

⁶  Elimination of Financial Products’ profit due to equity method of accounting.

⁷  Profit attributable to common stockholders.

85

Caterpillar Inc.

Supplemental Data for Results of Operations

For The Nine Months Ended September 30, 2012

(Unaudited)

(Millions of dollars)

			Supplemental Consolidating Data
	Consolidated		Machinery and Power Systems 1			Financial Products		Consolidating Adjustments
Sales and revenues:
Sales of Machinery and Power Systems	$	47,711	$	47,711		$	—	$	—
Revenues of Financial Products	2,089		—			2,353		(264		)	2
Total sales and revenues	49,800		47,711			2,353		(264		)
Operating costs:
Cost of goods sold	35,156		35,156			—		—
Selling, general and administrative expenses	4,328		3,922			430		(24		)	3
Research and development expenses	1,853		1,853			—		—
Interest expense of Financial Products	599		—			602		(3		)	4
Other operating (income) expenses	329		(408		)	762		(25		)	3
Total operating costs	42,265		40,523			1,794		(52		)
Operating profit	7,535		7,188			559		(212		)
Interest expense excluding Financial Products	352		386			—		(34		)	4
Other income (expense)	141		(62		)	25		178			5
Consolidated profit before taxes	7,324		6,740			584		—
Provision (benefit) for income taxes	2,314		2,146			168		—
Profit of consolidated companies	5,010		4,594			416		—
Equity in profit (loss) of unconsolidated affiliated companies	12		12			—		—
Equity in profit of Financial Products’ subsidiaries	—		408			—		(408		)	6
Profit of consolidated and affiliated companies	5,022		5,014			416		(408		)
Less: Profit (loss) attributable to noncontrolling interests	38		30			8		—
Profit7	$	4,984	$	4,984		$	408	$	(408	)

¹ Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.

² Elimination of Financial Products’ revenues earned from Machinery and Power Systems.

³ Elimination of net expenses recorded by Machinery and Power Systems paid to Financial Products.

⁴ Elimination of interest expense recorded between Financial Products and Machinery and Power Systems.

⁵ Elimination of discount recorded by Machinery and Power Systems on receivables sold to Financial Products and of interest earned between Machinery and Power Systems and Financial Products.

⁶ Elimination of Financial Products’ profit due to equity method of accounting.

⁷ Profit attributable to common stockholders.

86

Caterpillar Inc.

Supplemental Data for Financial Position

At September 30, 2013

(Unaudited)

(Millions of dollars)

				Supplemental Consolidating Data
	Consolidated			Machinery and Power Systems 1			Financial Products		Consolidating Adjustments
Assets
Current assets:
Cash and short-term investments	$	6,357		$	4,108		$	2,249	$	—
Receivables – trade and other	8,649			4,727			364		3,558			2,3
Receivables – finance	9,161			—			12,977		(3,816		)	3
Deferred and refundable income taxes	1,541			1,501			40		—
Prepaid expenses and other current assets	988			514			487		(13		)	4
Inventories	13,392			13,392			—		—
Total current assets	40,088			24,242			16,117		(271		)
Property, plant and equipment – net	16,588			12,852			3,736		—
Long-term receivables – trade and other	1,329			161			293		875			2,3
Long-term receivables – finance	14,585			—			15,495		(910		)	3
Investments in unconsolidated affiliated companies	278			278			—		—
Investments in Financial Products subsidiaries	—			4,769			—		(4,769		)	5
Noncurrent deferred and refundable income taxes	1,985			2,378			97		(490		)	6
Intangible assets	3,718			3,710			8		—
Goodwill	6,968			6,951			17		—
Other assets	1,733			408			1,325		—
Total assets	$	87,272		$	55,749		$	37,088	$	(5,565	)
Liabilities
Current liabilities:
Short-term borrowings	$	5,847		$	290		$	5,743	$	(186	)	7
Accounts payable	6,280			6,178			175		(73		)	8
Accrued expenses	3,373			3,083			303		(13		)	9
Accrued wages, salaries and employee benefits	1,391			1,362			29		—
Customer advances	2,699			2,699			—		—
Other current liabilities	1,854			1,342			519		(7		)	6
Long-term debt due within one year	7,675			1,110			6,565		—
Total current liabilities	29,119			16,064			13,334		(279		)
Long-term debt due after one year	26,015			7,985			18,064		(34		)	7
Liability for postemployment benefits	10,785			10,785			—		—
Other liabilities	3,176			2,738			921		(483		)	6
Total liabilities	69,095			37,572			32,319		(796		)
Commitments and contingencies
Stockholders’ equity
Common stock	4,657			4,657			906		(906		)	5
Treasury stock	(11,914		)	(11,914		)	—		—
Profit employed in the business	31,614			31,614			3,550		(3,550		)	5
Accumulated other comprehensive income (loss)	(6,247		)	(6,247		)	195		(195		)	5
Noncontrolling interests	67			67			118		(118		)	5
Total stockholders’ equity	18,177			18,177			4,769		(4,769		)
Total liabilities and stockholders’ equity	$	87,272		$	55,749		$	37,088	$	(5,565	)

¹  Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.

²  Elimination of receivables between Machinery and Power Systems and Financial Products.

³  Reclassification of Machinery and Power Systems’ trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables.

⁴  Elimination of Machinery and Power Systems’ insurance premiums that are prepaid to Financial Products.

⁵  Elimination of Financial Products’ equity which is accounted for by Machinery and Power Systems on the equity basis.

⁶  Reclassification reflecting required netting of deferred tax assets / liabilities by taxing jurisdiction.

⁷  Elimination of debt between Machinery and Power Systems and Financial Products.

⁸  Elimination of payables between Machinery and Power Systems and Financial Products.

⁹  Elimination of prepaid insurance in Financial Products’ accrued expenses.

87

Caterpillar Inc.

Supplemental Data for Financial Position

At December 31, 2012

(Unaudited)

(Millions of dollars)

				Supplemental Consolidating Data
	Consolidated			Machinery and Power Systems 1			Financial Products		Consolidating Adjustments
Assets
Current assets:
Cash and short-term investments	$	5,490		$	3,306		$	2,184	$	—
Receivables – trade and other	10,092			5,634			445		4,013			2,3
Receivables – finance	8,860			—			13,259		(4,399		)	3
Deferred and refundable income taxes	1,547			1,501			46		—
Prepaid expenses and other current assets	988			547			454		(13		)	4
Inventories	15,547			15,547			—		—
Total current assets	42,524			26,535			16,388		(399		)
Property, plant and equipment – net	16,461			13,058			3,403		—
Long-term receivables – trade and other	1,316			195			284		837			2,3
Long-term receivables – finance	14,029			—			14,902		(873		)	3
Investments in unconsolidated affiliated companies	272			272			—		—
Investments in Financial Products subsidiaries	—			4,433			—		(4,433		)	5
Noncurrent deferred and refundable income taxes	2,011			2,422			105		(516		)	6
Intangible assets	4,016			4,008			8		—
Goodwill	6,942			6,925			17		—
Other assets	1,785			436			1,349		—
Total assets	$	89,356		$	58,284		$	36,456	$	(5,384	)
Liabilities
Current liabilities:
Short-term borrowings	$	5,287		$	668		$	4,859	$	(240	)	7
Accounts payable	6,753			6,718			178		(143		)	8
Accrued expenses	3,667			3,258			422		(13		)	9
Accrued wages, salaries and employee benefits	1,911			1,876			35		—
Customer advances	2,978			2,978			—		—
Other current liabilities	2,055			1,561			502		(8		)	6
Long-term debt due within one year	7,104			1,113			5,991		—
Total current liabilities	29,755			18,172			11,987		(404		)
Long-term debt due after one year	27,752			8,705			19,086		(39		)	7
Liability for postemployment benefits	11,085			11,085			—		—
Other liabilities	3,182			2,740			950		(508		)	6
Total liabilities	71,774			40,702			32,023		(951		)
Commitments and contingencies
Stockholders’ equity
Common stock	4,481			4,481			906		(906		)	5
Treasury stock	(10,074		)	(10,074		)	—		—
Profit employed in the business	29,558			29,558			3,185		(3,185		)	5
Accumulated other comprehensive income (loss)	(6,433		)	(6,433		)	236		(236		)	5
Noncontrolling interests	50			50			106		(106		)	5
Total stockholders’ equity	17,582			17,582			4,433		(4,433		)
Total liabilities and stockholders’ equity	$	89,356		$	58,284		$	36,456	$	(5,384	)

¹  Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.

²  Elimination of receivables between Machinery and Power Systems and Financial Products.

³  Reclassification of Machinery and Power Systems’ trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables.

⁴  Elimination of Machinery and Power Systems’ insurance premiums that are prepaid to Financial Products.

⁵  Elimination of Financial Products’ equity which is accounted for by Machinery and Power Systems on the equity basis.

⁶  Reclassification reflecting required netting of deferred tax assets / liabilities by taxing jurisdiction.

⁷  Elimination of debt between Machinery and Power Systems and Financial Products.

⁸  Elimination of payables between Machinery and Power Systems and Financial Products.

⁹  Elimination of prepaid insurance in Financial Products’ accrued expenses.

88

Caterpillar Inc.

Supplemental Data for Cash Flow

For The Nine Months Ended September 30, 2013

(Unaudited)

(Millions of dollars)

				Supplemental Consolidating Data
	Consolidated			Machinery and Power Systems 1			Financial Products			Consolidating Adjustments
Cash flow from operating activities:
Profit of consolidated and affiliated companies	$	2,797		$	2,788		$	524		$	(515	)	2
Adjustments for non-cash items:
Depreciation and amortization	2,263			1,674			589			—
Undistributed profit of Financial Products	—			(365		)	—			365			3
Other	377			247			(33		)	163			4
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables - trade and other	1,165			758			40			367			4,5
Inventories	1,911			1,916			—			(5		)	4
Accounts payable	41			53			(82		)	70			4
Accrued expenses	(227		)	(101		)	(126		)	—
Accrued wages, salaries and employee benefits	(500		)	(494		)	(6		)	—
Customer advances	(287		)	(287		)	—			—
Other assets – net	(74		)	(51		)	3			(26		)	4
Other liabilities – net	145			109			10			26			4
Net cash provided by (used for) operating activities	7,611			6,247			919			445
Cash flow from investing activities:
Capital expenditures - excluding equipment leased to others	(1,862		)	(1,851		)	(11		)	—
Expenditures for equipment leased to others	(1,301		)	(52		)	(1,299		)	50			4
Proceeds from disposals of leased assets and property, plant and equipment	593			72			535			(14		)	4
Additions to finance receivables	(8,339		)	—			(10,400		)	2,061			5,8
Collections of finance receivables	6,790			—			8,803			(2,013		)	5
Net intercompany purchased receivables	—			—			600			(600		)	5
Proceeds from sale of finance receivables	110			—			111			(1		)	5
Net intercompany borrowings	—			—			35			(35		)	6
Investments and acquisitions (net of cash acquired)	(193		)	(193		)	—			—
Proceeds from sale of businesses and investments (net of cash sold)	168			246			—			(78		)	8
Proceeds from sale of available-for-sale securities	297			19			278			—
Investments in available-for-sale securities	(312		)	(15		)	(297		)	—
Other – net	(29		)	(32		)	3			—
Net cash provided by (used for) investing activities	(4,078		)	(1,806		)	(1,642		)	(630		)
Cash flow from financing activities:
Dividends paid	(730		)	(730		)	(150		)	150			7
Distribution to noncontrolling interests	(10		)	(10		)	—			—
Common stock issued, including treasury shares reissued	77			77			—			—
Treasury shares purchased	(2,000		)	(2,000		)	—			—
Excess tax benefit from stock-based compensation	70			70			—			—
Net intercompany borrowings	—			(35		)	—			35			6
Proceeds from debt issued (original maturities greater than three months)	6,999			145			6,854			—
Payments on debt (original maturities greater than three months)	(8,770		)	(1,134		)	(7,636		)	—
Short-term borrowings – net  (original maturities three months or less)	1,736			1			1,735			—
Net cash provided by (used for) financing activities	(2,628		)	(3,616		)	803			185
Effect of exchange rate changes on cash	(38		)	(23		)	(15		)	—
Increase (decrease) in cash and short-term investments	867			802			65			—
Cash and short-term investments at beginning of period	5,490			3,306			2,184			—
Cash and short-term investments at end of period	$	6,357		$	4,108		$	2,249		$	—

¹  Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.

²  Elimination of Financial Products’ profit after tax due to equity method of accounting.

³  Elimination of non-cash adjustment for the undistributed earnings from Financial Products.

⁴  Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.

⁵  Reclassification of Financial Products' cash flow activity from investing to operating for receivables that arose from the sale of inventory.

⁶  Elimination of net proceeds and payments to/from Machinery and Power Systems and Financial Products.

⁷  Elimination of dividend from Financial Products to Machinery and Power Systems.

⁸  Elimination of proceeds received from Financial Products related to Machinery and Power Systems' sale of portions of the Bucyrus distribution business to Cat Dealers.

89

Caterpillar Inc.

Supplemental Data for Cash Flow

For The Nine Months Ended September 30, 2012

(Unaudited)

(Millions of dollars)

				Supplemental Consolidating Data
	Consolidated			Machinery and Power Systems 1			Financial Products			Consolidating Adjustments
Cash flow from operating activities:
Profit of consolidated and affiliated companies	$	5,022		$	5,014		$	416		$	(408	)	2
Adjustments for non-cash items:
Depreciation and amortization	2,070			1,523			547			—
Undistributed profit of Financial Products	—			(158		)	—			158			3
Other	(267		)	(295		)	(112		)	140			4
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables - trade and other	136			191			(59		)	4			4,5
Inventories	(3,118		)	(3,069		)	—			(49		)	4
Accounts payable	(334		)	(342		)	(2		)	10			4
Accrued expenses	32			69			(38		)	1			4
Accrued wages, salaries and employee benefits	(643		)	(636		)	(7		)	—
Customer advances	306			306			—			—
Other assets – net	(20		)	(5		)	(21		)	6			4
Other liabilities – net	34			(89		)	130			(7		)	4
Net cash provided by (used for) operating activities	3,218			2,509			854			(145		)
Cash flow from investing activities:
Capital expenditures - excluding equipment leased to others	(2,270		)	(2,259		)	(11		)	—
Expenditures for equipment leased to others	(1,256		)	(65		)	(1,330		)	139			4,9
Proceeds from disposals of leased assets and property, plant and equipment	840			154			702			(16		)	4
Additions to finance receivables	(8,835		)	—			(14,195		)	5,360			5,8,9
Collections of finance receivables	6,567			—			11,253			(4,686		)	5,9
Net intercompany purchased receivables	—			—			366			(366		)	5
Proceeds from sale of finance receivables	109			—			109			—
Net intercompany borrowings	—			(203		)	17			186			6
Investments and acquisitions (net of cash acquired)	(542		)	(486		)	—			(56		)	9
Proceeds from sale of businesses and investments (net of cash sold)	1,009			1,489			—			(480		)	8
Proceeds from sale of available-for-sale securities	243			24			219			—
Investments in available-for-sale securities	(299		)	(6		)	(293		)	—
Other – net	82			36			46			—
Net cash provided by (used for) investing activities	(4,352		)	(1,316		)	(3,117		)	81
Cash flow from financing activities:
Dividends paid	(937		)	(937		)	(250		)	250			7
Distribution to noncontrolling interests	(5		)	(5		)	—			—
Common stock issued, including treasury shares reissued	41			41			—			—
Excess tax benefit from stock-based compensation	165			165			—			—
Acquisitions of redeemable noncontrolling interests	(444		)	(444		)	—			—
Net intercompany borrowings	—			(17		)	203			(186		)	6
Proceeds from debt issued (original maturities greater than three months)	11,632			2,015			9,617			—
Payments on debt (original maturities greater than three months)	(6,727		)	(485		)	(6,242		)	—
Short-term borrowings – net  (original maturities three months or less)	166			38			128			—
Net cash provided by (used for) financing activities	3,891			371			3,456			64
Effect of exchange rate changes on cash	(125		)	(30		)	(95		)	—
Increase (decrease) in cash and short-term investments	2,632			1,534			1,098			—
Cash and short-term investments at beginning of period	3,057			1,829			1,228			—
Cash and short-term investments at end of period	$	5,689		$	3,363		$	2,326		$	—

¹  Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.

²  Elimination of Financial Products' profit after tax due to equity method of accounting.

³  Elimination of non-cash adjustment for the undistributed earnings from Financial Products.

⁴  Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.

⁵  Reclassification of Financial Products' cash flow activity from investing to operating for receivables that arose from the sale of inventory.

⁶  Elimination of net proceeds and payments to/from Machinery and Power Systems and Financial Products.

⁷  Elimination of dividend from Financial Products to Machinery and Power Systems.

⁸  Elimination of proceeds received from Financial Products related to Machinery and Power Systems' sale of portions of the Bucyrus distribution business to Cat dealers.

⁹  Reclassification of Financial Products' payments related to Machinery and Power Systems' acquisition of Caterpillar Tohoku Limited.

90

Forward-looking Statements

Certain statements in this Form 10-Q relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “project,” “intend,” “could,” “should” or other similar words or expressions often identify forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future performance, and we do not undertake to update our forward-looking statements.

Caterpillar's actual results may differ materially from those described or implied in our forward-looking statements based on a number of factors, including, but not limited to: (i) global economic conditions and economic conditions in the industries and markets we serve; (ii) government monetary or fiscal policies and infrastructure spending; (iii) commodity or component price increases, fluctuations in demand for our products, or limited availability of raw materials and component products, including steel; (iv) our and our customers', dealers' and suppliers' ability to access and manage liquidity; (v) political and economic risks and instability, including national or international conflicts and civil unrest; (vi) our and Cat Financial's ability to: maintain credit ratings, avoid material increases in borrowing costs, and access capital markets; (vii) the financial condition and credit worthiness of Cat Financial's customers; (viii) changes in interest rates or market liquidity; (ix) changes in financial services regulation; (x) inability to realize expected benefits from acquisitions, including ERA Mining Machinery Limited, and divestitures, including the divestiture of the Bucyrus International, Inc. distribution business to our independent dealers; (xi) international trade and investment policies; (xii) market acceptance of our products and services; (xiii) changes in the competitive environment, including market share, pricing and geographic and product mix of sales; (xiv) successful implementation of capacity expansion projects, cost reduction initiatives and efficiency or productivity initiatives, including the Caterpillar Production System; (xv) inventory management decisions and sourcing practices of our dealers or original equipment manufacturers; (xvi) compliance with environmental laws and regulations; (xvii) alleged or actual violations of trade or anti-corruption laws and regulations; (xviii) additional tax expense or exposure; (xix) currency fluctuations; (xx) our or Cat Financial's compliance with financial covenants; (xxi) increased pension plan funding obligations; (xxii) union disputes or other labor matters; (xxiii) significant legal proceedings, claims, lawsuits or investigations; (xxiv) compliance requirements imposed if carbon emissions legislation and/or regulations are adopted; (xxv) changes in accounting standards; (xxvi) failure or breach of information technology security; (xxvii) adverse effects of natural disasters; and (xxviii) other factors described in more detail under “Item 1A. Risk Factors” in our Form 10-K filed with the SEC on February 19, 2013 for the year ended December 31, 2012. This filing is available on our website at www.caterpillar.com/secfilings.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The information required by this Item is incorporated by reference from Note 4 – “Derivative Financial Instruments and Risk Management” included in Part I, Item 1 and Management’s Discussion and Analysis included in Part I, Item 2 of this Form 10-Q.

Item 4.  Controls and Procedures

Evaluation of disclosure controls and procedures

An evaluation was performed under the supervision and with the participation of the company’s management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the company’s disclosure controls and procedures, as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this quarterly report.  Based on that evaluation, the company’s management, including the CEO and CFO, concluded that the company’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.

Changes in internal control over financial reporting

During the third quarter of 2013, there has been no change in the company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

91

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

The information required by this Item is incorporated by reference from Note 13 included in Part I, Item 1 of this Form 10-Q.    

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Period 1	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased Under the Program	Approximate Dollar Value of Shares that may yet be Purchased under the Program (dollars in billions) 2
July 1-31, 2013	11,370,672	$	83.73	11,370,672	$	1.787
August 1-31, 2013	—	$	—	—	$	—
September 1-30, 2013	572,065	$	83.73	572,065	$	1.739
Total	11,942,737	$	83.73	11,942,737

¹  In July 2013, we entered into a definitive agreement with Société Générale to purchase shares of our common stock under an accelerated stock repurchase transaction (July ASR Agreement). Pursuant to the terms of the July ASR Agreement, a total of 11.9 million shares of our common stock were repurchased at an aggregate cost to Caterpillar of $1.0 billion.

²  In February 2007, the Board of Directors authorized the repurchase of $7.5 billion of Caterpillar stock, and in December 2011, the authorization was extended through December 31, 2015. Through the end of the third quarter of 2013, $5.8 billion of the $7.5 billion authorization was spent.

Other Purchases of Equity Securities

Period	Total Number of Shares Purchased 1	Average Price Paid per Share		Total Number of Shares Purchased Under the Program	Approximate Dollar Value of Shares that may yet be Purchased under the Program
July 1-31, 2013	5,818	$	83.09	NA	NA
August 1-31, 2013	619	$	83.01	NA	NA
September 1-30, 2013	16,605	$	82.63	NA	NA
Total	23,042	$	82.76

¹  Represents shares delivered back to issuer for the payment of taxes resulting from the vesting of restricted stock units and the exercise of stock options by employees and Directors.

Non-U.S. Employee Stock Purchase Plans

We have 28 employee stock purchase plans administered outside the United States for our non-U.S. employees.  As of September 30, 2013, those plans had approximately 14,500 active participants in the aggregate.  During the third quarter of 2013, approximately 268,000 shares of Caterpillar common stock or foreign denominated equivalents were distributed under the plans.  Participants in some foreign plans have the option of receiving non-U.S. share certificates (foreign-denominated equivalents) in lieu of U.S. shares of Caterpillar common stock upon withdrawal from the plan.  These equivalent certificates are tradable only on the local stock market and are included in our determination of shares outstanding.

Distributions of Caterpillar stock under the plans are exempt from registration under the Securities Act of 1933 (Act) pursuant to 17 CFR 230.903.

92

Item 4. Mine Safety Disclosures

Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this quarterly report.

Item 6. Exhibits

10.1	Credit Agreement (2013 364-Day Credit Agreement), dated as of September 12, 2013, among the Company, Cat Financial, Caterpillar International Finance Limited and Caterpillar Finance Corporation, certain financial institutions named therein, Citibank, N.A., as Agent, Citibank International plc, as Local Currency Agent, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Japan Local Currency Agent (incorporated by reference from Exhibit 99.1 to the Company's Current Report on Form 8-K filed September 17, 2013).
10.2	Local Currency Addendum, dated as of September 12, 2013, to the 2013 364-Day Credit Agreement (incorporated by reference from Exhibit 99.2 to the Company's Current Report on Form 8-K filed September 17, 2013).
10.3	Japan Local Currency Addendum, dated as of September 12, 2013, to the 2013 364-Day Credit Agreement (incorporated by reference from Exhibit 99.3 to the Company's Current Report on Form 8-K filed September 17, 2013).
10.4	Omnibus Amendment No. 3 to the Credit Agreement (4-Year Facility) and Amendment No. 1 to the Local Currency Addendum, dated as of September 12, 2013, by and among the Company, Cat Financial, Caterpillar International Finance Limited and Caterpillar Finance Corporation, the Banks named therein, Local Currency Banks and Japan Local Currency Banks party thereto, Citibank, N.A., as Agent, Citibank International plc, as Local Currency Agent, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Japan Local Currency Agent (incorporated by reference from Exhibit 99.4 to the Company's Current Report on Form 8-K filed September 17, 2013).
10.5	Omnibus Amendment No. 2 to the Credit Agreement (5-Year Facility) and Amendment No. 1 to the Local Currency Addendum, dated as of September 12, 2013, by and among the Company, Cat Financial, Caterpillar International Finance Limited and Caterpillar Finance Corporation, the Banks named therein, Local Currency Banks and Japan Local Currency Banks party thereto, Citibank, N.A., as Agent, Citibank International plc, as Local Currency Agent, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Japan Local Currency Agent (incorporated by reference from Exhibit 99.5 to the Company's Current Report on Form 8-K filed September 17, 2013).
10.6	Caterpillar Inc. 2006 Long-Term Incentive Plan amended and restated through second amendment dated August 22, 2013.
11	Computations of Earnings per Share (included in Note 11 of this Form 10-Q filed for the quarter ended September 30, 2013).
31.1	Certification of Douglas R. Oberhelman, Chairman and Chief Executive Officer of Caterpillar Inc., as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Bradley M. Halverson, Group President and Chief Financial Officer of Caterpillar Inc., as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Douglas R. Oberhelman, Chairman and Chief Executive Officer of Caterpillar Inc. and Bradley M. Halverson, Group President and Chief Financial Officer of Caterpillar Inc., as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
95	Mine Safety Disclosures
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

93

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CATERPILLAR INC.
November 1, 2013	/s/Douglas R. Oberhelman	Chairman and Chief Executive Officer
	(Douglas R. Oberhelman)
November 1, 2013	/s/Bradley M. Halverson	Group President and Chief Financial Officer
	(Bradley M. Halverson)
November 1, 2013	/s/James B. Buda	Executive Vice President, Law and Public Policy
	(James B. Buda)
November 1, 2013	/s/Jananne A. Copeland	Chief Accounting Officer
	(Jananne A. Copeland)

94

EXHIBIT INDEX

Exhibit No.	Description
10.1	Credit Agreement (2013 364-Day Credit Agreement), dated as of September 12, 2013, among the Company, Cat Financial, Caterpillar International Finance Limited and Caterpillar Finance Corporation, certain financial institutions named therein, Citibank, N.A., as Agent, Citibank International plc, as Local Currency Agent, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Japan Local Currency Agent (incorporated by reference from Exhibit 99.1 to the Company's Current Report on Form 8-K filed September 17, 2013).
10.2	Local Currency Addendum, dated as of September 12, 2013, to the 2013 364-Day Credit Agreement (incorporated by reference from Exhibit 99.2 to the Company's Current Report on Form 8-K filed September 17, 2013).
10.3	Japan Local Currency Addendum, dated as of September 12, 2013, to the 2013 364-Day Credit Agreement (incorporated by reference from Exhibit 99.3 to the Company's Current Report on Form 8-K filed September 17, 2013).
10.4	Omnibus Amendment No. 3 to the Credit Agreement (4-Year Facility) and Amendment No. 1 to the Local Currency Addendum, dated as of September 12, 2013, by and among the Company, Cat Financial, Caterpillar International Finance Limited and Caterpillar Finance Corporation, the Banks named therein, Local Currency Banks and Japan Local Currency Banks party thereto, Citibank, N.A., as Agent, Citibank International plc, as Local Currency Agent, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Japan Local Currency Agent (incorporated by reference from Exhibit 99.4 to the Company's Current Report on Form 8-K filed September 17, 2013).
10.5	Omnibus Amendment No. 2 to the Credit Agreement (5-Year Facility) and Amendment No. 1 to the Local Currency Addendum dated as of September 12, 2013, by and among the Company, Cat Financial, Caterpillar International Finance Limited and Caterpillar Finance Corporation, the Banks named therein, Local Currency Banks and Japan Local Currency Banks party thereto, Citibank, N.A., as Agent, Citibank International plc, as Local Currency Agent, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Japan Local Currency Agent (incorporated by reference from Exhibit 99.5 to the Company's Current Report on Form 8-K filed September 17, 2013).
10.6	Caterpillar Inc. 2006 Long-Term Incentive Plan amended and restated through second amendment dated August 22, 2013.
11	Computations of Earnings per Share (included in Note 11 of this Form 10-Q filed for the quarter ended September 30, 2013).
31.1	Certification of Douglas R. Oberhelman, Chairman and Chief Executive Officer of Caterpillar Inc., as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Bradley M. Halverson, Group President and Chief Financial Officer of Caterpillar Inc., as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Douglas R. Oberhelman, Chairman and Chief Executive Officer of Caterpillar Inc. and Bradley M. Halverson, Group President and Chief Financial Officer of Caterpillar Inc., as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
95	Mine Safety Disclosures
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

95

EX-10.6

EXHIBIT 10.6

CATERPILLAR INC.
2006 LONG-TERM INCENTIVE PLAN

(As Amended and Restated Through Second Amendment Dated August 22, 2013)

Caterpillar Inc.

2006 Long-Term Incentive Plan

Section 1.Establishment, Objectives and Duration

1.1.     Establishment. With the approval of the stockholders of Caterpillar Inc., a Delaware corporation (the “Company”), the Company established the Caterpillar Inc. 2006 Long-Term Incentive Plan (the “Plan”) effective June 14, 2006. The Plan supersedes and replaces all prior equity and non-equity long-term incentive compensation plans or programs maintained by the Company; provided that, any prior plans of the Company shall remain in effect until all awards granted under such prior plans have been exercised, forfeited, canceled, expired or otherwise terminated in accordance with the terms of such grants.

1.2.     Purpose. The Plan is intended to provide certain present and future employees and Directors cash-based incentives, stock-based incentives and other equity interests in the Company thereby giving them a stake in the growth and prosperity of the Company and encouraging the continuance of their services with the Company or its Subsidiaries.

1.3.     Effective Date. The Plan was originally effective on June 14, 2006. This amendment and restatement of the Plan shall be effective as of the later of (a) the date the amendment and restatement of the Plan is adopted by the Board or (b) the date the Company’s stockholders approve the amendment and restatement of the Plan (the “Effective Date”). The amendment and restatement of the Plan will be deemed to be approved by the stockholders if it receives the affirmative vote of the holders of a majority of the shares of stock of the Company present or represented and entitled to vote at a meeting duly held in accordance with the applicable provisions of the Certificate of Incorporation or Bylaws of the Company.

1.4.     Duration. The Plan shall remain in effect, subject to the right of the Company’s Board of Directors to amend or terminate the Plan at any time pursuant to Section 16, until all Shares subject to the Plan shall have been purchased or granted according to the Plan’s provisions. However, in no event may an Award be granted under the Plan on or after the tenth anniversary of the original effective date of the Plan, June 14, 2006. Upon termination of the Plan, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with the terms of the Plan and the applicable Award Document.

Section 2.Definitions and Construction

When a word or phrase appears in the Plan with the initial letter capitalized, and the word or phrase does not commence a sentence, the word or phrase shall generally be given the meaning ascribed to it in this Section unless a clearly different meaning is required by the context. The following words and phrases shall have the following meanings:

2.1.     “Award” means, individually or collectively, a grant under the Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Performance Shares or Performance Units.

2

2.2.     “Award Document” means any agreement, contract, or other written instrument that evidences an Award granted to the Participant under the Plan and sets forth the terms and provisions applicable to such Award.

2.3.     “Award Gain” means (a) with respect to a given Option exercise, the product of (X) the excess of the Fair Market Value of a Share on the date of exercise over the Option Price times (Y) the number of shares as to which the Option was exercised at that date, and (b) with respect to any other settlement of an Award granted to the Participant, the Fair Market Value of the cash or Shares paid or payable to the Participant (regardless of any elective deferral pursuant to Section 13) less any cash or the Fair Market Value of any Shares or property (other than an Award that would have itself then been forfeitable hereunder and excluding any payment of tax withholding) paid by the Participant to the Company as a condition of or in connection with such settlement.

2.4.     “Board” means the Board of Directors of the Company.

2.5.     “Cause” means, except as otherwise provided in an Award Document, a willful engaging in gross misconduct materially and demonstrably injurious to the Company. For this purpose, “willful” means an act or omission in bad faith and without reasonable belief that such act or omission was in or not opposed to the best interests of the Company.

2.6.     “Change of Control” means the occurrence of any of the following events: (a) any person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company’s then outstanding common stock, unless the Board by resolution negates the effect of this provision in a particular circumstance, deeming that resolution to be in the best interests of Company stockholders; (b) during any period of two consecutive years, there shall cease to be a majority of the Board comprised of individuals who at the beginning of such period constituted the Board; (c) upon the consummation of a Company stockholder-approved merger or consolidation that results in the voting securities of the Company outstanding immediately prior thereto representing (either by remaining outstanding or by being converted into voting securities of the surviving entity) less than fifty percent of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (d) Company stockholders approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of its assets.

2.7.     “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation thereto.

2.8.     “Committee” means the Compensation Committee of the Board, appointed to administer the Plan, as provided in Section 3.

2.9.     “Company” means Caterpillar Inc., a Delaware corporation, and any successor to such entity as provided in Section 18.

2.10.     “Director” means any individual who is a member of the Board.

2.11.     “Disability” means, unless otherwise provided for in an employment, change of control or similar agreement in effect between the Participant and the Company or a Subsidiary or in an Award Document, (a) in the case of an Employee, the Employee qualifying for long-term disability benefits under any long-term disability

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program sponsored by the Company or Subsidiary in which the Employee participates, and (b) in the case of a Director, the inability of the Director to engage in any substantial gainful business activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months, as determined by the Committee, based upon medical evidence.

2.12.     “Effective Date” means the date specified in Section 1.3.

2.13.     “Employee” means any employee of the Company or any Subsidiary.

2.14.     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

2.15.     “Fair Market Value” means, as of any given date, the fair market value of a Share on a particular date determined by such methods or procedures as may be established from time to time by the Committee. Unless otherwise determined by the Committee, the Fair Market Value of a Share as of any date shall be the mean between the high and low prices at which the Share is traded on the New York Stock Exchange for that date or, if no prices are reported for that date, the prices on the next preceding date for which prices were reported. Notwithstanding the foregoing, unless otherwise determined by the Committee, for purposes of Section 6.5(d) of the Plan, Fair Market Value means the actual price at which the Shares used to acquire Shares are sold.

2.16.     “Family Member” means any (a) child; (b) stepchild; (c) grandchild; (d) parent; (e) stepparent; (f) grandparent; (g) spouse; (h) former spouse; (i) sibling; (j) niece; (k) nephew; (l) mother-in-law; (m) father-in-law; (n) son-in-law; (o) daughter-in-law; (p) brother-in-law; or (q) sister-in-law of the Participant (including adoptive relationships). Family Member also shall mean any person sharing in the Participant’s household (other than a tenant or an employee).

2.17.     “Good Reason” means, except as otherwise provided in an Award Document, the occurrence of any of the following circumstances (unless such circumstances are fully corrected by the Company before a Participant’s termination of employment):

(a)     the Company’s assignment of any duties materially inconsistent with the Participant’s position within the Company, or which have a significant adverse alteration in the nature or status of the responsibilities of the Participant’s employment; or

(b)     a material reduction by the Company in the Participant’s annual base salary, unless such reduction is part of a compensation reduction program affecting all similarly situated management employees.

2.18.     “Incentive Stock Option” or “ISO” means the right to purchase Shares pursuant to terms and conditions that provide that such right will be treated as an incentive stock option within the meaning of Code Section 422, as described in Section 6.

2.19.     “Long Service Separation” means, except as otherwise provided in an Award Document, a termination of employment with the Company or a Subsidiary after the attainment of age 55 and the completion of five or more years of continuous service with the Company and or its Subsidiaries. Notwithstanding the foregoing and notwithstanding anything in an Award Document to the contrary, for purposes of determining years of continuous service under this provision, the Committee (or its delegate) may determine, in its discretion, that the service of

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a Participant who became an employee of the Company or a Subsidiary as the result of a corporate merger or acquisition, include service accrued by the Participant with the target company prior to the corporate merger or acquisition.

2.20.     “Named Executive Officer” means a Participant who is one of the group of covered employees as defined in the regulations promulgated under Code Section 162(m), or any successor provision or statute.

2.21.     “Nonqualified Stock Option” or “NQSO” means the right to purchase Shares pursuant to terms and conditions that provide that such right will not be treated as an Incentive Stock Option, as described in Section 6.

2.22.     “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Section 6.

2.23.     “Option Price” means the per share price of a Share available for purchase pursuant to an Option.

2.24.     “Participant” means an Employee, prospective Employee, Director, beneficiary or any other person who has outstanding an Award granted under the Plan, and includes those former Employees and Directors who have certain post-termination rights under the terms of an Award granted under the Plan.

2.25.     “Performance-Based Exception” means the exception for performance-based compensation from the tax deductibility limitations of Code Section 162(m).

2.26.     “Performance Period” means the time period during which performance goals must be achieved with respect to an Award, as determined by the Committee.

2.27.     “Performance Share” means an Award granted to a Participant, as described in Section 9.

2.28.     “Performance Unit” means an Award granted to a Participant, as described in Section 9.

2.29.     “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock is limited in some way, and the Shares are subject to a substantial risk of forfeiture, as provided in Section 8.

2.30.     “Permitted Transferee” means any one or more of the following: (a) Family Members; (b) a trust in which the Participant and/or Family Members have more than fifty percent of the beneficial interest; (c) a foundation in which the Participant and/or Family Members control the management of the assets; or (d) any other entity in which the Participant and/or Family Members own more than fifty percent of the voting interests.

2.31.     “Plan” means the Caterpillar Inc. 2006 Long-Term Incentive Plan, as set forth herein.

2.32.     “Restricted Stock” means an Award of restricted stock or restricted stock units granted to a Participant pursuant to Section 8.

2.33.     “Section 16 Officer” means any Employee who is considered an officer of the Company for purposes of Section 16 of the Exchange Act.

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2.34.     “Share” or “Shares” means shares of common stock of the Company.

2.35.     “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with a related Option, designated as a SAR, pursuant to the terms of Section 7.

2.36.     “Subsidiary” means any partnership, limited liability company, corporation, trust or other entity or association, directly or indirectly, through one or more intermediaries, controlled by the Company. The term “control,” as used in the immediately preceding sentence, means, with respect to a corporation or limited liability company, the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any partnership, trust, other entity or association, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity.

2.37.     “Tandem SAR” means a SAR that is granted in connection with a related Option pursuant to Section 7, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be forfeited).

2.38.     “Non-Tandem SAR” means a SAR that is granted independently of any Options, as described in Section 7.

Section 3.Administration

3.1.     Plan Administration. The Committee, or any other committee appointed by the Board, shall administer the Plan. The Committee or other committee appointed to administer the Plan shall consist of not less than two non-Employee Directors of the Company, within the meaning of Rule 16b-3 of the Exchange Act and not less than two outside directors, within the meaning of Code Section 162(m). The Board may, from time to time, remove members from, or add members to, the Committee. Members of the Board shall fill any vacancies on the Committee. Acts of a majority of the Committee at a meeting at which a quorum is present, or acts reduced to or approved in writing by unanimous consent of the members of the Committee, shall be valid acts of the Committee.

3.2.     Authority of the Committee. Except as limited by law or by the Certificate of Incorporation or Bylaws of the Company, and subject to the provisions herein, the Committee shall have full power to select Employees, prospective Employees and Directors who shall participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any agreement or instrument entered into under the Plan; establish, amend, or waive rules and regulations for the Plan’s administration; and amend the terms and conditions of any outstanding Award to the extent such terms and conditions are within the sole discretion of the Committee as provided in the Plan and subject to Section 16. Further, the Committee shall make all other determinations, which may be necessary or advisable for the administration of the Plan. As permitted by law, the Committee may delegate the authority granted to it herein.

3.3.     Electronic Administration. The Committee may, in its discretion, utilize a system for complete or partial electronic administration of the Plan and may replace any written documents described in the Plan with electronic counterparts, as appropriate.

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3.4.     Decisions Binding. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders and resolutions of the Board shall be final, conclusive and binding on all persons, including the Company, its stockholders, Employees, Participants, and their estates and beneficiaries.

Section 4.Shares Subject to the Plan and Maximum Awards

4.1.     Shares Available for Awards.

(a)     The Shares available for Awards may be either authorized and unissued Shares or Shares held in or acquired for the treasury of the Company. The aggregate number of Shares that may be issued or used for reference purposes under the Plan or with respect to which Awards may be granted shall not exceed forty million (40,000,000) Shares, subject to adjustment as provided in Section 4.3. In addition, seventeen million six hundred thousand (17,600,000) Shares authorized but unissued pursuant to the Caterpillar Inc. 1996 Stock Option and Long-Term Incentive Plan shall be reserved and available for grant under the Plan. Accordingly, the total Shares authorized and available for Awards under the Plan are fifty-seven million six hundred thousand (57,600,000) Shares. Notwithstanding the foregoing, the aggregate number of Shares with respect to which ISOs may be granted shall not exceed the number specified above, and provided further, that no more than an aggregate of thirty-five percent (35%) of the authorized Shares under the Plan may be issued with respect to Awards of Restricted Stock and Awards of Performance Shares.

(b)     Upon:

(i)     a payout of a Non-Tandem SAR or Tandem SAR in the form of cash;

(ii)     a cancellation, termination, expiration, forfeiture, or lapse for any reason (with the exception of the termination of a Tandem SAR upon exercise of the related Options, or the termination of a related Option upon exercise of the corresponding Tandem SAR) of any Award; or

(iii)     payment of an Option Price or payout of any Award with previously acquired Shares or by withholding Shares which otherwise would be acquired on exercise or issued upon such payout (excluding shares withheld for the payment of taxes),

the number of Shares underlying any such Award that were not issued as a result of any of the foregoing actions shall again be available for all purposes of Awards under the Plan (including, without limitation, for purposes of applying the limitations set forth in the last sentence of Section 4.1(a)). In addition, in the case of any Award granted in substitution for an award of a company or business acquired by the Company or a Subsidiary, Shares issued or issuable in connection with such substitute Award shall not be counted against the number of Shares reserved under the Plan, but shall be available under the Plan by virtue of the Company’s assumption of the plan or arrangement of the acquired company or business.

4.2.     Individual Participant Limitations. Unless and until the Committee determines that an Award to a Named Executive Officer shall not be designed to comply with the Performance-Based Exception, the following rules shall apply to grants of such Awards under the Plan:

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(a)     Subject to adjustment as provided in Section 4.3, the maximum aggregate number of Shares (including Options, SARs, Restricted Stock and Performance Shares to be paid out in Shares) that may be granted in any one fiscal year to a Participant shall be eight hundred thousand (800,000) Shares.

(b)     Except as otherwise provided in Section 7.5(b) regarding SAR exercise, the maximum aggregate cash payout (including Performance Units and Performance Shares paid out in cash) with respect to Awards granted in any one fiscal year that may be made to any Participant shall be five million dollars ($5,000,000).

4.3.     Adjustments in Authorized Shares. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368) or any partial or complete liquidation of the Company, an adjustment shall be made in the number and class of Shares available for Awards, the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan and the number of Shares set forth in Sections 4.1 and 4.2, to prevent dilution or enlargement of rights. Such adjustment shall be made in a manner determined by the Committee, in its sole discretion, to be appropriate and equitable; provided, however, that (a) no such adjustment shall cause an increase in the fair value of an Award for purposes of Statement of Financial Accounting Standards No. 123 (revised 2004) or any successor thereto; and (b) the number of Shares subject to any Award shall always be a whole number by rounding any fractional Share (up or down) to the nearest whole Share.

Section 5.Eligibility and Participation

5.1.     Eligibility. Persons eligible to participate in the Plan include all current and future Employees (including officers), persons who have been offered employment by the Company or a Subsidiary (provided that such prospective Employee may not receive any payment or exercise any right relating to an Award until such person begins employment with the Company or Subsidiary), and Directors, as determined by the Committee.

5.2.     Participation. Subject to the provisions of the Plan, the Committee shall determine and designate, from time to time, the Employees, prospective Employees, and Directors to whom Awards shall be granted, the terms of such Awards, and the number of Shares subject to such Award.

5.3.     Foreign Participants. In order to assure the viability of Awards granted to Participants employed in foreign countries, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom. Moreover, the Committee may approve such supplements to, or amendments, restatements, or alternative versions of the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements, or alternative versions shall increase the share limitations contained in Section 4 of the Plan.

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Section 6.Stock Options

6.1.     Grant of Options.

(a)     Option Grant. Subject to the terms and provisions of the Plan, Options may be granted to one or more Participants in such number, upon such terms and provisions, and at any time and from time to time, as determined by the Committee, in its sole discretion. The Committee may grant either Nonqualified Stock Options or (in the case of Options granted to Employees) Incentive Stock Options, and shall have complete discretion in determining the number of Options of each granted to each Participant, subject to the limitations of Section 4. Each Option grant shall be evidenced by a resolution of the Committee approving the Option grant.

(b)     Award Document. All Options shall be evidenced by an Award Document. The Award Document shall specify the Option Price, the term of the Option, the number of Shares subject to the Option, and such other provisions as the Committee shall determine, and which are not inconsistent with the terms and provisions of the Plan. The Award Document shall also specify whether the Option is to be treated as an ISO within the meaning of Code Section 422. If such Option is not designated as an ISO, such Option shall be a NQSO.

6.2.     Option Price. The Committee shall designate the Option Price for each Share subject to an Option under the Plan, provided that such Option Price shall not be less than 100% of the Fair Market Value of Shares subject to an Option on the date the Option is granted. With respect to a Participant who owns, directly or indirectly, more than 10% of the total combined voting power of all classes of the stock of the Company or any Subsidiary, the Option Price of Shares subject to an ISO shall be at least 110% of the Fair Market Value of such Shares on the ISO’s grant date.

6.3.     Term of Options. Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant, but in no event shall be exercisable later than the 10th anniversary of the grant date. Notwithstanding the foregoing, with respect to ISOs, in the case of a Participant who owns, directly or indirectly, more than 10% of the total combined voting power of all classes of the stock of the Company or any Subsidiary, no such ISO shall be exercisable later than the fifth anniversary of the grant date.

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6.4.     Exercise of Options. Options granted under this Section 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant, and shall be set forth in the applicable Award Document. Notwithstanding the preceding sentence, the Fair Market Value of Shares to which ISOs are exercisable for the first time by any Participant during any calendar year (under all plans of the Company and its Subsidiaries) may not exceed $100,000. Any ISOs that become exercisable in excess of such amount shall be deemed NQSOs to the extent of such excess. If the Award Document does not specify the time or times at which the Option shall first become exercisable, such an Option shall become fully vested and exercisable by the Participant on the third anniversary of the grant date.

6.5.     Payment. Options granted under this Section 6 shall be exercised by the delivery of a notice of exercise to the Company (or its designated agent(s)), setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. The Option Price upon exercise of any Option shall be payable to the Company in full either:

(a)     in cash or its equivalent, or

(b)     by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price, or

(c)     by cashless exercise through delivery of irrevocable instructions to a broker to promptly deliver to the Company the amount of proceeds from a sale of shares having a Fair Market Value equal to the purchase price.

6.6.     Termination of Employment or Service as a Director. The Committee, in its sole discretion, shall set forth in the applicable Award Document the extent to which a Participant shall have the right to exercise the Option or Options following termination of his or her employment with the Company or any Subsidiary or following termination of his or her service as a Director. Such provisions need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for such termination, including, but not limited to, termination for Cause or for Good Reason, or reasons relating to the breach or threatened breach of restrictive covenants. Subject to Section 15, in the event that a Participant’s Award Document does not set forth such provisions, the following provisions shall apply:

(a)     Long Service Separation, Death or Disability. If a Participant’s employment with the Company and/or any Subsidiary or service as a Director terminates by reason of Long Service Separation, death or Disability, to the extent that the Option is not exercisable, all Shares covered by his or her Options shall immediately become fully vested and shall remain exercisable until the earlier of (i) the remainder of the term of the Option, or (ii) 60 months from the date of such termination. In the case of the Participant’s death, the Participant’s beneficiary or estate may exercise the Option.

(b)     Termination for Cause. If a Participant’s employment with the Company and/or any Subsidiary or service as a Director terminates for Cause, all Options granted to such Participant shall expire immediately and all rights to purchase Shares (vested or nonvested) under the Options shall cease upon such termination.

(c)     Other Termination. If a Participant’s employment with the Company and/or any Subsidiary or service as a Director terminates for any reason other than Long Service Separation, death, Disability, or for Cause, all Options shall remain exercisable until the earlier of (i) the remainder of the term of the Option, or (ii) 60 days from the date of such termination. In such circumstance, the Option shall only be exercisable to the extent that it was exercisable as of such termination date and shall not be exercisable with respect to any additional Shares.

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Notwithstanding the foregoing or anything herein or in an Award Document to the contrary, the Committee, in its sole discretion, shall have the authority to extend the period during which an Option is exercisable pursuant to this Section 6.6(c) to a period that is no longer than the earlier of (A) the remainder of the term of the Option, or (B) 60 months from the date of the Participant’s termination of employment.

6.7.     Restrictions on Shares. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Section 6 as it may deem advisable, including, without limitation, restrictions under applicable Federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state or foreign securities laws applicable to such Shares.

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6.8.     Transferability of Options.

(a)     Incentive Stock Options. No ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant.

(b)     Nonqualified Stock Options. NQSOs may only be transferred in accordance with this Section 6.8(b).

(i)     Except as otherwise provided in paragraph (ii) below or in an Award Document, no NQSO shall be assignable or transferable by a Participant other than by will, by the laws of descent and distribution or pursuant to a Domestic Relations Order (as such term is defined in Section 414(p)(1)(B) of the Code).

(ii)     NQSOs (whether vested or unvested) held by (A) Participants who are Section 16 Officers; (B) Participants who are Directors; or (C) any Participants who previously held the positions in clauses (A) and (B) may be transferred by gift or by domestic relations order to one or more Permitted Transferees. NQSOs (whether vested or unvested) held by all other Participants and by Permitted Transferees may be transferred by gift or by domestic relations order only to Permitted Transferees upon the prior written approval of the Company’s Director of Compensation + Benefits.

6.9.     Prohibition on Repricing. Except (a) as provided in Section 4.3 or (b) to the extent approved by the stockholders of the Company, the Option Price of an Option may not be changed following the date such Option is granted. Similarly, the exchange of an Option (an “Original Option”) for cash, Shares, or other Awards at a time when the Option Price of such Original Option is equal to or greater than the Fair Market Value of a Share is prohibited. Notwithstanding the preceding sentence, the exchange of an Original Option for a SAR or another Option (a “New Option”) shall be permitted only if: (a) the exchange is approved by the stockholders of the Company and (b) either (i) the grant price of the SAR is greater than the Option Price of the Original Option or (ii) the Option Price of the New Option is greater than the Option Price of the Original Option.

6.10.     Acceleration of Vesting. Notwithstanding anything in this Section 6 to the contrary, the Committee, in its sole discretion, shall have the authority to accelerate the vesting of Options at any time.

Section 7.Stock Appreciation Rights

7.1.     Grant of SARs.

(a)     SAR Grant. Subject to the terms and provisions of the Plan, SARs may be granted to Participants in such number, upon such terms and provisions, and at any time and from time to time, as determined by the Committee in its sole discretion. The Committee may grant Non-Tandem SARs, Tandem SARs, or any combination of these forms of SARs. The Committee shall have complete discretion in determining the number of SARs granted to each Participant (subject to Section 4) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs. The Committee shall designate, at the time of grant, the grant price of a Non-Tandem SAR, which grant price shall not be less than 100% of the Fair Market Value of a Share on the grant date of the SAR. The grant price of Tandem SARs shall equal the Option Price of the related Option.

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(b)     Award Document. All SARs shall be evidenced by an Award Document. The Award Document shall specify the grant price, the term of the SAR, and such other provisions as the Committee shall determine, and which are not inconsistent with the terms and provisions of the Plan.

7.2.     Term of SARs. The term of a SAR granted under the Plan shall be determined by the Committee, in its sole discretion; provided, however, that unless otherwise designated by the Committee, such term shall not exceed ten years from the grant date.

7.3.     Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable. Notwithstanding any other provision of the Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR will expire no later than the expiration of the underlying ISO; (ii) the value of the payout with respect to the Tandem SAR may be for no more than 100% of the difference between the Option Price of the underlying ISO and the Fair Market Value of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the Option Price of the ISO.

7.4.     Exercise of Non-Tandem SARs. Non-Tandem SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them.

7.5.     Payment of SAR Amount.

(a)     Upon exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:

(i)     The excess of the Fair Market Value of a Share on the date of exercise over the grant price; by

(ii)     The number of Shares with respect to which the SAR is exercised.

(b)     Unless otherwise provided in the Award Document, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. If, and to the extent that the payment upon SAR exercise is made in cash, such cash payment shall not be subject to the limitation of Section 4.2(b).

7.6.     Termination of Employment or Service as a Director. The Committee, in its sole discretion, shall set forth in the applicable Award Document the extent to which a Participant shall have the right to exercise the SAR or SARs following termination of his or her employment with the Company or any Subsidiary or following termination of his or her service as a Director. Such provisions need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for such termination, including, but not limited to, termination for Cause or for Good Reason, or reasons relating to the breach or threatened breach of restrictive covenants. Subject to Section 15, in the event that a Participant’s Award Document does not set forth such provisions, the following provisions shall apply:

(a)     Long Service Separation, Death or Disability. If a Participant’s employment with the Company and/or any Subsidiary or service as a Director terminates by reason of Long Service Separation, death or Disability, to the extent that the SARs are not exercisable, all of his or her SARs shall immediately become fully vested and shall remain exercisable until the earlier of (i) the remainder of the term of the SAR, or (ii) 60 months from the

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date of such termination. In the case of the Participant’s death, the Participant’s beneficiary or estate may exercise the SAR.

(b)     Termination for Cause. If a Participant’s employment with the Company and/or any Subsidiary or service as a Director terminates for Cause, all SARs shall expire immediately and all rights thereunder shall cease upon such termination.

(c)     Other Termination. If a Participant’s employment with the Company and/or any Subsidiary or service as a Director terminates for any reason other than Long Service Separation, death, Disability, or for Cause, all SARs shall remain exerciseable until the earlier of (i) the remainder of the term of the SAR, or (ii) 60 days from the date of such termination. In such circumstance, the SAR shall only be exercisable to the extent it was exercisable as of such termination date and shall not be exercisable with respect to any additional SARs. Notwithstanding the foregoing or anything herein or in an Award Document to the contrary, the Committee, in its sole discretion, shall have the authority to extend the period during which a SAR is exercisable pursuant to this Section 76.6(c) to a period that is no longer than the earlier of (A) the remainder of the term of the SAR, or (B) 60 months from the date of the Participant’s termination of employment.

7.7.     Transferability of SARs. SARs may only be transferred in accordance with this Section 7.7.

(a)     Except as otherwise provided in paragraph (b) below or in an Award Document, no SAR shall be assignable or transferable by a Participant other than by will, by the laws of descent and distribution or pursuant to a Domestic Relations Order (as such term is defined in Section 414(p)(1)(B) of the Code).

(b)     SARs held by (i) Participants who are Section 16 Officers; (ii) Participants who are Directors; or (iii) any Participants who previously held the positions in clauses (i) and (ii) may be transferred by gift or by domestic relations order to one or more Permitted Transferees. SARs held by all other Participants and by Permitted Transferees may be transferred by gift or by domestic relations order to Permitted Transferees only upon the prior written approval of the Company’s Director of Compensation and Benefits.

(c)     Notwithstanding the foregoing, with respect to a Tandem SAR granted in connection with an ISO, no such Tandem SAR may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.

7.8.     Prohibition on Repricing. Except (a) as provided in Section 4.3 or (b) to the extent approved by the stockholders of the Company, the grant price of a SAR may not be changed following the date the SAR is granted. Similarly, the exchange of a SAR (an “Original SAR”) for cash, Shares, or other Awards at a time when the grant price of such Original SAR is equal to or greater than the Fair Market Value of a Share is prohibited. Notwithstanding the preceding sentence, the exchange of an Original SAR for an Option or another SAR (a “New SAR”) shall be permitted only if: (a) the exchange is approved by the stockholders of the Company and (b) either (i) the Option Price amount is greater than the grant price of the Original SAR or (ii) the grant price of the New SAR is greater than the grant price of the Original SAR.

7.9.     Acceleration of Vesting. Notwithstanding anything in this Section 7 to the contrary, the Committee, in its sole discretion, shall have the authority to accelerate the vesting of SARs at any time.

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Section 8.Restricted Stock

8.1.     Grant of Restricted Stock.

(a)     Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Restricted Stock to Participants in such amounts as the Committee shall determine.

(b)     Award Document. All grants of Restricted Stock shall be evidenced by an Award Document. The Award Document shall specify the Period or Periods of Restriction, the number of shares of Restricted Stock granted, and such other provisions as the Committee shall determine pursuant to Section 8.2 or otherwise, and which shall not be inconsistent with the terms and provisions of the Plan. If no Period of Restriction is set forth in the Award Document, the transfer and any other restrictions shall lapse (i) to the extent of one-third of the shares (rounded to the nearest whole) covered by the Restricted Stock Award on the third anniversary of the grant date, (ii) to the extent of two-thirds of the shares (rounded to the nearest whole) covered by the Restricted Stock Award on the fourth anniversary of the grant date, and (iii) to the extent of 100% of the shares covered by the Restricted Stock Award on the fifth anniversary of the grant date.

(c)     Limitation on the Committee. Notwithstanding the preceding provisions of Section 8.1(b) and subject to the provisions of the Plan, no more than five percent (5%) of the shares that may be issued as Restricted Stock pursuant to Section 4.1 may have a Period of Restriction as determined by the Committee at the time of grant that will lapse prior to the third anniversary of the grant date. All remaining shares that may be issued with respect to Awards of Restricted Stock pursuant to Section 4.1 shall have a Period of Restriction determined by the Committee at the time of grant that will not lapse until on or after the third anniversary of the grant date. For the avoidance of doubt, this Section 8.1(c) shall not impair the Committee’s ability to accelerate the vesting of Restricted Stock pursuant to Section 8.6 or to make grants that provide that vesting is accelerated upon Long Service Separation, death or Disability pursuant to Section 8.5 and the shares of Restricted Stock for which such acceleration of vesting occurs shall not be considered in applying the limitations set forth in this Section 8.1(c).

8.2.     Other Restrictions. Subject to Section 10 herein, the Committee may impose such other conditions and/or restrictions on any shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including without limitation, a requirement that Shares will not be issued until the end of the applicable Period of Restriction (i.e., a restricted stock unit), a requirement that Participants pay a stipulated purchase price for each share of Restricted Stock, restrictions based upon the achievement of specific performance goals (Company-wide, Subsidiary-wide, divisional, and/or individual), time-based restrictions on vesting, which may or may not be following the attainment of the performance goals, sales restrictions under applicable shareholder agreements or similar agreements, and/or restrictions under applicable Federal or state securities laws. The Company shall retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied. Except as otherwise provided in this Section 8 or in any Award Document, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the applicable Period of Restriction.

8.3.     Voting Rights. Unless otherwise designated by the Committee at the time of grant, Participants to whom Shares of Restricted Stock (but not restricted stock units) have been granted hereunder may exercise full voting rights with respect to those Shares during the Period of Restriction.

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8.4.     Dividends and Other Distributions. Unless otherwise designated by the Committee at the time of grant, Participants holding Shares of Restricted Stock (but not restricted stock units) granted hereunder shall be credited with regular cash dividends paid with respect to the underlying Shares while they are so held during the Period of Restriction. The Committee may apply any restrictions to the dividends that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of Shares of Restricted Stock granted to a Named Executive Officer is designed to comply with the requirements of the Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to such Shares of Restricted Stock, such that the dividends and/or the Shares of Restricted Stock maintain eligibility for the Performance-Based Exception. In the event that any dividend constitutes a derivative security or an equity security pursuant to the rules under Section 16 of the Exchange Act, such dividend shall be subject to a vesting period equal to the remaining vesting period of the Shares of Restricted Stock with respect to which the dividend is paid.

8.5.     Termination of Employment or Service as a Director. The Committee, in its sole discretion, shall set forth in the applicable Award Document the extent to which the Participant shall have the right to receive unvested Restricted Stock following termination of the Participant’s employment with the Company and/or its Subsidiaries or termination of service as a Director. Such provisions need not be uniform among all shares of Restricted Stock issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment including; but not limited to, termination of employment for Cause or for Good Reason, or reasons relating to the breach or threatened breach of restrictive covenants; provided, however that, except in the cases of terminations connected with a Change of Control and terminations by reason of death or Disability, the vesting of Restricted Stock that qualify for the Performance-Based Exception and that are held by Named Executive Officers shall not occur before the time they otherwise would have, but for the employment termination. Subject to Section 15, in the event that a Participant’s Award Document does not set forth such termination provisions, the following termination provisions shall apply:

(a)     Long-Service Separation, Death and Disability. Unless the Award qualifies for the Performance-Based Exception, if a Participant’s employment with the Company and/or any Subsidiary or service as a Director is terminated due to Long Service Separation, death or Disability, all shares of Restricted Stock of such Participant shall immediately become fully vested on the date of such termination and any restrictions shall lapse.

(b)     Other Termination. If a Participant’s employment with the Company and/or any Subsidiary or service as a Director is terminated for any reason other than Long Service Separation, death or Disability, all shares of Restricted Stock that are unvested at the date of termination shall be forfeited to the Company.

8.6.     Acceleration of Vesting. Notwithstanding anything in this Section 8 to the contrary, the Committee, in its sole discretion, shall have the authority to accelerate the vesting of shares of Restricted Stock at any time.

8.7.     Transferability. Except as provided in this Section 8, the shares of Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, voluntarily or involuntarily, until the end of the applicable Period of Restriction established by the Committee and specified in the Award Document, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Award Document. All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant.

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Section 9.Performance Units and Performance Shares

9.1.     Grant of Performance Units/Shares.

(a)     Grant of Performance Unit/Shares. Subject to the terms of the Plan, Performance Units and/or Performance Shares may be granted to Participants in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee, which shall not be inconsistent with the terms and provisions of the Plan and shall be set forth in an Award Document.

(b)     Award Document. All Performance Units and Performance Shares shall be evidenced by an Award Document. The Award Document shall specify the initial value of the Award, the performance goals and the Performance Period, as the Committee shall determine, and which are not inconsistent with the terms and provisions of the Plan.

9.2.     Value of Performance Units/Shares. Each Performance Unit shall have an initial value (which may be $0) that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the grant date. The Committee shall set performance goals in its sole discretion which, depending on the extent to which they are met will determine the number and/or value of Performance Units and/or Performance Shares that will be paid out to the Participant. For purposes of this Section 9, the time period during which the performance goals must be met shall be called a Performance Period. Performance Shares not in excess of five percent of the number of shares that may be issued with respect to Awards of Performance Shares, as provided in Section 4.1, may have a Performance Period as determined by the Committee in its sole discretion, and any other Performance Shares shall have a Performance Period, as determined by the Committee, of not less than one year.

9.3.     Earning of Performance Units/Shares. Subject to the terms of the Plan, after the applicable Performance Period has ended, the holder of Performance Units and/or Performance Shares shall be entitled to receive payout on the number and value of Performance Units and/or Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved, as established by the Committee.

9.4.     Form and Timing of Payment of Performance Units/Shares. Except as provided below, payment of earned Performance Units and/or Performance Shares shall be made in a single lump sum as soon as reasonably practicable following the close of the applicable Performance Period. Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Performance Units and/or Performance Shares in the form of cash or in Shares (or in a combination thereof) which have an aggregate Fair Market Value equal to the value of the earned Performance Units and/or Performance Shares at the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed appropriate by the Committee. At the sole discretion of the Committee, Participants may be entitled to receive any dividends declared with respect to Shares which have been earned in connection with grants of Performance Units and/or Performance Shares which have been earned, but not yet distributed to Participants.

9.5.     Termination of Employment or Service as a Director. The Committee, in its sole discretion, shall set forth in the applicable Award Document the extent to which the Participant shall have the right to receive payment for Performance Units and/or Performance Shares following termination of the Participant’s employment with the Company and/or its Subsidiaries or termination of service as a Director. Such provisions need not be uniform

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among all Performance Units and/or Performance Shares granted pursuant to the Plan, and may reflect distinctions based on the reasons for such termination including; but not limited to, termination for Cause or for Good Reason, or reasons relating to the breach or threatened breach of restrictive covenants. Subject to Section 15, in the event that a Participant’s Award Document does not set forth such termination provisions, the following termination provisions shall apply:

(a)     Long Service Separation, Death or Disability. Subject to Section 15, if a Participant’s employment with the Company and/or any Subsidiary or service as a Director is terminated during a Performance Period due to Long Service Termination, death or Disability, the Participant shall receive a prorated payout of the Performance Units and/or Performance Shares, unless the Committee determines otherwise. The prorated payout shall be determined by the Committee, shall be based upon the length of time that the Participant held the Performance Units and/or Performance Shares during the Performance Period, and shall further be adjusted based on the achievement of the pre-established performance goals. Unless the Committee determines otherwise in the event of a termination due to death, Disability or Long Service Separation, payment of earned Performance Units and/or Performance Shares shall be made at the same time as payments are made to Participants who did not terminate employment during the applicable Performance Period.

(b)     Other Termination. If a Participant’s employment with the Company and/or any Subsidiary or service as a Director is terminated during a Performance Period for any reason other than Long Service Termination, death or Disability all Performance Units and/or Performance Shares shall be forfeited by the Participant to the Company.

9.6.     Nontransferability. Except as otherwise provided in a Participant’s Award Document, Performance Units and/or Performance Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant’s Award Document, a Participant’s rights under the Plan shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s legal representative.

9.7.     Acceleration of Vesting. Notwithstanding anything in this Section 9 to the contrary, the Committee, in its sole discretion, shall have the authority to accelerate the vesting of Performance Units and/or Performance Shares at any time.

Section 10.Performance Measures

10.1.     Performance Measures. Unless and until the Committee proposes for stockholder vote and stockholders approve a change in the general performance measures set forth in this Section 10, the attainment of which may determine the degree of payout and/or vesting with respect to Awards to Named Executive Officers that are designed to qualify for the Performance-Based Exception, the performance goals to be used for purposes of such grants shall be established by the Committee in writing and stated in terms of the attainment of specified levels of or percentage changes in any one or more of the following measurements: (a) revenue; (b) primary or fully-diluted earnings per Share; (c) earnings before interest, taxes, depreciation, and/or amortization; (d) pretax income; (e) cash flow from operations; (f) total cash flow; (g) return on equity; (h) return on invested capital; (i) return on assets; (j) net operating profits after taxes; (k) economic value added; (l) total stockholder return; (m) return on sales; or (n) any individual performance objective which is measured solely in terms of quantifiable targets related to the Company or the Company’s business; or any combination thereof. In addition, such performance goals

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may be based in whole or in part upon the performance of the Company, a Subsidiary, division and/or other operational unit under one or more of such measures.

10.2.     Performance Procedures. The degree of payout and/or vesting of such Awards designed to qualify for the Performance-Based Exception shall be determined based upon the written certification of the Committee as to the extent to which the performance goals and any other material terms and conditions precedent to such payment and/or vesting have been satisfied. The Committee shall have the sole discretion to adjust the determinations of the degree of attainment of the pre-established performance goals; provided, however, that the performance goals applicable to Awards which are designed to qualify for the Performance-Based Exception, and which are held by Named Executive Officers, may not be adjusted so as to increase the payment under the Award (the Committee shall retain the sole discretion to adjust such performance goals upward, or to otherwise reduce the amount of the payment and/or vesting of the Award relative to the pre-established performance goals). In the event that applicable tax and/or securities laws change to permit Committee sole discretion to alter the governing performance measures without obtaining stockholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining stockholder approval. In addition, in the event that the Committee determines that it is advisable to grant Awards which shall not qualify for the Performance-Based Exception, the Committee may make such grants without satisfying the requirements of Code Section 162(m) and, thus, which use performance measures other than those specified above.

Section 11.Award Forfeitures

11.1.     Forfeiture of Options and Other Awards. Each Award granted hereunder shall be subject to the following additional forfeiture conditions, to which the Participant, by accepting an Award hereunder, agrees. If any of the events specified in Section 11.2 occurs (a “Forfeiture Event”), all of the following forfeitures will result:

(a)     The unexercised portion of any Option, whether or not vested, and any other Award not then settled (except for an Award that has not been settled solely due to an elective deferral pursuant to Section 13 by the Participant and otherwise is not forfeitable in the event of any termination of service of the Participant) will be immediately forfeited and canceled upon the occurrence of the Forfeiture Event; and

(b)     The Participant will be obligated to repay to the Company, in cash, within five business days after demand is made therefor by the Company, the total amount of Award Gain (as defined herein) realized by the Participant upon each exercise of an Option or settlement of an Award (regardless of any elective deferral pursuant to Section 13) that occurred on or after (i) the date that is six months before the occurrence of the Forfeiture Event, if the Forfeiture Event occurred while the Participant was employed by the Company or a Subsidiary, or (ii) the date that is six months before the date the Participant’s employment by, or service as a Director with the Company or a Subsidiary terminated, if the Forfeiture Event occurred after the Participant ceased to be so employed.

11.2.     Events Triggering Forfeiture. The forfeitures specified in Section 11.1 will be triggered upon the occurrence of any one of the following Forfeiture Events at any time during the Participant’s employment by or service as a Director with the Company or a Subsidiary or during the one-year period following termination of such employment or service:

(a)     Non-Solicitation. The Participant, for his or her own benefit or for the benefit of any other person, company or entity, directly or indirectly, (i) induces or attempts to induce or hires or otherwise counsels, induces or attempts to induce or hire or otherwise counsel, advise, encourage or solicit any person to leave the employment

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of or the service for the Company or any Subsidiary, (ii) hires or in any manner employs or retains the services of any individual employed by or providing services to the Company or any Subsidiary as of the date of his or her termination of employment, or employed by or providing services to the Company or any Subsidiary subsequent to such termination, (iii) solicits, pursues, calls upon or takes away, any of the customers of the Company or any Subsidiary, (iv) solicits, pursues, calls upon or takes away, any potential customer of the Company or any Subsidiary that has been the subject of a bid, offer or proposal by the Company or any Subsidiary, or of substantial preparation with a view to making such a bid, proposal or offer, within six months before such Participant’s termination of employment with the Company or any Subsidiary, or (v) otherwise interferes with the business or accounts of the Company or any Subsidiary.

(b)     Confidential Information. The Participant discloses to any person or entity or makes use of any “confidential or proprietary information” (as defined below in this subparagraph (b)) for his or her own purpose or for the benefit of any person or entity, except as may be necessary in the ordinary course of employment with or other service to the Company or any Subsidiary. Such “confidential or proprietary information” of the Company or any Subsidiary, includes, but is not limited to, the design, development, operation, building or manufacturing of products manufactured and supplied by the Company and its Subsidiaries, the identity of the Company’s or any Subsidiary’s customers, the identity of representatives of customers with whom the Company or any Subsidiary has dealt, the kinds of services provided by the Company or any Subsidiary to customers and offered to be performed for potential customers, the manner in which such services are performed or offered to be performed, the service needs of actual or prospective customers, pricing information, information concerning the creation, acquisition or disposition of products and services, customer maintenance listings, computer software and hardware applications and other programs, personnel information, information identifying, relating to or concerning investors in the Company or any Subsidiary, joint venture partners of the Company or any Subsidiary, business partners of the Company or any Subsidiary or other entities providing financing to the Company or any Subsidiary, real estate and leasing opportunities, communications and telecommunications operations and processes, zoning and licensing matters, relationships with, or matters involving, landlords and/or property owners, and other trade secrets.

11.3.     Agreement Does Not Prohibit Competition or Other Participant Activities. Although the conditions set forth in this Section 11 shall be deemed to be incorporated into an Award, the Plan does not thereby prohibit the Participant from engaging in any activity, including but not limited to competition with the Company and its Subsidiaries. Rather, the non-occurrence of the Forfeiture Events set forth in Section 11.2 is a condition to the Participant’s right to realize and retain value from his or her compensatory Awards, and the consequence under the Plan if the Participant engages in an activity giving rise to any such Forfeiture Event are the forfeitures specified herein. This provision shall not preclude the Company and the Participant from entering into other written agreements concerning the subject matter of Sections 11.1 and 11.2 and, to the extent any terms of this Section 11 are inconsistent with any express terms of such agreement, this Section 11 shall not be deemed to modify or amend such terms.

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11.4.     Committee Discretion. The Committee may, in its sole discretion, waive in whole or in part the Company’s right to forfeiture under this Section 11, but no such waiver shall be effective unless evidenced by a writing signed by a duly authorized officer of the Company. In addition, the Committee may impose additional conditions on Awards, by inclusion of appropriate provisions in the Award Document. Nothing contained herein shall require the Committee to enforce the forfeiture provisions of this Section 11. Failure to enforce these forfeiture provisions against any individual shall not be construed as a waiver of the Company’s right to forfeiture under this Section 11.

11.5.     Clawback Provision. Notwithstanding any other provision of the Plan to the contrary, including Section 16.1 which prohibits material and adverse changes to any outstanding Award, any Participant who is an officer of the Company whose negligent, intentional or gross misconduct contributes to the Company’s having to restate all or a portion of its financial statements, will be required to forfeit Awards granted under this Plan and repay the Company the total amount of Award Gain realized by the Participant upon the exercise of an Option or settlement of an Award, as determined by the Board of Directors, an authorized committee, or its designee, pursuant to the Caterpillar Inc. Guidelines on Corporate Governance Issues, as adopted on February 14, 2007 and any subsequent amendments. Any Awards granted under this Plan prior to February 14, 2007 are subject to the provisions of this Section 11.5 only with the written consent of the Participant.

Section 12.Beneficiary Designation

12.1.     Beneficiary Designations. Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

Section 13.

Deferrals and Section 409A

13.1    Restrictions on Payments and Distributions.

(a)Restrictions. To the extent that an Award constitutes a deferral of compensation subject to Code Section 409A (for example, certain grants of restricted stock units), payment or distribution of such deferred compensation shall not occur prior to the first to occur of the following events:

(i)The Participant’s Separation from Service, or in the case of a Participant who is a Specified Employee, the date which is six months after the Participant’s Separation from Service;

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(ii)The date the Participant becomes Disabled;

(iii)The Participant’s death;

(iv)A specified time (or pursuant to a fixed schedule) specified at the date of the deferral of compensation;

(v)An Unforeseeable Emergency; or

(vi)To the extent provided by the Secretary of the Treasury, a change in the ownership or effective control of the Company or a Subsidiary or in the ownership of a substantial portion of the assets of the Company or a Subsidiary.

This Section 13.1 restates the restrictions on payments and distributions set forth in Code Section 409A and is intended to impose restrictions on payments and distributions made pursuant to the Plan. This Section 13.1 does not describe the instances in which payments and distributions actually will be made. Rather, payments and distributions will be made only if and when permitted by: (1) the provisions of this Section 13.1 and (2) the terms of the governing Award Document.

(b)Special Definitions. For purposes of this Section 13.1, the following terms shall have the following meanings:

(i)“Disabled” means that a Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment, which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

(ii)“Separation from Service” means a separation from service as defined in Treas. Reg. 1.409A-1(h).

(iii)“Specified Employee” means certain officers and highly compensated employees of the Company and its Subsidiaries as defined in Treas. Reg. 1.409A-1(i), and determined in accordance with such procedures as may be adopted from time to time by the Company.

(iv)“Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Code Section 152 without regard to Code Sections 152(b)(1), (b)(2) and (d)(1)(B)) of the Participant, loss of the Participant’s property due to casualty or some other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Whether an Unforeseeable Emergency has occurred will be determined in accordance with Treas. Reg. 1.409A-3(i)(3).

13.2    Ban on Acceleration. To the extent that an Award constitutes a deferral of compensation subject to Code Section 409A, neither the time nor the schedule of any payment or distribution of such deferred compensation may be accelerated or subject to a further deferral except as provided in Treas. Reg. 1.409A-3(j)(4).

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13.3    Section 409A. Except to the extent specifically provided otherwise by the Committee, Awards under the Plan are intended to satisfy the requirements of Code Section 409A (and the Treasury Department guidance and regulations issued thereunder) so as to avoid the imposition of any additional taxes or penalties under Section 409A of the Code. If the Committee determines that an Award, Award Document, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under Code Section 409A, then unless the Committee specifically provides otherwise, such Award, Award Document, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan and/or Award Document will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Code Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant.

13.4    Deferrals. The Committee may permit a Participant to elect to defer such Participant’s receipt of the payment of cash or the delivery of shares that would otherwise be due to such Participant upon the exercise of any Option or SAR or by virtue of the lapse or waiver of restrictions with respect to restricted stock, or the satisfaction of any requirements or goals with respect to Performance Units/Shares. If any such deferral election is permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals. The rules and procedures regarding such payment deferrals shall be set forth clearly in the Award Document to which the compensation relates. All such deferrals (and rules and procedures) shall comply with Code Section 409A (and the Treasury Department guidance and regulations issued thereunder) and any other applicable law.

Section 14.Rights and Obligations of Parties

14.1.     No Guarantee of Employment or Service Rights. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment at any time, nor confer upon any Participant any right to continue in the employ of the Company or any Subsidiary.

14.2.     Temporary Absence. For purposes of the Plan, temporary absence from employment because of illness, vacation, approved leaves of absence, and transfers of employment among the Company and its Subsidiaries, shall not be considered to terminate employment or to interrupt continuous employment.

14.3.     Participation. No Employee or Director shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to be selected to receive a future Award.

14.4.     Right of Setoff. The Company or any Subsidiary may, to the extent permitted by applicable law, deduct from and set off against any amounts the Company or Subsidiary may owe to the Participant from time to time, including amounts payable in connection with any Award, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such deduction and setoff. By accepting any Award granted hereunder, the Participant agrees to any deduction or setoff under this Section 14.

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14.5.     Section 83(b) Election. No election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Code Section 83(b)) or under a similar provision of the laws of a jurisdiction outside the United States may be made, unless expressly permitted by the terms of the Award Document or by action of the Committee in writing before the making of such election. In any case in which a Participant is permitted to make such an election in connection with an Award, the Participant shall notify the Company of such election within ten days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Code Section 83(b) or other applicable provision.

14.6.     Disqualifying Disposition Notification. If any Participant shall make any disposition of Shares delivered pursuant to the exercise of an Incentive Stock Option under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition within ten days thereof.

Section 15.Change of Control

15.1.     Change of Control. If a Participant’s employment or service with the Company and/or any Subsidiary terminates either without Cause or for Good Reason within the 12 month period following a Change of Control, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges:

(a)     Any and all Options and SARs granted hereunder shall become immediately exercisable, and shall remain exercisable throughout their entire term;

(b)     Any Period of Restriction and other restrictions imposed on Restricted Stock shall lapse; and

(c)     Unless otherwise specified in an Award Document, the maximum payout opportunities attainable under all outstanding Awards of Performance Units and Performance Shares shall be deemed to have been fully earned for the entire Performance Period(s) as of the effective date of the Change of Control. The vesting of all such Awards shall be accelerated as of the effective date of the Change of Control, and in full settlement of such Awards, there shall be paid out in cash to Participants within 30 days following the effective date of the Change of Control the maximum of payout opportunities associated with such outstanding Awards.

Section 16.Amendment, Modification, and Termination

16.1.     Amendment, Modification, and Termination. The Board may amend, suspend or terminate the Plan or the Committee’s authority to grant Awards under the Plan without the consent of stockholders or Participants; provided, however, that any amendment to the Plan shall be submitted to the Company’s stockholders for approval not later than the earliest annual meeting for which the record date is after the date of such Board action if such stockholder approval is required by any federal or state law or regulation or the rules of any stock exchange or automated quotation system on which the Shares may then be listed or quoted and the Board may otherwise, in its sole discretion, determine to submit other amendments to the Plan to stockholders for approval; and provided further, that, without the written consent of an affected Participant, no such Board action may materially and adversely affect the rights of such Participant under any outstanding Award. The Committee shall have no authority to waive or modify any other Award term after the Award has been granted to the extent that the waived or modified term was mandatory under the Plan.

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Section 17.Withholding

17.1.     Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan.

17.2.     Share Withholding. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of Awards granted hereunder, the withholding requirement shall be satisfied by the Company withholding Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which would be imposed on the transaction.

Section 18.Miscellaneous

18.1.     Unfunded Plan. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant or obligation to deliver Shares pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company; provided that the Committee may authorize the creation of trusts and deposit therein cash, Shares, other Awards or other property, or make other arrangements to meet the Company’s obligations under the Plan. Such trusts or other arrangements shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise determines with the consent of each affected Participant. No such funding shall be established that would cause an amount to be taxable under Code Section 409A before it is received by a Participant or cause an amount to be subject to additional tax under such Section.

18.2.     Forfeitures; Fractional Shares. Unless otherwise determined by the Committee, in the event of a forfeiture of an Award with respect to which a Participant paid cash consideration, the Participant shall be repaid the amount of such cash consideration. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

18.3.     Compliance with Code Section 162(m). The Company intends that Options and SARs granted to Named Executive Officers and other Awards designated as Awards to Named Executive Officers shall constitute qualified “performance-based compensation” within the meaning of Code Section 162(m) and regulations thereunder, unless otherwise determined by the Committee at the time of allocation of an Award. Accordingly, the terms of Sections 4.2, 6, 7, 8.5, 8.6, 9 and 10, including the definitions of Named Executive Officer and other terms used therein, shall be interpreted in a manner consistent with Code Section 162(m) and regulations thereunder. The foregoing notwithstanding, because the Committee cannot determine with certainty whether a given Participant will be a Named Executive Officer with respect to a fiscal year that has not yet been completed, the Committee may, in its discretion, extend the terms of such Sections to any Participant that the Committee deems appropriate. If any provision of the Plan or any Award Document relating to a Performance Award that is designated as intended to comply with Code Section 162(m) does not comply or is inconsistent with the requirements of Code Section 162(m) or regulations thereunder, such provision shall be construed or deemed

25

amended to the extent necessary to conform to such requirements, and no provision shall be deemed to confer upon the Committee or any other person sole discretion to increase the amount of compensation otherwise payable in connection with any such Award upon attainment of the applicable performance objectives.

18.4.     Gender and Number; Headings. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural. Headings are included for the convenience of reference only and shall not be used in the interpretation or construction of any such provision contained in the Plan.

18.5.     Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

18.6.     Successors. All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect merger, consolidation, purchase of all or substantially all of the business and/or assets of the Company or otherwise.

18.7.     Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

18.8.     Securities Law Compliance. With respect to “insiders,” transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. An “insider” includes any individual who is, on the relevant date, an officer, Director or more than 10% beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act.

18.9.     Governing Law. To the extent not preempted by Federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Illinois without regard to the conflict of law provisions thereof.

* * * * *

26

EX-31.1

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, Douglas R. Oberhelman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Caterpillar Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 1, 2013	/s/Douglas R. Oberhelman	Chairman of the Board and Chief Executive Officer
	(Douglas R. Oberhelman)

EX-31.2

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, Bradley M. Halverson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Caterpillar Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 1, 2013	/s/Bradley M. Halverson	Group President and Chief Financial Officer
	(Bradley M. Halverson)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Caterpillar Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 1, 2013	/s/Douglas R. Oberhelman	Chairman of the Board and Chief Executive Officer
	(Douglas R. Oberhelman)
November 1, 2013	/s/Bradley M. Halverson	Group President and Chief Financial Officer
	(Bradley M. Halverson)

A signed original of this written statement required by Section 906 has been provided to Caterpillar Inc. and will be retained by Caterpillar Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-95

Exhibit 95

Third Quarter, 2013 Mine Safety Disclosures

Mine or Operating Name/MSHA Identification Number

Contractor ID

Section 104 S&S Citations (#)

Section 104(b) Orders (#)

Section 104(d) Citations and Orders (#)

Section 110(b)(2) Violations (#)

Section 107(a) Orders (#)

Total Dollar Value of MSHA Assessments Proposed ($)

Total Number of Mining Related Fatalities (#)

Received Notice of Pattern Violations Under Section 104(e) (yes/no)

Received Notice of Potential to Have Pattern Under Section 104(e) (yes/no)

Legal Actions Pending as of Last Day of Period (#)

Legal Actions Initiated During Period (#)

Legal Actions Resolved During Period (#)

Bear Run, 1202422

Z8T

1

Dolet Hills, 1601031

Z8T

1

North Antelope Rochelle, 4801353

Z8T

1

Republic Energy, 4609054

Z8T

1

Total

1

3

XML

Divestitures and Assets Held for Sale (Details 2) (Bucyrus Distribution Business, USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Bucyrus Distribution Business
Current assets held for sale
Inventories	$ 63	$ 30
Current assets	63	30
Non-current assets held for sale
Property, plant and equipment - net	3	0
Intangible assets	101	32
Goodwill	64	52
Non-current assets	$ 168	$ 84

XML

Cat Financial Financing Activities (Details 2) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Receivables [Abstract]
Period after which Unpaid Installments are Considered as Past Due (in days)	30 days
Period after which collection of future income is considered as not probable (in days)	120 days
Aging related to loans and finance leases
31-60 Days Past Due	$ 200	$ 188
61-90 Days Past Due	119	70
91+ Days Past Due	396	418
Total Past Due	715	676
Current	23,430	22,632
Total Finance Receivables	24,145	23,308
91+ Still Accruing	31	28
North America
Aging related to loans and finance leases
Total Finance Receivables	8,676	8,030
Europe
Aging related to loans and finance leases
Total Finance Receivables	2,942	2,740
Asia Pacific
Aging related to loans and finance leases
Total Finance Receivables	3,558	3,789
Mining
Aging related to loans and finance leases
Total Finance Receivables	2,294	1,974
Latin America
Aging related to loans and finance leases
Total Finance Receivables	3,556	3,603
Caterpillar Power Finance
Aging related to loans and finance leases
Total Finance Receivables	3,119	3,172
Customer
Aging related to loans and finance leases
Total Finance Receivables	20,275	19,424
Investment in loans and finance leases on non-accrual status	497	513
Customer | North America
Aging related to loans and finance leases
31-60 Days Past Due	33	35
61-90 Days Past Due	9	8
91+ Days Past Due	29	52
Total Past Due	71	95
Current	6,256	5,872
Total Finance Receivables	6,327	5,967
91+ Still Accruing	0	0
Investment in loans and finance leases on non-accrual status	39	59
Customer | Europe
Aging related to loans and finance leases
31-60 Days Past Due	32	23
61-90 Days Past Due	16	9
91+ Days Past Due	36	36
Total Past Due	84	68
Current	2,682	2,487
Total Finance Receivables	2,766	2,555
91+ Still Accruing	8	6
Investment in loans and finance leases on non-accrual status	41	38
Customer | Asia Pacific
Aging related to loans and finance leases
31-60 Days Past Due	65	53
61-90 Days Past Due	42	19
91+ Days Past Due	60	54
Total Past Due	167	126
Current	2,826	2,912
Total Finance Receivables	2,993	3,038
91+ Still Accruing	16	18
Investment in loans and finance leases on non-accrual status	51	36
Customer | Mining
Aging related to loans and finance leases
31-60 Days Past Due	0	0
61-90 Days Past Due	0	1
91+ Days Past Due	12	12
Total Past Due	12	13
Current	2,281	1,960
Total Finance Receivables	2,293	1,973
91+ Still Accruing	0	0
Investment in loans and finance leases on non-accrual status	31	12
Customer | Latin America
Aging related to loans and finance leases
31-60 Days Past Due	63	62
61-90 Days Past Due	34	19
91+ Days Past Due	189	138
Total Past Due	286	219
Current	2,491	2,500
Total Finance Receivables	2,777	2,719
91+ Still Accruing	5	0
Investment in loans and finance leases on non-accrual status	194	148
Customer | Caterpillar Power Finance
Aging related to loans and finance leases
31-60 Days Past Due	7	15
61-90 Days Past Due	18	14
91+ Days Past Due	69	126
Total Past Due	94	155
Current	3,025	3,017
Total Finance Receivables	3,119	3,172
91+ Still Accruing	1	4
Investment in loans and finance leases on non-accrual status	141	220
Dealer
Aging related to loans and finance leases
Total Finance Receivables	3,870	3,884
Investment in loans and finance leases on non-accrual status	0	0
Dealer | North America
Aging related to loans and finance leases
31-60 Days Past Due
61-90 Days Past Due
91+ Days Past Due
Total Past Due	0	0
Current	2,349	2,063
Total Finance Receivables	2,349	2,063
91+ Still Accruing
Dealer | Europe
Aging related to loans and finance leases
31-60 Days Past Due
61-90 Days Past Due
91+ Days Past Due
Total Past Due	0	0
Current	176	185
Total Finance Receivables	176	185
91+ Still Accruing
Dealer | Asia Pacific
Aging related to loans and finance leases
31-60 Days Past Due
61-90 Days Past Due
91+ Days Past Due
Total Past Due	0	0
Current	565	751
Total Finance Receivables	565	751
91+ Still Accruing
Dealer | Mining
Aging related to loans and finance leases
31-60 Days Past Due
61-90 Days Past Due
91+ Days Past Due
Total Past Due	0	0
Current	1	1
Total Finance Receivables	1	1
91+ Still Accruing
Dealer | Latin America
Aging related to loans and finance leases
31-60 Days Past Due
61-90 Days Past Due
91+ Days Past Due	1
Total Past Due	1	0
Current	778	884
Total Finance Receivables	779	884
91+ Still Accruing	1
Dealer | Caterpillar Power Finance
Aging related to loans and finance leases
Total Finance Receivables	$ 0	$ 0

XML

Cat Financial Financing Activities (Details 4) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Receivables [Abstract]
Period after which finance receivables are considered non-performing (in days)	120 days
Finance Receivables
Ending balance-recorded investment in finance receivables	$ 24,145	$ 23,308
Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	23,648	22,795
Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	497	513
North America
Finance Receivables
Ending balance-recorded investment in finance receivables	8,676	8,030
North America | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	8,637	7,971
North America | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	39	59
Europe
Finance Receivables
Ending balance-recorded investment in finance receivables	2,942	2,740
Europe | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	2,901	2,702
Europe | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	41	38
Asia Pacific
Finance Receivables
Ending balance-recorded investment in finance receivables	3,558	3,789
Asia Pacific | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	3,507	3,753
Asia Pacific | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	51	36
Mining
Finance Receivables
Ending balance-recorded investment in finance receivables	2,294	1,974
Mining | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	2,263	1,962
Mining | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	31	12
Latin America
Finance Receivables
Ending balance-recorded investment in finance receivables	3,556	3,603
Latin America | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	3,362	3,455
Latin America | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	194	148
Caterpillar Power Finance
Finance Receivables
Ending balance-recorded investment in finance receivables	3,119	3,172
Caterpillar Power Finance | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	2,978	2,952
Caterpillar Power Finance | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	141	220
Customer
Finance Receivables
Ending balance-recorded investment in finance receivables	20,275	19,424
Customer | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	19,778	18,911
Customer | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	497	513
Customer | North America
Finance Receivables
Ending balance-recorded investment in finance receivables	6,327	5,967
Customer | North America | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	6,288	5,908
Customer | North America | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	39	59
Customer | Europe
Finance Receivables
Ending balance-recorded investment in finance receivables	2,766	2,555
Customer | Europe | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	2,725	2,517
Customer | Europe | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	41	38
Customer | Asia Pacific
Finance Receivables
Ending balance-recorded investment in finance receivables	2,993	3,038
Customer | Asia Pacific | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	2,942	3,002
Customer | Asia Pacific | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	51	36
Customer | Mining
Finance Receivables
Ending balance-recorded investment in finance receivables	2,293	1,973
Customer | Mining | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	2,262	1,961
Customer | Mining | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	31	12
Customer | Latin America
Finance Receivables
Ending balance-recorded investment in finance receivables	2,777	2,719
Customer | Latin America | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	2,583	2,571
Customer | Latin America | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	194	148
Customer | Caterpillar Power Finance
Finance Receivables
Ending balance-recorded investment in finance receivables	3,119	3,172
Customer | Caterpillar Power Finance | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	2,978	2,952
Customer | Caterpillar Power Finance | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	141	220
Dealer
Finance Receivables
Ending balance-recorded investment in finance receivables	3,870	3,884
Dealer | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	3,870	3,884
Dealer | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables	0	0
Dealer | North America
Finance Receivables
Ending balance-recorded investment in finance receivables	2,349	2,063
Dealer | North America | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	2,349	2,063
Dealer | North America | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables
Dealer | Europe
Finance Receivables
Ending balance-recorded investment in finance receivables	176	185
Dealer | Europe | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	176	185
Dealer | Europe | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables
Dealer | Asia Pacific
Finance Receivables
Ending balance-recorded investment in finance receivables	565	751
Dealer | Asia Pacific | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	565	751
Dealer | Asia Pacific | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables
Dealer | Mining
Finance Receivables
Ending balance-recorded investment in finance receivables	1	1
Dealer | Mining | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	1	1
Dealer | Mining | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables
Dealer | Latin America
Finance Receivables
Ending balance-recorded investment in finance receivables	779	884
Dealer | Latin America | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	779	884
Dealer | Latin America | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables
Dealer | Caterpillar Power Finance
Finance Receivables
Ending balance-recorded investment in finance receivables	0	0
Dealer | Caterpillar Power Finance | Performing
Finance Receivables
Ending balance-recorded investment in finance receivables	0	0
Dealer | Caterpillar Power Finance | Nonperforming
Finance Receivables
Ending balance-recorded investment in finance receivables

XML

Available-For-Sale Securities

9 Months Ended

Sep. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Available-For-Sale Securities

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 investments are primarily 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.

	September 30, 2013						December 31, 2012
(Millions of dollars)	Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value		Cost Basis		Unrealized Pretax Net Gains (Losses)			Fair Value
Government debt
U.S. treasury bonds	$	11	$	—	$	11	$	10	$	—		$	10
Other U.S. and non-U.S. government bonds	125		1		126		144		2			146
Corporate bonds
Corporate bonds	648		24		672		626		38			664
Asset-backed securities	75		—		75		96		—			96
Mortgage-backed debt securities
U.S. governmental agency	336		1		337		291		8			299
Residential	21		—		21		26		(1		)	25
Commercial	87		6		93		117		10			127
Equity securities
Large capitalization value	158		73		231		147		38			185
Smaller company growth	22		23		45		22		12			34
Total	$	1,483	$	128	$	1,611	$	1,479	$	107		$	1,586

During the three months ended September 30, 2013 and 2012, there were no charges for other-than-temporary declines in the market values of securities. During the nine months ended September 30, 2013 and 2012, charges for other-than-temporary declines in the market values of securities were $1 million. These charges were accounted for as realized losses and were included in Other income (expense) in the Consolidated Statement of Results of Operations. The cost basis for the impacted securities was adjusted to reflect these charges.

Investments in an unrealized loss position that are not other-than-temporarily impaired:
	September 30, 2013
	Less than 12 months1				12 months or more1				Total
(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate bonds
Corporate bonds	$	174	$	2	$	—	$	—	$	174	$	2
Asset-backed securities	4		—		20		2		24		2
Mortgage-backed debt securities
U.S. governmental agency	145		4		56		1		201		5
Equity securities
Large capitalization value	15		1		2		—		17		1
Total	$	338	$	7	$	78	$	3	$	416	$	10

	December 31, 2012
	Less than 12 months1				12 months or more1				Total
(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate bonds
Asset-backed securities	$	—	$	—	$	20	$	3	$	20	$	3
Mortgage-backed debt securities
U.S. governmental agency	84		1		15		—		99		1
Residential	—		—		14		1		14		1
Equity securities
Large capitalization value	25		2		10		1		35		3
Total	$	109	$	3	$	59	$	5	$	168	$	8

¹  Indicates length of time that individual securities have been in a continuous unrealized loss position.

Corporate Bonds.  The unrealized losses on our investments in corporate bonds and asset-backed securities relate to changes in interest rates and credit-related yield spreads since time of purchase.  We do not intend to sell the investments and it is not likely that we will be required to sell the investments before recovery of their amortized cost basis.  We do not consider these investments to be other-than-temporarily impaired as of September 30, 2013.

Mortgage-Backed Debt Securities.  The unrealized losses on our investments in mortgage-backed securities and mortgage-related asset-backed securities relate mainly to the continuation of elevated housing delinquencies, default rates and higher market yields since the time of purchase.  We do not intend to sell the investments and it is not likely that we will be required to sell these investments before recovery of their amortized cost basis.  We do not consider these investments to be other-than-temporarily impaired as of September 30, 2013.

Equity Securities.  Cat Insurance maintains a well-diversified equity portfolio consisting of two specific mandates:  large capitalization value stocks and smaller company growth stocks.  U.S. equity valuations were generally higher during the third quarter of 2013 on generally favorable employment and housing data.  The unrealized losses on investments in equity securities relate to uneven sector participation in the market recovery. We do not consider these investments to be other-than-temporarily impaired as of September 30, 2013.

The cost basis and fair value of the available-for-sale debt securities at September 30, 2013, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay and creditors may have the right to call obligations.

	September 30, 2013
(Millions of dollars)	Cost Basis		Fair Value
Due in one year or less	$	211	$	214
Due after one year through five years	589		611
Due after five years through ten years	28		29
Due after ten years	31		30
U.S. governmental agency mortgage-backed securities	336		337
Residential mortgage-backed securities	21		21
Commercial mortgage-backed securities	87		93
Total debt securities – available-for-sale	$	1,303	$	1,335

Sales of Securities:
	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2013		2012		2013		2012
Proceeds from the sale of available-for-sale securities	$	90	$	66	$	297	$	243
Gross gains from the sale of available-for-sale securities	$	2	$	1	$	4	$	4
Gross losses from the sale of available-for-sale securities	$	1	$	—	$	2	$	—

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Derivative Financial Instruments and Risk Management (Details 5) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Offsetting Liabilities
Gross Amount of Recognized Liabilities	$ (69)	$ (144)
Gross Amounts Offset in the Statement of Financial Postion	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	(69)	(144)
Financial Instruments	61	71
Cash Collateral Pledged	0	0
Net Amount of Liabilities	(8)	(73)
Machinery and Power Systems
Offsetting Liabilities
Gross Amount of Recognized Liabilities	(56)	(129)
Gross Amounts Offset in the Statement of Financial Postion	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	(56)	(129)
Financial Instruments	52	59
Cash Collateral Pledged	0	0
Net Amount of Liabilities	(4)	(70)
Financial Products
Offsetting Liabilities
Gross Amount of Recognized Liabilities	(13)	(15)
Gross Amounts Offset in the Statement of Financial Postion	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	(13)	(15)
Financial Instruments	9	12
Cash Collateral Pledged	0	0
Net Amount of Liabilities	$ (4)	$ (3)

XML

Consolidated Statement of Comprehensive Income (Parenthetical) (Parentheticals) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Statement of Comprehensive Income [Abstract]
Foreign currency translation, net of tax (provision)/benefit	$ 33	$ 11	$ 41	$ (5)
Current year actuarial gain (loss), net of tax (provision)/benefit	2	91	(14)	83
Amortization of actuarial (gain) loss, net of tax (provision)/benefit	(67)	(61)	(201)	(181)
Current year prior service credit (cost), net of tax (provision)/benefit	0	(3)	0	(1)
Amortization of prior service (credit) cost, net of tax (provision)/benefit	5	4	14	12
Amortization of transition (asset) obligation, net of tax (provision)/benefit	(1)	0	(1)	0
Derivative financial instruments, Gains (losses) deferred, net of tax (provision)/benefit	(15)	5	(2)	21
Derivative financial instruments, (Gains) losses reclassified to earnings, net of tax (provision)/benefit	(5)	(5)	(24)	(6)
Available-for-sale securities, Gains (losses) deferred, net of tax (provision)/benefit	(6)	(8)	(8)	(13)
Available-for-sale securities, (Gains) losses reclassified to earnings, net of tax (provision)/benefit	$ 0	$ 0	$ 0	$ 0

XML

Basis of Presentation and Nature of Operations

9 Months Ended

Sep. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and Nature of Operations

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, 2013 and 2012, (b) the consolidated comprehensive income for the three and nine month periods ended September 30, 2013 and 2012, (c) the consolidated financial position at September 30, 2013 and December 31, 2012, (d) the consolidated changes in stockholders’ equity for the nine month periods ended September 30, 2013 and 2012, and (e) the consolidated cash flow for the nine month periods ended September 30, 2013 and 2012.  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.  Certain amounts for prior periods have been reclassified to conform to the current period financial statement presentation.

We have revised previously reported cash flows from operating and financing activities for the nine month period ended September 30, 2012 to correct for the impact of interest payments on certain Cat Financial bank borrowings. Cash provided by operating activities decreased from the amounts previously reported by $44 million for the nine month period ended September 30, 2012, and cash provided by financing activities increased by the same amount. Revisions will be made to previously reported amounts in future filings. Cash provided by operating activities will decrease by $57 million and $53 million for the years ended December 31, 2012 and 2011, respectively. Cash provided by financing activities will increase by the same amounts for the respective periods. Management has concluded that the impact was not material to any quarterly or annual period.

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, 2012 (2012 Form 10-K).

The December 31, 2012 financial position data included herein is derived from the audited consolidated financial statements included in the 2012 Form 10-K but does not include all disclosures required by U.S. GAAP.

B.  Nature of Operations

Information in our financial statements and related commentary are presented in the following categories:

Machinery and Power Systems – Represents the aggregate total of Construction Industries, Resource Industries, Power Systems, and All Other segments and related corporate items and eliminations.

Financial Products – Primarily includes the company’s Financial Products Segment.  This category includes Caterpillar Financial Services Corporation (Cat Financial), Caterpillar Insurance Holdings Inc. (Cat Insurance) and their respective subsidiaries.

XML

Segment Information

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Segment Information

Segment Information

A. Basis for segment information

Our Executive Office is comprised of five Group Presidents, a Senior Vice President and a CEO. Group Presidents are accountable for a related set of end-to-end businesses that they manage.  The Senior Vice President leads the Caterpillar Enterprise System Group, which was formed during the second quarter of 2013 with the goal of improving our manufacturing and supply chain capabilities, driving sustained improvements in customer deliveries, improving operational efficiencies and building on recent product quality improvements. The CEO allocates resources and manages performance at the Group President level.  As such, the CEO serves as our Chief Operating Decision Maker and operating segments are primarily based on the Group President reporting structure.

Three of our operating segments, Construction Industries, Resource Industries and Power Systems, are led by Group Presidents.  One operating segment, Financial Products, is led by a Group President who has responsibility for Corporate Services.  Corporate Services is a cost center primarily responsible for the performance of certain support functions globally and to provide centralized services; it does not meet the definition of an operating segment.  The Caterpillar Enterprise System Group is also a cost center and does not meet the definition of an operating segment. One Group President leads a smaller operating segment that is included in the All Other operating segment. 

B. Description of segments

We have five operating segments, of which four are reportable segments.  Following is a brief description of our reportable segments and the business activities included in the All Other operating segment:

Construction Industries:  A segment primarily responsible for supporting customers using machinery in infrastructure and building construction applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing, and sales and product support. The product portfolio includes backhoe loaders, small wheel loaders, small track-type tractors, skid steer loaders, multi-terrain loaders, mini excavators, compact wheel loaders, select work tools, small, medium and large track excavators, wheel excavators, medium wheel loaders, medium track-type tractors, track-type loaders, motor graders and pipe layers. In addition, Construction Industries has responsibility for Power Systems and three wholly-owned dealers in Japan and an integrated manufacturing cost center. Inter-segment sales are a source of revenue for this segment.

Resource Industries: A segment primarily responsible for supporting customers using machinery in mining and quarrying applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes large track-type tractors, large mining trucks, underground mining equipment, electric rope shovels, draglines, hydraulic shovels, drills, highwall miners, tunnel boring equipment, large wheel loaders, off-highway trucks, articulated trucks, wheel tractor scrapers, wheel dozers, select work tools, forestry products, paving products, industrial and waste products, machinery components and electronics and control systems. Resource Industries also manages areas that provide services to other parts of the company, including integrated manufacturing and research and development. In addition, segment profit includes the impact from divestiture of portions of the Bucyrus distribution business and the acquisition of ERA Mining Machinery Limited, including its wholly-owned subsidiary Zhengzhou Siwei Mechanical & Electrical Manufacturing Co., Ltd., commonly known as Siwei, which was completed during the second quarter of 2012. Siwei primarily designs, manufactures, sells and supports underground coal mining equipment in China. Inter-segment sales are a source of revenue for this segment.

Power Systems:  A segment primarily responsible for supporting customers using reciprocating engines, turbines and related parts across industries serving electric power, industrial, petroleum and marine applications as well as rail-related businesses. Responsibilities include business strategy, product design, product management, development, manufacturing, marketing, sales and product support of reciprocating engine powered generator sets, integrated systems used in the electric power generation industry, reciprocating engines and integrated systems and solutions for the marine and petroleum industries; reciprocating engines supplied to the industrial industry as well as Caterpillar machinery; the business strategy, product design, product management, development, manufacturing, marketing, sales and product support of turbines and turbine-related services; the development, manufacturing, remanufacturing, maintenance, leasing and service of diesel-electric locomotives and components and other rail-related products and services. Inter-segment sales are a source of revenue for this segment.

Financial Products Segment:  Provides financing to customers and dealers for the purchase and lease of Caterpillar and other equipment, as well as some financing for Caterpillar sales to dealers.  Financing plans include operating and finance leases, installment sale contracts, working capital loans and wholesale financing plans. The segment also provides various forms of insurance to customers and dealers to help support the purchase and lease of our equipment.

All Other: Primarily includes activities such as: the remanufacturing of Cat® engines and components and remanufacturing services for other companies as well as the product management, development, manufacturing, marketing and product support of undercarriage, specialty products, hardened bar stock components and ground engaging tools primarily for Caterpillar products; logistics services; the product management, development, marketing, sales and product support of on-highway vocational trucks for North America; distribution services responsible for dealer development and administration, dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts. On July 31, 2012, we sold a majority interest in Caterpillar's third party logistics business. Inter-segment sales are a source of revenue for this segment. Results for the All Other operating segment are included as a reconciling item between reportable segments and consolidated external reporting.

C. Segment measurement and reconciliations

There are several methodology differences between our segment reporting and our external reporting.  The following is a list of the more significant methodology differences:

• Machinery and Power Systems segment net assets generally include inventories, receivables, property, plant and equipment, goodwill, intangibles, accounts payable, and customer advances.  Liabilities other than accounts payable and customer advances are generally managed at the corporate level and are not included in segment operations.  Financial Products Segment assets generally include all categories of assets.

• Segment inventories and cost of sales are valued using a current cost methodology.

• Goodwill allocated to segments is amortized using a fixed amount based on a 20 year useful life.  This methodology difference only impacts segment assets; no goodwill amortization expense is included in segment profit. In addition, only a portion of goodwill for certain acquisitions made in 2011 or later has been allocated to segments.

• The present value of future lease payments for certain Machinery and Power Systems operating leases is included in segment assets.  The estimated financing component of the lease payments is excluded.

• Currency exposures for Machinery and Power Systems are generally managed at the corporate level and the effects of changes in exchange rates on results of operations within the year are not included in segment profit.  The net difference created in the translation of revenues and costs between exchange rates used for U.S. GAAP reporting and exchange rates used for segment reporting are recorded as a methodology difference.

• Postretirement benefit expenses are split; segments are generally responsible for service and prior service costs, with the remaining elements of net periodic benefit cost included as a methodology difference.

• Machinery and Power Systems segment profit is determined on a pretax basis and excludes interest expense, gains and losses on interest rate swaps and other income/expense items.  Financial Products Segment profit is determined on a pretax basis and includes other income/expense items.

Reconciling items are created based on accounting differences between segment reporting and our consolidated external reporting. Please refer to pages 34 to 39 for financial information regarding significant reconciling items.  Most of our reconciling items are self-explanatory given the above explanations.  For the reconciliation of profit, we have grouped the reconciling items as follows:

• Corporate costs:  These costs are related to corporate requirements and strategies that are considered to be for the benefit of the entire organization.

• Methodology differences:  See previous discussion of significant accounting differences between segment reporting and consolidated external reporting.

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

Reportable Segments
Three Months Ended September 30,
(Millions of dollars)
	2013
	External sales and revenues		Inter- segment sales and revenues		Total sales and revenues		Depreciation and amortization		Segment profit		Segment assets at September 30		Capital expenditures
Construction Industries	$	4,547	$	68	$	4,615	$	145	$	262	$	8,489	$	143
Resource Industries	3,004		208		3,212		192		409		11,703		106
Power Systems	4,922		471		5,393		161		883		9,013		125
Machinery and Power Systems	$	12,473	$	747	$	13,220	$	498	$	1,554	$	29,205	$	374
Financial Products Segment	807		—		807		203		218		37,239		473
Total	$	13,280	$	747	$	14,027	$	701	$	1,772	$	66,444	$	847
	2012
	External sales and revenues		Inter- segment sales and revenues		Total sales and revenues		Depreciation and amortization		Segment profit		Segment assets at December 31		Capital expenditures
Construction Industries	$	4,904	$	102	$	5,006	$	144	$	459	$	10,393	$	247
Resource Industries	5,214		253		5,467		179		1,113		13,455		229
Power Systems	5,317		597		5,914		157		943		9,323		244
Machinery and Power Systems	$	15,435	$	952	$	16,387	$	480	$	2,515	$	33,171	$	720
Financial Products Segment	776		—		776		179		190		36,563		432
Total	$	16,211	$	952	$	17,163	$	659	$	2,705	$	69,734	$	1,152

Reportable Segments
Nine Months Ended September 30,
(Millions of dollars)
	2013
	External sales and revenues		Inter- segment sales and revenues		Total sales and revenues		Depreciation and amortization		Segment profit		Segment assets at September 30		Capital expenditures
Construction Industries	$	13,594	$	262	$	13,856	$	426	$	863	$	8,489	$	403
Resource Industries	10,251		661		10,912		558		1,436		11,703		358
Power Systems	14,590		1,328		15,918		468		2,436		9,013		390
Machinery and Power Systems	$	38,435	$	2,251	$	40,686	$	1,452	$	4,735	$	29,205	$	1,151
Financial Products Segment	2,408		—		2,408		571		724		37,239		1,244
Total	$	40,843	$	2,251	$	43,094	$	2,023	$	5,459	$	66,444	$	2,395
	2012
	External sales and revenues		Inter- segment sales and revenues		Total sales and revenues		Depreciation and amortization		Segment profit		Segment assets at December 31		Capital expenditures
Construction Industries	$	15,306	$	355	$	15,661	$	414	$	1,763	$	10,393	$	597
Resource Industries	15,382		909		16,291		510		3,707		13,455		603
Power Systems	15,815		1,952		17,767		442		2,737		9,323		610
Machinery and Power Systems	$	46,503	$	3,216	$	49,719	$	1,366	$	8,207	$	33,171	$	1,810
Financial Products Segment	2,301		—		2,301		530		583		36,563		1,232
Total	$	48,804	$	3,216	$	52,020	$	1,896	$	8,790	$	69,734	$	3,042

Reconciliation of Sales and revenues:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidating Adjustments				Consolidated Total
Three Months Ended September 30, 2013
Total external sales and revenues from reportable segments	$	12,473		$	807	$	—			$	13,280
All Other operating segment	219			—		—				219
Other	(14		)	18		(80		)	1	(76		)
Total sales and revenues	$	12,678		$	825	$	(80	)		$	13,423
Three Months Ended September 30, 2012
Total external sales and revenues from reportable segments	$	15,435		$	776	$	—			$	16,211
All Other operating segment	318			—		—				318
Other	(14		)	20		(90		)	1	(84		)
Total sales and revenues	$	15,739		$	796	$	(90	)		$	16,445
1  Elimination of Financial Products revenues from Machinery and Power Systems.

Reconciliation of Sales and revenues:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidating Adjustments				Consolidated Total
Nine Months Ended September 30, 2013
Total external sales and revenues from reportable segments	$	38,435		$	2,408	$	—			$	40,843
All Other operating segment	647			—		—				647
Other	(34		)	54		(256		)	1	(236		)
Total sales and revenues	$	39,048		$	2,462	$	(256	)		$	41,254
Nine Months Ended September 30, 2012
Total external sales and revenues from reportable segments	$	46,503		$	2,301	$	—			$	48,804
All Other operating segment	1,246			—		—				1,246
Other	(38		)	52		(264		)	1	(250		)
Total sales and revenues	$	47,711		$	2,353	$	(264	)		$	49,800
1  Elimination of Financial Products revenues from Machinery and Power Systems.

Reconciliation of Consolidated profit before taxes:
(Millions of dollars)	Machinery and Power Systems			Financial Products			Consolidated Total
Three Months Ended September 30, 2013
Total profit from reportable segments	$	1,554		$	218		$	1,772
All Other operating segment	170			—			170
Cost centers	42			—			42
Corporate costs	(376		)	—			(376		)
Timing	77			—			77
Methodology differences:
Inventory/cost of sales	(36		)	—			(36		)
Postretirement benefit expense	(174		)	—			(174		)
Financing costs	(120		)	—			(120		)
Equity in (profit) loss of unconsolidated affiliated companies	1			—			1
Currency	(32		)	—			(32		)
Other income/expense methodology differences	(58		)	—			(58		)
Other methodology differences	(1		)	(4		)	(5		)
Total consolidated profit before taxes	$	1,047		$	214		$	1,261
Three Months Ended September 30, 2012
Total profit from reportable segments	$	2,515		$	190		$	2,705
All Other operating segment	482			—			482
Cost centers	9			—			9
Corporate costs	(366		)	—			(366		)
Timing	(30		)	—			(30		)
Methodology differences:
Inventory/cost of sales	9			—			9
Postretirement benefit expense	(177		)	—			(177		)
Financing costs	(130		)	—			(130		)
Equity in (profit) loss of unconsolidated affiliated companies	(5		)	—			(5		)
Currency	20			—			20
Interest rate swaps	2			—			2
Other income/expense methodology differences	(64		)	—			(64		)
Other methodology differences	(9		)	4			(5		)
Total consolidated profit before taxes	$	2,256		$	194		$	2,450

Reconciliation of Consolidated profit before taxes:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidated Total
Nine Months Ended September 30, 2013
Total profit from reportable segments	$	4,735		$	724	$	5,459
All Other operating segment	547			—		547
Cost centers	100			—		100
Corporate costs	(1,160		)	—		(1,160		)
Timing	58			—		58
Methodology differences:
Inventory/cost of sales	(139		)	—		(139		)
Postretirement benefit expense	(505		)	—		(505		)
Financing costs	(361		)	—		(361		)
Equity in (profit) loss of unconsolidated affiliated companies	1			—		1
Currency	(71		)	—		(71		)
Other income/expense methodology differences	(178		)	—		(178		)
Other methodology differences	(20		)	10		(10		)
Total consolidated profit before taxes	$	3,007		$	734	$	3,741
Nine Months Ended September 30, 2012
Total profit from reportable segments	$	8,207		$	583	$	8,790
All Other operating segment	888			—		888
Cost centers	32			—		32
Corporate costs	(1,126		)	—		(1,126		)
Timing	(318		)	—		(318		)
Methodology differences:
Inventory/cost of sales	(26		)	—		(26		)
Postretirement benefit expense	(508		)	—		(508		)
Financing costs	(357		)	—		(357		)
Equity in (profit) loss of unconsolidated affiliated companies	(12		)	—		(12		)
Currency	160			—		160
Interest rate swaps	2			—		2
Other income/expense methodology differences	(199		)	—		(199		)
Other methodology differences	(3		)	1		(2		)
Total consolidated profit before taxes	$	6,740		$	584	$	7,324

Reconciliation of Assets:
(Millions of dollars)	Machinery and Power Systems			Financial Products			Consolidating Adjustments			Consolidated Total
September 30, 2013
Total assets from reportable segments	$	29,205		$	37,239		$	—		$	66,444
All Other operating segment	1,442			—			—			1,442
Items not included in segment assets:
Cash and short-term investments	4,108			—			—			4,108
Intercompany receivables	243			—			(243		)	—
Investment in Financial Products	4,769			—			(4,769		)	—
Deferred income taxes	3,883			—			(490		)	3,393
Goodwill and intangible assets	3,567			—			—			3,567
Property, plant and equipment – net and other assets	1,057			—			—			1,057
Operating lease methodology difference	(287		)	—			—			(287		)
Liabilities included in segment assets	10,504			—			—			10,504
Inventory methodology differences	(2,610		)	—			—			(2,610		)
Other	(132		)	(151		)	(63		)	(346		)
Total assets	$	55,749		$	37,088		$	(5,565	)	$	87,272
December 31, 2012
Total assets from reportable segments	$	33,171		$	36,563		$	—		$	69,734
All Other operating segment	1,499			—			—			1,499
Items not included in segment assets:
Cash and short-term investments	3,306			—			—			3,306
Intercompany receivables	303			—			(303		)	—
Investment in Financial Products	4,433			—			(4,433		)	—
Deferred income taxes	3,926			—			(516		)	3,410
Goodwill and intangible assets	3,145			—			—			3,145
Property, plant and equipment – net and other assets	668			—			—			668
Operating lease methodology difference	(329		)	—			—			(329		)
Liabilities included in segment assets	11,293			—			—			11,293
Inventory methodology differences	(2,949		)	—			—			(2,949		)
Other	(182		)	(107		)	(132		)	(421		)
Total assets	$	58,284		$	36,456		$	(5,384	)	$	89,356

Reconciliations of Depreciation and amortization:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidated Total
Three Months Ended September 30, 2013
Total depreciation and amortization from reportable segments	$	498		$	203	$	701
Items not included in segment depreciation and amortization:
All Other operating segment	43			—		43
Cost centers	36			—		36
Other	(7		)	6		(1		)
Total depreciation and amortization	$	570		$	209	$	779
Three Months Ended September 30, 2012
Total depreciation and amortization from reportable segments	$	480		$	179	$	659
Items not included in segment depreciation and amortization:
All Other operating segment	41			—		41
Cost centers	23			—		23
Other	(9		)	6		(3		)
Total depreciation and amortization	$	535		$	185	$	720

Reconciliations of Depreciation and amortization:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidated Total
Nine Months Ended September 30, 2013
Total depreciation and amortization from reportable segments	$	1,452		$	571	$	2,023
Items not included in segment depreciation and amortization:
All Other operating segment	127			—		127
Cost centers	104			—		104
Other	(9		)	18		9
Total depreciation and amortization	$	1,674		$	589	$	2,263
Nine Months Ended September 30, 2012
Total depreciation and amortization from reportable segments	$	1,366		$	530	$	1,896
Items not included in segment depreciation and amortization:
All Other operating segment	125			—		125
Cost centers	64			—		64
Other	(32		)	17		(15		)
Total depreciation and amortization	$	1,523		$	547	$	2,070

Reconciliations of Capital expenditures:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidating Adjustments			Consolidated Total
Three Months Ended September 30, 2013
Total capital expenditures from reportable segments	$	374		$	473	$	—		$	847
Items not included in segment capital expenditures:
All Other operating segment	88			—		—			88
Cost centers	41			—		—			41
Timing	5			—		—			5
Other	(18		)	18		(15		)	(15		)
Total capital expenditures	$	490		$	491	$	(15	)	$	966
Three Months Ended September 30, 2012
Total capital expenditures from reportable segments	$	720		$	432	$	—		$	1,152
Items not included in segment capital expenditures:
All Other operating segment	75			—		—			75
Cost centers	16			—		—			16
Timing	(40		)	—		—			(40		)
Other	8			35		(15		)	28
Total capital expenditures	$	779		$	467	$	(15	)	$	1,231

Reconciliations of Capital expenditures:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidating Adjustments			Consolidated Total
Nine Months Ended September 30, 2013
Total capital expenditures from reportable segments	$	1,151		$	1,244	$	—		$	2,395
Items not included in segment capital expenditures:
All Other operating segment	200			—		—			200
Cost centers	115			—		—			115
Timing	531			—		—			531
Other	(94		)	66		(50		)	(78		)
Total capital expenditures	$	1,903		$	1,310	$	(50	)	$	3,163
Nine Months Ended September 30, 2012
Total capital expenditures from reportable segments	$	1,810		$	1,232	$	—		$	3,042
Items not included in segment capital expenditures:
All Other operating segment	229			—		—			229
Cost centers	119			—		—			119
Timing	281			—		—			281
Other	(115		)	109		(139		)	(145		)
Total capital expenditures	$	2,324		$	1,341	$	(139	)	$	3,526

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Accumulated Other Comprehensive Income (Loss) (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
Other income (expense)	$ (24)		$ (17)		$ (79)		$ 141
Interest expense of Financial Products	(178)		(197)		(552)		(599)
Tax (provision) benefit	(310)		(753)		(943)		(2,314)
Reclassifications net of tax	946	[1]	1,699	[1]	2,786	[1]	4,984	[1]
Reclassification out of Accumulated Other Comprehensive Income
Reclassifications net of tax	(128)				(403)
Reclassification out of Accumulated Other Comprehensive Income | Pension and other postretirement benefits
Amortization of actuarial gain (loss)	(196)				(589)
Amortization of prior service credit (cost)	14				41
Amortization of transition asset (obligation)	(1)				(2)
Reclassifications before tax	(183)				(550)
Tax (provision) benefit	63				188
Reclassifications net of tax	(120)				(362)
Reclassification out of Accumulated Other Comprehensive Income | Derivative financial instruments
Reclassifications before tax	(14)				(66)
Tax (provision) benefit	5				24
Reclassifications net of tax	(9)				(42)
Reclassification out of Accumulated Other Comprehensive Income | Derivative financial instruments | Foreign exchange contracts
Other income (expense)	(12)				(60)
Reclassification out of Accumulated Other Comprehensive Income | Derivative financial instruments | Interest rate contracts | Machinery and Power Systems
Other income (expense)	(1)				(2)
Reclassification out of Accumulated Other Comprehensive Income | Derivative financial instruments | Interest rate contracts | Financial Products
Interest expense of Financial Products	(1)				(4)
Reclassification out of Accumulated Other Comprehensive Income | Available-for-sale securities
Other income (expense)	1				1
Tax (provision) benefit	0				0
Reclassifications net of tax	$ 1				$ 1

[1] 1 Profit attributable to common stockholders.

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Intangible Assets and Goodwill (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended	1 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2013 Johan Walter Berg AB	Sep. 30, 2013 Customer Relationships	Dec. 31, 2012 Customer Relationships	Sep. 30, 2013 Intellectual Property	Dec. 31, 2012 Intellectual Property	Sep. 30, 2013 Other	Dec. 31, 2012 Other
Intangible assets
Weighted Amortizable Life (in years)			13 years		13 years		15 years	15 years	11 years	12 years	10 years	10 years
Gross Carrying Amount	$ 4,783		$ 4,783		$ 4,822		$ 2,685	$ 2,756	$ 1,816	$ 1,767	$ 282	$ 299
Accumulated Amortization	(1,083)		(1,083)		(824)		(497)	(377)	(455)	(342)	(131)	(105)
Net	3,700		3,700		3,998		2,188	2,379	1,361	1,425	151	194
Indefinite-lived intangible assets - In-process research & development	18		18		18
Total intangible assets, net	3,718		3,718		4,016
Total intangible assets, gross carrying amount	4,801		4,801		4,840
Finite-lived Intangible Assets Acquired						66
Intangible assets reclassified to held for sale and/or divested							123
Accumulated amortization on held for sale intangible assets							17
Amortization expense	91	101	276	294
2013	369		369
2014	374		374
2015	372		372
2016	360		360
2017	358		358
Thereafter	$ 2,161		$ 2,161

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Postretirement Benefits

9 Months Ended

Sep. 30, 2013

Compensation and Retirement Disclosure [Abstract]

Postretirement Benefits

Postretirement Benefits

A.  Pension and postretirement benefit costs

In February 2012, we announced the closure of the Electro-Motive Diesel facility located in London, Ontario. As a result of the closure, we recognized a $37 million other postretirement benefits curtailment gain. This excludes a $21 million loss of a third-party receivable for other postretirement benefits that was eliminated due to the closure. In addition, a $10 million special termination benefit expense was recognized related to statutory pension benefits required to be paid to certain affected employees. As a result, a net gain of $6 million related to the facility closure was recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations for the nine months ended September 30, 2012.

In August 2012, we announced changes to our U.S. hourly pension plan, which impacted certain hourly employees. For the impacted employees, pension benefit accruals were frozen on January 1, 2013 or will freeze on January 1, 2016, at which time employees will become eligible for various provisions of company sponsored 401(k) plans including a matching contribution and an annual employer contribution. The plan changes resulted in a curtailment and required a remeasurement as of August 31, 2012. The curtailment and the remeasurement resulted in a net increase in our Liability for postemployment benefits of $243 million and a net loss of $153 million, net of tax, recognized in Accumulated other comprehensive income (loss). The increase in the liability was primarily due to a decline in the discount rate. Also, the curtailment resulted in expense of $7 million which was recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations for the three and nine months ended September 30, 2012.

(Millions of dollars)	U.S. Pension Benefits						Non-U.S. Pension Benefits						Other Postretirement Benefits
	September 30,						September 30,						September 30,
	2013			2012			2013			2012			2013			2012
For the three months ended:
Components of net periodic benefit cost:
Service cost	$	49		$	46		$	31		$	26		$	24		$	23
Interest cost	147			152			43			44			48			55
Expected return on plan assets	(208		)	(204		)	(59		)	(53		)	(14		)	(15		)
Amortization of:
Transition obligation (asset)	—			—			—			—			1			1
Prior service cost (credit) 1	4			5			—			1			(18		)	(18		)
Net actuarial loss (gain) 1	136			126			33			24			27			25
Net periodic benefit cost	128			125			48			42			68			71
Adjustment for subsidiary pension plan 2	31			—			—			—			—			—
Curtailments, settlements and special termination benefits 3	—			7			—			6			—			—
Total cost included in operating profit	$	159		$	132		$	48		$	48		$	68		$	71
For the nine months ended:
Components of net periodic benefit cost:
Service cost	$	147		$	138		$	93		$	82		$	79		$	69
Interest cost	436			460			128			135			146			166
Expected return on plan assets	(624		)	(610		)	(176		)	(160		)	(42		)	(47		)
Amortization of:
Transition obligation (asset)	—			—			—			—			2			2
Prior service cost (credit)1	13			15			1			1			(55		)	(51		)
Net actuarial loss (gain) 1	409			374			99			72			81			75
Net periodic benefit cost	381			377			145			130			211			214
Adjustment for subsidiary pension plan 2	31			—			—			—			—			—
Curtailments, settlements and special termination benefits 3	—			7			3			28			—			(40		)
Total cost included in operating profit	$	412		$	384		$	148		$	158		$	211		$	174
Weighted-average assumptions used to determine net cost:
Discount rate	3.7		%	4.3		%	3.7		%	4.3		%	3.7		%	4.3		%
Expected return on plan assets	7.8		%	8.0		%	6.7		%	7.1		%	7.8		%	8.0		%
Rate of compensation increase	4.5		%	4.5		%	3.9		%	3.9		%	4.4		%	4.4		%

¹  Prior service cost (credit) and net actuarial loss (gain) for both pension and other postretirement benefits are generally amortized using the straight-line method over the average remaining service period to the full retirement eligibility date of employees expected to receive benefits from the plan. For pension plans in which all or almost all of the plan's participants are inactive and other postretirement benefit plans in which all or almost all of the plan's participants are fully eligible for benefits under the plan, prior service cost (credit) and net actuarial loss (gain) are amortized using the straight-line method over the remaining life expectancy of those participants.

²  Charge to recognize a previously unrecorded liability related to a subsidiary's pension plans.

³  Curtailments, settlements and special termination benefits were recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations.

We made $118 million and $398 million of contributions to our pension plans during the three and nine months ended September 30, 2013, respectively. We currently anticipate full-year 2013 contributions of approximately $500 million, all of which are required. We made $195 million and $488 million of contributions to our pension plans during the three and nine months ended September 30, 2012, respectively.

B.  Defined contribution benefit costs

Total company costs related to our defined contribution plans were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2013		2012		2013		2012
U.S. Plans	$	74	$	62	$	218	$	196
Non-U.S. Plans	16		15		47		46
	$	90	$	77	$	265	$	242

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Employee Separation Charges (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Dec. 31, 2012
Employee Separation Charges [Roll Forward]
Liability balance at beginning of period		$ 29	$ 90
Increase in liability (separation charges)	34	57	94
Reduction in liability (payments and other adjustments)		(43)	(155)
Liability balance at end of period	$ 43	$ 43	$ 29

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Stock-Based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-based compensation expense, before tax (in dollars)	$ 64	$ 69	$ 196	$ 204
Stock-based compensation awards
Granted, Stock options (in shares)			4,276,060	3,224,203
Fair Value Per Award, Stock options (in dollars per share)			$ 28.34	$ 39.20
Stock price on the date of grant (in dollars per share)	$ 89.75	$ 110.09	$ 89.75	$ 110.09
Assumptions used in determining the fair value of the stock-based awards
Weighted-average dividend yield (as a percent)			2.13%	2.16%
Weighted-average volatility (as a percent)			30.60%	35.00%
Volatilities, low end of range (as a percent)			23.40%	33.30%
Volatilities, high end of range (as a percent)			40.60%	40.40%
Risk-free interest rates, low end of range (as a percent)			0.16%	0.17%
Risk-free interest rates, high end of range (as a percent)			1.88%	2.00%
Weighted-average expected lives (in years)			8 years	7 years
Unrecognized compensation cost related to nonvested stock-based compensation awards (in dollars)	$ 232		$ 232
Term of amortization of unrecognized compensation cost over weighted-average remaining requisite service periods (in years)			1 year 11 months
RSUs
Stock-based compensation awards
Granted (in shares)			1,614,870	1,429,939
Fair Value Per Award (in dollars per share)			$ 84.05	$ 104.61

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Redeemable Noncontrolling Interest - Caterpillar Japan Ltd. (Details) In Millions, unless otherwise specified	1 Months Ended		9 Months Ended
	Apr. 30, 2012 USD ($)	Apr. 30, 2012 JPY (¥)	Sep. 30, 2013 USD ($)	Sep. 30, 2012 USD ($)	Apr. 02, 2012	Aug. 01, 2008
Redeemable Noncontrolling Interest Disclosure Abstract
Caterpillar majority percentage ownership (as a percent)					100.00%	67.00%
MHI minority percentage ownership (as a percent)						33.00%
Additional ownership percentage by Caterpillar (as a percent)					33.00%
Cash paid to acquire remaining equity interest	$ 444	¥ 36,500	$ 0	$ 444

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Intangible Assets and Goodwill (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Goodwill
Goodwill	$ 6,968		$ 6,968
Goodwill reclassified to held for sale and/or divested			47
Changes in carrying amount of goodwill by reportable segment:
Goodwill, beginning of period			7,544
Impairments, beginning of period			(602)
Net goodwill, beginning of period			6,942
Goodwill Acquired			109
Held for sale and business divestitures			(47)
Goodwill impairment charge	0	0	0	0
Other adjustments			(36)
Goodwill, end of period	7,570		7,570
Impairments, end of period	(602)		(602)
Net goodwill, end of period	6,968		6,968
Johan Walter Berg AB
Goodwill
Goodwill	109		109
Changes in carrying amount of goodwill by reportable segment:
Net goodwill, end of period	109		109
Construction Industries
Goodwill
Goodwill	336		336
Changes in carrying amount of goodwill by reportable segment:
Net goodwill, beginning of period			382
Goodwill Acquired			0
Held for sale and business divestitures			0
Other adjustments			(46)
Net goodwill, end of period	336		336
Resource Industries
Goodwill
Goodwill	3,921		3,921
Changes in carrying amount of goodwill by reportable segment:
Goodwill, beginning of period			4,559
Impairments, beginning of period			(602)
Net goodwill, beginning of period			3,957
Goodwill Acquired			0
Held for sale and business divestitures			(37)
Other adjustments			1
Goodwill, end of period	4,523		4,523
Impairments, end of period	(602)		(602)
Net goodwill, end of period	3,921		3,921
Power Systems
Goodwill
Goodwill	2,594		2,594
Changes in carrying amount of goodwill by reportable segment:
Net goodwill, beginning of period			2,486
Goodwill Acquired			109
Held for sale and business divestitures			(10)
Other adjustments			9
Net goodwill, end of period	2,594		2,594
Other
Goodwill
Goodwill	117		117
Changes in carrying amount of goodwill by reportable segment:
Net goodwill, beginning of period			117
Goodwill Acquired			0
Held for sale and business divestitures			0
Other adjustments			0
Net goodwill, end of period	$ 117		$ 117

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Postretirement Benefits (Tables)

9 Months Ended

Sep. 30, 2013

Compensation and Retirement Disclosure [Abstract]

Components of net periodic cost and weighted-average assumptions used to determine net cost

(Millions of dollars)	U.S. Pension Benefits						Non-U.S. Pension Benefits						Other Postretirement Benefits
	September 30,						September 30,						September 30,
	2013			2012			2013			2012			2013			2012
For the three months ended:
Components of net periodic benefit cost:
Service cost	$	49		$	46		$	31		$	26		$	24		$	23
Interest cost	147			152			43			44			48			55
Expected return on plan assets	(208		)	(204		)	(59		)	(53		)	(14		)	(15		)
Amortization of:
Transition obligation (asset)	—			—			—			—			1			1
Prior service cost (credit) 1	4			5			—			1			(18		)	(18		)
Net actuarial loss (gain) 1	136			126			33			24			27			25
Net periodic benefit cost	128			125			48			42			68			71
Adjustment for subsidiary pension plan 2	31			—			—			—			—			—
Curtailments, settlements and special termination benefits 3	—			7			—			6			—			—
Total cost included in operating profit	$	159		$	132		$	48		$	48		$	68		$	71
For the nine months ended:
Components of net periodic benefit cost:
Service cost	$	147		$	138		$	93		$	82		$	79		$	69
Interest cost	436			460			128			135			146			166
Expected return on plan assets	(624		)	(610		)	(176		)	(160		)	(42		)	(47		)
Amortization of:
Transition obligation (asset)	—			—			—			—			2			2
Prior service cost (credit)1	13			15			1			1			(55		)	(51		)
Net actuarial loss (gain) 1	409			374			99			72			81			75
Net periodic benefit cost	381			377			145			130			211			214
Adjustment for subsidiary pension plan 2	31			—			—			—			—			—
Curtailments, settlements and special termination benefits 3	—			7			3			28			—			(40		)
Total cost included in operating profit	$	412		$	384		$	148		$	158		$	211		$	174
Weighted-average assumptions used to determine net cost:
Discount rate	3.7		%	4.3		%	3.7		%	4.3		%	3.7		%	4.3		%
Expected return on plan assets	7.8		%	8.0		%	6.7		%	7.1		%	7.8		%	8.0		%
Rate of compensation increase	4.5		%	4.5		%	3.9		%	3.9		%	4.4		%	4.4		%

¹  Prior service cost (credit) and net actuarial loss (gain) for both pension and other postretirement benefits are generally amortized using the straight-line method over the average remaining service period to the full retirement eligibility date of employees expected to receive benefits from the plan. For pension plans in which all or almost all of the plan's participants are inactive and other postretirement benefit plans in which all or almost all of the plan's participants are fully eligible for benefits under the plan, prior service cost (credit) and net actuarial loss (gain) are amortized using the straight-line method over the remaining life expectancy of those participants.

²  Charge to recognize a previously unrecorded liability related to a subsidiary's pension plans.

³  Curtailments, settlements and special termination benefits were recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations.

Company costs related to U.S. and non-U.S. defined contribution plans

Total company costs related to our defined contribution plans were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2013		2012		2013		2012
U.S. Plans	$	74	$	62	$	218	$	196
Non-U.S. Plans	16		15		47		46
	$	90	$	77	$	265	$	242

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Fair Value Measurements

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

A.Fair value measurements

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

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

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

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

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

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

Fair value measurement includes the consideration of nonperformance risk.  Nonperformance risk refers to the risk that an obligation (either by a counterparty or Caterpillar) will not be fulfilled.  For 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 (certain Level 2 and Level 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 sales, risk-free yield curves and prices of similarly rated bonds.

Derivative financial instruments

The fair value of interest rate swap derivatives is primarily based on models that utilize the appropriate market-based forward swap curves and zero-coupon interest rates to determine discounted cash flows.  The fair value of foreign currency and commodity forward, option and cross currency contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward rate.

Guarantees

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

Assets and liabilities measured on a recurring basis at fair value, primarily related to Financial Products, included in our Consolidated Statement of Financial Position as of September 30, 2013 and December 31, 2012 are summarized below:

(Millions of dollars)	September 30, 2013
	Level 1		Level 2		Level 3		Total Assets / Liabilities, at Fair Value
Assets
Available-for-sale securities
Government debt
U.S. treasury bonds	$	11	$	—	$	—	$	11
Other U.S. and non-U.S. government bonds	—		126		—		126
Corporate bonds
Corporate bonds	—		672		—		672
Asset-backed securities	—		75		—		75
Mortgage-backed debt securities
U.S. governmental agency	—		337		—		337
Residential	—		21		—		21
Commercial	—		93		—		93
Equity securities
Large capitalization value	231		—		—		231
Smaller company growth	45		—		—		45
Total available-for-sale securities	287		1,324		—		1,611
Derivative financial instruments, net	—		186		—		186
Total Assets	$	287	$	1,510	$	—	$	1,797
Liabilities
Guarantees	$	—	$	—	$	15	$	15
Total Liabilities	$	—	$	—	$	15	$	15

(Millions of dollars)	December 31, 2012
	Level 1		Level 2		Level 3		Total Assets / Liabilities, at Fair Value
Assets
Available-for-sale securities
Government debt
U.S. treasury bonds	$	10	$	—	$	—	$	10
Other U.S. and non-U.S. government bonds	—		146		—		146
Corporate bonds
Corporate bonds	—		664		—		664
Asset-backed securities	—		96		—		96
Mortgage-backed debt securities
U.S. governmental agency	—		299		—		299
Residential	—		25		—		25
Commercial	—		127		—		127
Equity securities
Large capitalization value	185		—		—		185
Smaller company growth	34		—		—		34
Total available-for-sale securities	229		1,357		—		1,586
Derivative financial instruments, net	—		154		—		154
Total Assets	$	229	$	1,511	$	—	$	1,740
Liabilities
Guarantees	$	—	$	—	$	14	$	14
Total Liabilities	$	—	$	—	$	14	$	14

Below are roll-forwards of liabilities measured at fair value using Level 3 inputs for the nine months ended September 30, 2013 and 2012.  These instruments were valued using pricing models that, in management’s judgment, reflect the assumptions of a marketplace participant.

(Millions of dollars)	Guarantees
Balance at December 31, 2012	$	14
Issuance of guarantees	6
Expiration of guarantees	(5		)
Balance at September 30, 2013	$	15
Balance at December 31, 2011	$	7
Acquisitions	6
Issuance of guarantees	7
Expiration of guarantees	(3		)
Balance at September 30, 2012	$	17

In addition to the amounts above, Cat Financial impaired loans are subject to measurement at fair value on a nonrecurring basis. A loan is considered impaired when management determines that collection of contractual amounts due is not probable.  In these cases, an allowance for credit losses may be established based primarily on the fair value of associated collateral.  As the collateral’s fair value is based on observable market prices and/or current appraised values, the impaired loans are classified as Level 2 measurements. Cat Financial had impaired loans with a fair value of $109 million and $117 million as of September 30, 2013 and December 31, 2012, respectively.  

B.Fair values of financial instruments

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

Cash and short-term investments

Carrying amount approximated fair value.

Restricted cash and short-term investments

Carrying amount approximated fair value.  Restricted cash and short-term investments are included in Prepaid expenses and other current assets in the Consolidated Statement of Financial Position.

Finance receivables

Fair value was estimated by discounting the future cash flows using current rates, representative of receivables with similar remaining maturities.

Wholesale inventory receivables

Fair value was estimated by discounting the future cash flows using current rates, representative of receivables with similar remaining maturities.

Short-term borrowings

Carrying amount approximated fair value.

Long-term debt

Fair value for fixed and floating rate debt was estimated based on quoted market prices.

Please refer to the table below for the fair values of our financial instruments.

Fair Value of Financial Instruments
	September 30, 2013				December 31, 2012
(Millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Levels	Reference
Assets
Cash and short-term investments	$	6,357	$	6,357	$	5,490	$	5,490	1
Restricted cash and short-term investments	50		50		53		53		1
Available-for-sale securities	1,611		1,611		1,586		1,586		1 & 2	Note 8
Finance receivables – net (excluding finance leases 1)	16,077		15,952		15,404		15,359		2	Note 16
Wholesale inventory receivables – net (excluding finance leases 1)	1,616		1,542		1,674		1,609		2	Note 16
Foreign currency contracts – net	51		51		—		—		2	Note 4
Interest rate swaps – net	136		136		219		219		2	Note 4
Commodity contracts – net	—		—		1		1		2	Note 4
Liabilities
Short-term borrowings	5,847		5,847		5,287		5,287		1
Long-term debt (including amounts due within one year)
Machinery and Power Systems	9,061		10,337		9,779		11,969		2
Financial Products	24,629		25,239		25,077		26,063		2
Foreign currency contracts – net	—		—		66		66		2	Note 4
Commodity contracts – net	1		1		—		—		2	Note 4
Guarantees	15		15		14		14		3	Note 10

¹  Total excluded items have a net carrying value at September 30, 2013 and December 31, 2012 of $8,132 million and $7,959 million, respectively.

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Redeemable Noncontrolling Interest - Caterpillar Japan Ltd.

9 Months Ended

Sep. 30, 2013

Redeemable Noncontrolling Interest Disclosure Abstract

Redeemable Noncontrolling Interest - Caterpillar Japan Ltd.

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 Mitsubishi Heavy Industries' (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) and we consolidated its financial statements.  On April 2, 2012, we redeemed the remaining 33 percent interest at its carrying amount, resulting in Caterpillar becoming the sole owner of Cat Japan. Caterpillar paid $444 million (36.5 billion Japanese Yen) to acquire the remaining equity interest held in Cat Japan by MHI.

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Employee Separation Charges (Tables)

9 Months Ended

Sep. 30, 2013

Employee separation charges [Abstract]

Summary of separation activity

The following table summarizes the 2012 and 2013 separation activity:

(Millions of dollars)
	Total
Liability balance at December 31, 2011	$	90
Increase in liability (separation charges)	94
Reduction in liability (payments and other adjustments)	(155		)
Liability balance at December 31, 2012	$	29
Increase in liability (separation charges)	57
Reduction in liability (payments and other adjustments)	(43		)
Liability balance at September 30, 2013	$	43

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Inventories (Tables)

9 Months Ended

Sep. 30, 2013

Inventory Disclosure [Abstract]

Inventories

Inventories (principally using the last-in, first-out (LIFO) method) are comprised of the following:

(Millions of dollars)	September 30, 2013		December 31, 2012
Raw materials	$	3,138	$	3,573
Work-in-process	2,749		2,920
Finished goods	7,221		8,767
Supplies	284		287
Total inventories	$	13,392	$	15,547

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Profit Per Share (Tables)

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Computations of profit per share

Computations of profit per share:	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions except per share data)	2013		2012		2013		2012
Profit for the period (A) 1:	$	946	$	1,699	$	2,786	$	4,984
Determination of shares (in millions):
Weighted-average number of common shares outstanding (B)	639.3		653.6		647.6		652.0
Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price	12.6		15.1		13.7		17.7
Average common shares outstanding for fully diluted computation (C) 2	651.9		668.7		661.3		669.7
Profit per share of common stock:
Assuming no dilution (A/B)	$	1.48	$	2.60	$	4.30	$	7.64
Assuming full dilution (A/C) 2	$	1.45	$	2.54	$	4.21	$	7.44
Shares outstanding as of September 30 (in millions)					636.4		653.9

¹  Profit attributable to common stockholders.

²  Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

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Derivative Financial Instruments and Risk Management (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Foreign currency cash flow hedges, maximum period (in years)	5 years
Deferred net gains, foreign currency exchange rate risk, to be reclassified from equity to current earnings over the next twelve months	$ 15
Deferred net losses, interest rate risk, to be reclassified from equity to current earnings over the next twelve months	$ 3
Commodity forward and option contracts, maximum period (in years)	5 years

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Derivative Financial Instruments and Risk Management (Policies)

9 Months Ended

Sep. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Risk Management Policy

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of sales made and costs incurred in foreign currencies. Movements in foreign currency rates also affect our competitive position as these changes may affect business practices and/or pricing strategies of non-U.S.-based competitors. Additionally, we have balance sheet positions denominated in foreign currencies, thereby creating exposure to movements in exchange rates.

Our Machinery and Power Systems operations purchase, manufacture and sell products in many locations around the world. As we have a diversified revenue and cost base, we manage our future foreign currency cash flow exposure on a net basis. We use foreign currency forward and option contracts to manage unmatched foreign currency cash inflow and outflow. Our objective is to minimize the risk of exchange rate movements that would reduce the U.S. dollar value of our foreign currency cash flow. Our policy allows for managing anticipated foreign currency cash flow for up to five years.

We generally designate as cash flow hedges at inception of the contract any Australian dollar, Brazilian real, British pound, Canadian dollar, Chinese yuan, euro, Indian rupee, Japanese yen, Mexican peso, Singapore dollar or Swiss franc forward or option contracts that meet the requirements for hedge accounting and the maturity extends beyond the current quarter-end. Designation is performed on a specific exposure basis to support hedge accounting. The remainder of Machinery and Power Systems foreign currency contracts are undesignated, including any hedges designed to protect our competitive exposure.  

As of September 30, 2013, $15 million of deferred net gains, net of tax, included in equity (AOCI in the Consolidated Statement of Financial Position), are expected to be reclassified to current earnings (Other income (expense) in the Consolidated Statement of Results of Operations) over the next twelve months when earnings are affected by the hedged transactions.  The actual amount recorded in Other income (expense) will vary based on exchange rates at the time the hedged transactions impact earnings.

In managing foreign currency risk for our Financial Products operations, our objective is to minimize earnings volatility resulting from conversion and the remeasurement of net foreign currency balance sheet positions, and future transactions denominated in foreign currencies. Our policy allows the use of foreign currency forward, option and cross currency contracts to offset the risk of currency mismatch between our receivables and debt, and exchange rate risk associated with future transactions denominated in foreign currencies. Substantially all such foreign currency forward, option and cross currency contracts are undesignated.

Interest Rate Risk

Interest rate movements create a degree of risk by affecting the amount of our interest payments and the value of our fixed-rate debt. Our practice is to use interest rate derivatives to manage our exposure to interest rate changes and, in some cases, lower the cost of borrowed funds.

Our Machinery and Power Systems operations generally use fixed-rate debt as a source of funding.  Our objective is to minimize the cost of borrowed funds.  Our policy allows us to enter into fixed-to-floating interest rate swaps and forward rate agreements to meet that objective with the intent to designate as fair value hedges at inception of the contract all fixed-to-floating interest rate swaps.  Designation as a hedge of the fair value of our fixed-rate debt is performed to support hedge accounting.

Financial Products operations has a match-funding policy that addresses interest rate risk by aligning the interest rate profile (fixed or floating rate) of Cat Financial’s debt portfolio with the interest rate profile of their receivables portfolio within predetermined ranges on an ongoing basis. In connection with that policy, we use interest rate derivative instruments to modify the debt structure to match assets within the receivables portfolio. This matched funding reduces the volatility of margins between interest-bearing assets and interest-bearing liabilities, regardless of which direction interest rates move.

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

As of September 30, 2013, $3 million of deferred net losses, net of tax, included in equity (AOCI in the Consolidated Statement of Financial Position), related to Financial Products floating-to-fixed interest rate swaps, are expected to be reclassified to current earnings (Interest expense of Financial Products in the Consolidated Statement of Results of Operations) over the next twelve months.  The actual amount recorded in Interest expense of Financial Products will vary based on interest rates at the time the hedged transactions impact earnings.

We have, at certain times, liquidated fixed-to-floating and floating-to-fixed interest rate swaps at both Machinery and Power Systems and Financial Products.  The gains or losses associated with these swaps at the time of liquidation are amortized into earnings over the original term of the previously designated hedged item.

Commodity Price Risk

Commodity price movements create a degree of risk by affecting the price we must pay for certain raw material. Our policy is to use commodity forward and option contracts to manage the commodity risk and reduce the cost of purchased materials.

Our Machinery and Power Systems operations purchase base and precious metals embedded in the components we purchase from suppliers.  Our suppliers pass on to us price changes in the commodity portion of the component cost. In addition, we are subject to price changes on energy products such as natural gas and diesel fuel purchased for operational use.

Our objective is to minimize volatility in the price of these commodities. Our policy allows us to enter into commodity forward and option contracts to lock in the purchase price of a portion of these commodities within a five-year horizon. All such commodity forward and option contracts are undesignated.

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Guarantees and Product Warranty (Details 2) (USD $) In Millions, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Movement in Standard Product Warranty Accrual
Warranty liability, beginning balance	$ 1,477	$ 1,308
Reduction in liability (payments)	(677)	(920)
Increase in liability (new warranties)	570	1,089
Warranty liability, ending balance	$ 1,370	$ 1,477

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Segment Information (Details 4) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Reconciliation of Assets
Total assets	$ 87,272	$ 89,356
Reportable Segments
Reconciliation of Assets
Total assets	66,444	69,734
All Other operating segment
Reconciliation of Assets
Total assets	1,442	1,499
Cash and Short Term Investments
Reconciliation of Assets
Total assets	4,108	3,306
Intercompany Receivables
Reconciliation of Assets
Total assets	0	0
Investment in Financial Products
Reconciliation of Assets
Total assets	0	0
Deferred Income Taxes
Reconciliation of Assets
Total assets	3,393	3,410
Goodwill and Intangible Assets
Reconciliation of Assets
Total assets	3,567	3,145
Property Plant and Equipment-Net and Other Assets
Reconciliation of Assets
Total assets	1,057	668
Operating Lease Methodology Difference
Reconciliation of Assets
Total assets	(287)	(329)
Liabilities Included in Segment Assets
Reconciliation of Assets
Total assets	10,504	11,293
Inventory Methodology Differences
Reconciliation of Assets
Total assets	(2,610)	(2,949)
Other
Reconciliation of Assets
Total assets	(346)	(421)
Consolidating Adjustments
Reconciliation of Assets
Total assets	(5,565)	(5,384)
Consolidating Adjustments | Reportable Segments
Reconciliation of Assets
Total assets	0	0
Consolidating Adjustments | All Other operating segment
Reconciliation of Assets
Total assets	0	0
Consolidating Adjustments | Cash and Short Term Investments
Reconciliation of Assets
Total assets	0	0
Consolidating Adjustments | Intercompany Receivables
Reconciliation of Assets
Total assets	(243)	(303)
Consolidating Adjustments | Investment in Financial Products
Reconciliation of Assets
Total assets	(4,769)	(4,433)
Consolidating Adjustments | Deferred Income Taxes
Reconciliation of Assets
Total assets	(490)	(516)
Consolidating Adjustments | Goodwill and Intangible Assets
Reconciliation of Assets
Total assets	0	0
Consolidating Adjustments | Property Plant and Equipment-Net and Other Assets
Reconciliation of Assets
Total assets	0	0
Consolidating Adjustments | Operating Lease Methodology Difference
Reconciliation of Assets
Total assets	0	0
Consolidating Adjustments | Liabilities Included in Segment Assets
Reconciliation of Assets
Total assets	0	0
Consolidating Adjustments | Inventory Methodology Differences
Reconciliation of Assets
Total assets	0	0
Consolidating Adjustments | Other
Reconciliation of Assets
Total assets	(63)	(132)
Machinery and Power Systems | Reportable Segments
Reconciliation of Assets
Total assets	29,205	33,171
Machinery and Power Systems | Business
Reconciliation of Assets
Total assets	55,749	58,284
Machinery and Power Systems | Business | Reportable Segments
Reconciliation of Assets
Total assets	29,205	33,171
Machinery and Power Systems | Business | All Other operating segment
Reconciliation of Assets
Total assets	1,442	1,499
Machinery and Power Systems | Business | Cash and Short Term Investments
Reconciliation of Assets
Total assets	4,108	3,306
Machinery and Power Systems | Business | Intercompany Receivables
Reconciliation of Assets
Total assets	243	303
Machinery and Power Systems | Business | Investment in Financial Products
Reconciliation of Assets
Total assets	4,769	4,433
Machinery and Power Systems | Business | Deferred Income Taxes
Reconciliation of Assets
Total assets	3,883	3,926
Machinery and Power Systems | Business | Goodwill and Intangible Assets
Reconciliation of Assets
Total assets	3,567	3,145
Machinery and Power Systems | Business | Property Plant and Equipment-Net and Other Assets
Reconciliation of Assets
Total assets	1,057	668
Machinery and Power Systems | Business | Operating Lease Methodology Difference
Reconciliation of Assets
Total assets	(287)	(329)
Machinery and Power Systems | Business | Liabilities Included in Segment Assets
Reconciliation of Assets
Total assets	10,504	11,293
Machinery and Power Systems | Business | Inventory Methodology Differences
Reconciliation of Assets
Total assets	(2,610)	(2,949)
Machinery and Power Systems | Business | Other
Reconciliation of Assets
Total assets	(132)	(182)
Financial Products | Business
Reconciliation of Assets
Total assets	37,088	36,456
Financial Products | Business | Reportable Segments
Reconciliation of Assets
Total assets	37,239	36,563
Financial Products | Business | All Other operating segment
Reconciliation of Assets
Total assets	0	0
Financial Products | Business | Cash and Short Term Investments
Reconciliation of Assets
Total assets	0	0
Financial Products | Business | Intercompany Receivables
Reconciliation of Assets
Total assets	0	0
Financial Products | Business | Investment in Financial Products
Reconciliation of Assets
Total assets	0	0
Financial Products | Business | Deferred Income Taxes
Reconciliation of Assets
Total assets	0	0
Financial Products | Business | Goodwill and Intangible Assets
Reconciliation of Assets
Total assets	0	0
Financial Products | Business | Property Plant and Equipment-Net and Other Assets
Reconciliation of Assets
Total assets	0	0
Financial Products | Business | Operating Lease Methodology Difference
Reconciliation of Assets
Total assets	0	0
Financial Products | Business | Liabilities Included in Segment Assets
Reconciliation of Assets
Total assets	0	0
Financial Products | Business | Inventory Methodology Differences
Reconciliation of Assets
Total assets	0	0
Financial Products | Business | Other
Reconciliation of Assets
Total assets	$ (151)	$ (107)

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Guarantees and Product Warranty (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Jul. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Percentage of equity interest sold in subsidiary (as a percent)			65.00%
Related liability	$ 15	$ 14
Guarantor Obligations
Guarantees, maximum potential amount of future payments	804	486
Special-Purpose Corporation assets in Consolidated Statement of Financial Position	1,044	927
Special-Purpose Corporation liabilities in Consolidated Statement of Financial Position	1,043	927
Caterpillar dealer guarantees
Guarantor Obligations
Guarantees, maximum potential amount of future payments	201	180
Customer guarantees
Guarantor Obligations
Guarantees, maximum potential amount of future payments	53	77
Customer guarantees-supplier consortium
Guarantor Obligations
Guarantees, maximum potential amount of future payments	359	0
Third party logistics business guarantees
Guarantor Obligations
Guarantees, maximum potential amount of future payments	156	176
Other guarantees
Guarantor Obligations
Guarantees, maximum potential amount of future payments	$ 35	$ 53

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Cat Financial Financing Activities (Tables)

9 Months Ended

Sep. 30, 2013

Receivables [Abstract]

Impaired loans and finance leases

Individually impaired loans and finance leases for the Customer portfolio segment were as follows: 

	September 30, 2013						December 31, 2012
(Millions of dollars)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Impaired Loans and Finance Leases With No Allowance Recorded
Customer
North America	$	20	$	19	$	—	$	28	$	27	$	—
Europe	53		52		—		45		45		—
Asia Pacific	2		2		—		2		2		—
Mining	127		127		—		1		1		—
Latin America	16		16		—		7		7		—
Caterpillar Power Finance	305		304		—		295		295		—
Total	$	523	$	520	$	—	$	378	$	377	$	—
Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	16	$	14	$	4	$	25	$	23	$	7
Europe	19		15		7		28		26		11
Asia Pacific	22		22		6		19		19		4
Mining	—		—		—		—		—		—
Latin America	62		62		18		30		30		8
Caterpillar Power Finance	94		89		25		113		109		24
Total	$	213	$	202	$	60	$	215	$	207	$	54
Total Impaired Loans and Finance Leases
Customer
North America	$	36	$	33	$	4	$	53	$	50	$	7
Europe	72		67		7		73		71		11
Asia Pacific	24		24		6		21		21		4
Mining	127		127		—		1		1		—
Latin America	78		78		18		37		37		8
Caterpillar Power Finance	399		393		25		408		404		24
Total	$	736	$	722	$	60	$	593	$	584	$	54

	Three Months Ended September 30, 2013				Three Months Ended September 30, 2012
(Millions of dollars)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Impaired Loans and Finance Leases With No Allowance Recorded
Customer
North America	$	23	$	—	$	41	$	1
Europe	52		—		45		—
Asia Pacific	3		—		3		—
Mining	96		2		9		1
Latin America	14		—		6		—
Caterpillar Power Finance	280		1		219		—
Total	$	468	$	3	$	323	$	2
Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	14	$	—	$	25	$	—
Europe	21		—		27		1
Asia Pacific	18		—		15		—
Mining	—		—		—		—
Latin America	53		1		37		1
Caterpillar Power Finance	156		1		106		—
Total	$	262	$	2	$	210	$	2
Total Impaired Loans and Finance Leases
Customer
North America	$	37	$	—	$	66	$	1
Europe	73		—		72		1
Asia Pacific	21		—		18		—
Mining	96		2		9		1
Latin America	67		1		43		1
Caterpillar Power Finance	436		2		325		—
Total	$	730	$	5	$	533	$	4

	Nine Months Ended September 30, 2013				Nine Months Ended September 30, 2012
(Millions of dollars)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Impaired Loans and Finance Leases With No Allowance Recorded
Customer
North America	$	26	$	3	$	56	$	2
Europe	48		—		45		—
Asia Pacific	4		—		4		—
Mining	40		2		8		1
Latin America	11		—		6		—
Caterpillar Power Finance	285		2		204		2
Total	$	414	$	7	$	323	$	5
Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	18	$	—	$	25	$	—
Europe	23		1		26		1
Asia Pacific	18		1		13		1
Mining	1		—		—		—
Latin America	44		2		26		1
Caterpillar Power Finance	143		1		87		—
Total	$	247	$	5	$	177	$	3
Total Impaired Loans and Finance Leases
Customer
North America	$	44	$	3	$	81	$	2
Europe	71		1		71		1
Asia Pacific	22		1		17		1
Mining	41		2		8		1
Latin America	55		2		32		1
Caterpillar Power Finance	428		3		291		2
Total	$	661	$	12	$	500	$	8

Investment in loans and finance leases on non-accrual status

The investment in customer loans and finance leases on non-accrual status was as follows:

(Millions of dollars)
	September 30, 2013		December 31, 2012
Customer
North America	$	39	$	59
Europe	41		38
Asia Pacific	51		36
Mining	31		12
Latin America	194		148
Caterpillar Power Finance	141		220
Total	$	497	$	513

Aging related to loans and finance leases

Aging related to loans and finance leases was as follows:

(Millions of dollars)
	September 30, 2013
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	33	$	9	$	29	$	71	$	6,256	$	6,327	$	—
Europe	32		16		36		84		2,682		2,766		8
Asia Pacific	65		42		60		167		2,826		2,993		16
Mining	—		—		12		12		2,281		2,293		—
Latin America	63		34		189		286		2,491		2,777		5
Caterpillar Power Finance	7		18		69		94		3,025		3,119		1
Dealer
North America	—		—		—		—		2,349		2,349		—
Europe	—		—		—		—		176		176		—
Asia Pacific	—		—		—		—		565		565		—
Mining	—		—		—		—		1		1		—
Latin America	—		—		1		1		778		779		1
Total	$	200	$	119	$	396	$	715	$	23,430	$	24,145	$	31

(Millions of dollars)
	December 31, 2012
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	35	$	8	$	52	$	95	$	5,872	$	5,967	$	—
Europe	23		9		36		68		2,487		2,555		6
Asia Pacific	53		19		54		126		2,912		3,038		18
Mining	—		1		12		13		1,960		1,973		—
Latin America	62		19		138		219		2,500		2,719		—
Caterpillar Power Finance	15		14		126		155		3,017		3,172		4
Dealer
North America	—		—		—		—		2,063		2,063		—
Europe	—		—		—		—		185		185		—
Asia Pacific	—		—		—		—		751		751		—
Mining	—		—		—		—		1		1		—
Latin America	—		—		—		—		884		884		—
Total	$	188	$	70	$	418	$	676	$	22,632	$	23,308	$	28

Allowance for credit losses and recorded investment in finance receivables

An analysis of the allowance for credit losses was as follows:

(Millions of dollars)
	September 30, 2013
Allowance for Credit Losses:	Customer			Dealer		Total
Balance at beginning of year	$	414		$	9	$	423
Receivables written off	(133		)	—		(133		)
Recoveries on receivables previously written off	38			—		38
Provision for credit losses	76			2		78
Other	(5		)	—		(5		)
Balance at end of period	$	390		$	11	$	401
Individually evaluated for impairment	$	60		$	—	$	60
Collectively evaluated for impairment	330			11		341
Ending Balance	$	390		$	11	$	401
Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	736		$	—	$	736
Collectively evaluated for impairment	19,539			3,870		23,409
Ending Balance	$	20,275		$	3,870	$	24,145

(Millions of dollars)
	December 31, 2012
Allowance for Credit Losses:	Customer			Dealer		Total
Balance at beginning of year	$	360		$	6	$	366
Receivables written off	(149		)	—		(149		)
Recoveries on receivables previously written off	47			—		47
Provision for credit losses	157			3		160
Other	(1		)	—		(1		)
Balance at end of year	$	414		$	9	$	423
Individually evaluated for impairment	$	54		$	—	$	54
Collectively evaluated for impairment	360			9		369
Ending Balance	$	414		$	9	$	423
Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	593		$	—	$	593
Collectively evaluated for impairment	18,831			3,884		22,715
Ending Balance	$	19,424		$	3,884	$	23,308

Recorded investment of performing and non-performing finance receivables

The recorded investment in performing and non-performing finance receivables was as follows: 

(Millions of dollars)
	September 30, 2013						December 31, 2012
	Customer		Dealer		Total		Customer		Dealer		Total
Performing
North America	$	6,288	$	2,349	$	8,637	$	5,908	$	2,063	$	7,971
Europe	2,725		176		2,901		2,517		185		2,702
Asia Pacific	2,942		565		3,507		3,002		751		3,753
Mining	2,262		1		2,263		1,961		1		1,962
Latin America	2,583		779		3,362		2,571		884		3,455
Caterpillar Power Finance	2,978		—		2,978		2,952		—		2,952
Total Performing	$	19,778	$	3,870	$	23,648	$	18,911	$	3,884	$	22,795
Non-Performing
North America	$	39	$	—	$	39	$	59	$	—	$	59
Europe	41		—		41		38		—		38
Asia Pacific	51		—		51		36		—		36
Mining	31		—		31		12		—		12
Latin America	194		—		194		148		—		148
Caterpillar Power Finance	141		—		141		220		—		220
Total Non-Performing	$	497	$	—	$	497	$	513	$	—	$	513
Performing & Non-Performing
North America	$	6,327	$	2,349	$	8,676	$	5,967	$	2,063	$	8,030
Europe	2,766		176		2,942		2,555		185		2,740
Asia Pacific	2,993		565		3,558		3,038		751		3,789
Mining	2,293		1		2,294		1,973		1		1,974
Latin America	2,777		779		3,556		2,719		884		3,603
Caterpillar Power Finance	3,119		—		3,119		3,172		—		3,172
Total	$	20,275	$	3,870	$	24,145	$	19,424	$	3,884	$	23,308

Loans and finance receivables modified as TDRs

Loan and finance lease receivables in the Customer portfolio segment modified as TDRs during the three and nine months ended September 30, 2013 and 2012, were as follows:

(Dollars in millions)
	Three Months Ended September 30, 2013					Three Months Ended September 30, 2012
	Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment		Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment
Customer
North America	14	$	1	$	—	17	$	4	$	4
Europe	7	5		5		14	1		1
Asia Pacific	—	—		—		12	3		3
Mining	45	123		123		—	—		—
Latin America	10	1		1		—	—		—
Caterpillar Power Finance 1	6	65		67		15	151		151
Total 2	82	$	195	$	196	58	$	159	$	159

	Nine Months Ended September 30, 2013					Nine Months Ended September 30, 2012
	Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment		Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment
Customer
North America	46	$	5	$	5	58	$	8	$	8
Europe	15	6		6		21	8		8
Asia Pacific	—	—		—		12	3		3
Mining	45	123		123		—	—		—
Latin America	16	2		2		—	—		—
Caterpillar Power Finance 1	10	101		104		20	183		183
Total 2	132	$	237	$	240	111	$	202	$	202

¹  During the three and nine months ended September 30, 2013, $13 million and $25 million, respectively, of additional funds were subsequently loaned to a borrower whose terms had been modified in a TDR.  The $13 million and $25 million of additional funds are not reflected in the table above as no incremental modifications have been made with the borrower during the period presented.  At September 30, 2013, remaining commitments to lend additional funds to a borrower whose terms have been modified in a TDR were $4 million.

²  Modifications include extended contract maturities, inclusion of interest only periods, below market interest rates, and extended skip payment periods.

TDRs with a payment default which had been modified within twelve months prior to the default date

TDRs in the Customer portfolio segment with a payment default during the three and nine months ended September 30, 2013 and 2012, which had been modified within twelve months prior to the default date, were as follows: 

(Dollars in millions)	Three Months Ended September 30, 2013			Three Months Ended September 30, 2012
	Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment
Customer
North America	5	$	1	8	$	1
Europe	5	—		—	—
Asia Pacific	—	—		2	1
Total	10	$	1	10	$	2

	Nine Months Ended September 30, 2013			Nine Months Ended September 30, 2012
	Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment
Customer
North America	18	$	4	39	$	3
Europe	5	—		—	—
Asia Pacific	—	—		2	1
Caterpillar Power Finance	2	3		16	21
Total	25	$	7	57	$	25

XML

Segment Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 group_presidents segments	Sep. 30, 2012	Dec. 31, 2012
Reportable Segments
Number of group presidents			5
Number of operating segments led by Group Presidents			3
Number of operating segments led by Group President responsible for corporate services			1
Number of smaller operating segments led by Group President			1
Number of operating segments			5
Number of reportable segments			4
Useful life to amortize goodwill for segment assets			20 years
Sales and revenues	$ 13,423	$ 16,445	$ 41,254	$ 49,800
Depreciation and amortization	779	720	2,263	2,070
Consolidated profit before taxes	1,261	2,450	3,741	7,324
Segment assets	87,272		87,272		89,356
Capital expenditures	966	1,231	3,163	3,526
Reportable Segments Including Intersegment Eliminations
Reportable Segments
Sales and revenues	14,027	17,163	43,094	52,020
Reportable Segments
Reportable Segments
Sales and revenues	13,280	16,211	40,843	48,804
Depreciation and amortization	701	659	2,023	1,896
Consolidated profit before taxes	1,772	2,705	5,459	8,790
Segment assets	66,444		66,444		69,734
Capital expenditures	847	1,152	2,395	3,042
Intersegment Eliminations
Reportable Segments
Sales and revenues	747	952	2,251	3,216
Machinery and Power Systems | Reportable Segments Including Intersegment Eliminations
Reportable Segments
Sales and revenues	13,220	16,387	40,686	49,719
Machinery and Power Systems | Reportable Segments
Reportable Segments
Sales and revenues	12,473	15,435	38,435	46,503
Depreciation and amortization	498	480	1,452	1,366
Consolidated profit before taxes	1,554	2,515	4,735	8,207
Segment assets	29,205		29,205		33,171
Capital expenditures	374	720	1,151	1,810
Machinery and Power Systems | Intersegment Eliminations
Reportable Segments
Sales and revenues	747	952	2,251	3,216
Construction Industries | Reportable Segments Including Intersegment Eliminations
Reportable Segments
Sales and revenues	4,615	5,006	13,856	15,661
Construction Industries | Reportable Segments
Reportable Segments
Sales and revenues	4,547	4,904	13,594	15,306
Depreciation and amortization	145	144	426	414
Consolidated profit before taxes	262	459	863	1,763
Segment assets	8,489		8,489		10,393
Capital expenditures	143	247	403	597
Construction Industries | Intersegment Eliminations
Reportable Segments
Sales and revenues	68	102	262	355
Resource Industries | Reportable Segments Including Intersegment Eliminations
Reportable Segments
Sales and revenues	3,212	5,467	10,912	16,291
Resource Industries | Reportable Segments
Reportable Segments
Sales and revenues	3,004	5,214	10,251	15,382
Depreciation and amortization	192	179	558	510
Consolidated profit before taxes	409	1,113	1,436	3,707
Segment assets	11,703		11,703		13,455
Capital expenditures	106	229	358	603
Resource Industries | Intersegment Eliminations
Reportable Segments
Sales and revenues	208	253	661	909
Power Systems | Reportable Segments Including Intersegment Eliminations
Reportable Segments
Sales and revenues	5,393	5,914	15,918	17,767
Power Systems | Reportable Segments
Reportable Segments
Sales and revenues	4,922	5,317	14,590	15,815
Depreciation and amortization	161	157	468	442
Consolidated profit before taxes	883	943	2,436	2,737
Segment assets	9,013		9,013		9,323
Capital expenditures	125	244	390	610
Power Systems | Intersegment Eliminations
Reportable Segments
Sales and revenues	471	597	1,328	1,952
Financial Products Segment | Reportable Segments Including Intersegment Eliminations
Reportable Segments
Sales and revenues	807	776	2,408	2,301
Financial Products Segment | Reportable Segments
Reportable Segments
Sales and revenues	807	776	2,408	2,301
Depreciation and amortization	203	179	571	530
Consolidated profit before taxes	218	190	724	583
Segment assets	37,239		37,239		36,563
Capital expenditures	473	432	1,244	1,232
Financial Products Segment | Intersegment Eliminations
Reportable Segments
Sales and revenues	$ 0	$ 0	$ 0	$ 0

XML

Cat Financial Financing Activities

9 Months Ended

Sep. 30, 2013

Receivables [Abstract]

Cat Financial Financing Activities

Cat Financial Financing Activities

Credit quality of financing receivables and allowance for credit losses

Cat Financial applies a systematic methodology to determine the allowance for credit losses for finance receivables.  Based upon Cat Financial’s analysis of credit losses and risk factors, portfolio segments are as follows:

• Customer – Finance receivables with retail customers.

• Dealer – Finance receivables with Caterpillar dealers.

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

• North America – Finance receivables originated in the United States or Canada.

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

• Asia Pacific – Finance receivables originated in Australia, New Zealand, China, Japan, South Korea and Southeast Asia.

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

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

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

Impaired loans and finance leases

For all classes, a loan or finance lease is considered impaired, based on current information and events, if it is probable that Cat Financial will be unable to collect all amounts due according to the contractual terms of the loan or finance lease.  Loans and finance leases reviewed for impairment include loans and finance leases that are past due, non-performing or in bankruptcy. Recognition of income is suspended and the loan or finance lease is placed on non-accrual status when management determines that collection of future income is not probable (generally after 120 days past due except in locations where local regulatory requirements dictate a different method, or in instances in which relevant information is known that warrants placing the loan or finance lease on non-accrual status).  Accrual is resumed, and previously suspended income is recognized, when the loan or finance lease 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.

During the second quarter of 2013, Cat Financial changed the classification of certain loans and finance leases previously reported as impaired. While these loans and finance leases had been incorrectly reported as impaired, the related allowance for these loans and finance leases was appropriately measured; therefore, this change had no impact on the allowance for credit losses. The impact of incorrectly reporting these loans and finance leases as impaired was not considered material to previously issued financial statements; however, prior period impaired loan and finance lease balances have been revised throughout Notes 16 and 18.

There were no impaired loans or finance leases as of September 30, 2013 or December 31, 2012, for the Dealer portfolio segment.  The average recorded investment for impaired loans and finance leases for the Dealer portfolio segment was zero for the three and nine months ended September 30, 2013 and 2012.

Individually impaired loans and finance leases for the Customer portfolio segment were as follows: 

	September 30, 2013						December 31, 2012
(Millions of dollars)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Impaired Loans and Finance Leases With No Allowance Recorded
Customer
North America	$	20	$	19	$	—	$	28	$	27	$	—
Europe	53		52		—		45		45		—
Asia Pacific	2		2		—		2		2		—
Mining	127		127		—		1		1		—
Latin America	16		16		—		7		7		—
Caterpillar Power Finance	305		304		—		295		295		—
Total	$	523	$	520	$	—	$	378	$	377	$	—
Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	16	$	14	$	4	$	25	$	23	$	7
Europe	19		15		7		28		26		11
Asia Pacific	22		22		6		19		19		4
Mining	—		—		—		—		—		—
Latin America	62		62		18		30		30		8
Caterpillar Power Finance	94		89		25		113		109		24
Total	$	213	$	202	$	60	$	215	$	207	$	54
Total Impaired Loans and Finance Leases
Customer
North America	$	36	$	33	$	4	$	53	$	50	$	7
Europe	72		67		7		73		71		11
Asia Pacific	24		24		6		21		21		4
Mining	127		127		—		1		1		—
Latin America	78		78		18		37		37		8
Caterpillar Power Finance	399		393		25		408		404		24
Total	$	736	$	722	$	60	$	593	$	584	$	54

	Three Months Ended September 30, 2013				Three Months Ended September 30, 2012
(Millions of dollars)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Impaired Loans and Finance Leases With No Allowance Recorded
Customer
North America	$	23	$	—	$	41	$	1
Europe	52		—		45		—
Asia Pacific	3		—		3		—
Mining	96		2		9		1
Latin America	14		—		6		—
Caterpillar Power Finance	280		1		219		—
Total	$	468	$	3	$	323	$	2
Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	14	$	—	$	25	$	—
Europe	21		—		27		1
Asia Pacific	18		—		15		—
Mining	—		—		—		—
Latin America	53		1		37		1
Caterpillar Power Finance	156		1		106		—
Total	$	262	$	2	$	210	$	2
Total Impaired Loans and Finance Leases
Customer
North America	$	37	$	—	$	66	$	1
Europe	73		—		72		1
Asia Pacific	21		—		18		—
Mining	96		2		9		1
Latin America	67		1		43		1
Caterpillar Power Finance	436		2		325		—
Total	$	730	$	5	$	533	$	4

	Nine Months Ended September 30, 2013				Nine Months Ended September 30, 2012
(Millions of dollars)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Impaired Loans and Finance Leases With No Allowance Recorded
Customer
North America	$	26	$	3	$	56	$	2
Europe	48		—		45		—
Asia Pacific	4		—		4		—
Mining	40		2		8		1
Latin America	11		—		6		—
Caterpillar Power Finance	285		2		204		2
Total	$	414	$	7	$	323	$	5
Impaired Loans and Finance Leases With An Allowance Recorded
Customer
North America	$	18	$	—	$	25	$	—
Europe	23		1		26		1
Asia Pacific	18		1		13		1
Mining	1		—		—		—
Latin America	44		2		26		1
Caterpillar Power Finance	143		1		87		—
Total	$	247	$	5	$	177	$	3
Total Impaired Loans and Finance Leases
Customer
North America	$	44	$	3	$	81	$	2
Europe	71		1		71		1
Asia Pacific	22		1		17		1
Mining	41		2		8		1
Latin America	55		2		32		1
Caterpillar Power Finance	428		3		291		2
Total	$	661	$	12	$	500	$	8

Non-accrual and past due loans and finance leases

For all classes, Cat Financial considers a loan or finance lease past due if any portion of a contractual payment is due and unpaid for more than 30 days.  Recognition of income is suspended and the loan or finance lease is placed on non-accrual status when management determines that collection of future income is not probable (generally after 120 days past due except in locations where local regulatory requirements dictate a different method, or in instances in which relevant information is known that warrants placing the loan or finance lease on non-accrual status).  Accrual is resumed, and previously suspended income is recognized, when the loan or finance lease becomes contractually current and/or collection doubts are removed.

As of September 30, 2013 and December 31, 2012, there were no loans or finance leases on non-accrual status for the Dealer portfolio segment.

The investment in customer loans and finance leases on non-accrual status was as follows:

(Millions of dollars)
	September 30, 2013		December 31, 2012
Customer
North America	$	39	$	59
Europe	41		38
Asia Pacific	51		36
Mining	31		12
Latin America	194		148
Caterpillar Power Finance	141		220
Total	$	497	$	513

Aging related to loans and finance leases was as follows:

(Millions of dollars)
	September 30, 2013
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	33	$	9	$	29	$	71	$	6,256	$	6,327	$	—
Europe	32		16		36		84		2,682		2,766		8
Asia Pacific	65		42		60		167		2,826		2,993		16
Mining	—		—		12		12		2,281		2,293		—
Latin America	63		34		189		286		2,491		2,777		5
Caterpillar Power Finance	7		18		69		94		3,025		3,119		1
Dealer
North America	—		—		—		—		2,349		2,349		—
Europe	—		—		—		—		176		176		—
Asia Pacific	—		—		—		—		565		565		—
Mining	—		—		—		—		1		1		—
Latin America	—		—		1		1		778		779		1
Total	$	200	$	119	$	396	$	715	$	23,430	$	24,145	$	31

(Millions of dollars)
	December 31, 2012
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	35	$	8	$	52	$	95	$	5,872	$	5,967	$	—
Europe	23		9		36		68		2,487		2,555		6
Asia Pacific	53		19		54		126		2,912		3,038		18
Mining	—		1		12		13		1,960		1,973		—
Latin America	62		19		138		219		2,500		2,719		—
Caterpillar Power Finance	15		14		126		155		3,017		3,172		4
Dealer
North America	—		—		—		—		2,063		2,063		—
Europe	—		—		—		—		185		185		—
Asia Pacific	—		—		—		—		751		751		—
Mining	—		—		—		—		1		1		—
Latin America	—		—		—		—		884		884		—
Total	$	188	$	70	$	418	$	676	$	22,632	$	23,308	$	28

Allowance for credit loss activity

In estimating the allowance for credit losses, Cat Financial reviews loans and finance leases that are past due, non-performing or in bankruptcy. An analysis of the allowance for credit losses was as follows:

(Millions of dollars)
	September 30, 2013
Allowance for Credit Losses:	Customer			Dealer		Total
Balance at beginning of year	$	414		$	9	$	423
Receivables written off	(133		)	—		(133		)
Recoveries on receivables previously written off	38			—		38
Provision for credit losses	76			2		78
Other	(5		)	—		(5		)
Balance at end of period	$	390		$	11	$	401
Individually evaluated for impairment	$	60		$	—	$	60
Collectively evaluated for impairment	330			11		341
Ending Balance	$	390		$	11	$	401
Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	736		$	—	$	736
Collectively evaluated for impairment	19,539			3,870		23,409
Ending Balance	$	20,275		$	3,870	$	24,145

(Millions of dollars)
	December 31, 2012
Allowance for Credit Losses:	Customer			Dealer		Total
Balance at beginning of year	$	360		$	6	$	366
Receivables written off	(149		)	—		(149		)
Recoveries on receivables previously written off	47			—		47
Provision for credit losses	157			3		160
Other	(1		)	—		(1		)
Balance at end of year	$	414		$	9	$	423
Individually evaluated for impairment	$	54		$	—	$	54
Collectively evaluated for impairment	360			9		369
Ending Balance	$	414		$	9	$	423
Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	593		$	—	$	593
Collectively evaluated for impairment	18,831			3,884		22,715
Ending Balance	$	19,424		$	3,884	$	23,308

Credit quality of finance receivables

The credit quality of finance receivables is reviewed on a monthly basis.  Credit quality indicators include performing and non-performing.  Non-performing is defined as finance receivables currently over 120 days past due and/or on non-accrual status or in bankruptcy.  Finance receivables not meeting the criteria listed above are considered performing.  Non-performing receivables have the highest probability for credit loss.  The allowance for credit losses attributable to non-performing receivables is based on the most probable source of repayment, which is normally the liquidation of collateral.  In determining collateral value, Cat Financial estimates the current fair market value of the collateral. In addition, Cat Financial considers credit enhancements such as additional collateral and contractual third-party guarantees in determining the allowance for credit losses attributable to non-performing receivables.

The recorded investment in performing and non-performing finance receivables was as follows: 

(Millions of dollars)
	September 30, 2013						December 31, 2012
	Customer		Dealer		Total		Customer		Dealer		Total
Performing
North America	$	6,288	$	2,349	$	8,637	$	5,908	$	2,063	$	7,971
Europe	2,725		176		2,901		2,517		185		2,702
Asia Pacific	2,942		565		3,507		3,002		751		3,753
Mining	2,262		1		2,263		1,961		1		1,962
Latin America	2,583		779		3,362		2,571		884		3,455
Caterpillar Power Finance	2,978		—		2,978		2,952		—		2,952
Total Performing	$	19,778	$	3,870	$	23,648	$	18,911	$	3,884	$	22,795
Non-Performing
North America	$	39	$	—	$	39	$	59	$	—	$	59
Europe	41		—		41		38		—		38
Asia Pacific	51		—		51		36		—		36
Mining	31		—		31		12		—		12
Latin America	194		—		194		148		—		148
Caterpillar Power Finance	141		—		141		220		—		220
Total Non-Performing	$	497	$	—	$	497	$	513	$	—	$	513
Performing & Non-Performing
North America	$	6,327	$	2,349	$	8,676	$	5,967	$	2,063	$	8,030
Europe	2,766		176		2,942		2,555		185		2,740
Asia Pacific	2,993		565		3,558		3,038		751		3,789
Mining	2,293		1		2,294		1,973		1		1,974
Latin America	2,777		779		3,556		2,719		884		3,603
Caterpillar Power Finance	3,119		—		3,119		3,172		—		3,172
Total	$	20,275	$	3,870	$	24,145	$	19,424	$	3,884	$	23,308

Troubled Debt Restructurings

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

TDRs are reviewed along with other receivables as part of management’s ongoing evaluation of the adequacy of the allowance for credit losses.  The allowance for credit losses attributable to TDRs is based on the most probable source of repayment, which is normally the liquidation of collateral.  In determining collateral value, Cat Financial estimates the current fair market value of the collateral. In addition, Cat Financial factors in credit enhancements such as additional collateral and contractual third-party guarantees in determining the allowance for credit losses attributable to TDRs.

There were no loans or finance lease receivables modified as TDRs during the three and nine months ended September 30, 2013 or 2012 for the Dealer portfolio segment.

Loan and finance lease receivables in the Customer portfolio segment modified as TDRs during the three and nine months ended September 30, 2013 and 2012, were as follows:

(Dollars in millions)
	Three Months Ended September 30, 2013					Three Months Ended September 30, 2012
	Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment		Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment
Customer
North America	14	$	1	$	—	17	$	4	$	4
Europe	7	5		5		14	1		1
Asia Pacific	—	—		—		12	3		3
Mining	45	123		123		—	—		—
Latin America	10	1		1		—	—		—
Caterpillar Power Finance 1	6	65		67		15	151		151
Total 2	82	$	195	$	196	58	$	159	$	159

	Nine Months Ended September 30, 2013					Nine Months Ended September 30, 2012
	Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment		Number of Contracts	Pre-TDR Outstanding Recorded Investment		Post-TDR Outstanding Recorded Investment
Customer
North America	46	$	5	$	5	58	$	8	$	8
Europe	15	6		6		21	8		8
Asia Pacific	—	—		—		12	3		3
Mining	45	123		123		—	—		—
Latin America	16	2		2		—	—		—
Caterpillar Power Finance 1	10	101		104		20	183		183
Total 2	132	$	237	$	240	111	$	202	$	202

¹  During the three and nine months ended September 30, 2013, $13 million and $25 million, respectively, of additional funds were subsequently loaned to a borrower whose terms had been modified in a TDR.  The $13 million and $25 million of additional funds are not reflected in the table above as no incremental modifications have been made with the borrower during the period presented.  At September 30, 2013, remaining commitments to lend additional funds to a borrower whose terms have been modified in a TDR were $4 million.

²  Modifications include extended contract maturities, inclusion of interest only periods, below market interest rates, and extended skip payment periods.

TDRs in the Customer portfolio segment with a payment default during the three and nine months ended September 30, 2013 and 2012, which had been modified within twelve months prior to the default date, were as follows: 

(Dollars in millions)	Three Months Ended September 30, 2013			Three Months Ended September 30, 2012
	Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment
Customer
North America	5	$	1	8	$	1
Europe	5	—		—	—
Asia Pacific	—	—		2	1
Total	10	$	1	10	$	2

	Nine Months Ended September 30, 2013			Nine Months Ended September 30, 2012
	Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment
Customer
North America	18	$	4	39	$	3
Europe	5	—		—	—
Asia Pacific	—	—		2	1
Caterpillar Power Finance	2	3		16	21
Total	25	$	7	57	$	25

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Consolidated Statement of Financial Position (Parenthetical) (Parentheticals) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 1.00	$ 1.00
Common stock, Authorized shares	2,000,000,000	2,000,000,000
Common stock, Issued shares	814,894,624	814,894,624
Treasury stock, shares	178,538,633	159,846,131

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Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) (Parentheticals)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Statement of Stockholders' Equity [Abstract]
Common shares issued from treasury stock for stock-based compensation (in shares)	4,792,341	6,400,328
Common shares repurchased (in shares)	23,484,843	0

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New Accounting Guidance

9 Months Ended

Sep. 30, 2013

Accounting Changes and Error Corrections [Abstract]

New Accounting Guidance

New Accounting Guidance

Disclosures about offsetting assets and liabilities – In December 2011, the Financial Accounting Standards Board (FASB) issued accounting guidance on disclosures about offsetting assets and liabilities. The guidance requires entities to disclose both gross and net information about instruments and transactions that are offset in the statement of financial position, as well as instruments and transactions that are subject to an enforceable master netting arrangement or similar agreement. In January 2013, the FASB issued guidance clarifying the scope of the disclosures to apply only to derivatives, including bifurcated embedded derivatives, repurchase and reverse repurchase agreements, and securities lending and securities borrowing transactions. This guidance was effective January 1, 2013, with retrospective application required. The guidance did not have a material impact on our financial statements. See Note 4 for additional information.

Indefinite-lived intangible assets impairment testing– In July 2012, the FASB issued accounting guidance on the testing of indefinite-lived intangible assets for impairment. The guidance allows entities to first perform a qualitative assessment to determine the likelihood of an impairment for an indefinite-lived intangible asset and whether it is necessary to perform the quantitative impairment assessment currently required. This guidance was effective January 1, 2013 and did not have a material impact on our financial statements.

Reporting of amounts reclassified out of accumulated other comprehensive income – In February 2013, the FASB issued accounting guidance on the reporting of reclassifications out of accumulated other comprehensive income. The guidance requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income if the amount is reclassified to net income in its entirety in the same reporting period. For other amounts not required to be reclassified in their entirety to net income in the same reporting period, a cross reference to other disclosures that provide additional detail about the reclassification amounts is required. This guidance was effective January 1, 2013 and did not have a material impact on our financial statements. See Note 12 for additional information.

Joint and several liability arrangements – In February 2013,the FASB issued accounting guidance on the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements. The guidance requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The entity is also required to disclose the nature and amount of the obligation as well as any other information about those obligations. This guidance is effective January 1, 2014, with retrospective application required. We do not expect the adoption to have a material impact on our financial statements.

Parent's accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity – In March 2013, the FASB issued accounting guidance on the parent's accounting for the cumulative translation adjustment (CTA) upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. The new standard clarifies existing guidance regarding when the CTA should be released into earnings upon various deconsolidation and consolidation transactions. This guidance is effective January 1, 2014. We do not expect the adoption to have a material impact on our financial statements.

Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists – In July 2013, the FASB issued accounting guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward in the financial statements if available under the applicable tax jurisdiction. The guidance is effective January 1, 2014. We do not expect the adoption to have a material impact on our financial statements.

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Segment Information (Details 5) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Reconciliation of Depreciation and amortization
Total depreciation and amortization	$ 779	$ 720	$ 2,263	$ 2,070
Reportable Segments
Reconciliation of Depreciation and amortization
Total depreciation and amortization	701	659	2,023	1,896
All Other operating segment
Reconciliation of Depreciation and amortization
Total depreciation and amortization	43	41	127	125
Cost Centers
Reconciliation of Depreciation and amortization
Total depreciation and amortization	36	23	104	64
Other
Reconciliation of Depreciation and amortization
Total depreciation and amortization	(1)	(3)	9	(15)
Machinery and Power Systems | Reportable Segments
Reconciliation of Depreciation and amortization
Total depreciation and amortization	498	480	1,452	1,366
Machinery and Power Systems | Business
Reconciliation of Depreciation and amortization
Total depreciation and amortization	570	535	1,674	1,523
Machinery and Power Systems | Business | Reportable Segments
Reconciliation of Depreciation and amortization
Total depreciation and amortization	498	480	1,452	1,366
Machinery and Power Systems | Business | All Other operating segment
Reconciliation of Depreciation and amortization
Total depreciation and amortization	43	41	127	125
Machinery and Power Systems | Business | Cost Centers
Reconciliation of Depreciation and amortization
Total depreciation and amortization	36	23	104	64
Machinery and Power Systems | Business | Other
Reconciliation of Depreciation and amortization
Total depreciation and amortization	(7)	(9)	(9)	(32)
Financial Products | Business
Reconciliation of Depreciation and amortization
Total depreciation and amortization	209	185	589	547
Financial Products | Business | Reportable Segments
Reconciliation of Depreciation and amortization
Total depreciation and amortization	203	179	571	530
Financial Products | Business | All Other operating segment
Reconciliation of Depreciation and amortization
Total depreciation and amortization	0	0	0	0
Financial Products | Business | Cost Centers
Reconciliation of Depreciation and amortization
Total depreciation and amortization	0	0	0	0
Financial Products | Business | Other
Reconciliation of Depreciation and amortization
Total depreciation and amortization	$ 6	$ 6	$ 18	$ 17

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Consolidated Statement of Cash Flow In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013 USD ($)	Sep. 30, 2012 USD ($)
Cash flow from operating activities:
Profit of consolidated and affiliated companies	$ 2,797	$ 5,022
Adjustments for non-cash items:
Depreciation and amortization	2,263	2,070
Other	377	(267)
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables - trade and other	1,165	136
Inventories	1,911	(3,118)
Accounts payable	41	(334)
Accrued expenses	(227)	32
Accrued wages, salaries and employee benefits	(500)	(643)
Customer advances	(287)	306
Other assets - net	(74)	(20)
Other liabilities - net	145	34
Net cash provided by (used for) operating activities	7,611	3,218
Cash flow from investing activities:
Capital expenditures - excluding equipment leased to others	(1,862)	(2,270)
Expenditures for equipment leased to others	(1,301)	(1,256)
Proceeds from disposals of leased assets and property, plant and equipment	593	840
Additions to finance receivables	(8,339)	(8,835)
Collections of finance receivables	6,790	6,567
Proceeds from sale of finance receivables	110	109
Investments and acquisitions (net of cash acquired)	(193)	(542)
Proceeds from sale of businesses and investments (net of cash sold)	168	1,009
Proceeds from sale of available-for-sale securities	297	243
Investments in available-for-sale securities	(312)	(299)
Other - net	(29)	82
Net cash provided by (used for) investing activities	(4,078)	(4,352)
Cash flow from financing activities:
Dividends paid	(730)	(937)
Distribution to noncontrolling interests	(10)	(5)
Common stock issued, including treasury shares reissued	77	41
Treasury shares purchased	(2,000)	0
Excess tax benefit from stock-based compensation	70	165
Acquisitions of redeemable noncontrolling interests	0	(444)
Proceeds from debt issued (original maturities greater than three months):
Machinery and Power Systems	145	2,015
Financial Products	6,854	9,617
Payments on debt (original maturities greater than three months):
Machinery and Power Systems	(1,134)	(485)
Financial Products	(7,636)	(6,242)
Short-term borrowings - net (original maturities three months or less)	1,736	166
Net cash provided by (used for) financing activities	(2,628)	3,891
Effect of exchange rate changes on cash	(38)	(125)
Increase (decrease) in cash and short-term investments	867	2,632
Cash and short-term investments at beginning of period	5,490	3,057
Cash and short-term investments at end of period	6,357	5,689
Non-cash activities:
Debt exchange original debentures amount		1,325
Debt exchange new debentures amount		1,722
Debt exchange new debentures interest rate (as a percent)		3.803%
Debt exchange new debentures due date (year)		2042
Debt exchange cash paid		$ 179

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2013

Accumulated other comprehensive income (loss) [Abstract]

Changes in Accumulated other comprehensive income (loss), net of tax

Changes in Accumulated other comprehensive income (loss), net of tax, included in the Consolidated Statement of Changes in Stockholders’ Equity, consisted of the following:

(Millions of dollars)	Foreign currency translation			Pension and other postretirement benefits			Derivative financial instruments			Available-for-sale securities			Total
Balance at September 30, 2012 1	$	432		$	(6,454	)	$	(35	)	$	69		$	(5,988	)
Three Months Ended September 30, 2013
Balance at June 30, 2013	$	(92	)	$	(6,645	)	$	(33	)	$	72		$	(6,698	)
Other comprehensive income (loss) before reclassifications	291			(3		)	26			9			323
Amounts reclassified from accumulated other comprehensive (income) loss	—			120			9			(1		)	128
Other comprehensive income (loss)	291			117			35			8			451
Balance at September 30, 2013	$	199		$	(6,528	)	$	2		$	80		$	(6,247	)
Nine Months Ended September 30, 2013
Balance at December 31, 2012	$	456		$	(6,914	)	$	(42	)	$	67		$	(6,433	)
Other comprehensive income (loss) before reclassifications	(257		)	24			2			14			(217		)
Amounts reclassified from accumulated other comprehensive (income) loss	—			362			42			(1		)	403
Other comprehensive income (loss)	(257		)	386			44			13			186
Balance at September 30, 2013	$	199		$	(6,528	)	$	2		$	80		$	(6,247	)

¹  In conjunction with the Cat Japan share redemption, to reflect the increase in our ownership interest in Cat Japan from 67 percent to 100 percent, $107 million was reclassified to Accumulated other comprehensive income (loss) from other components of stockholders' equity and was not included in Comprehensive income during the second quarter of 2012. The amount was comprised of foreign currency translation of $167 million, pension and other postretirement benefits of $(61) million and available-for-sale securities of $1 million.

Reclassifications out of Accumulated other comprehensive income (loss)

The effect of the reclassifications out of Accumulated other comprehensive income (loss) on the Consolidated Statement of Results of Operations is as follows:

(Millions of dollars)	Classification of income (expense)	Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
Pension and other postretirement benefits:
Amortization of actuarial gain (loss)	Note 9 1	$	(196	)	$	(589	)
Amortization of prior service credit (cost)	Note 9 1	14			41
Amortization of transition asset (obligation)	Note 9 1	(1		)	(2		)
Reclassifications before tax		(183		)	(550		)
Tax (provision) benefit		63			188
Reclassifications net of tax		$	(120	)	$	(362	)
Derivative financial instruments:
Foreign exchange contracts	Other income (expense)	$	(12	)	$	(60	)
Interest rate contracts	Other income (expense)	(1		)	(2		)
Interest rate contracts	Interest expense of Financial Products	(1		)	(4		)
Reclassifications before tax		(14		)	(66		)
Tax (provision) benefit		5			24
Reclassifications net of tax		$	(9	)	$	(42	)
Available-for-sale securities:
Realized gain (loss)	Other income (expense)	$	1		$	1
Tax (provision) benefit		—			—
Reclassifications net of tax		$	1		$	1
Total reclassifications from Accumulated other comprehensive income (loss)		$	(128	)	$	(403	)

¹    Amounts are included in the calculation of net periodic benefit cost. See Note 9 for additional information.

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Acquisitions

9 Months Ended

Sep. 30, 2013

Business Combinations [Abstract]

Acquisitions

Acquisitions

Johan Walter Berg AB

In September 2013, we acquired 100 percent of the stock of Johan Walter Berg AB (Berg). Berg is a leading manufacturer of mechanically and electrically driven propulsion systems and marine controls for ships. Headquartered in Öckerö Islands, Sweden, Berg has designed and manufactured heavy-duty marine thrusters and controllable pitch propellers since 1929. Its proprietary systems are employed in maritime applications throughout the world that require precise maneuvering and positioning. With the acquisition, Caterpillar will transition from selling only engines and generators to providing complete marine propulsion package systems. The purchase price, net of $9 million of acquired cash, was approximately $166 million. The purchase price includes contingent consideration, payable in 2016, with a fair value of approximately $7 million. The contingent consideration will be based on the revenues achieved by Berg in the period from January 1, 2013 to December 31, 2015 and is capped at €30 million. The contingent consideration will be remeasured each reporting period at its estimated fair value with any adjustment included in Other operating (income) expenses in the Consolidated Statement of Results of Operations.

The transaction was financed with available cash. Tangible assets as of the acquisition date were $83 million, recorded at their fair values, and primarily included cash of $9 million, receivables of $13 million, inventories of $33 million and property, plant and equipment of $28 million. Finite-lived intangible assets acquired of $66 million included developed technology, customer relationships, and trade names. The finite lived intangible assets are being amortized on a straight-line basis over a weighted-average amortization period of approximately 10 years. Liabilities assumed as of the acquisition date were $83 million, recorded at their fair values, and primarily included accounts payable of $19 million, advance payments of $33 million and net deferred tax liabilities of $13 million. Goodwill of $109 million, non-deductible for income tax purposes, represented the excess of the consideration transferred over the net assets recognized and represented the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Factors that contributed to a purchase price resulting in the recognition of goodwill include Berg’s strategic fit into our product portfolio, the opportunity to provide worldwide support to marine operators for a complete, optimized propulsion package, and the acquired assembled workforce. These values represent a preliminary allocation of purchase price subject to finalization of post-closing procedures. Berg will be reported in the Power Systems segment in Note 15. 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.

ERA Mining Machinery Limited (Siwei)

During the second quarter of 2012, Caterpillar, through its wholly-owned subsidiary Caterpillar (Luxembourg) Investment Co. S.A. (CAT Lux), completed a tender offer to acquire the issued shares of ERA Mining Machinery Limited (Siwei), including its wholly-owned subsidiary Zhengzhou Siwei Mechanical Manufacturing Co., Ltd. Substantially all of the issued shares of Siwei, a public company listed on the Hong Kong Exchange, were acquired at the end of May 2012. In October 2012, the remaining shares of Siwei common stock were acquired for approximately $7 million in cash. Siwei primarily designs, manufactures, sells and supports underground coal mining equipment in mainland China and is known for its expertise in manufacturing mining roof support equipment. The acquisition supports Caterpillar's long-term commitment to invest in China in order to support our growing base of Chinese customers and will further expand our underground mining business both inside and outside of China.

The tender offer allowed Siwei shareholders to choose between two types of consideration in exchange for their shares. The alternatives were either cash consideration of HK$0.88 or a HK$1.00 loan note issued by CAT Lux to the former shareholders of Siwei that provided, subject to its terms, for the holder to receive on redemption a minimum of HK$0.75 up to a maximum of HK$1.15 depending on Siwei's consolidated gross profit for 2012 and 2013. Approximately 4 billion Siwei shares were tendered for the cash alternative and approximately 1.6 billion Siwei shares were tendered for the loan note alternative. The purchase price of approximately $677 million was comprised of net cash paid of approximately $444 million ($475 million in cash paid for shares and to cancel share options less cash acquired of $31 million), the fair value of the loan notes of $152 million, approximately $168 million of assumed third-party short term borrowings and notes payable, a loan and interest payable to Caterpillar from Siwei of $51 million, less restricted cash acquired of approximately $138 million. The noncontrolling interest for the outstanding shares not tendered was approximately $7 million.

The transaction was financed with available cash and included the issuance of loan notes to certain former shareholders of Siwei, which had a debt component and a portion that was contingent consideration. The $152 million fair value represented the minimum redemption amount of the debt component payable in April 2013.

Tangible assets as of the acquisition date and after giving effect to the adjustments described below were $598 million, recorded at their fair values, and primarily included cash of $31 million, restricted cash of $138 million, receivables of $184 million, inventories of $77 million and property, plant and equipment of $94 million. Finite-lived intangible assets acquired of $112 million were primarily related to customer relationships and also included trade names. The finite-lived intangible assets are being amortized on a straight-line basis over a weighted average amortization period of approximately 14 years. Liabilities assumed as of the acquisition date and after giving effect to the adjustments described below were $626 million, recorded at their fair values, and primarily included accounts payable of $352 million, third-party short term borrowings and notes payable of $168 million and accrued expenses of $37 million. Additionally, deferred tax liabilities were $25 million. Goodwill of $625 million, substantially all of which is non-deductible for income tax purposes, represented the excess of the consideration transferred over the net assets recognized and represented the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill will not be amortized, but will be tested for impairment at least annually. Factors that contributed to a purchase price resulting in the recognition of goodwill include expected cost savings primarily from increased purchasing power for raw materials, improved working capital management, expanded underground mining equipment sales opportunities in China and internationally, along with the acquired assembled workforce. The results of the acquired business for the period from the acquisition date are included in the accompanying consolidated financial statements and are reported in the Resource Industries segment in Note 15. 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.

In November 2012, Caterpillar became aware of inventory accounting discrepancies at Siwei which led to an internal investigation. Caterpillar's investigation determined that Siwei had engaged in accounting misconduct prior to Caterpillar's acquisition of Siwei in mid-2012. The accounting misconduct included inappropriate accounting practices involving improper cost allocation that resulted in overstated profit and improper revenue recognition practices involving early and, at times unsupported, revenue recognition. Due to the identified accounting misconduct that occurred before the acquisition, measurement period adjustments were made to the fair value of the acquired assets and assumed liabilities during the fourth quarter of 2012. The fair values presented above are a final allocation of the purchase price and reflect these changes, which are primarily comprised of a decrease in finite-lived intangible assets of $82 million, a decrease in receivables of $29 million, a decrease in inventory of $17 million and a net increase in liabilities of $23 million, resulting in an increase in goodwill of $149 million.

Because of the accounting misconduct identified in the fourth quarter of 2012, Siwei's goodwill was tested for impairment as of November 30, 2012. We determined the carrying value of Siwei, which is a separate reporting unit, exceeded its fair value at the measurement date, requiring step two in the impairment test process.  The fair value of the Siwei reporting unit was determined primarily using an income approach based on the present value of discounted cash flows. We assigned the fair value to the reporting unit's assets and liabilities and determined the implied fair value of goodwill was substantially below the carrying value of the reporting unit's goodwill.  Accordingly, we recognized a $580 million goodwill impairment charge, which resulted in goodwill of approximately $45 million remaining for Siwei. The goodwill impairment was a result of changes in the assumptions used to determine the fair value resulting from the accounting misconduct that occurred before the acquisition. There was no tax benefit associated with this impairment charge. The Siwei goodwill impairment charge was reported in the fourth quarter of 2012 in the Resource Industries segment.

In May 2013, Caterpillar and its wholly-owned subsidiaries CAT Lux and Siwei entered into a settlement agreement with two former directors of Siwei and two other parties with an interest in the settlement, including Mining Machinery Limited (MML). The agreement settles the dispute between the parties which arose from Caterpillar's determination that Siwei senior managers had engaged in accounting misconduct for several years prior to Caterpillar's announcement of the completion of its tender offer for Siwei in the second quarter of 2012.

Under the terms of the settlement agreement, the parties agreed that (i) the loan notes issued by CAT Lux (and guaranteed by Caterpillar) as a portion of the Siwei purchase price and held by MML and (ii) loans made by the two former Siwei directors to Siwei prior to its acquisition by Caterpillar would all be canceled and discharged in exchange for payments by CAT Lux to MML and the two former directors in an aggregate amount of approximately $30 million. As of the settlement in May 2013, the loan notes had a book value of approximately $152 million and the obligation related to the loans by the two former directors was approximately $13 million. The settlement agreement contains a mutual release and discharge of the parties' respective claims with respect to the dispute and contains an agreement by Caterpillar and CAT Lux not to pursue any such claims against either the auditors or former directors of Siwei. The settlement and discharge of the loan obligations resulted in the recognition of a gain of approximately $135 million reported in Other operating (income) expenses in the Consolidated Statement of Results of Operations and is included in the Resource Industries segment.

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of type and fair value of the stock-based compensation awards granted during the period

The following table illustrates the type and fair value of the stock-based compensation awards granted during the nine month periods ended September 30, 2013 and 2012, respectively:

	2013			2012
	Shares Granted	Fair Value Per Award		Shares Granted	Fair Value Per Award
Stock options	4,276,060	$	28.34	3,224,203	$	39.20
RSUs	1,614,870	$	84.05	1,429,939	$	104.61

Schedule providing assumptions used in determining the fair value of stock-based awards

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, 2013 and 2012, respectively:

	Grant Year
	2013	2012
Weighted-average dividend yield	2.13%	2.16%
Weighted-average volatility	30.6%	35.0%
Range of volatilities	23.4-40.6%	33.3-40.4%
Range of risk-free interest rates	0.16-1.88%	0.17-2.00%
Weighted-average expected lives	8 years	7 years

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Segment Information (Details 3) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	$ 1,261	$ 2,450	$ 3,741	$ 7,324
Reportable Segments
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	1,772	2,705	5,459	8,790
All Other operating segment
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	170	482	547	888
Cost Centers
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	42	9	100	32
Corporate Costs
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(376)	(366)	(1,160)	(1,126)
Timing
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	77	(30)	58	(318)
Inventory/cost of sales
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(36)	9	(139)	(26)
Postretirement Benefits Expense
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(174)	(177)	(505)	(508)
Financing Costs
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(120)	(130)	(361)	(357)
Equity in Profit/Loss of Unconsolidated Affiliated Companies
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	1	(5)	1	(12)
Currency
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(32)	20	(71)	160
Interest rate swaps
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes		2		2
Other Income Expense Methodology Differences
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(58)	(64)	(178)	(199)
Other
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(5)	(5)	(10)	(2)
Machinery and Power Systems | Reportable Segments
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	1,554	2,515	4,735	8,207
Machinery and Power Systems | Business
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	1,047	2,256	3,007	6,740
Machinery and Power Systems | Business | Reportable Segments
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	1,554	2,515	4,735	8,207
Machinery and Power Systems | Business | All Other operating segment
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	170	482	547	888
Machinery and Power Systems | Business | Cost Centers
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	42	9	100	32
Machinery and Power Systems | Business | Corporate Costs
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(376)	(366)	(1,160)	(1,126)
Machinery and Power Systems | Business | Timing
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	77	(30)	58	(318)
Machinery and Power Systems | Business | Inventory/cost of sales
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(36)	9	(139)	(26)
Machinery and Power Systems | Business | Postretirement Benefits Expense
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(174)	(177)	(505)	(508)
Machinery and Power Systems | Business | Financing Costs
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(120)	(130)	(361)	(357)
Machinery and Power Systems | Business | Equity in Profit/Loss of Unconsolidated Affiliated Companies
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	1	(5)	1	(12)
Machinery and Power Systems | Business | Currency
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(32)	20	(71)	160
Machinery and Power Systems | Business | Interest rate swaps
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes		2		2
Machinery and Power Systems | Business | Other Income Expense Methodology Differences
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(58)	(64)	(178)	(199)
Machinery and Power Systems | Business | Other
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	(1)	(9)	(20)	(3)
Financial Products | Business
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	214	194	734	584
Financial Products | Business | Reportable Segments
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	218	190	724	583
Financial Products | Business | All Other operating segment
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	0	0	0	0
Financial Products | Business | Cost Centers
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	0	0	0	0
Financial Products | Business | Corporate Costs
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	0	0	0	0
Financial Products | Business | Timing
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	0	0	0	0
Financial Products | Business | Inventory/cost of sales
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	0	0	0	0
Financial Products | Business | Postretirement Benefits Expense
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	0	0	0	0
Financial Products | Business | Financing Costs
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	0	0	0	0
Financial Products | Business | Equity in Profit/Loss of Unconsolidated Affiliated Companies
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	0	0	0	0
Financial Products | Business | Currency
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	0	0	0	0
Financial Products | Business | Interest rate swaps
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes		0		0
Financial Products | Business | Other Income Expense Methodology Differences
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	0	0	0	0
Financial Products | Business | Other
Reconciliation of Consolidated profit (loss) before taxes
Consolidated profit before taxes	$ (4)	$ 4	$ 10	$ 1

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Available-For-Sale Securities (Tables)

9 Months Ended

Sep. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Schedule of available-for-sale securities

	September 30, 2013						December 31, 2012
(Millions of dollars)	Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value		Cost Basis		Unrealized Pretax Net Gains (Losses)			Fair Value
Government debt
U.S. treasury bonds	$	11	$	—	$	11	$	10	$	—		$	10
Other U.S. and non-U.S. government bonds	125		1		126		144		2			146
Corporate bonds
Corporate bonds	648		24		672		626		38			664
Asset-backed securities	75		—		75		96		—			96
Mortgage-backed debt securities
U.S. governmental agency	336		1		337		291		8			299
Residential	21		—		21		26		(1		)	25
Commercial	87		6		93		117		10			127
Equity securities
Large capitalization value	158		73		231		147		38			185
Smaller company growth	22		23		45		22		12			34
Total	$	1,483	$	128	$	1,611	$	1,479	$	107		$	1,586

Investments in an unrealized loss position that are not other-than-temporarily impaired:

Investments in an unrealized loss position that are not other-than-temporarily impaired:
	September 30, 2013
	Less than 12 months1				12 months or more1				Total
(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate bonds
Corporate bonds	$	174	$	2	$	—	$	—	$	174	$	2
Asset-backed securities	4		—		20		2		24		2
Mortgage-backed debt securities
U.S. governmental agency	145		4		56		1		201		5
Equity securities
Large capitalization value	15		1		2		—		17		1
Total	$	338	$	7	$	78	$	3	$	416	$	10

	December 31, 2012
	Less than 12 months1				12 months or more1				Total
(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate bonds
Asset-backed securities	$	—	$	—	$	20	$	3	$	20	$	3
Mortgage-backed debt securities
U.S. governmental agency	84		1		15		—		99		1
Residential	—		—		14		1		14		1
Equity securities
Large capitalization value	25		2		10		1		35		3
Total	$	109	$	3	$	59	$	5	$	168	$	8

¹  Indicates length of time that individual securities have been in a continuous unrealized loss position.

Cost basis and fair value of the available-for-sale debt securities by contractual maturity

	September 30, 2013
(Millions of dollars)	Cost Basis		Fair Value
Due in one year or less	$	211	$	214
Due after one year through five years	589		611
Due after five years through ten years	28		29
Due after ten years	31		30
U.S. governmental agency mortgage-backed securities	336		337
Residential mortgage-backed securities	21		21
Commercial mortgage-backed securities	87		93
Total debt securities – available-for-sale	$	1,303	$	1,335

Schedule of proceeds and gross gain and losses from the sale of available-for-sale securities

Sales of Securities:
	Three Months Ended September 30,				Nine Months Ended September 30,
(Millions of dollars)	2013		2012		2013		2012
Proceeds from the sale of available-for-sale securities	$	90	$	66	$	297	$	243
Gross gains from the sale of available-for-sale securities	$	2	$	1	$	4	$	4
Gross losses from the sale of available-for-sale securities	$	1	$	—	$	2	$	—

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Segment Information (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Reconciliation of Sales and revenues
Sales and revenues	$ 13,423	$ 16,445	$ 41,254	$ 49,800
Reportable Segments
Reconciliation of Sales and revenues
Sales and revenues	13,280	16,211	40,843	48,804
All Other operating segment
Reconciliation of Sales and revenues
Sales and revenues	219	318	647	1,246
Other
Reconciliation of Sales and revenues
Sales and revenues	(76)	(84)	(236)	(250)
Consolidating Adjustments
Reconciliation of Sales and revenues
Sales and revenues	(80)	(90)	(256)	(264)
Consolidating Adjustments | Reportable Segments
Reconciliation of Sales and revenues
Sales and revenues	0	0	0	0
Consolidating Adjustments | All Other operating segment
Reconciliation of Sales and revenues
Sales and revenues	0	0	0	0
Consolidating Adjustments | Other
Reconciliation of Sales and revenues
Sales and revenues	(80)	(90)	(256)	(264)
Machinery and Power Systems | Reportable Segments
Reconciliation of Sales and revenues
Sales and revenues	12,473	15,435	38,435	46,503
Machinery and Power Systems | Business
Reconciliation of Sales and revenues
Sales and revenues	12,678	15,739	39,048	47,711
Machinery and Power Systems | Business | Reportable Segments
Reconciliation of Sales and revenues
Sales and revenues	12,473	15,435	38,435	46,503
Machinery and Power Systems | Business | All Other operating segment
Reconciliation of Sales and revenues
Sales and revenues	219	318	647	1,246
Machinery and Power Systems | Business | Other
Reconciliation of Sales and revenues
Sales and revenues	(14)	(14)	(34)	(38)
Financial Products | Business
Reconciliation of Sales and revenues
Sales and revenues	825	796	2,462	2,353
Financial Products | Business | Reportable Segments
Reconciliation of Sales and revenues
Sales and revenues	807	776	2,408	2,301
Financial Products | Business | All Other operating segment
Reconciliation of Sales and revenues
Sales and revenues	0	0	0	0
Financial Products | Business | Other
Reconciliation of Sales and revenues
Sales and revenues	$ 18	$ 20	$ 54	$ 52

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Investments in Unconsolidated Affiliated Companies (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Jul. 31, 2012
Results of Operations of unconsolidated affiliated companies:
Sales	$ 349	$ 253	$ 916	$ 625
Cost of sales	284	206	722	492
Gross profit	65	47	194	133
Profit (loss)	(6)	17	(31)	39
Assets:
Current assets	707		707		715
Property, plant and equipment - net	714		714		529
Other assets	498		498		616
Assets	1,919		1,919		1,860
Liabilities:
Current liabilities	450		450		443
Long-term debt due after one year	887		887		708
Other liabilities	167		167		170
Liabilities	1,504		1,504		1,321
Equity	415		415		539
Caterpillar's investments in unconsolidated affiliated companies:
Investments in equity method companies	268		268		256
Plus: Investments in cost method companies	10		10		16
Total investments in unconsolidated affiliated companies	$ 278		$ 278		$ 272
Percentage of equity interest retained in subsidiary (as a percent)						35.00%

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Derivative Financial Instruments and Risk Management (Details 2) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Derivatives Fair Value
Asset Fair Value	$ 255	$ 298
Liability Fair Value	(69)	(144)
Machinery and Power Systems
Derivatives Fair Value
Asset Fair Value	92	60
Liability Fair Value	(56)	(129)
Financial Products
Derivatives Fair Value
Asset Fair Value	163	238
Liability Fair Value	(13)	(15)
Designated Derivatives
Derivatives Fair Value
Asset (Liability) Fair Value	162	180
Designated Derivatives | Foreign exchange contracts | Receivables-trade and other | Machinery and Power Systems
Derivatives Fair Value
Asset Fair Value	49	28
Designated Derivatives | Foreign exchange contracts | Long-term receivables-trade and other | Machinery and Power Systems
Derivatives Fair Value
Asset Fair Value	1	0
Designated Derivatives | Foreign exchange contracts | Accrued Expenses | Machinery and Power Systems
Derivatives Fair Value
Liability Fair Value	(24)	(66)
Designated Derivatives | Interest rate contracts | Receivables-trade and other | Financial Products
Derivatives Fair Value
Asset Fair Value	12	17
Designated Derivatives | Interest rate contracts | Long-term receivables-trade and other | Financial Products
Derivatives Fair Value
Asset Fair Value	130	209
Designated Derivatives | Interest rate contracts | Accrued Expenses | Financial Products
Derivatives Fair Value
Liability Fair Value	(6)	(8)
Undesignated Derivatives
Derivatives Fair Value
Asset (Liability) Fair Value	24	(26)
Undesignated Derivatives | Foreign exchange contracts | Receivables-trade and other | Machinery and Power Systems
Derivatives Fair Value
Asset Fair Value	42	31
Undesignated Derivatives | Foreign exchange contracts | Receivables-trade and other | Financial Products
Derivatives Fair Value
Asset Fair Value	13	10
Undesignated Derivatives | Foreign exchange contracts | Long-term receivables-trade and other | Financial Products
Derivatives Fair Value
Asset Fair Value	8	0
Undesignated Derivatives | Foreign exchange contracts | Accrued Expenses | Machinery and Power Systems
Derivatives Fair Value
Liability Fair Value	(31)	(63)
Undesignated Derivatives | Foreign exchange contracts | Accrued Expenses | Financial Products
Derivatives Fair Value
Liability Fair Value	(7)	(6)
Undesignated Derivatives | Interest rate contracts | Receivables-trade and other | Financial Products
Derivatives Fair Value
Asset Fair Value	0	2
Undesignated Derivatives | Interest rate contracts | Accrued Expenses | Financial Products
Derivatives Fair Value
Liability Fair Value	0	(1)
Undesignated Derivatives | Commodity contracts | Receivables-trade and other | Machinery and Power Systems
Derivatives Fair Value
Asset Fair Value	0	1
Undesignated Derivatives | Commodity contracts | Accrued Expenses | Machinery and Power Systems
Derivatives Fair Value
Liability Fair Value	$ (1)	$ 0

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Divestitures and Assets Held for Sale (Tables)

9 Months Ended

Sep. 30, 2013

Divestitures and Assets held for sale [Abstract]

Major classes of assets held for sale

The major classes of assets held for sale for a portion of the Bucyrus distribution business were as follows:

(Millions of dollars)	September 30, 2013		December 31, 2012
Inventories	$	63	$	30
Current assets	$	63	$	30
Property, plant and equipment – net	$	3	$	—
Intangible assets	101		32
Goodwill	64		52
Non-current assets	$	168	$	84

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Consolidated Statement of Comprehensive Income (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Profit of consolidated and affiliated companies	$ 950	$ 1,702	$ 2,797	$ 5,022
Other Comprehensive Income (Loss), Net of Tax:
Foreign currency translation, net of tax (provision)/benefit of: Three months ended: 2013-$33, 2012-$11; Nine months ended: 2013-$41, 2012-$(5)	291	193	(255)	35
Pension and other postretirement benefits:
Current year actuarial gain (loss), net of tax (provision)/benefit of: Three months ended: 2013-$2, 2012-$91; Nine months ended: 2013-$(14), 2012-$83	(3)	(155)	24	(140)
Amortization of actuarial (gain) loss, net of tax (provision)/benefit of: Three months ended: 2013-$(67), 2012-$(61); Nine months ended: 2013-$(201), 2012-$(181)	129	114	388	340
Current year prior service credit (cost), net of tax (provision)/benefit of: Three months ended: 2013-$0, 2012-$(3); Nine months ended: 2013-$0, 2012-$(1)	0	4	0	1
Amortization of prior service (credit) cost, net of tax (provision)/benefit of: Three months ended: 2013-$5, 2012-$4; Nine months ended: 2013-$14, 2012-$12	(9)	(8)	(27)	(23)
Amortization of transition (asset) obligation, net of tax (provision)/benefit of: Three months ended: 2013-$(1), 2012-$0; Nine months ended: 2013-$(1), 2012-$0	0	1	1	2
Derivative financial instruments:
Gains (losses) deferred, net of tax (provision)/benefit of: Three months ended: 2013-$(15), 2012-$5; Nine months ended: 2013-$(2), 2012-$21	26	(7)	2	(35)
(Gains) losses reclassified to earnings, net of tax (provision)/benefit of: Three months ended: 2013-$(5), 2012-$(5); Nine months ended: 2013-$(24), 2012-$(6)	9	9	42	10
Available-for-sale securities:
Gains (losses) deferred, net of tax (provision)/benefit of: Three months ended: 2013-$(6), 2012-$(8); Nine months ended: 2013-$(8), 2012-$(13)	9	12	14	28
(Gains) losses reclassified to earnings, net of tax (provision)/benefit of: Three months ended: 2013-$0, 2012-$0; Nine months ended: 2013-$0, 2012-$0	(1)	(1)	(1)	(3)
Total other comprehensive income (loss), net of tax	451	162	188	215
Comprehensive Income	1,401	1,864	2,985	5,237
Less: comprehensive income attributable to the noncontrolling interests	(4)	(3)	(13)	(20)
Comprehensive income attributable to stockholders	$ 1,397	$ 1,861	$ 2,972	$ 5,217

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Inventories

9 Months Ended

Sep. 30, 2013

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories (principally using the last-in, first-out (LIFO) method) are comprised of the following:

(Millions of dollars)	September 30, 2013		December 31, 2012
Raw materials	$	3,138	$	3,573
Work-in-process	2,749		2,920
Finished goods	7,221		8,767
Supplies	284		287
Total inventories	$	13,392	$	15,547

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Consolidated Statement of Financial Position (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash and short-term investments	$ 6,357	$ 5,490
Receivables - trade and other	8,649	10,092
Receivables - finance	9,161	8,860
Deferred and refundable income taxes	1,541	1,547
Prepaid expenses and other current assets	988	988
Inventories	13,392	15,547
Total current assets	40,088	42,524
Property, plant and equipment - net	16,588	16,461
Long-term receivables - trade and other	1,329	1,316
Long-term receivables - finance	14,585	14,029
Investments in unconsolidated affiliated companies	278	272
Noncurrent deferred and refundable income taxes	1,985	2,011
Intangible assets	3,718	4,016
Goodwill	6,968	6,942
Other assets	1,733	1,785
Total assets	87,272	89,356
Short-term borrowings:
Machinery and Power Systems	290	636
Financial Products	5,557	4,651
Accounts payable	6,280	6,753
Accrued expenses	3,373	3,667
Accrued wages, salaries and employee benefits	1,391	1,911
Customer advances	2,699	2,978
Other current liabilities	1,854	2,055
Long-term debt due within one year:
Machinery and Power Systems	1,110	1,113
Financial Products	6,565	5,991
Total current liabilities	29,119	29,755
Long-term debt due after one year:
Machinery and Power Systems	7,951	8,666
Financial Products	18,064	19,086
Liability for postemployment benefits	10,785	11,085
Other liabilities	3,176	3,182
Total liabilities	69,095	71,774
Commitments and contingencies (Notes 10 and 13)
Stockholders' equity
Common stock of $1.00 par value: Authorized shares: 2,000,000,000 Issued shares: (9/30/13 and 12/31/12 - 814,894,624) at paid-in amount	4,657	4,481
Treasury stock (9/30/13 - 178,538,633 shares; 12/31/12 - 159,846,131 shares) at cost	(11,914)	(10,074)
Profit employed in the business	31,614	29,558
Accumulated other comprehensive income (loss)	(6,247)	(6,433)
Noncontrolling interests	67	50
Total stockholders' equity	18,177	17,582
Total liabilities and stockholders' equity	$ 87,272	$ 89,356

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Available-For-Sale Securities (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Schedule of Available-for-sale Securities
Cost Basis	$ 1,483		$ 1,483		$ 1,479
Unrealized pretax net gains (losses)	128		128		107
Fair Value	1,611		1,611		1,586
Charges for other than temporary decIines in the value of securities	0	0	1	1
U.S. treasury bonds
Schedule of Available-for-sale Securities
Cost Basis	11		11		10
Unrealized pretax net gains (losses)	0		0		0
Fair Value	11		11		10
Other U.S. and non-U.S. government bonds
Schedule of Available-for-sale Securities
Cost Basis	125		125		144
Unrealized pretax net gains (losses)	1		1		2
Fair Value	126		126		146
Corporate bonds
Schedule of Available-for-sale Securities
Cost Basis	648		648		626
Unrealized pretax net gains (losses)	24		24		38
Fair Value	672		672		664
Asset-backed Securities
Schedule of Available-for-sale Securities
Cost Basis	75		75		96
Unrealized pretax net gains (losses)	0		0		0
Fair Value	75		75		96
U.S. governmental agency mortgage-backed securities
Schedule of Available-for-sale Securities
Cost Basis	336		336		291
Unrealized pretax net gains (losses)	1		1		8
Fair Value	337		337		299
Residential
Schedule of Available-for-sale Securities
Cost Basis	21		21		26
Unrealized pretax net gains (losses)	0		0		(1)
Fair Value	21		21		25
Commercial
Schedule of Available-for-sale Securities
Cost Basis	87		87		117
Unrealized pretax net gains (losses)	6		6		10
Fair Value	93		93		127
Large capitalization value
Schedule of Available-for-sale Securities
Cost Basis	158		158		147
Unrealized pretax net gains (losses)	73		73		38
Fair Value	231		231		185
Smaller company growth
Schedule of Available-for-sale Securities
Cost Basis	22		22		22
Unrealized pretax net gains (losses)	23		23		12
Fair Value	$ 45		$ 45		$ 34

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Consolidated Statement of Results of Operations (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
Sales and revenues:
Sales of Machinery and Power Systems	$ 12,678		$ 15,739		$ 39,048		$ 47,711
Revenues of Financial Products	745		706		2,206		2,089
Total sales and revenues	13,423		16,445		41,254		49,800
Operating costs:
Cost of goods sold	9,774		11,639		30,186		35,156
Selling, general and administrative expenses	1,319		1,471		4,130		4,328
Research and development expenses	469		634		1,579		1,853
Interest expense of Financial Products	178		197		552		599
Other operating (income) expenses	282		(92)		631		329
Total operating costs	12,022		13,849		37,078		42,265
Operating profit	1,401		2,596		4,176		7,535
Interest expense excluding Financial Products	116		129		356		352
Other income (expense)	(24)		(17)		(79)		141
Consolidated profit before taxes	1,261		2,450		3,741		7,324
Provision (benefit) for income taxes	310		753		943		2,314
Profit of consolidated companies	951		1,697		2,798		5,010
Equity in profit (loss) of unconsolidated affiliated companies	(1)		5		(1)		12
Profit of consolidated and affiliated companies	950		1,702		2,797		5,022
Less: Profit (loss) attributable to noncontrolling interests	4		3		11		38
Profit	$ 946	[1]	$ 1,699	[1]	$ 2,786	[1]	$ 4,984	[1]
Profit per common share (in dollars per share)	$ 1.48		$ 2.60		$ 4.30		$ 7.64
Profit per common share - diluted (in dollars per share)	$ 1.45	[2]	$ 2.54	[2]	$ 4.21	[2]	$ 7.44	[2]
Weighted-average common shares outstanding (millions)
Basic (in shares)	639.3		653.6		647.6		652.0
Diluted (in shares)	651.9	[2]	668.7	[2]	661.3	[2]	669.7	[2]
Cash dividends declared per common share (in dollars per share)	$ 0.00		$ 0.00		$ 1.12		$ 0.98

[1] 1 Profit attributable to common stockholders.

[2] 2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

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Derivative Financial Instruments and Risk Management (Details 3) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Designated Derivatives | Fair Value Hedges
Derivative Instruments, Gain (Loss)
Gains (Losses) on Derivatives	$ (9)	$ 7	$ (87)	$ 4
Gains (Losses) on Borrowings	12	(3)	92	7
Designated Derivatives | Fair Value Hedges | Interest rate contracts | Financial Products | Other Income (Expense)
Derivative Instruments, Gain (Loss)
Gains (Losses) on Derivatives	(9)	7	(87)	4
Gains (Losses) on Borrowings	12	(3)	92	7
Designated Derivatives | Cash Flow Hedges
Derivative Instruments, Gain (Loss)
Amount of Gains (Losses) Recognized in AOCI (Effective Portion)	41	(12)	4	(56)
Amount of Gains (Losses) Reclassified from AOCI to Earnings	(14)	(14)	(66)	(16)
Recognized in Earnings (Ineffective Portion)	0	0	0	(1)
Designated Derivatives | Cash Flow Hedges | Foreign exchange contracts | Machinery and Power Systems
Derivative Instruments, Gain (Loss)
Amount of Gains (Losses) Recognized in AOCI (Effective Portion)	44	(6)	4	(48)
Designated Derivatives | Cash Flow Hedges | Foreign exchange contracts | Machinery and Power Systems | Other Income (Expense)
Derivative Instruments, Gain (Loss)
Amount of Gains (Losses) Reclassified from AOCI to Earnings	(12)	(14)	(60)	(13)
Recognized in Earnings (Ineffective Portion)	0	0	0	0
Gains (Losses) reclassified from AOCI to earnings for derivatives dedesignated as related transactions are no longer probable to occur			(3)
Designated Derivatives | Cash Flow Hedges | Interest rate contracts | Machinery and Power Systems
Derivative Instruments, Gain (Loss)
Amount of Gains (Losses) Recognized in AOCI (Effective Portion)	0	0	0
Designated Derivatives | Cash Flow Hedges | Interest rate contracts | Machinery and Power Systems | Other Income (Expense)
Derivative Instruments, Gain (Loss)
Amount of Gains (Losses) Reclassified from AOCI to Earnings	(1)	1	(2)
Recognized in Earnings (Ineffective Portion)	0	0	0
Designated Derivatives | Cash Flow Hedges | Interest rate contracts | Financial Products
Derivative Instruments, Gain (Loss)
Amount of Gains (Losses) Recognized in AOCI (Effective Portion)	(3)	(6)	0	(8)
Designated Derivatives | Cash Flow Hedges | Interest rate contracts | Financial Products | Interest Expense of Financial Products
Derivative Instruments, Gain (Loss)
Amount of Gains (Losses) Reclassified from AOCI to Earnings	(1)	(1)	(4)	(3)
Recognized in Earnings (Ineffective Portion)	0	0	0	(1)
Undesignated Derivatives
Derivative Instruments, Gain (Loss)
Gains (Losses) on Derivatives Not Designated as Hedging Instruments	19	(1)	8	31
Undesignated Derivatives | Foreign exchange contracts | Machinery and Power Systems | Other Income (Expense)
Derivative Instruments, Gain (Loss)
Gains (Losses) on Derivatives Not Designated as Hedging Instruments	15	(9)	7	21
Undesignated Derivatives | Foreign exchange contracts | Financial Products | Other Income (Expense)
Derivative Instruments, Gain (Loss)
Gains (Losses) on Derivatives Not Designated as Hedging Instruments	3	5	4	7
Undesignated Derivatives | Interest rate contracts | Financial Products | Other Income (Expense)
Derivative Instruments, Gain (Loss)
Gains (Losses) on Derivatives Not Designated as Hedging Instruments	(1)	0	(1)	0
Undesignated Derivatives | Commodity contracts | Machinery and Power Systems | Other Income (Expense)
Derivative Instruments, Gain (Loss)
Gains (Losses) on Derivatives Not Designated as Hedging Instruments	$ 2	$ 3	$ (2)	$ 3

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Cat Financial Financing Activities (Details 5) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013 Contracts	Sep. 30, 2012 Contracts	Sep. 30, 2013 Contracts	Sep. 30, 2012 Contracts
Customer
Loans modified as TDRs
Number of Contracts (in contracts)	82	58	132	111
Pre-TDR Outstanding Recorded Investment	$ 195	$ 159	$ 237	$ 202
Post-TDR Outstanding Recorded Investment	196	159	240	202
TDRs with a payment default which had been modified within twelve months prior to the default date
Number of Contracts (in contracts)	10	10	25	57
Post-TDR Recorded Investment	1	2	7	25
Customer | North America
Loans modified as TDRs
Number of Contracts (in contracts)	14	17	46	58
Pre-TDR Outstanding Recorded Investment	1	4	5	8
Post-TDR Outstanding Recorded Investment	0	4	5	8
TDRs with a payment default which had been modified within twelve months prior to the default date
Number of Contracts (in contracts)	5	8	18	39
Post-TDR Recorded Investment	1	1	4	3
Customer | Europe
Loans modified as TDRs
Number of Contracts (in contracts)	7	14	15	21
Pre-TDR Outstanding Recorded Investment	5	1	6	8
Post-TDR Outstanding Recorded Investment	5	1	6	8
TDRs with a payment default which had been modified within twelve months prior to the default date
Number of Contracts (in contracts)	5	0	5	0
Post-TDR Recorded Investment	0	0	0	0
Customer | Asia Pacific
Loans modified as TDRs
Number of Contracts (in contracts)	0	12	0	12
Pre-TDR Outstanding Recorded Investment	0	3	0	3
Post-TDR Outstanding Recorded Investment	0	3	0	3
TDRs with a payment default which had been modified within twelve months prior to the default date
Number of Contracts (in contracts)	0	2	0	2
Post-TDR Recorded Investment	0	1	0	1
Customer | Mining
Loans modified as TDRs
Number of Contracts (in contracts)	45	0	45	0
Pre-TDR Outstanding Recorded Investment	123	0	123	0
Post-TDR Outstanding Recorded Investment	123	0	123	0
Customer | Latin America
Loans modified as TDRs
Number of Contracts (in contracts)	10	0	16	0
Pre-TDR Outstanding Recorded Investment	1	0	2	0
Post-TDR Outstanding Recorded Investment	1	0	2	0
Customer | Caterpillar Power Finance
Loans modified as TDRs
Number of Contracts (in contracts)	6	15	10	20
Pre-TDR Outstanding Recorded Investment	65	151	101	183
Post-TDR Outstanding Recorded Investment	67	151	104	183
Additional funds loaned not recorded as TDRs	13		25
Remaining Commitments	4		4
TDRs with a payment default which had been modified within twelve months prior to the default date
Number of Contracts (in contracts)			2	16
Post-TDR Recorded Investment			$ 3	$ 21
Dealer
Loans modified as TDRs
Number of Contracts (in contracts)	0	0	0	0

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Cat Financial Financing Activities (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Receivables [Abstract]
Period after which collection of future income is considered as not probable (in days)			120 days
Customer
Impaired loans and finance leases
Recorded Investment With No Allowance Recorded	$ 523		$ 523		$ 378
Unpaid Principal Balance With No Allowance Recorded	520		520		377
Related Allowance With No Allowance Recorded	0		0		0
Recorded Investment With An Allowance Recorded	213		213		215
Unpaid Principal Balance With An Allowance Recorded	202		202		207
Related Allowance	60		60		54
Recorded Investment, Total	736		736		593
Unpaid Principal Balance, Total	722		722		584
Related Allowance, Total	60		60		54
Average Recorded Investment With No Allowance Recorded	468	323	414	323
Interest Income Recognized With No Allowance Recorded	3	2	7	5
Average Recorded Investment With An Allowance Recorded	262	210	247	177
Interest Income Recognized With An Allowance Recorded	2	2	5	3
Average Recorded Investment, Total	730	533	661	500
Interest Income Recognized, Total	5	4	12	8
Customer | North America
Impaired loans and finance leases
Recorded Investment With No Allowance Recorded	20		20		28
Unpaid Principal Balance With No Allowance Recorded	19		19		27
Related Allowance With No Allowance Recorded	0		0		0
Recorded Investment With An Allowance Recorded	16		16		25
Unpaid Principal Balance With An Allowance Recorded	14		14		23
Related Allowance	4		4		7
Recorded Investment, Total	36		36		53
Unpaid Principal Balance, Total	33		33		50
Related Allowance, Total	4		4		7
Average Recorded Investment With No Allowance Recorded	23	41	26	56
Interest Income Recognized With No Allowance Recorded	0	1	3	2
Average Recorded Investment With An Allowance Recorded	14	25	18	25
Interest Income Recognized With An Allowance Recorded	0	0	0	0
Average Recorded Investment, Total	37	66	44	81
Interest Income Recognized, Total	0	1	3	2
Customer | Europe
Impaired loans and finance leases
Recorded Investment With No Allowance Recorded	53		53		45
Unpaid Principal Balance With No Allowance Recorded	52		52		45
Related Allowance With No Allowance Recorded	0		0		0
Recorded Investment With An Allowance Recorded	19		19		28
Unpaid Principal Balance With An Allowance Recorded	15		15		26
Related Allowance	7		7		11
Recorded Investment, Total	72		72		73
Unpaid Principal Balance, Total	67		67		71
Related Allowance, Total	7		7		11
Average Recorded Investment With No Allowance Recorded	52	45	48	45
Interest Income Recognized With No Allowance Recorded	0	0	0	0
Average Recorded Investment With An Allowance Recorded	21	27	23	26
Interest Income Recognized With An Allowance Recorded	0	1	1	1
Average Recorded Investment, Total	73	72	71	71
Interest Income Recognized, Total	0	1	1	1
Customer | Asia Pacific
Impaired loans and finance leases
Recorded Investment With No Allowance Recorded	2		2		2
Unpaid Principal Balance With No Allowance Recorded	2		2		2
Related Allowance With No Allowance Recorded	0		0		0
Recorded Investment With An Allowance Recorded	22		22		19
Unpaid Principal Balance With An Allowance Recorded	22		22		19
Related Allowance	6		6		4
Recorded Investment, Total	24		24		21
Unpaid Principal Balance, Total	24		24		21
Related Allowance, Total	6		6		4
Average Recorded Investment With No Allowance Recorded	3	3	4	4
Interest Income Recognized With No Allowance Recorded	0	0	0	0
Average Recorded Investment With An Allowance Recorded	18	15	18	13
Interest Income Recognized With An Allowance Recorded	0	0	1	1
Average Recorded Investment, Total	21	18	22	17
Interest Income Recognized, Total	0	0	1	1
Customer | Mining
Impaired loans and finance leases
Recorded Investment With No Allowance Recorded	127		127		1
Unpaid Principal Balance With No Allowance Recorded	127		127		1
Related Allowance With No Allowance Recorded	0		0		0
Recorded Investment With An Allowance Recorded	0		0		0
Unpaid Principal Balance With An Allowance Recorded	0		0		0
Related Allowance	0		0		0
Recorded Investment, Total	127		127		1
Unpaid Principal Balance, Total	127		127		1
Related Allowance, Total	0		0		0
Average Recorded Investment With No Allowance Recorded	96	9	40	8
Interest Income Recognized With No Allowance Recorded	2	1	2	1
Average Recorded Investment With An Allowance Recorded	0	0	1	0
Interest Income Recognized With An Allowance Recorded	0	0	0	0
Average Recorded Investment, Total	96	9	41	8
Interest Income Recognized, Total	2	1	2	1
Customer | Latin America
Impaired loans and finance leases
Recorded Investment With No Allowance Recorded	16		16		7
Unpaid Principal Balance With No Allowance Recorded	16		16		7
Related Allowance With No Allowance Recorded	0		0		0
Recorded Investment With An Allowance Recorded	62		62		30
Unpaid Principal Balance With An Allowance Recorded	62		62		30
Related Allowance	18		18		8
Recorded Investment, Total	78		78		37
Unpaid Principal Balance, Total	78		78		37
Related Allowance, Total	18		18		8
Average Recorded Investment With No Allowance Recorded	14	6	11	6
Interest Income Recognized With No Allowance Recorded	0	0	0	0
Average Recorded Investment With An Allowance Recorded	53	37	44	26
Interest Income Recognized With An Allowance Recorded	1	1	2	1
Average Recorded Investment, Total	67	43	55	32
Interest Income Recognized, Total	1	1	2	1
Customer | Caterpillar Power Finance
Impaired loans and finance leases
Recorded Investment With No Allowance Recorded	305		305		295
Unpaid Principal Balance With No Allowance Recorded	304		304		295
Related Allowance With No Allowance Recorded	0		0		0
Recorded Investment With An Allowance Recorded	94		94		113
Unpaid Principal Balance With An Allowance Recorded	89		89		109
Related Allowance	25		25		24
Recorded Investment, Total	399		399		408
Unpaid Principal Balance, Total	393		393		404
Related Allowance, Total	25		25		24
Average Recorded Investment With No Allowance Recorded	280	219	285	204
Interest Income Recognized With No Allowance Recorded	1	0	2	2
Average Recorded Investment With An Allowance Recorded	156	106	143	87
Interest Income Recognized With An Allowance Recorded	1	0	1	0
Average Recorded Investment, Total	436	325	428	291
Interest Income Recognized, Total	2	0	3	2
Dealer
Impaired loans and finance leases
Recorded Investment, Total	0		0		0
Average Recorded Investment, Total	$ 0	$ 0	$ 0	$ 0

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Divestitures and Assets Held for Sale

9 Months Ended

Sep. 30, 2013

Divestitures and Assets held for sale [Abstract]

Divestitures and Assets Held for Sale

Divestitures and Assets Held for Sale

Bucyrus Distribution Business Divestiture

In conjunction with our acquisition of Bucyrus in July 2011, we announced our intention to sell the Bucyrus distribution business to Caterpillar dealers that support mining customers around the world in a series of individual transactions.  Bucyrus predominantly employed a direct to end customer model to sell and support products.  The intention is for all Bucyrus products to be sold and serviced by Caterpillar dealers, consistent with our long-held distribution strategy.  These transitions are occurring in phases based on the mining business opportunity within each dealer territory.

As portions of the Bucyrus distribution business are sold or classified as held for sale, they will not qualify as discontinued operations because Caterpillar expects significant continuing direct cash flows from the Caterpillar dealers after the divestitures. The gain or loss on disposal, along with the continuing operations of these disposal groups, will be reported in the Resource Industries segment. Goodwill will be allocated to each disposal group using the relative fair value method. The value of the customer relationship intangibles related to each portion of the Bucyrus distribution business to be sold will be included in the disposal groups. The disposal groups will be recorded at the lower of their carrying value or fair value less cost to sell. The portions of the distribution business that were sold were not material to our results of operations, financial position or cash flow.

We completed two sale transactions during the first quarter, one during the second quarter and three during the third quarter of 2013 whereby we sold portions of the Bucyrus distribution business to Caterpillar dealers for an aggregate price of $199 million. For the first nine months of 2013, after-tax profit was unfavorably impacted by $44 million as a result of the Bucyrus distribution divestiture activities. This is comprised of $64 million of gains related to the sales transactions, a $34 million unfavorable adjustment due to a change in estimate to increase the reserve for parts returns related to prior sale transactions (both included in Other operating (income) expenses) and costs incurred related to the Bucyrus distribution divestiture activities of $85 million (included in Selling, general and administrative expenses), offset by an income tax benefit of $11 million.

Assets sold in the first nine months of 2013 primarily consisted of customer relationship intangibles of $31 million, allocated goodwill of $24 million, inventory of $20 million and fixed assets of $8 million related to the divested portions of the Bucyrus distribution business.

As of September 30, 2013, nine divestiture transactions were classified as held for sale and are expected to close in 2013 and 2014. Current assets held for sale were included in Prepaid expenses and other current assets and non-current assets held for sale were included in Other assets in the Consolidated Statement of Financial Position.

The major classes of assets held for sale for a portion of the Bucyrus distribution business were as follows:

(Millions of dollars)	September 30, 2013		December 31, 2012
Inventories	$	63	$	30
Current assets	$	63	$	30
Property, plant and equipment – net	$	3	$	—
Intangible assets	101		32
Goodwill	64		52
Non-current assets	$	168	$	84

Third Party Logistics Business Divestiture

On July 31, 2012 Platinum Equity acquired a 65 percent equity interest in Caterpillar Logistics Services LLC, the third party logistics division of our wholly owned subsidiary, Caterpillar Logistics Inc., for $567 million subject to certain working capital adjustments. The purchase price of $567 million was comprised of a $107 million equity contribution from Platinum Equity to, and third party debt raised by, Caterpillar Logistics Services LLC. The sale of the third party logistics business supports Caterpillar's increased focus on the continuing growth opportunities in its core businesses. Under the terms of the agreement, Caterpillar retained a 35 percent equity interest.

As a result of the divestiture, we recorded a pretax gain of $276 million (included in Other operating (income) expenses). In addition, we recognized $8 million of incremental incentive compensation expense. The fair value of our retained noncontrolling interest was $58 million, as determined by the $107 million equity contribution from Platinum Equity, and was included in Investments in unconsolidated affiliated companies in the Consolidated Statement of Financial Position. The disposal did not qualify as discontinued operations because Caterpillar has significant continuing involvement through its noncontrolling interest. The financial impact of the disposal was reported in the All Other operating segment. Results for our remaining interest are recorded in Equity in profit (loss) of unconsolidated affiliated companies and are reported in the All Other operating segment.

The controlling financial interest in Caterpillar Logistics Services LLC was not material to our results of operations, financial position or cash flow.

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Income Taxes

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes for the first nine months of 2013 reflects an estimated annual effective tax rate of29 percent compared with 30.5 percent for 2012, excluding the items discussed below. The decrease is primarily due to the U.S. research and development tax credit that was expired in 2012, along with expected changes in our geographic mix of profits from a tax perspective.

The 2013 tax provision also includes a benefit of $87 million primarily related to the research and development tax credit that was retroactively extended for 2012 and a benefit of $55 million resulting from true-up of estimated amounts used in the tax provision to the 2012 U.S. tax return as filed in September 2013. This compares to an $81 million negative impact related to nondeductible goodwill in the first nine months of 2012.

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Assets and liabilities measured on a recurring basis at fair value

Assets and liabilities measured on a recurring basis at fair value, primarily related to Financial Products, included in our Consolidated Statement of Financial Position as of September 30, 2013 and December 31, 2012 are summarized below:

(Millions of dollars)	September 30, 2013
	Level 1		Level 2		Level 3		Total Assets / Liabilities, at Fair Value
Assets
Available-for-sale securities
Government debt
U.S. treasury bonds	$	11	$	—	$	—	$	11
Other U.S. and non-U.S. government bonds	—		126		—		126
Corporate bonds
Corporate bonds	—		672		—		672
Asset-backed securities	—		75		—		75
Mortgage-backed debt securities
U.S. governmental agency	—		337		—		337
Residential	—		21		—		21
Commercial	—		93		—		93
Equity securities
Large capitalization value	231		—		—		231
Smaller company growth	45		—		—		45
Total available-for-sale securities	287		1,324		—		1,611
Derivative financial instruments, net	—		186		—		186
Total Assets	$	287	$	1,510	$	—	$	1,797
Liabilities
Guarantees	$	—	$	—	$	15	$	15
Total Liabilities	$	—	$	—	$	15	$	15

(Millions of dollars)	December 31, 2012
	Level 1		Level 2		Level 3		Total Assets / Liabilities, at Fair Value
Assets
Available-for-sale securities
Government debt
U.S. treasury bonds	$	10	$	—	$	—	$	10
Other U.S. and non-U.S. government bonds	—		146		—		146
Corporate bonds
Corporate bonds	—		664		—		664
Asset-backed securities	—		96		—		96
Mortgage-backed debt securities
U.S. governmental agency	—		299		—		299
Residential	—		25		—		25
Commercial	—		127		—		127
Equity securities
Large capitalization value	185		—		—		185
Smaller company growth	34		—		—		34
Total available-for-sale securities	229		1,357		—		1,586
Derivative financial instruments, net	—		154		—		154
Total Assets	$	229	$	1,511	$	—	$	1,740
Liabilities
Guarantees	$	—	$	—	$	14	$	14
Total Liabilities	$	—	$	—	$	14	$	14

Roll-forward of liabilities measured at fair value using Level 3 inputs

Below are roll-forwards of liabilities measured at fair value using Level 3 inputs for the nine months ended September 30, 2013 and 2012.  These instruments were valued using pricing models that, in management’s judgment, reflect the assumptions of a marketplace participant.

(Millions of dollars)	Guarantees
Balance at December 31, 2012	$	14
Issuance of guarantees	6
Expiration of guarantees	(5		)
Balance at September 30, 2013	$	15
Balance at December 31, 2011	$	7
Acquisitions	6
Issuance of guarantees	7
Expiration of guarantees	(3		)
Balance at September 30, 2012	$	17

Fair values of financial instruments

Please refer to the table below for the fair values of our financial instruments.

Fair Value of Financial Instruments
	September 30, 2013				December 31, 2012
(Millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Levels	Reference
Assets
Cash and short-term investments	$	6,357	$	6,357	$	5,490	$	5,490	1
Restricted cash and short-term investments	50		50		53		53		1
Available-for-sale securities	1,611		1,611		1,586		1,586		1 & 2	Note 8
Finance receivables – net (excluding finance leases 1)	16,077		15,952		15,404		15,359		2	Note 16
Wholesale inventory receivables – net (excluding finance leases 1)	1,616		1,542		1,674		1,609		2	Note 16
Foreign currency contracts – net	51		51		—		—		2	Note 4
Interest rate swaps – net	136		136		219		219		2	Note 4
Commodity contracts – net	—		—		1		1		2	Note 4
Liabilities
Short-term borrowings	5,847		5,847		5,287		5,287		1
Long-term debt (including amounts due within one year)
Machinery and Power Systems	9,061		10,337		9,779		11,969		2
Financial Products	24,629		25,239		25,077		26,063		2
Foreign currency contracts – net	—		—		66		66		2	Note 4
Commodity contracts – net	1		1		—		—		2	Note 4
Guarantees	15		15		14		14		3	Note 10

¹  Total excluded items have a net carrying value at September 30, 2013 and December 31, 2012 of $8,132 million and $7,959 million, respectively.

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Cat Financial Financing Activities (Details 3) (USD $) In Millions, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Allowance for Credit Loss Activity
Balance at beginning of year	$ 423	$ 366
Receivables written off	(133)	(149)
Recoveries on receivables previously written off	38	47
Provision for credit losses	78	160
Other	(5)	(1)
Balance at end of period	401	423
Allowance for Credit Losses
Individually evaluated for impairment	60	54
Collectively evaluated for impairment	341	369
Ending Balance	401	423
Recorded Investment in Finance Receivables
Individually evaluated for impairment	736	593
Collectively evaluated for impairment	23,409	22,715
Ending balance-recorded investment in finance receivables	24,145	23,308
Customer
Allowance for Credit Loss Activity
Balance at beginning of year	414	360
Receivables written off	(133)	(149)
Recoveries on receivables previously written off	38	47
Provision for credit losses	76	157
Other	(5)	(1)
Balance at end of period	390	414
Allowance for Credit Losses
Individually evaluated for impairment	60	54
Collectively evaluated for impairment	330	360
Ending Balance	390	414
Recorded Investment in Finance Receivables
Individually evaluated for impairment	736	593
Collectively evaluated for impairment	19,539	18,831
Ending balance-recorded investment in finance receivables	20,275	19,424
Dealer
Allowance for Credit Loss Activity
Balance at beginning of year	9	6
Receivables written off	0	0
Recoveries on receivables previously written off	0	0
Provision for credit losses	2	3
Other	0	0
Balance at end of period	11	9
Allowance for Credit Losses
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	11	9
Ending Balance	11	9
Recorded Investment in Finance Receivables
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	3,870	3,884
Ending balance-recorded investment in finance receivables	$ 3,870	$ 3,884

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Inventories (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Inventory Disclosure [Abstract]
Raw materials	$ 3,138	$ 3,573
Work-in-process	2,749	2,920
Finished goods	7,221	8,767
Supplies	284	287
Total inventories	$ 13,392	$ 15,547

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Profit Per Share (Details) (USD $)	1 Months Ended	3 Months Ended					9 Months Ended				80 Months Ended
	Feb. 28, 2007	Sep. 30, 2013		Jun. 30, 2013	Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013
Earnings Per Share [Abstract]
Profit for the period (A) (in dollars)		$ 946,000,000	[1]		$ 1,699,000,000	[1]	$ 2,786,000,000	[1]	$ 4,984,000,000	[1]
Weighted-average common shares outstanding:
Weighted-average number of common shares outstanding (B) (in shares)		639,300,000			653,600,000		647,600,000		652,000,000
Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price (in shares)		12,600,000			15,100,000		13,700,000		17,700,000
Average common shares outstanding for fully diluted computation (C) (in shares)		651,900,000	[2]		668,700,000	[2]	661,300,000	[2]	669,700,000	[2]
Profit (loss) per share of common stock:
Assuming no dilution (A/B) (in dollars per share)		$ 1.48			$ 2.60		$ 4.30		$ 7.64
Assuming full dilution (A/C) (in dollars per share)		$ 1.45	[2]		$ 2.54	[2]	$ 4.21	[2]	$ 7.44	[2]
Shares outstanding as of September 30		636,400,000			653,900,000		636,400,000		653,900,000		636,400,000
Common shares under SARs and stock options not included in the computation of diluted earnings per share (in shares)		10,285,409			6,073,271		10,191,424		6,073,271
Common stock repurchase
Stock Repurchase Program, Authorized Amount	7,500,000,000
Common shares repurchased (in shares)		11,942,737		11,542,106			23,484,843		0
Payments for repurchase of common stock		1,000,000,000		1,000,000,000			2,000,000,000		0
Stock repurchase program, amount of authorized repurchase spent to date											$ 5,800,000,000

[1] 1 Profit attributable to common stockholders.

[2] 2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

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Guarantees and Product Warranty (Tables)

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Guarantees

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, 2013		December 31, 2012
Caterpillar dealer guarantees	$	201	$	180
Customer guarantees	53		77
Customer guarantees – supplier consortium	359		—
Third party logistics business guarantees	156		176
Other guarantees	35		53
Total guarantees	$	804	$	486

Product warranty

(Millions of dollars)	2013
Warranty liability, January 1	$	1,477
Reduction in liability (payments)	(677		)
Increase in liability (new warranties)	570
Warranty liability, September 30	$	1,370

(Millions of dollars)	2012
Warranty liability, January 1	$	1,308
Reduction in liability (payments)	(920		)
Increase in liability (new warranties)	1,089
Warranty liability, December 31	$	1,477

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Investments in Unconsolidated Affiliated Companies (Tables)

9 Months Ended

Sep. 30, 2013

Equity Method Investments and Joint Ventures [Abstract]

Results of Operations of unconsolidated affiliated companies

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: (Millions of dollars)	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013			2012
Sales	$	349		$	253	$	916		$	625
Cost of sales	284			206		722			492
Gross profit	$	65		$	47	$	194		$	133
Profit (loss)	$	(6	)	$	17	$	(31	)	$	39

Financial Position of unconsolidated affiliated companies

Financial Position of unconsolidated affiliated companies: (Millions of dollars)	September 30, 2013		December 31, 2012
Assets:
Current assets	$	707	$	715
Property, plant and equipment – net	714		529
Other assets	498		616
	1,919		1,860
Liabilities:
Current liabilities	450		443
Long-term debt due after one year	887		708
Other liabilities	167		170
	1,504		1,321
Equity	$	415	$	539

Caterpillar's investments in unconsolidated affiliated companies

Caterpillar’s investments in unconsolidated affiliated companies: (Millions of dollars)	September 30, 2013		December 31, 2012
Investments in equity method companies	$	268	$	256
Plus: Investments in cost method companies	10		16
Total investments in unconsolidated affiliated companies	$	278	$	272

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Intangible Assets and Goodwill (Tables)

9 Months Ended

Sep. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

Intangible assets are comprised of the following:

		September 30, 2013
(Millions of dollars)	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	15	$	2,685	$	(497	)	$	2,188
Intellectual property	11	1,816		(455		)	1,361
Other	10	282		(131		)	151
Total finite-lived intangible assets	13	4,783		(1,083		)	3,700
Indefinite-lived intangible assets - In-process research & development		18		—			18
Total intangible assets		$	4,801	$	(1,083	)	$	3,718

		December 31, 2012
	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	15	$	2,756	$	(377	)	$	2,379
Intellectual property	12	1,767		(342		)	1,425
Other	10	299		(105		)	194
Total finite-lived intangible assets	13	4,822		(824		)	3,998
Indefinite-lived intangible assets - In-process research & development		18		—			18
Total intangible assets		$	4,840	$	(824	)	$	4,016

Expected amortization expense related to intangible assets

Amortization expense related to intangible assets is expected to be:

(Millions of dollars)
2013	2014	2015	2016	2017	Thereafter
$369	$374	$372	$360	$358	$2,161

Goodwill

The changes in the carrying amount of the goodwill by reportable segment for the nine months ended September 30, 2013 were as follows: 

(Millions of dollars)
	December 31, 2012			Acquisitions 1		Held for Sale and Business Divestitures 2			Other Adjustments 3			September 30, 2013
Construction Industries
Goodwill	$	382		$	—	$	—		$	(46	)	$	336
Resource Industries
Goodwill	4,559			—		(37		)	1			4,523
Impairments	(602		)	—		—			—			(602		)
Net goodwill	3,957			—		(37		)	1			3,921
Power Systems
Goodwill	2,486			109		(10		)	9			2,594
All Other 4
Goodwill	117			—		—			—			117
Consolidated total
Goodwill	7,544			109		(47		)	(36		)	7,570
Impairments	(602		)	—		—			—			(602		)
Net goodwill	$	6,942		$	109	$	(47	)	$	(36	)	$	6,968

¹See Note 19 for additional details.

²See Note 20 for additional details.

³ Other adjustments are comprised primarily of foreign currency translation.

⁴Includes All Other operating segment (See Note 15).

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Derivative Financial Instruments and Risk Management

9 Months Ended

Sep. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments and Risk Management

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.  Our Risk Management Policy (policy) allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate, interest rate and commodity price exposures.  Our policy specifies that derivatives are not to be used for speculative purposes.  Derivatives that we use are primarily foreign currency forward, option, and cross currency contracts, 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 into, 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 recognized 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 (loss) (AOCI), to the extent effective, on 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 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 underlying hedged transaction is no longer probable, we discontinue hedge accounting prospectively, in accordance with the derecognition criteria for hedge accounting.

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of sales made and costs incurred in foreign currencies. Movements in foreign currency rates also affect our competitive position as these changes may affect business practices and/or pricing strategies of non-U.S.-based competitors. Additionally, we have balance sheet positions denominated in foreign currencies, thereby creating exposure to movements in exchange rates.

Our Machinery and Power Systems operations purchase, manufacture and sell products in many locations around the world. As we have a diversified revenue and cost base, we manage our future foreign currency cash flow exposure on a net basis. We use foreign currency forward and option contracts to manage unmatched foreign currency cash inflow and outflow. Our objective is to minimize the risk of exchange rate movements that would reduce the U.S. dollar value of our foreign currency cash flow. Our policy allows for managing anticipated foreign currency cash flow for up to five years.

We generally designate as cash flow hedges at inception of the contract any Australian dollar, Brazilian real, British pound, Canadian dollar, Chinese yuan, euro, Indian rupee, Japanese yen, Mexican peso, Singapore dollar or Swiss franc forward or option contracts that meet the requirements for hedge accounting and the maturity extends beyond the current quarter-end. Designation is performed on a specific exposure basis to support hedge accounting. The remainder of Machinery and Power Systems foreign currency contracts are undesignated, including any hedges designed to protect our competitive exposure.  

As of September 30, 2013, $15 million of deferred net gains, net of tax, included in equity (AOCI in the Consolidated Statement of Financial Position), are expected to be reclassified to current earnings (Other income (expense) in the Consolidated Statement of Results of Operations) over the next twelve months when earnings are affected by the hedged transactions.  The actual amount recorded in Other income (expense) will vary based on exchange rates at the time the hedged transactions impact earnings.

In managing foreign currency risk for our Financial Products operations, our objective is to minimize earnings volatility resulting from conversion and the remeasurement of net foreign currency balance sheet positions, and future transactions denominated in foreign currencies. Our policy allows the use of foreign currency forward, option and cross currency contracts to offset the risk of currency mismatch between our receivables and debt, and exchange rate risk associated with future transactions denominated in foreign currencies. Substantially all such foreign currency forward, option and cross currency contracts are undesignated.

Interest Rate Risk

Interest rate movements create a degree of risk by affecting the amount of our interest payments and the value of our fixed-rate debt. Our practice is to use interest rate derivatives to manage our exposure to interest rate changes and, in some cases, lower the cost of borrowed funds.

Our Machinery and Power Systems operations generally use fixed-rate debt as a source of funding.  Our objective is to minimize the cost of borrowed funds.  Our policy allows us to enter into fixed-to-floating interest rate swaps and forward rate agreements to meet that objective with the intent to designate as fair value hedges at inception of the contract all fixed-to-floating interest rate swaps.  Designation as a hedge of the fair value of our fixed-rate debt is performed to support hedge accounting.

Financial Products operations has a match-funding policy that addresses interest rate risk by aligning the interest rate profile (fixed or floating rate) of Cat Financial’s debt portfolio with the interest rate profile of their receivables portfolio within predetermined ranges on an ongoing basis. In connection with that policy, we use interest rate derivative instruments to modify the debt structure to match assets within the receivables portfolio. This matched funding reduces the volatility of margins between interest-bearing assets and interest-bearing liabilities, regardless of which direction interest rates move.

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

As of September 30, 2013, $3 million of deferred net losses, net of tax, included in equity (AOCI in the Consolidated Statement of Financial Position), related to Financial Products floating-to-fixed interest rate swaps, are expected to be reclassified to current earnings (Interest expense of Financial Products in the Consolidated Statement of Results of Operations) over the next twelve months.  The actual amount recorded in Interest expense of Financial Products will vary based on interest rates at the time the hedged transactions impact earnings.

We have, at certain times, liquidated fixed-to-floating and floating-to-fixed interest rate swaps at both Machinery and Power Systems and Financial Products.  The gains or losses associated with these swaps at the time of liquidation are amortized into earnings over the original term of the previously designated hedged item.

Commodity Price Risk

Commodity price movements create a degree of risk by affecting the price we must pay for certain raw material. Our policy is to use commodity forward and option contracts to manage the commodity risk and reduce the cost of purchased materials.

Our Machinery and Power Systems operations purchase base and precious metals embedded in the components we purchase from suppliers.  Our suppliers pass on to us price changes in the commodity portion of the component cost. In addition, we are subject to price changes on energy products such as natural gas and diesel fuel purchased for operational use.

Our objective is to minimize volatility in the price of these commodities. Our policy allows us to enter into commodity forward and option contracts to lock in the purchase price of a portion of these commodities within a five-year horizon. All such commodity forward and option contracts are undesignated.

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

(Millions of dollars)
	Consolidated Statement of Financial	Asset (Liability) Fair Value
	Position Location	September 30, 2013			December 31, 2012
Designated derivatives
Foreign exchange contracts
Machinery and Power Systems	Receivables – trade and other	$	49		$	28
Machinery and Power Systems	Long-term receivables – trade and other	1			—
Machinery and Power Systems	Accrued expenses	(24		)	(66		)
Interest rate contracts
Financial Products	Receivables – trade and other	12			17
Financial Products	Long-term receivables – trade and other	130			209
Financial Products	Accrued expenses	(6		)	(8		)
		$	162		$	180
Undesignated derivatives
Foreign exchange contracts
Machinery and Power Systems	Receivables – trade and other	$	42		$	31
Machinery and Power Systems	Accrued expenses	(31		)	(63		)
Financial Products	Receivables – trade and other	13			10
Financial Products	Long-term receivables – trade and other	8			—
Financial Products	Accrued expenses	(7		)	(6		)
Interest rate contracts
Financial Products	Receivables – trade and other	—			2
Financial Products	Accrued expenses	—			(1		)
Commodity contracts
Machinery and Power Systems	Receivables – trade and other	—			1
Machinery and Power Systems	Accrued expenses	(1		)	—
		$	24		$	(26	)

The effect of derivatives designated as hedging instruments on the Consolidated Statement of Results of Operations is as follows: 

Fair Value Hedges (Millions of dollars)
		Three Months Ended September 30, 2013					Three Months Ended September 30, 2012
	Classification	Gains (Losses) on Derivatives			Gains (Losses) on Borrowings		Gains (Losses) on Derivatives		Gains (Losses) on Borrowings
Interest rate contracts
Financial Products	Other income (expense)	$	(9	)	$	12	$	7	$	(3	)
		$	(9	)	$	12	$	7	$	(3	)
		Nine Months Ended September 30, 2013					Nine Months Ended September 30, 2012
	Classification	Gains (Losses) on Derivatives			Gains (Losses) on Borrowings		Gains (Losses) on Derivatives		Gains (Losses) on Borrowings
Interest rate contracts
Financial Products	Other income (expense)	$	(87	)	$	92	$	4	$	7
		$	(87	)	$	92	$	4	$	7

Cash Flow Hedges (Millions of dollars)
	Three Months Ended September 30, 2013
				Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI (Effective Portion)			Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI to Earnings			Recognized in Earnings (Ineffective Portion)
Foreign exchange contracts
Machinery and Power Systems	$	44		Other income (expense)	$	(12	)	$	—
Interest rate contracts
Machinery and Power Systems	—			Other income (expense)	(1		)	—
Financial Products	(3		)	Interest expense of Financial Products	(1		)	—
	$	41			$	(14	)	$	—

	Three Months Ended September 30, 2012
				Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI (Effective Portion)			Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI to Earnings			Recognized in Earnings (Ineffective Portion)
Foreign exchange contracts
Machinery and Power Systems	$	(6	)	Other income (expense)	$	(14	)	$	—
Interest rate contracts
Machinery and Power Systems	—			Other income (expense)	1			—
Financial Products	(6		)	Interest expense of Financial Products	(1		)	—
	$	(12	)		$	(14	)	$	—

	Nine Months Ended September 30, 2013
				Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI (Effective Portion)			Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI to Earnings				Recognized in Earnings (Ineffective Portion)
Foreign exchange contracts
Machinery and Power Systems	$	4		Other income (expense)	$	(60	)	2	$	—
Interest rate contracts
Machinery and Power Systems	—			Other income (expense)	(2		)		—
Financial Products	—			Interest expense of Financial Products	(4		)		—
	$	4			$	(66	)		$	—
	Nine Months Ended September 30, 2012
				Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI (Effective Portion)			Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI to Earnings				Recognized in Earnings (Ineffective Portion)
Foreign exchange contracts
Machinery and Power Systems	$	(48	)	Other income (expense)	$	(13	)		$	—
Interest rate contracts
Financial Products	(8		)	Interest expense of Financial Products	(3		)		(1		)	1
	$	(56	)		$	(16	)		$	(1	)

¹  The ineffective portion recognized in earnings is included in Other income (expense).

²  Includes $3 million loss reclassified from AOCI to Other income (expense) in 2013 as certain derivatives were dedesignated as the related transactions are no longer probable to occur.

The effect of derivatives not designated as hedging instruments on the Consolidated Statement of Results of Operations is as follows: 

(Millions of dollars)
	Classification of Gains (Losses)	Three Months Ended September 30, 2013			Three Months Ended September 30, 2012
Foreign exchange contracts
Machinery and Power Systems	Other income (expense)	$	15		$	(9	)
Financial Products	Other income (expense)	3			5
Interest rate contracts
Financial Products	Other income (expense)	(1		)	—
Commodity contracts
Machinery and Power Systems	Other income (expense)	2			3
		$	19		$	(1	)
	Classification of Gains (Losses)	Nine Months Ended September 30, 2013			Nine Months Ended September 30, 2012
Foreign exchange contracts
Machinery and Power Systems	Other income (expense)	$	7		$	21
Financial Products	Other income (expense)	4			7
Interest rate contracts
Financial Products	Other income (expense)	(1		)	—
Commodity contracts
Machinery and Power Systems	Other income (expense)	(2		)	3
		$	8		$	31

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

Collateral is generally not required of the counterparties or of our company under the master netting agreements. As of September 30, 2013 and December 31, 2012, no cash collateral was received or pledged under the master netting agreements.

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

September 30, 2013							Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amount of Assets Presented in the Statement of Financial Position		Financial Instruments			Cash Collateral Received		Net Amount of Assets
Derivatives
Machinery & Power Systems	$	92	$	—	$	92	$	(52	)	$	—	$	40
Financial Products	163		—		163		(9		)	—		154
Total	$	255	$	—	$	255	$	(61	)	$	—	$	194

September 30, 2013									Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position		Net Amount of Liabilities Presented in the Statement of Financial Position			Financial Instruments		Cash Collateral Pledged		Net Amount of Liabilities
Derivatives
Machinery & Power Systems	$	(56	)	$	—	$	(56	)	$	52	$	—	$	(4	)
Financial Products	(13		)	—		(13		)	9		—		(4		)
Total	$	(69	)	$	—	$	(69	)	$	61	$	—	$	(8	)

December 31, 2012							Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amount of Assets Presented in the Statement of Financial Position		Financial Instruments			Cash Collateral Received		Net Amount of Assets
Derivatives
Machinery & Power Systems	$	60	$	—	$	60	$	(59	)	$	—	$	1
Financial Products	238		—		238		(12		)	—		226
Total	$	298	$	—	$	298	$	(71	)	$	—	$	227

December 31, 2012									Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position		Net Amount of Liabilities Presented in the Statement of Financial Position			Financial Instruments		Cash Collateral Pledged		Net Amount of Liabilities
Derivatives
Machinery & Power Systems	$	(129	)	$	—	$	(129	)	$	59	$	—	$	(70	)
Financial Products	(15		)	—		(15		)	12		—		(3		)
Total	$	(144	)	$	—	$	(144	)	$	71	$	—	$	(73	)

XML

Postretirement Benefits (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Defined contribution plans
Costs related to defined contribution plans	$ 90	$ 77	$ 265	$ 242
U.S. Plans
Defined contribution plans
Costs related to defined contribution plans	74	62	218	196
Non-U.S. Plans
Defined contribution plans
Costs related to defined contribution plans	$ 16	$ 15	$ 47	$ 46

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Employee Separation Charges

9 Months Ended

Sep. 30, 2013

Employee separation charges [Abstract]

Employee Separation Charges

Employee Separation Charges

In 2012, we reported employee separation charges of $94 million in Other operating (income) expenses in the Consolidated Statement of Results of Operations primarily related to the closure of the Electro-Motive Diesel facility located in London, Ontario and separation programs in Europe. The majority of the charges were related to the Power Systems segment.

For the three and nine months ended September 30, 2013, we recognized employee separation charges of $34 million and $57 million, respectively, in Other operating (income) expenses in the Consolidated Statement of Results of Operations primarily related to separation programs in North America and Europe. The charges were related primarily to the Resource Industries and Construction Industries segments.

Our accounting for separations was dependent upon how the particular program was designed. For voluntary programs, eligible separation costs were recognized at the time of employee acceptance. For involuntary programs, eligible costs were recognized when management had approved the program, the affected employees had been properly notified and the costs were estimable.

The following table summarizes the 2012 and 2013 separation activity:

(Millions of dollars)
	Total
Liability balance at December 31, 2011	$	90
Increase in liability (separation charges)	94
Reduction in liability (payments and other adjustments)	(155		)
Liability balance at December 31, 2012	$	29
Increase in liability (separation charges)	57
Reduction in liability (payments and other adjustments)	(43		)
Liability balance at September 30, 2013	$	43

The remaining liability balances as of September 30, 2013 represent costs for employees that have either not yet separated from the Company or their full severance has not yet been paid. The majority of these remaining costs are expected to be paid in 2013 and 2014.

XML

Segment Information (Tables)

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Reportable Segments

Reportable Segments
Three Months Ended September 30,
(Millions of dollars)
	2013
	External sales and revenues		Inter- segment sales and revenues		Total sales and revenues		Depreciation and amortization		Segment profit		Segment assets at September 30		Capital expenditures
Construction Industries	$	4,547	$	68	$	4,615	$	145	$	262	$	8,489	$	143
Resource Industries	3,004		208		3,212		192		409		11,703		106
Power Systems	4,922		471		5,393		161		883		9,013		125
Machinery and Power Systems	$	12,473	$	747	$	13,220	$	498	$	1,554	$	29,205	$	374
Financial Products Segment	807		—		807		203		218		37,239		473
Total	$	13,280	$	747	$	14,027	$	701	$	1,772	$	66,444	$	847
	2012
	External sales and revenues		Inter- segment sales and revenues		Total sales and revenues		Depreciation and amortization		Segment profit		Segment assets at December 31		Capital expenditures
Construction Industries	$	4,904	$	102	$	5,006	$	144	$	459	$	10,393	$	247
Resource Industries	5,214		253		5,467		179		1,113		13,455		229
Power Systems	5,317		597		5,914		157		943		9,323		244
Machinery and Power Systems	$	15,435	$	952	$	16,387	$	480	$	2,515	$	33,171	$	720
Financial Products Segment	776		—		776		179		190		36,563		432
Total	$	16,211	$	952	$	17,163	$	659	$	2,705	$	69,734	$	1,152

Reportable Segments
Nine Months Ended September 30,
(Millions of dollars)
	2013
	External sales and revenues		Inter- segment sales and revenues		Total sales and revenues		Depreciation and amortization		Segment profit		Segment assets at September 30		Capital expenditures
Construction Industries	$	13,594	$	262	$	13,856	$	426	$	863	$	8,489	$	403
Resource Industries	10,251		661		10,912		558		1,436		11,703		358
Power Systems	14,590		1,328		15,918		468		2,436		9,013		390
Machinery and Power Systems	$	38,435	$	2,251	$	40,686	$	1,452	$	4,735	$	29,205	$	1,151
Financial Products Segment	2,408		—		2,408		571		724		37,239		1,244
Total	$	40,843	$	2,251	$	43,094	$	2,023	$	5,459	$	66,444	$	2,395
	2012
	External sales and revenues		Inter- segment sales and revenues		Total sales and revenues		Depreciation and amortization		Segment profit		Segment assets at December 31		Capital expenditures
Construction Industries	$	15,306	$	355	$	15,661	$	414	$	1,763	$	10,393	$	597
Resource Industries	15,382		909		16,291		510		3,707		13,455		603
Power Systems	15,815		1,952		17,767		442		2,737		9,323		610
Machinery and Power Systems	$	46,503	$	3,216	$	49,719	$	1,366	$	8,207	$	33,171	$	1,810
Financial Products Segment	2,301		—		2,301		530		583		36,563		1,232
Total	$	48,804	$	3,216	$	52,020	$	1,896	$	8,790	$	69,734	$	3,042

Reconciliation of Sales and revenues:

Reconciliation of Sales and revenues:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidating Adjustments				Consolidated Total
Three Months Ended September 30, 2013
Total external sales and revenues from reportable segments	$	12,473		$	807	$	—			$	13,280
All Other operating segment	219			—		—				219
Other	(14		)	18		(80		)	1	(76		)
Total sales and revenues	$	12,678		$	825	$	(80	)		$	13,423
Three Months Ended September 30, 2012
Total external sales and revenues from reportable segments	$	15,435		$	776	$	—			$	16,211
All Other operating segment	318			—		—				318
Other	(14		)	20		(90		)	1	(84		)
Total sales and revenues	$	15,739		$	796	$	(90	)		$	16,445
1  Elimination of Financial Products revenues from Machinery and Power Systems.

Reconciliation of Sales and revenues:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidating Adjustments				Consolidated Total
Nine Months Ended September 30, 2013
Total external sales and revenues from reportable segments	$	38,435		$	2,408	$	—			$	40,843
All Other operating segment	647			—		—				647
Other	(34		)	54		(256		)	1	(236		)
Total sales and revenues	$	39,048		$	2,462	$	(256	)		$	41,254
Nine Months Ended September 30, 2012
Total external sales and revenues from reportable segments	$	46,503		$	2,301	$	—			$	48,804
All Other operating segment	1,246			—		—				1,246
Other	(38		)	52		(264		)	1	(250		)
Total sales and revenues	$	47,711		$	2,353	$	(264	)		$	49,800
1  Elimination of Financial Products revenues from Machinery and Power Systems.

Reconciliation of Consolidated profit before taxes:

Reconciliation of Consolidated profit before taxes:
(Millions of dollars)	Machinery and Power Systems			Financial Products			Consolidated Total
Three Months Ended September 30, 2013
Total profit from reportable segments	$	1,554		$	218		$	1,772
All Other operating segment	170			—			170
Cost centers	42			—			42
Corporate costs	(376		)	—			(376		)
Timing	77			—			77
Methodology differences:
Inventory/cost of sales	(36		)	—			(36		)
Postretirement benefit expense	(174		)	—			(174		)
Financing costs	(120		)	—			(120		)
Equity in (profit) loss of unconsolidated affiliated companies	1			—			1
Currency	(32		)	—			(32		)
Other income/expense methodology differences	(58		)	—			(58		)
Other methodology differences	(1		)	(4		)	(5		)
Total consolidated profit before taxes	$	1,047		$	214		$	1,261
Three Months Ended September 30, 2012
Total profit from reportable segments	$	2,515		$	190		$	2,705
All Other operating segment	482			—			482
Cost centers	9			—			9
Corporate costs	(366		)	—			(366		)
Timing	(30		)	—			(30		)
Methodology differences:
Inventory/cost of sales	9			—			9
Postretirement benefit expense	(177		)	—			(177		)
Financing costs	(130		)	—			(130		)
Equity in (profit) loss of unconsolidated affiliated companies	(5		)	—			(5		)
Currency	20			—			20
Interest rate swaps	2			—			2
Other income/expense methodology differences	(64		)	—			(64		)
Other methodology differences	(9		)	4			(5		)
Total consolidated profit before taxes	$	2,256		$	194		$	2,450

Reconciliation of Consolidated profit before taxes:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidated Total
Nine Months Ended September 30, 2013
Total profit from reportable segments	$	4,735		$	724	$	5,459
All Other operating segment	547			—		547
Cost centers	100			—		100
Corporate costs	(1,160		)	—		(1,160		)
Timing	58			—		58
Methodology differences:
Inventory/cost of sales	(139		)	—		(139		)
Postretirement benefit expense	(505		)	—		(505		)
Financing costs	(361		)	—		(361		)
Equity in (profit) loss of unconsolidated affiliated companies	1			—		1
Currency	(71		)	—		(71		)
Other income/expense methodology differences	(178		)	—		(178		)
Other methodology differences	(20		)	10		(10		)
Total consolidated profit before taxes	$	3,007		$	734	$	3,741
Nine Months Ended September 30, 2012
Total profit from reportable segments	$	8,207		$	583	$	8,790
All Other operating segment	888			—		888
Cost centers	32			—		32
Corporate costs	(1,126		)	—		(1,126		)
Timing	(318		)	—		(318		)
Methodology differences:
Inventory/cost of sales	(26		)	—		(26		)
Postretirement benefit expense	(508		)	—		(508		)
Financing costs	(357		)	—		(357		)
Equity in (profit) loss of unconsolidated affiliated companies	(12		)	—		(12		)
Currency	160			—		160
Interest rate swaps	2			—		2
Other income/expense methodology differences	(199		)	—		(199		)
Other methodology differences	(3		)	1		(2		)
Total consolidated profit before taxes	$	6,740		$	584	$	7,324

Reconciliation of Assets:

Reconciliation of Assets:
(Millions of dollars)	Machinery and Power Systems			Financial Products			Consolidating Adjustments			Consolidated Total
September 30, 2013
Total assets from reportable segments	$	29,205		$	37,239		$	—		$	66,444
All Other operating segment	1,442			—			—			1,442
Items not included in segment assets:
Cash and short-term investments	4,108			—			—			4,108
Intercompany receivables	243			—			(243		)	—
Investment in Financial Products	4,769			—			(4,769		)	—
Deferred income taxes	3,883			—			(490		)	3,393
Goodwill and intangible assets	3,567			—			—			3,567
Property, plant and equipment – net and other assets	1,057			—			—			1,057
Operating lease methodology difference	(287		)	—			—			(287		)
Liabilities included in segment assets	10,504			—			—			10,504
Inventory methodology differences	(2,610		)	—			—			(2,610		)
Other	(132		)	(151		)	(63		)	(346		)
Total assets	$	55,749		$	37,088		$	(5,565	)	$	87,272
December 31, 2012
Total assets from reportable segments	$	33,171		$	36,563		$	—		$	69,734
All Other operating segment	1,499			—			—			1,499
Items not included in segment assets:
Cash and short-term investments	3,306			—			—			3,306
Intercompany receivables	303			—			(303		)	—
Investment in Financial Products	4,433			—			(4,433		)	—
Deferred income taxes	3,926			—			(516		)	3,410
Goodwill and intangible assets	3,145			—			—			3,145
Property, plant and equipment – net and other assets	668			—			—			668
Operating lease methodology difference	(329		)	—			—			(329		)
Liabilities included in segment assets	11,293			—			—			11,293
Inventory methodology differences	(2,949		)	—			—			(2,949		)
Other	(182		)	(107		)	(132		)	(421		)
Total assets	$	58,284		$	36,456		$	(5,384	)	$	89,356

Reconciliation of Depreciation and amortization:

Reconciliations of Depreciation and amortization:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidated Total
Three Months Ended September 30, 2013
Total depreciation and amortization from reportable segments	$	498		$	203	$	701
Items not included in segment depreciation and amortization:
All Other operating segment	43			—		43
Cost centers	36			—		36
Other	(7		)	6		(1		)
Total depreciation and amortization	$	570		$	209	$	779
Three Months Ended September 30, 2012
Total depreciation and amortization from reportable segments	$	480		$	179	$	659
Items not included in segment depreciation and amortization:
All Other operating segment	41			—		41
Cost centers	23			—		23
Other	(9		)	6		(3		)
Total depreciation and amortization	$	535		$	185	$	720

Reconciliations of Depreciation and amortization:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidated Total
Nine Months Ended September 30, 2013
Total depreciation and amortization from reportable segments	$	1,452		$	571	$	2,023
Items not included in segment depreciation and amortization:
All Other operating segment	127			—		127
Cost centers	104			—		104
Other	(9		)	18		9
Total depreciation and amortization	$	1,674		$	589	$	2,263
Nine Months Ended September 30, 2012
Total depreciation and amortization from reportable segments	$	1,366		$	530	$	1,896
Items not included in segment depreciation and amortization:
All Other operating segment	125			—		125
Cost centers	64			—		64
Other	(32		)	17		(15		)
Total depreciation and amortization	$	1,523		$	547	$	2,070

Reconciliation of Capital expenditures:

Reconciliations of Capital expenditures:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidating Adjustments			Consolidated Total
Three Months Ended September 30, 2013
Total capital expenditures from reportable segments	$	374		$	473	$	—		$	847
Items not included in segment capital expenditures:
All Other operating segment	88			—		—			88
Cost centers	41			—		—			41
Timing	5			—		—			5
Other	(18		)	18		(15		)	(15		)
Total capital expenditures	$	490		$	491	$	(15	)	$	966
Three Months Ended September 30, 2012
Total capital expenditures from reportable segments	$	720		$	432	$	—		$	1,152
Items not included in segment capital expenditures:
All Other operating segment	75			—		—			75
Cost centers	16			—		—			16
Timing	(40		)	—		—			(40		)
Other	8			35		(15		)	28
Total capital expenditures	$	779		$	467	$	(15	)	$	1,231

Reconciliations of Capital expenditures:
(Millions of dollars)	Machinery and Power Systems			Financial Products		Consolidating Adjustments			Consolidated Total
Nine Months Ended September 30, 2013
Total capital expenditures from reportable segments	$	1,151		$	1,244	$	—		$	2,395
Items not included in segment capital expenditures:
All Other operating segment	200			—		—			200
Cost centers	115			—		—			115
Timing	531			—		—			531
Other	(94		)	66		(50		)	(78		)
Total capital expenditures	$	1,903		$	1,310	$	(50	)	$	3,163
Nine Months Ended September 30, 2012
Total capital expenditures from reportable segments	$	1,810		$	1,232	$	—		$	3,042
Items not included in segment capital expenditures:
All Other operating segment	229			—		—			229
Cost centers	119			—		—			119
Timing	281			—		—			281
Other	(115		)	109		(139		)	(145		)
Total capital expenditures	$	2,324		$	1,341	$	(139	)	$	3,526

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Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

Intangible Assets and Goodwill

A.  Intangible assets

Intangible assets are comprised of the following:

		September 30, 2013
(Millions of dollars)	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	15	$	2,685	$	(497	)	$	2,188
Intellectual property	11	1,816		(455		)	1,361
Other	10	282		(131		)	151
Total finite-lived intangible assets	13	4,783		(1,083		)	3,700
Indefinite-lived intangible assets - In-process research & development		18		—			18
Total intangible assets		$	4,801	$	(1,083	)	$	3,718

		December 31, 2012
	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	15	$	2,756	$	(377	)	$	2,379
Intellectual property	12	1,767		(342		)	1,425
Other	10	299		(105		)	194
Total finite-lived intangible assets	13	4,822		(824		)	3,998
Indefinite-lived intangible assets - In-process research & development		18		—			18
Total intangible assets		$	4,840	$	(824	)	$	4,016

During the third quarter of 2013, we acquired finite-lived intangible assets of $66 million due to the purchase of Johan Walter Berg AB. See Note 19 for details on this business combination.

Gross customer relationship intangibles of $123 million and related accumulated amortization of $17 million were reclassified from Intangible assets to assets held for sale and/or divested during the nine months ended September 30, 2013, and are not included in the September 30, 2013 balances in the table above. These transactions were related to the divestiture of portions of the Bucyrus distribution business. See Note 20 for additional information on divestitures and assets held for sale.

Amortization expense for the three and nine months ended September 30, 2013 was $91 million and $276 million, respectively. Amortization expense for the three and nine months ended September 30, 2012 was $101 million and $294 million, respectively. Amortization expense related to intangible assets is expected to be:

(Millions of dollars)
2013	2014	2015	2016	2017	Thereafter
$369	$374	$372	$360	$358	$2,161

B.  Goodwill

During the third quarter of 2013, we recorded goodwill of $109 million related to the acquisition of Johan Walter Berg AB. See Note 19 for details on this business combination.

Goodwill of $47 million was reclassified to assets held for sale and/or divested during the nine months ended September 30, 2013, and is not included in the September 30, 2013 balance in the table below. These transactions were related to the divestiture of portions of the Bucyrus distribution business and the sale of certain Power Systems assets that were accounted for as a business. See Note 20 for additional information on divestitures and assets held for sale.

We test goodwill for impairment 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. Goodwill is reviewed for impairment utilizing a qualitative assessment or a two-step process. We have an option to make a qualitative assessment of a reporting unit's goodwill for impairment. If we choose to perform a qualitative assessment and determine the fair value more likely than not exceeds the carrying value, no further evaluation is necessary. For reporting units where we perform the two-step process, the first step requires us to compare the fair value of each reporting unit, which we primarily determine using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value is higher than the fair value, there is an indication that an impairment may exist and the second step is required. In step two, the implied fair value of goodwill is calculated as the excess of the fair value of a reporting unit over the fair values assigned to its assets and liabilities. If the implied fair value of goodwill is less than the carrying value of the reporting unit's goodwill, the difference is recognized as an impairment loss. No goodwill for reporting units was impaired during the three and nine months ended September 30, 2013 or 2012.

The changes in the carrying amount of the goodwill by reportable segment for the nine months ended September 30, 2013 were as follows: 

(Millions of dollars)
	December 31, 2012			Acquisitions 1		Held for Sale and Business Divestitures 2			Other Adjustments 3			September 30, 2013
Construction Industries
Goodwill	$	382		$	—	$	—		$	(46	)	$	336
Resource Industries
Goodwill	4,559			—		(37		)	1			4,523
Impairments	(602		)	—		—			—			(602		)
Net goodwill	3,957			—		(37		)	1			3,921
Power Systems
Goodwill	2,486			109		(10		)	9			2,594
All Other 4
Goodwill	117			—		—			—			117
Consolidated total
Goodwill	7,544			109		(47		)	(36		)	7,570
Impairments	(602		)	—		—			—			(602		)
Net goodwill	$	6,942		$	109	$	(47	)	$	(36	)	$	6,968

¹See Note 19 for additional details.

²See Note 20 for additional details.

³ Other adjustments are comprised primarily of foreign currency translation.

⁴Includes All Other operating segment (See Note 15).

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Segment Information (Details 6) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Reconciliation of Capital expenditures
Total capital expenditures	$ 966	$ 1,231	$ 3,163	$ 3,526
Reportable Segments
Reconciliation of Capital expenditures
Total capital expenditures	847	1,152	2,395	3,042
All Other operating segment
Reconciliation of Capital expenditures
Total capital expenditures	88	75	200	229
Cost Centers
Reconciliation of Capital expenditures
Total capital expenditures	41	16	115	119
Timing
Reconciliation of Capital expenditures
Total capital expenditures	5	(40)	531	281
Other
Reconciliation of Capital expenditures
Total capital expenditures	(15)	28	(78)	(145)
Consolidating Adjustments
Reconciliation of Capital expenditures
Total capital expenditures	(15)	(15)	(50)	(139)
Consolidating Adjustments | Reportable Segments
Reconciliation of Capital expenditures
Total capital expenditures	0	0	0	0
Consolidating Adjustments | All Other operating segment
Reconciliation of Capital expenditures
Total capital expenditures	0	0	0	0
Consolidating Adjustments | Cost Centers
Reconciliation of Capital expenditures
Total capital expenditures	0	0	0	0
Consolidating Adjustments | Timing
Reconciliation of Capital expenditures
Total capital expenditures	0	0	0	0
Consolidating Adjustments | Other
Reconciliation of Capital expenditures
Total capital expenditures	(15)	(15)	(50)	(139)
Machinery and Power Systems | Reportable Segments
Reconciliation of Capital expenditures
Total capital expenditures	374	720	1,151	1,810
Machinery and Power Systems | Business
Reconciliation of Capital expenditures
Total capital expenditures	490	779	1,903	2,324
Machinery and Power Systems | Business | Reportable Segments
Reconciliation of Capital expenditures
Total capital expenditures	374	720	1,151	1,810
Machinery and Power Systems | Business | All Other operating segment
Reconciliation of Capital expenditures
Total capital expenditures	88	75	200	229
Machinery and Power Systems | Business | Cost Centers
Reconciliation of Capital expenditures
Total capital expenditures	41	16	115	119
Machinery and Power Systems | Business | Timing
Reconciliation of Capital expenditures
Total capital expenditures	5	(40)	531	281
Machinery and Power Systems | Business | Other
Reconciliation of Capital expenditures
Total capital expenditures	(18)	8	(94)	(115)
Financial Products | Business
Reconciliation of Capital expenditures
Total capital expenditures	491	467	1,310	1,341
Financial Products | Business | Reportable Segments
Reconciliation of Capital expenditures
Total capital expenditures	473	432	1,244	1,232
Financial Products | Business | All Other operating segment
Reconciliation of Capital expenditures
Total capital expenditures	0	0	0	0
Financial Products | Business | Cost Centers
Reconciliation of Capital expenditures
Total capital expenditures	0	0	0	0
Financial Products | Business | Timing
Reconciliation of Capital expenditures
Total capital expenditures	0	0	0	0
Financial Products | Business | Other
Reconciliation of Capital expenditures
Total capital expenditures	$ 18	$ 35	$ 66	$ 109

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

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 options, restricted stock units (RSUs) and stock-settled stock appreciation rights (SARs).  We recognized pretax stock-based compensation cost in the amount of $64 million and $196 million for the three and nine months ended September 30, 2013, respectively; and $69 million and $204 million for the three and nine months ended September 30, 2012, 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, 2013 and 2012, respectively:

	2013			2012
	Shares Granted	Fair Value Per Award		Shares Granted	Fair Value Per Award
Stock options	4,276,060	$	28.34	3,224,203	$	39.20
RSUs	1,614,870	$	84.05	1,429,939	$	104.61

The stock price on the date of grant was $89.75 and $110.09 for 2013 and 2012, 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, 2013 and 2012, respectively:

	Grant Year
	2013	2012
Weighted-average dividend yield	2.13%	2.16%
Weighted-average volatility	30.6%	35.0%
Range of volatilities	23.4-40.6%	33.3-40.4%
Range of risk-free interest rates	0.16-1.88%	0.17-2.00%
Weighted-average expected lives	8 years	7 years

As of September 30, 2013, the total remaining unrecognized compensation cost related to nonvested stock-based compensation awards was $232 million, which will be amortized over the weighted-average remaining requisite service periods of approximately 1.9 years.

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Consolidated Statement of Changes in Stockholders' Equity (USD $) In Millions, unless otherwise specified		Total	Common stock	Treasury stock	Profit employed in the business	Accumulated other comprehensive income (loss)	Noncontrolling interests
Balance at Dec. 31, 2011		$ 12,929	$ 4,273	$ (10,281)	$ 25,219	$ (6,328)	$ 46
Increase (Decrease) in Stockholders' Equity
Profit of consolidated and affiliated companies		5,022	0	0	4,984	0	38
Foreign currency translation, net of tax		35	0	0	0	59	(24)
Pension and other postretirement benefits, net of tax		180	0	0	0	175	5
Derivative financial instruments, net of tax		(25)	0	0	0	(25)	0
Available-for-sale securities, net of tax		25	0	0	0	24	1
Change in ownership from noncontrolling interests		1	0	0	0	0	1
Dividends declared		(639)	0	0	(639)	0	0
Distribution to noncontrolling interests		(5)	0	0	0	0	(5)
Common shares issued from treasury stock for stock-based compensation: 4,792,341 and 6,400,328 for the nine months ended September 30, 2013 and 2012, respectively		41	(122)	163	0	0	0
Stock-based compensation expense		208	208	0	0	0	0
Net excess tax benefits from stock-based compensation		164	164	0	0	0	0
Cat Japan share redemption	[1]	0	(74)	0	(23)	107	(10)
Balance at Sep. 30, 2012		17,936	4,449	(10,118)	29,541	(5,988)	52
Balance at Dec. 31, 2012		17,582	4,481	(10,074)	29,558	(6,433)	50
Increase (Decrease) in Stockholders' Equity
Profit of consolidated and affiliated companies		2,797	0	0	2,786	0	11
Foreign currency translation, net of tax		(255)	0	0	0	(257)	2
Pension and other postretirement benefits, net of tax		386	0	0	0	386	0
Derivative financial instruments, net of tax		44	0	0	0	44	0
Available-for-sale securities, net of tax		13	0	0	0	13	0
Change in ownership from noncontrolling interests		8	(6)	0	0	0	14
Dividends declared		(730)	0	0	(730)	0	0
Distribution to noncontrolling interests		(10)	0	0	0	0	(10)
Common shares issued from treasury stock for stock-based compensation: 4,792,341 and 6,400,328 for the nine months ended September 30, 2013 and 2012, respectively		77	(83)	160	0	0	0
Stock-based compensation expense		196	196	0	0	0	0
Net excess tax benefits from stock-based compensation		69	69	0	0	0	0
Common shares repurchased: 23,484,843 for the nine months ended September 30, 2013	[2]	(2,000)	0	(2,000)	0	0	0
Balance at Sep. 30, 2013		$ 18,177	$ 4,657	$ (11,914)	$ 31,614	$ (6,247)	$ 67

[1] 1 See Notes 12 and 17 regarding the Cat Japan share redemption.

[2] 2 See Note 11 regarding shares repurchased.

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Derivative Financial Instruments and Risk Management (Details 4) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Offsetting Assets
Gross Amount of Recognized Assets	$ 255	$ 298
Gross Amounts Offset in the Statement of Fnancial Position	0	0
Net Amount of Assets Presented in the Statement of Financial Position	255	298
Financial Instruments	(61)	(71)
Cash Collateral Received	0	0
Net Amount of Assets	194	227
Machinery and Power Systems
Offsetting Assets
Gross Amount of Recognized Assets	92	60
Gross Amounts Offset in the Statement of Fnancial Position	0	0
Net Amount of Assets Presented in the Statement of Financial Position	92	60
Financial Instruments	(52)	(59)
Cash Collateral Received	0	0
Net Amount of Assets	40	1
Financial Products
Offsetting Assets
Gross Amount of Recognized Assets	163	238
Gross Amounts Offset in the Statement of Fnancial Position	0	0
Net Amount of Assets Presented in the Statement of Financial Position	163	238
Financial Instruments	(9)	(12)
Cash Collateral Received	0	0
Net Amount of Assets	$ 154	$ 226

XML

Basis of Presentation and Nature of Operations Cash Flow Adjustment (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended			12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2012 Cash flow revision	Dec. 31, 2012 Cash flow revision	Dec. 31, 2011 Cash flow revision
Net cash provided by (used for) operating activities	$ 7,611	$ 3,218	$ (44)	$ (57)	$ (53)
Net cash provided by (used for) financing activities	$ (2,628)	$ 3,891	$ 44	$ 57	$ 53

XML

Fair Value Measurements (Details 2) (USD $) In Millions, unless otherwise specified			9 Months Ended
	Sep. 30, 2013 Level 2 Financial Products Nonrecurring basis	Dec. 31, 2012 Level 2 Financial Products Nonrecurring basis	Sep. 30, 2013 Level 3 Guarantees Recurring basis	Sep. 30, 2012 Level 3 Guarantees Recurring basis
Roll-forward of liabilities measured at fair value using Level 3 inputs
Balance at beginning of year			$ 14	$ 7
Acquisitions				6
Issuance of guarantees			6	7
Expiration of guarantees			(5)	(3)
Balance at end of period			15	17
Fair value of impaired loans
Impaired loans	$ 109	$ 117

XML

Derivative Financial Instruments and Risk Management (Tables)

9 Months Ended

Sep. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Location and fair value of derivative instruments reported in the Consolidated Statement of Financial Position

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

(Millions of dollars)
	Consolidated Statement of Financial	Asset (Liability) Fair Value
	Position Location	September 30, 2013			December 31, 2012
Designated derivatives
Foreign exchange contracts
Machinery and Power Systems	Receivables – trade and other	$	49		$	28
Machinery and Power Systems	Long-term receivables – trade and other	1			—
Machinery and Power Systems	Accrued expenses	(24		)	(66		)
Interest rate contracts
Financial Products	Receivables – trade and other	12			17
Financial Products	Long-term receivables – trade and other	130			209
Financial Products	Accrued expenses	(6		)	(8		)
		$	162		$	180
Undesignated derivatives
Foreign exchange contracts
Machinery and Power Systems	Receivables – trade and other	$	42		$	31
Machinery and Power Systems	Accrued expenses	(31		)	(63		)
Financial Products	Receivables – trade and other	13			10
Financial Products	Long-term receivables – trade and other	8			—
Financial Products	Accrued expenses	(7		)	(6		)
Interest rate contracts
Financial Products	Receivables – trade and other	—			2
Financial Products	Accrued expenses	—			(1		)
Commodity contracts
Machinery and Power Systems	Receivables – trade and other	—			1
Machinery and Power Systems	Accrued expenses	(1		)	—
		$	24		$	(26	)

Effect of derivatives designated as hedging instruments on Consolidated Statement of Results of Operations

The effect of derivatives designated as hedging instruments on the Consolidated Statement of Results of Operations is as follows: 

Fair Value Hedges (Millions of dollars)
		Three Months Ended September 30, 2013					Three Months Ended September 30, 2012
	Classification	Gains (Losses) on Derivatives			Gains (Losses) on Borrowings		Gains (Losses) on Derivatives		Gains (Losses) on Borrowings
Interest rate contracts
Financial Products	Other income (expense)	$	(9	)	$	12	$	7	$	(3	)
		$	(9	)	$	12	$	7	$	(3	)
		Nine Months Ended September 30, 2013					Nine Months Ended September 30, 2012
	Classification	Gains (Losses) on Derivatives			Gains (Losses) on Borrowings		Gains (Losses) on Derivatives		Gains (Losses) on Borrowings
Interest rate contracts
Financial Products	Other income (expense)	$	(87	)	$	92	$	4	$	7
		$	(87	)	$	92	$	4	$	7

Cash Flow Hedges (Millions of dollars)
	Three Months Ended September 30, 2013
				Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI (Effective Portion)			Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI to Earnings			Recognized in Earnings (Ineffective Portion)
Foreign exchange contracts
Machinery and Power Systems	$	44		Other income (expense)	$	(12	)	$	—
Interest rate contracts
Machinery and Power Systems	—			Other income (expense)	(1		)	—
Financial Products	(3		)	Interest expense of Financial Products	(1		)	—
	$	41			$	(14	)	$	—

	Three Months Ended September 30, 2012
				Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI (Effective Portion)			Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI to Earnings			Recognized in Earnings (Ineffective Portion)
Foreign exchange contracts
Machinery and Power Systems	$	(6	)	Other income (expense)	$	(14	)	$	—
Interest rate contracts
Machinery and Power Systems	—			Other income (expense)	1			—
Financial Products	(6		)	Interest expense of Financial Products	(1		)	—
	$	(12	)		$	(14	)	$	—

	Nine Months Ended September 30, 2013
				Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI (Effective Portion)			Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI to Earnings				Recognized in Earnings (Ineffective Portion)
Foreign exchange contracts
Machinery and Power Systems	$	4		Other income (expense)	$	(60	)	2	$	—
Interest rate contracts
Machinery and Power Systems	—			Other income (expense)	(2		)		—
Financial Products	—			Interest expense of Financial Products	(4		)		—
	$	4			$	(66	)		$	—
	Nine Months Ended September 30, 2012
				Recognized in Earnings
	Amount of Gains (Losses) Recognized in AOCI (Effective Portion)			Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI to Earnings				Recognized in Earnings (Ineffective Portion)
Foreign exchange contracts
Machinery and Power Systems	$	(48	)	Other income (expense)	$	(13	)		$	—
Interest rate contracts
Financial Products	(8		)	Interest expense of Financial Products	(3		)		(1		)	1
	$	(56	)		$	(16	)		$	(1	)

¹  The ineffective portion recognized in earnings is included in Other income (expense).

²  Includes $3 million loss reclassified from AOCI to Other income (expense) in 2013 as certain derivatives were dedesignated as the related transactions are no longer probable to occur.

Effect of derivatives not designated as hedging instruments on the Consolidated Statement of Results of Operations

The effect of derivatives not designated as hedging instruments on the Consolidated Statement of Results of Operations is as follows: 

(Millions of dollars)
	Classification of Gains (Losses)	Three Months Ended September 30, 2013			Three Months Ended September 30, 2012
Foreign exchange contracts
Machinery and Power Systems	Other income (expense)	$	15		$	(9	)
Financial Products	Other income (expense)	3			5
Interest rate contracts
Financial Products	Other income (expense)	(1		)	—
Commodity contracts
Machinery and Power Systems	Other income (expense)	2			3
		$	19		$	(1	)
	Classification of Gains (Losses)	Nine Months Ended September 30, 2013			Nine Months Ended September 30, 2012
Foreign exchange contracts
Machinery and Power Systems	Other income (expense)	$	7		$	21
Financial Products	Other income (expense)	4			7
Interest rate contracts
Financial Products	Other income (expense)	(1		)	—
Commodity contracts
Machinery and Power Systems	Other income (expense)	(2		)	3
		$	8		$	31

Effect of net settlement provisions of the master netting agreements on derivative assets

December 31, 2012							Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amount of Assets Presented in the Statement of Financial Position		Financial Instruments			Cash Collateral Received		Net Amount of Assets
Derivatives
Machinery & Power Systems	$	60	$	—	$	60	$	(59	)	$	—	$	1
Financial Products	238		—		238		(12		)	—		226
Total	$	298	$	—	$	298	$	(71	)	$	—	$	227

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

September 30, 2013							Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amount of Assets Presented in the Statement of Financial Position		Financial Instruments			Cash Collateral Received		Net Amount of Assets
Derivatives
Machinery & Power Systems	$	92	$	—	$	92	$	(52	)	$	—	$	40
Financial Products	163		—		163		(9		)	—		154
Total	$	255	$	—	$	255	$	(61	)	$	—	$	194

Effect of net settlement provisions of the master netting agreements on derivative liabilities

September 30, 2013									Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position		Net Amount of Liabilities Presented in the Statement of Financial Position			Financial Instruments		Cash Collateral Pledged		Net Amount of Liabilities
Derivatives
Machinery & Power Systems	$	(56	)	$	—	$	(56	)	$	52	$	—	$	(4	)
Financial Products	(13		)	—		(13		)	9		—		(4		)
Total	$	(69	)	$	—	$	(69	)	$	61	$	—	$	(8	)

December 31, 2012									Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position		Net Amount of Liabilities Presented in the Statement of Financial Position			Financial Instruments		Cash Collateral Pledged		Net Amount of Liabilities
Derivatives
Machinery & Power Systems	$	(129	)	$	—	$	(129	)	$	59	$	—	$	(70	)
Financial Products	(15		)	—		(15		)	12		—		(3		)
Total	$	(144	)	$	—	$	(144	)	$	71	$	—	$	(73	)

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Fair Value Measurements (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Assets
Available-for-sale securities	$ 1,611	$ 1,586
Recurring basis
Assets
Available-for-sale securities	1,611	1,586
Derivative financial instruments, net	186	154
Total Assets	1,797	1,740
Liabilities
Guarantees	15	14
Total Liabilities	15	14
U.S. treasury bonds
Assets
Available-for-sale securities	11	10
U.S. treasury bonds | Recurring basis
Assets
Available-for-sale securities	11	10
Other U.S. and non-U.S. government bonds
Assets
Available-for-sale securities	126	146
Other U.S. and non-U.S. government bonds | Recurring basis
Assets
Available-for-sale securities	126	146
Corporate bonds
Assets
Available-for-sale securities	672	664
Corporate bonds | Recurring basis
Assets
Available-for-sale securities	672	664
Asset-backed Securities
Assets
Available-for-sale securities	75	96
Asset-backed Securities | Recurring basis
Assets
Available-for-sale securities	75	96
U.S. governmental agency | Recurring basis
Assets
Available-for-sale securities	337	299
Residential
Assets
Available-for-sale securities	21	25
Residential | Recurring basis
Assets
Available-for-sale securities	21	25
Commercial
Assets
Available-for-sale securities	93	127
Commercial | Recurring basis
Assets
Available-for-sale securities	93	127
Large capitalization value
Assets
Available-for-sale securities	231	185
Large capitalization value | Recurring basis
Assets
Available-for-sale securities	231	185
Smaller company growth
Assets
Available-for-sale securities	45	34
Smaller company growth | Recurring basis
Assets
Available-for-sale securities	45	34
Level 1 | Recurring basis
Assets
Available-for-sale securities	287	229
Derivative financial instruments, net	0	0
Total Assets	287	229
Liabilities
Guarantees	0	0
Total Liabilities	0	0
Level 1 | U.S. treasury bonds | Recurring basis
Assets
Available-for-sale securities	11	10
Level 1 | Other U.S. and non-U.S. government bonds | Recurring basis
Assets
Available-for-sale securities	0	0
Level 1 | Corporate bonds | Recurring basis
Assets
Available-for-sale securities	0	0
Level 1 | Asset-backed Securities | Recurring basis
Assets
Available-for-sale securities	0	0
Level 1 | U.S. governmental agency | Recurring basis
Assets
Available-for-sale securities	0	0
Level 1 | Residential | Recurring basis
Assets
Available-for-sale securities	0	0
Level 1 | Commercial | Recurring basis
Assets
Available-for-sale securities	0	0
Level 1 | Large capitalization value | Recurring basis
Assets
Available-for-sale securities	231	185
Level 1 | Smaller company growth | Recurring basis
Assets
Available-for-sale securities	45	34
Level 2 | Recurring basis
Assets
Available-for-sale securities	1,324	1,357
Derivative financial instruments, net	186	154
Total Assets	1,510	1,511
Liabilities
Guarantees	0	0
Total Liabilities	0	0
Level 2 | U.S. treasury bonds | Recurring basis
Assets
Available-for-sale securities	0	0
Level 2 | Other U.S. and non-U.S. government bonds | Recurring basis
Assets
Available-for-sale securities	126	146
Level 2 | Corporate bonds | Recurring basis
Assets
Available-for-sale securities	672	664
Level 2 | Asset-backed Securities | Recurring basis
Assets
Available-for-sale securities	75	96
Level 2 | U.S. governmental agency | Recurring basis
Assets
Available-for-sale securities	337	299
Level 2 | Residential | Recurring basis
Assets
Available-for-sale securities	21	25
Level 2 | Commercial | Recurring basis
Assets
Available-for-sale securities	93	127
Level 2 | Large capitalization value | Recurring basis
Assets
Available-for-sale securities	0	0
Level 2 | Smaller company growth | Recurring basis
Assets
Available-for-sale securities	0	0
Level 3 | Recurring basis
Assets
Available-for-sale securities	0	0
Derivative financial instruments, net	0	0
Total Assets	0	0
Liabilities
Guarantees	15	14
Total Liabilities	15	14
Level 3 | U.S. treasury bonds | Recurring basis
Assets
Available-for-sale securities	0	0
Level 3 | Other U.S. and non-U.S. government bonds | Recurring basis
Assets
Available-for-sale securities	0	0
Level 3 | Corporate bonds | Recurring basis
Assets
Available-for-sale securities	0	0
Level 3 | Asset-backed Securities | Recurring basis
Assets
Available-for-sale securities	0	0
Level 3 | U.S. governmental agency | Recurring basis
Assets
Available-for-sale securities	0	0
Level 3 | Residential | Recurring basis
Assets
Available-for-sale securities	0	0
Level 3 | Commercial | Recurring basis
Assets
Available-for-sale securities	0	0
Level 3 | Large capitalization value | Recurring basis
Assets
Available-for-sale securities	0	0
Level 3 | Smaller company growth | Recurring basis
Assets
Available-for-sale securities	$ 0	$ 0

XML

Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	3 Months Ended	9 Months Ended
	Apr. 30, 2012	Sep. 30, 2013	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012	Sep. 30, 2012		Apr. 02, 2012	Aug. 01, 2008
Accumulated other comprehensive income (loss), end of period		$ (6,247)	$ (6,247)	$ (6,698)	$ (6,433)	$ (5,988)	[1]
Other comprehensive income (loss) before reclassifications		323	(217)
Amounts reclassified from accumulated other comprehensive (income) loss		128	403
Other comprehensive income (loss)		451	186
Noncontrolling Interest, Ownership Percentage by Parent								100.00%	67.00%
Noncontrolling interest share redemption reclassified to Accumulated other comprehensive income (loss)	107
Foreign currency translation reclassified to Accumulated other comprehensive income (loss)	167
Pension and other postretirement benefits reclassified to Accumulated other comprehensive income (loss)	(61)
Available for sale securities reclassified to Accumulated other comprehensive income (loss)	1
Foreign currency translation
Accumulated other comprehensive income (loss), end of period		199	199	(92)	456	432	[1]
Other comprehensive income (loss) before reclassifications		291	(257)
Amounts reclassified from accumulated other comprehensive (income) loss		0	0
Other comprehensive income (loss)		291	(257)
Pension and other postretirement benefits
Accumulated other comprehensive income (loss), end of period		(6,528)	(6,528)	(6,645)	(6,914)	(6,454)	[1]
Other comprehensive income (loss) before reclassifications		(3)	24
Amounts reclassified from accumulated other comprehensive (income) loss		120	362
Other comprehensive income (loss)		117	386
Derivative financial instruments
Accumulated other comprehensive income (loss), end of period		2	2	(33)	(42)	(35)	[1]
Other comprehensive income (loss) before reclassifications		26	2
Amounts reclassified from accumulated other comprehensive (income) loss		9	42
Other comprehensive income (loss)		35	44
Available-for-sale securities
Accumulated other comprehensive income (loss), end of period		80	80	72	67	69	[1]
Other comprehensive income (loss) before reclassifications		9	14
Amounts reclassified from accumulated other comprehensive (income) loss		(1)	(1)
Other comprehensive income (loss)		$ 8	$ 13

[1] In conjunction with the Cat Japan share redemption, to reflect the increase in our ownership interest in Cat Japan from 67 percent to 100 percent, $107 million was reclassified to Accumulated other comprehensive income (loss) from other components of stockholders' equity and was not included in Comprehensive income during the second quarter of 2012. The amount was comprised of foreign currency translation of $167 million, pension and other postretirement benefits of $(61) million and available-for-sale securities of $1 million.

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Available-For-Sale Securities (Details 2) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Less than 12 months
Fair Value	$ 338	$ 109
Unrealized Losses	7	3
12 months or more
Fair Value	78	59
Unrealized Losses	3	5
Total
Fair Value	416	168
Unrealized Losses	10	8
Corporate bonds
Less than 12 months
Fair Value	174
Unrealized Losses	2
12 months or more
Fair Value	0
Unrealized Losses	0
Total
Fair Value	174
Unrealized Losses	2
Asset-backed Securities
Less than 12 months
Fair Value	4	0
Unrealized Losses	0	0
12 months or more
Fair Value	20	20
Unrealized Losses	2	3
Total
Fair Value	24	20
Unrealized Losses	2	3
U.S. governmental agency mortgage-backed securities
Less than 12 months
Fair Value	145	84
Unrealized Losses	4	1
12 months or more
Fair Value	56	15
Unrealized Losses	1	0
Total
Fair Value	201	99
Unrealized Losses	5	1
Residential
Less than 12 months
Fair Value		0
Unrealized Losses		0
12 months or more
Fair Value		14
Unrealized Losses		1
Total
Fair Value		14
Unrealized Losses		1
Large capitalization value
Less than 12 months
Fair Value	15	25
Unrealized Losses	1	2
12 months or more
Fair Value	2	10
Unrealized Losses	0	1
Total
Fair Value	17	35
Unrealized Losses	$ 1	$ 3

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Fair Value Measurements (Details 3) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2011
Assets
Cash and short-term investments	$ 6,357	$ 5,490	$ 5,689	$ 3,057
Available-for-sale securities	1,611	1,586
Carrying Amount
Assets
Cash and short-term investments	6,357	5,490
Restricted cash and short-term investments	50	53
Available-for-sale securities	1,611	1,586
Finance receivables-net (excluding finance leases)	16,077	15,404
Wholesale inventory receivables-net (excluding finance leases)	1,616	1,674
Foreign currency contracts - net	51	0
Interest rate swaps-net	136	219
Commodity contracts-net	0	1
Liabilities
Short-term borrowings	5,847	5,287
Foreign currency contracts-net	0	66
Commodity contracts-net	1	0
Guarantees	15	14
Carrying Amount | Machinery and Power Systems
Liabilities
Long-term debt (including amounts due within one year)	9,061	9,779
Carrying Amount | Financial Products
Liabilities
Long-term debt (including amounts due within one year)	24,629	25,077
Carrying amount of assets excluded from measurement at fair value
Assets
Finance leases	8,132	7,959
Level 1 | Fair Value
Assets
Cash and short-term investments	6,357	5,490
Restricted cash and short-term investments	50	53
Liabilities
Short-term borrowings	5,847	5,287
Level 1 & 2 | Fair Value
Assets
Available-for-sale securities	1,611	1,586
Level 2 | Fair Value
Assets
Finance receivables-net (excluding finance leases)	15,952	15,359
Wholesale inventory receivables-net (excluding finance leases)	1,542	1,609
Foreign currency contracts - net	51	0
Interest rate swaps-net	136	219
Commodity contracts-net	0	1
Liabilities
Foreign currency contracts-net	0	66
Commodity contracts-net	1	0
Level 2 | Fair Value | Machinery and Power Systems
Liabilities
Long-term debt (including amounts due within one year)	10,337	11,969
Level 2 | Fair Value | Financial Products
Liabilities
Long-term debt (including amounts due within one year)	25,239	26,063
Level 3 | Fair Value
Liabilities
Guarantees	$ 15	$ 14

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Guarantees and Product Warranty

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Guarantees and Product Warranty

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 being financed. 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.

We have provided a guarantee to one of our customers in Brazil related to the performance of contractual obligations by a supplier consortium to which one of our Caterpillar subsidiaries is a member. The guarantees cover potential damages (some of them capped) incurred by the customer resulting from the supplier consortium’s non-performance. The guarantee will expire when the supplier consortium performs all its contractual obligations, which is expected to be completed in 2022.

We have provided guarantees to third-party lessors for certain properties leased by Cat Logistics Services, LLC, in which we sold a 65 percent equity interest in the third quarter of 2012. The guarantees are for the possibility that the third party logistics business would default on real estate lease payments. The guarantees were granted at lease inception, which was prior to the divestiture, and generally will expire at the end of the lease terms.

No loss has been experienced or is anticipated under any of these guarantees.  At September 30, 2013 and December 31, 2012, 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, 2013		December 31, 2012
Caterpillar dealer guarantees	$	201	$	180
Customer guarantees	53		77
Customer guarantees – supplier consortium	359		—
Third party logistics business guarantees	156		176
Other guarantees	35		53
Total guarantees	$	804	$	486

Cat Financial provides guarantees to repurchase certain loans of Caterpillar dealers from a special-purpose corporation (SPC) that qualifies as a variable interest entity.  The purpose of the SPC is to provide short-term working capital loans to Caterpillar dealers.  This SPC issues commercial paper and uses the proceeds to fund its loan program.  Cat Financial has a loan purchase agreement with the SPC that obligates Cat Financial to purchase certain loans that are not paid at maturity.  Cat Financial receives a fee for providing this guarantee, which provides a source of liquidity for the SPC.  Cat Financial is the primary beneficiary of the SPC as their guarantees result in Cat Financial having both the power to direct the activities that most significantly impact the SPC’s economic performance and the obligation to absorb losses, and therefore Cat Financial has consolidated the financial statements of the SPC.  As of September 30, 2013 and December 31, 2012, the SPC’s assets of $1,044 million and $927 million, respectively, are primarily comprised of loans to dealers and the SPC’s liabilities of $1,043 million and $927 million, respectively, are primarily comprised of commercial paper.  The assets of the SPC are not available to pay Cat Financial's creditors. Cat Financial may be obligated to perform under the guarantee if the SPC experiences losses. No loss has been experienced or is anticipated under this loan purchase agreement.

Our product warranty liability is determined by applying historical claim rate experience to the current field population and dealer inventory.  Generally, historical claim rates are based on actual warranty experience for each product by machine model/engine size by customer or dealer location (inside or outside North America).  Specific rates are developed for each product shipment month and are updated monthly based on actual warranty claim experience.  

(Millions of dollars)	2013
Warranty liability, January 1	$	1,477
Reduction in liability (payments)	(677		)
Increase in liability (new warranties)	570
Warranty liability, September 30	$	1,370

(Millions of dollars)	2012
Warranty liability, January 1	$	1,308
Reduction in liability (payments)	(920		)
Increase in liability (new warranties)	1,089
Warranty liability, December 31	$	1,477

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Investments in Unconsolidated Affiliated Companies

9 Months Ended

Sep. 30, 2013

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Affiliated Companies

Investments in Unconsolidated Affiliated Companies

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: (Millions of dollars)	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013			2012
Sales	$	349		$	253	$	916		$	625
Cost of sales	284			206		722			492
Gross profit	$	65		$	47	$	194		$	133
Profit (loss)	$	(6	)	$	17	$	(31	)	$	39

Financial Position of unconsolidated affiliated companies: (Millions of dollars)	September 30, 2013		December 31, 2012
Assets:
Current assets	$	707	$	715
Property, plant and equipment – net	714		529
Other assets	498		616
	1,919		1,860
Liabilities:
Current liabilities	450		443
Long-term debt due after one year	887		708
Other liabilities	167		170
	1,504		1,321
Equity	$	415	$	539

Caterpillar’s investments in unconsolidated affiliated companies: (Millions of dollars)	September 30, 2013		December 31, 2012
Investments in equity method companies	$	268	$	256
Plus: Investments in cost method companies	10		16
Total investments in unconsolidated affiliated companies	$	278	$	272

The change in the results of operations amounts for the three and nine months ended September 30, 2013 as compared to September 30, 2012 primarily relates to the third party logistics business, in which Caterpillar sold a majority interest on July 31, 2012. Under the terms of the agreement, Caterpillar retained a 35 percent equity interest.

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Income Tax Disclosure [Abstract]
Estimated annual effective tax rate (as a percent)	29.00%	30.50%
Benefit from research and development tax credit retroactively extended	$ 87
Prior year tax adjustment	55
Negative impact related to nondeductible goodwill		$ 81

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Environmental and Legal Matters

9 Months Ended

Sep. 30, 2013

Environmental Remediation Obligations [Abstract]

Environmental and Legal Matters

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. We have made, and will continue to make, significant research and development and capital expenditures to comply with these emissions standards.

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 accrued 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 October 24, 2013, Progress Rail Services Corporation (Progress Rail), a wholly-owned indirect subsidiary of Caterpillar Inc., received a grand jury subpoena from the U.S. District Court for the Central District of California. The subpoena requests documents and information from Progress Rail, United Industries Corporation, a wholly-owned subsidiary of Progress Rail, and Caterpillar Inc. relating to allegations that Progress Rail conducted improper or unnecessary railcar inspections and repairs and improperly disposed of parts, equipment, tools and other items. In connection with this subpoena, Progress Rail was informed by the U.S. Attorney for the Central District of California that it is a target of a criminal investigation into potential violations of environmental laws and alleged improper business practices. The Company is cooperating with the authorities. Because of the recent timing of the subpoena, the Company is unable to predict the outcome or reasonably estimate the potential loss; however, we currently believe that this matter will not have a material adverse effect on the Company's consolidated results of operation, financial position or liquidity.

We are also involved in 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, environmental matters or intellectual property rights.  The aggregate range of reasonably possible losses in excess of accrued liabilities, if any, associated with these unresolved legal actions is not material.  In some cases, we cannot reasonably estimate a range of loss because there is insufficient information regarding the matter.  However, there is no more than a remote chance that any liability arising from these matters would be material.  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.

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Profit Per Share

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Profit Per Share

Profit Per Share

Computations of profit per share:	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions except per share data)	2013		2012		2013		2012
Profit for the period (A) 1:	$	946	$	1,699	$	2,786	$	4,984
Determination of shares (in millions):
Weighted-average number of common shares outstanding (B)	639.3		653.6		647.6		652.0
Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price	12.6		15.1		13.7		17.7
Average common shares outstanding for fully diluted computation (C) 2	651.9		668.7		661.3		669.7
Profit per share of common stock:
Assuming no dilution (A/B)	$	1.48	$	2.60	$	4.30	$	7.64
Assuming full dilution (A/C) 2	$	1.45	$	2.54	$	4.21	$	7.44
Shares outstanding as of September 30 (in millions)					636.4		653.9

¹  Profit attributable to common stockholders.

²  Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

SARs and stock options to purchase 10,285,409 and 10,191,424 common shares were outstanding for the three and nine months ended September 30, 2013, respectively, which were not included in the computation of diluted earnings per share because the effect would have been antidilutive. For the three and nine months ended September 30, 2012, there were outstanding SARs and stock options to purchase 6,073,271 common shares which were antidilutive.

In February 2007, the Board of Directors authorized the repurchase of $7.5 billion of Caterpillar stock, and in December 2011, the authorization was extended through December 31, 2015. In April 2013, we entered into a definitive agreement with Citibank, N.A. to purchase shares of our common stock under an accelerated stock repurchase transaction (April ASR Agreement), which was completed in June 2013. In accordance with the terms of the April ASR Agreement, a total of 11.5 million shares of our common stock were repurchased at an aggregate cost to Caterpillar of $1.0 billion.

In July 2013, we entered into a definitive agreement with Société Générale to purchase shares of our common stock under an accelerated stock repurchase transaction (July ASR Agreement), which was completed in September 2013. In accordance with the terms of the July ASR Agreement, a total of 11.9 million shares of our common stock were repurchased at an aggregate cost to Caterpillar of $1.0 billion. Through the end of the third quarter of 2013, $5.8 billion of the $7.5 billion authorization was spent.

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Document and Entity Information Document	9 Months Ended
	Sep. 30, 2013
Document and Entity Information
Entity Registrant Name	CATERPILLAR INC
Entity Central Index Key	0000018230
Document Type	10-Q
Document Period End Date	Sep. 30, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	636,355,991
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

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Acquisitions (Details) In Millions, except Share data in Billions, unless otherwise specified	3 Months Ended		9 Months Ended			1 Months Ended				3 Months Ended
	Sep. 30, 2013 USD ($)	Sep. 30, 2012 USD ($)	Sep. 30, 2013 USD ($)	Sep. 30, 2012 USD ($)	Dec. 31, 2012 USD ($)	Sep. 30, 2013 Johan Walter Berg AB USD ($)	Sep. 30, 2013 Johan Walter Berg AB EUR (€)	May 31, 2013 ERA Mining Machinery Limited (Siwei) USD ($) parties director	May 31, 2012 ERA Mining Machinery Limited (Siwei) USD ($) types	Dec. 31, 2012 ERA Mining Machinery Limited (Siwei) USD ($)	Oct. 31, 2012 ERA Mining Machinery Limited (Siwei)	May 31, 2012 Cash consideration ERA Mining Machinery Limited (Siwei) HKD	May 31, 2012 Loan note consideration ERA Mining Machinery Limited (Siwei) HKD
Acquisitions
Percentage of equity acquired (as a percent)						100.00%	100.00%		99.00%		1.00%
Purchase price of acquired entity						$ 166			$ 677
Cost of acquisition paid in cash									475	7
Net cash paid for acquisition			193	542					444
Fair value of loan notes debt component								152	152
Loan and interest payable to Caterpillar									51
Fair value of noncontrolling interest									7
Contingent consideration arrangements
Contingent consideration payable						7
Contingent consideration arrangement, maximum value (in Euro)							30
Number of consideration alternatives									2
Value of consideration to be paid (in HKD/share)												0.88	1.00
Contingent consideration arrangement, minimum value (in HKD/share)													0.75
Contingent consideration arrangement, maximum value (in HKD/share)													1.15
Number of shares tendered (in billions of shares)												4.0	1.6
Assets acquired
Tangible assets acquired						83			598
Cash						9			31
Restricted cash									138
Receivables						13			184
Inventories						33			77
Property, plant and equipment						28			94
Finite-lived intangible assets						66			112
Finite-lived intangible assets weighted average amortization period (in years)						10 years	10 years		14 years
Liabilities assumed
Total liabilities assumed						83			626
Accounts payable						19			352
Advance payments						33
Debt assumed									168
Accrued expenses									37
Net deferred tax liabilities						13			25
Goodwill	6,968		6,968		6,942	109			625	45
Adjustments to preliminary allocation of purchase price
Finite-lived intangibles decrease										82
Receivables decrease										29
Inventory decrease										17
Net liabilities increase										23
Goodwill increase										149
Goodwill impairment charge	0	0	0	0						580
Number of former directors								2
Number of other parties to the settlement								2
Payments by Caterpillar to parties of the settlement agreement								30
Obligation related to the loans by former directors								13
Gain related to settlement and discharge of loan obligations								$ 135

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2013

Accumulated other comprehensive income (loss) [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Comprehensive income and its components are presented in the Consolidated Statement of Comprehensive Income. Changes in Accumulated other comprehensive income (loss), net of tax, included in the Consolidated Statement of Changes in Stockholders’ Equity, consisted of the following:

(Millions of dollars)	Foreign currency translation			Pension and other postretirement benefits			Derivative financial instruments			Available-for-sale securities			Total
Balance at September 30, 2012 1	$	432		$	(6,454	)	$	(35	)	$	69		$	(5,988	)
Three Months Ended September 30, 2013
Balance at June 30, 2013	$	(92	)	$	(6,645	)	$	(33	)	$	72		$	(6,698	)
Other comprehensive income (loss) before reclassifications	291			(3		)	26			9			323
Amounts reclassified from accumulated other comprehensive (income) loss	—			120			9			(1		)	128
Other comprehensive income (loss)	291			117			35			8			451
Balance at September 30, 2013	$	199		$	(6,528	)	$	2		$	80		$	(6,247	)
Nine Months Ended September 30, 2013
Balance at December 31, 2012	$	456		$	(6,914	)	$	(42	)	$	67		$	(6,433	)
Other comprehensive income (loss) before reclassifications	(257		)	24			2			14			(217		)
Amounts reclassified from accumulated other comprehensive (income) loss	—			362			42			(1		)	403
Other comprehensive income (loss)	(257		)	386			44			13			186
Balance at September 30, 2013	$	199		$	(6,528	)	$	2		$	80		$	(6,247	)

¹  In conjunction with the Cat Japan share redemption, to reflect the increase in our ownership interest in Cat Japan from 67 percent to 100 percent, $107 million was reclassified to Accumulated other comprehensive income (loss) from other components of stockholders' equity and was not included in Comprehensive income during the second quarter of 2012. The amount was comprised of foreign currency translation of $167 million, pension and other postretirement benefits of $(61) million and available-for-sale securities of $1 million.

The effect of the reclassifications out of Accumulated other comprehensive income (loss) on the Consolidated Statement of Results of Operations is as follows:

(Millions of dollars)	Classification of income (expense)	Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
Pension and other postretirement benefits:
Amortization of actuarial gain (loss)	Note 9 1	$	(196	)	$	(589	)
Amortization of prior service credit (cost)	Note 9 1	14			41
Amortization of transition asset (obligation)	Note 9 1	(1		)	(2		)
Reclassifications before tax		(183		)	(550		)
Tax (provision) benefit		63			188
Reclassifications net of tax		$	(120	)	$	(362	)
Derivative financial instruments:
Foreign exchange contracts	Other income (expense)	$	(12	)	$	(60	)
Interest rate contracts	Other income (expense)	(1		)	(2		)
Interest rate contracts	Interest expense of Financial Products	(1		)	(4		)
Reclassifications before tax		(14		)	(66		)
Tax (provision) benefit		5			24
Reclassifications net of tax		$	(9	)	$	(42	)
Available-for-sale securities:
Realized gain (loss)	Other income (expense)	$	1		$	1
Tax (provision) benefit		—			—
Reclassifications net of tax		$	1		$	1
Total reclassifications from Accumulated other comprehensive income (loss)		$	(128	)	$	(403	)

¹    Amounts are included in the calculation of net periodic benefit cost. See Note 9 for additional information.

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Postretirement Benefits (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended			1 Months Ended	3 Months Ended		9 Months Ended		1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 29, 2012	Sep. 30, 2013 Pension Benefits	Sep. 30, 2012 Pension Benefits	Sep. 30, 2013 Pension Benefits	Sep. 30, 2012 Pension Benefits	Sep. 30, 2013 U.S. Pension Benefits	Sep. 30, 2012 U.S. Pension Benefits	Sep. 30, 2013 U.S. Pension Benefits	Sep. 30, 2012 U.S. Pension Benefits	Aug. 31, 2012 U.S. Pension Benefits	Feb. 29, 2012 Non-U.S. Pension Benefits	Sep. 30, 2013 Non-U.S. Pension Benefits	Sep. 30, 2012 Non-U.S. Pension Benefits	Sep. 30, 2013 Non-U.S. Pension Benefits	Sep. 30, 2012 Non-U.S. Pension Benefits	Feb. 29, 2012 Other Postretirement Benefits	Sep. 30, 2013 Other Postretirement Benefits	Sep. 30, 2012 Other Postretirement Benefits	Sep. 30, 2013 Other Postretirement Benefits	Sep. 30, 2012 Other Postretirement Benefits
Defined Benefit Plan Disclosure
Defined benefit plan loss of third party receivable																$ 21
Net gain due to facility closure	6
Net increase in liability due to curtailment and remeasurement										243
Net loss recognized in accumulated other comprehensive income/loss due to curtailment and remeasurement										153
Components of net periodic benefit cost
Service cost						49	46	147	138			31	26	93	82		24	23	79	69
Interest cost						147	152	436	460			43	44	128	135		48	55	146	166
Expected return on plan assets						(208)	(204)	(624)	(610)			(59)	(53)	(176)	(160)		(14)	(15)	(42)	(47)
Amortization of:
Transition obligation / (asset)						0	0	0	0			0	0	0	0		1	1	2	2
Prior service cost / (credit)						4	5	13	15			0	1	1	1		(18)	(18)	(55)	(51)
Net actuarial loss / (gain)						136	126	409	374			33	24	99	72		27	25	81	75
Net periodic benefit cost, excluding curtailments, settlements and special termination benefits						128	125	381	377			48	42	145	130		68	71	211	214
Adjustment for subsidiary pension plan						31	0	31	0			0	0	0	0		0	0	0	0
Curtailments, settlements and special termination benefits						0	7	0	7		10	0	6	3	28	(37)	0	0	0	(40)
Total cost included in operating profit						159	132	412	384			48	48	148	158		68	71	211	174
Weighted-average assumptions used to determine net cost:
Discount rate (as a percent)								3.70%	4.30%					3.70%	4.30%				3.70%	4.30%
Expected return on plan assets (as a percent)								7.80%	8.00%					6.70%	7.10%				7.80%	8.00%
Rate of compensation increase (as a percent)								4.50%	4.50%					3.90%	3.90%				4.40%	4.40%
Pension contributions
Contributions to pension plans		118	195	398	488
Expected full year contributions pension plans during the year		$ 500		$ 500

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Available-For-Sale Securities (Details 3) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
Due in one year or less, Cost Basis	$ 211		$ 211
Due after one year through five years, Cost Basis	589		589
Due after five through ten years, Cost Basis	28		28
Due after ten years, Cost Basis	31		31
Due in one year or less, Fair Value	214		214
Due after one year through five years, Fair Value	611		611
Due after five years through ten years, Fair Value	29		29
Due after ten years, Fair Value	30		30
Cost Basis	1,303		1,303
Fair Value	1,335		1,335
Schedule of Available-for-sale Securities
Cost Basis	1,483		1,483		1,479
Available-for-sale securities, Fair Value	1,611		1,611		1,586
Available-for-sale Securities, Proceeds, Gains and Losses
Proceeds from the sale of available-for-sale securities	90	66	297	243
Gross gains from the sale of available-for-sale securities	2	1	4	4
Gross losses from the sale of available-for-sale securities	1	0	2	0
U.S. governmental agency mortgage-backed securities
Schedule of Available-for-sale Securities
Cost Basis	336		336		291
Available-for-sale securities, Fair Value	337		337		299
Residential
Schedule of Available-for-sale Securities
Cost Basis	21		21		26
Available-for-sale securities, Fair Value	21		21		25
Commercial
Schedule of Available-for-sale Securities
Cost Basis	87		87		117
Available-for-sale securities, Fair Value	$ 93		$ 93		$ 127

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Divestitures and Assets Held for Sale (Details) (USD $) In Millions, unless otherwise specified		3 Months Ended			9 Months Ended	3 Months Ended
	Jul. 31, 2012	Sep. 30, 2013 Bucyrus Distribution Business Transaction	Jun. 30, 2013 Bucyrus Distribution Business Transaction	Mar. 31, 2013 Bucyrus Distribution Business Transaction	Sep. 30, 2013 Bucyrus Distribution Business Transaction	Sep. 30, 2012 Third Party Logistics Business	Jul. 31, 2012 Third Party Logistics Business
Disposal Groups
Number of sales transactions completed		3	1	2
Sales price of business					$ 199	$ 567
After-tax profit unfavorable impact					44
Gains related to sales transactions					64	276
Increase in reserve for parts returns related to prior sale transactions					34
Selling, general and administrative expenses					85
Income tax benefit					11
Customer relationship intangible assets sold		31			31
Allocated goodwill		24			24
Inventories sold		20			20
Fixed assets sold		8			8
Number of divestiture transactions classified as held for sale		9			9
Percentage of equity interest sold in subsidiary (as a percent)	65.00%						65.00%
Equity contribution from buyer						107
Percentage of equity interest retained in subsidiary (as a percent)	35.00%						35.00%
Incremental incentive compensation expense						8
Retained noncontrolling interest, fair value							$ 58