cat-20200930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2020

☐ 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

37-0602744

(State or other jurisdiction of incorporation)

(IRS Employer I.D. No.)

510 Lake Cook Road,

Suite 100,

Deerfield,

Illinois

60015

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (224) 551-4000

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common Stock ($1.00 par value)	CAT	New York Stock Exchange	¹
9 3/8% Debentures due March 15, 2021	CAT21	New York Stock Exchange
8% Debentures due February 15, 2023	CAT23	New York Stock Exchange
5.3% Debentures due September 15, 2035	CAT35	New York Stock Exchange

¹ In addition to the New York Stock Exchange, Caterpillar common stock is also listed on stock exchanges in France and Switzerland.

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 ☒ No ☐

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

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


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

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

At September 30, 2020, 543,258,283 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	54
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	93
Item 4.	Controls and Procedures	93

Part II. Other Information
Item 1.	Legal Proceedings	93
Item 1A.	Risk Factors	94
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	94
Item 3.	Defaults Upon Senior Securities	*
Item 4.	Mine Safety Disclosures	*
Item 5.	Other Information	*
Item 6.	Exhibits	95

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

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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
	2020		2019
Sales and revenues:
Sales of Machinery, Energy & Transportation	$	9,228	$	11,974
Revenues of Financial Products	653		784
Total sales and revenues	9,881		12,758

Operating costs:
Cost of goods sold	6,919		8,569
Selling, general and administrative expenses	1,126		1,251
Research and development expenses	344		431
Interest expense of Financial Products	137		189
Other operating (income) expenses	370		298
Total operating costs	8,896		10,738

Operating profit	985		2,020

Interest expense excluding Financial Products	136		103
Other income (expense)	14		88

Consolidated profit before taxes	863		2,005

Provision (benefit) for income taxes	187		518
Profit of consolidated companies	676		1,487

Equity in profit (loss) of unconsolidated affiliated companies	(5)		7

Profit of consolidated and affiliated companies	671		1,494

Less: Profit (loss) attributable to noncontrolling interests	3		—

Profit 1	$	668	$	1,494

Profit per common share	$	1.23	$	2.69

Profit per common share – diluted 2	$	1.22	$	2.66

Weighted-average common shares outstanding (millions)
– Basic	542.3		556.3
– Diluted 2	546.4		561.2

1 Profit attributable to common shareholders.

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

See accompanying notes to Consolidated Financial Statements.

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Caterpillar Inc.

Consolidated Statement of Comprehensive Income

(Unaudited)

(Dollars in millions)


	Three Months Ended September 30
	2020		2019

Profit of consolidated and affiliated companies	$	671	$	1,494
Other comprehensive income (loss), net of tax:
Foreign currency translation, net of tax (provision)/benefit of: 2020- $21; 2019 - $(21)	291		(263)

Pension and other postretirement benefits:


Current year prior service credit (cost), net of tax (provision)/benefit of: 2020 - $1; 2019 - $0	(1)		—
Amortization of prior service (credit) cost, net of tax (provision)/benefit of: 2020 - $2; 2019 - $2	(7)		(8)


Derivative financial instruments:
Gains (losses) deferred, net of tax (provision)/benefit of: 2020 - $(2); 2019 - $(16)	3		59
(Gains) losses reclassified to earnings, net of tax (provision)/benefit of: 2020 - $(20); 2019 - $20	73		(76)

Available-for-sale securities:
Gains (losses) deferred, net of tax (provision)/benefit of: 2020 - $0; 2019 - $(2)	8		4


Total other comprehensive income (loss), net of tax	367		(284)
Comprehensive income	1,038		1,210
Less: comprehensive income attributable to the noncontrolling interests	3		—
Comprehensive income attributable to shareholders	$	1,035	$	1,210

See accompanying notes to Consolidated Financial Statements.

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Caterpillar Inc.

Consolidated Statement of Results of Operations

(Unaudited)

(Dollars in millions except per share data)


	Nine Months Ended September 30
	2020		2019
Sales and revenues:
Sales of Machinery, Energy & Transportation	$	28,452	$	38,369
Revenues of Financial Products	2,061		2,287
Total sales and revenues	30,513		40,656

Operating costs:
Cost of goods sold	21,298		27,513
Selling, general and administrative expenses	3,426		3,879
Research and development expenses	1,041		1,307
Interest expense of Financial Products	461		571
Other operating (income) expenses	1,114		946
Total operating costs	27,340		34,216

Operating profit	3,173		6,440

Interest expense excluding Financial Products	384		309
Other income (expense)	265		316

Consolidated profit before taxes	3,054		6,447

Provision (benefit) for income taxes	839		1,470
Profit of consolidated companies	2,215		4,977

Equity in profit (loss) of unconsolidated affiliated companies	8		20

Profit of consolidated and affiliated companies	2,223		4,997

Less: Profit (loss) attributable to noncontrolling interests	5		2

Profit 1	$	2,218	$	4,995

Profit per common share	$	4.08	$	8.84

Profit per common share – diluted 2	$	4.05	$	8.75

Weighted-average common shares outstanding (millions)
– Basic	543.9		565.2
– Diluted 2	547.8		570.8

1 Profit attributable to common shareholders.

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

See accompanying notes to Consolidated Financial Statements.

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Caterpillar Inc.

Consolidated Statement of Comprehensive Income

(Unaudited)

(Dollars in millions)


	Nine Months Ended September 30
	2020		2019

Profit of consolidated and affiliated companies	$	2,223	$	4,997
Other comprehensive income (loss), net of tax:
Foreign currency translation, net of tax (provision)/benefit of: 2020 - $20; 2019 - $(19)	106		(186)

Pension and other postretirement benefits:


Current year prior service credit (cost), net of tax (provision)/benefit of: 2020 - $1; 2019 - $0	1		—
Amortization of prior service (credit) cost, net of tax (provision)/benefit of: 2020 - $7; 2019 - $8	(21)		(22)


Derivative financial instruments:
Gains (losses) deferred, net of tax (provision)/benefit of: 2020 - $21; 2019 - $(15)	(72)		53
(Gains) losses reclassified to earnings, net of tax (provision)/benefit of: 2020 - $(22); 2019 - $23	76		(86)

Available-for-sale securities:
Gains (losses) deferred, net of tax (provision)/benefit of: 2020 - $(9); 2019 - $(10)	29		34


Total other comprehensive income (loss), net of tax	119		(207)
Comprehensive income	2,342		4,790
Less: comprehensive income attributable to the noncontrolling interests	5		2
Comprehensive income attributable to shareholders	$	2,337	$	4,788

See accompanying notes to Consolidated Financial Statements.

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Caterpillar Inc.

Consolidated Statement of Financial Position

(Unaudited)

(Dollars in millions)


	September 30, 2020		December 31, 2019
Assets
Current assets:
Cash and short-term investments	$	9,315	$	8,284
Receivables – trade and other	6,969		8,568
Receivables – finance	8,966		9,336

Prepaid expenses and other current assets	1,831		1,739
Inventories	11,453		11,266
Total current assets	38,534		39,193

Property, plant and equipment – net	12,232		12,904
Long-term receivables – trade and other	1,149		1,193
Long-term receivables – finance	12,209		12,651

Noncurrent deferred and refundable income taxes	1,440		1,411
Intangible assets	1,363		1,565
Goodwill	6,304		6,196
Other assets	3,510		3,340
Total assets	$	76,741	$	78,453

Liabilities
Current liabilities:
Short-term borrowings:
Machinery, Energy & Transportation	$	—	$	5
Financial Products	2,660		5,161
Accounts payable	5,193		5,957
Accrued expenses	3,510		3,750
Accrued wages, salaries and employee benefits	1,069		1,629
Customer advances	1,209		1,187
Dividends payable	—		567
Other current liabilities	1,978		2,155
Long-term debt due within one year:
Machinery, Energy & Transportation	1,397		16
Financial Products	7,962		6,194
Total current liabilities	24,978		26,621

Long-term debt due after one year:
Machinery, Energy & Transportation	9,742		9,141
Financial Products	16,365		17,140
Liability for postemployment benefits	6,254		6,599
Other liabilities	4,408		4,323
Total liabilities	61,747		63,824
Commitments and contingencies (Notes 11 and 14)

Shareholders’ equity
Common stock of $1.00 par value:
Authorized shares: 2,000,000,000 Issued shares: (9/30/20 and 12/31/19 – 814,894,624) at paid-in amount	6,204		5,935
Treasury stock (9/30/20 – 271,636,341 shares; 12/31/19 – 264,812,014 shares) at cost	(25,315)		(24,217)
Profit employed in the business	35,508		34,437
Accumulated other comprehensive income (loss)	(1,448)		(1,567)
Noncontrolling interests	45		41
Total shareholders’ equity	14,994		14,629
Total liabilities and shareholders’ equity	$	76,741	$	78,453

See accompanying notes to Consolidated Financial Statements.

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Caterpillar Inc.

Consolidated Statement of Changes in Shareholders’ Equity

(Unaudited)

(Dollars in millions)


	Common stock		Treasury stock		Profit employed in the business		Accumulated other comprehensive income (loss)		Noncontrolling interests		Total
Three Months Ended September 30, 2019
Balance at June 30, 2019	$	5,822	$	(22,467)	$	32,981	$	(1,499)	$	41	$	14,878
Profit of consolidated and affiliated companies	—		—		1,494		—		—		1,494
Foreign currency translation, net of tax	—		—		—		(263)		—		(263)
Pension and other postretirement benefits, net of tax	—		—		—		(8)		—		(8)
Derivative financial instruments, net of tax	—		—		—		(17)		—		(17)
Available-for-sale securities, net of tax	—		—		—		4		—		4



Common shares issued from treasury stock for stock-based compensation: 404,606	—		20		—		—		—		20
Stock-based compensation expense	57		—		—		—		—		57

Common shares repurchased: 10,335,410 1	—		(1,246)		—		—		—		(1,246)
Other	72		—		2		—		—		74
Balance at September 30, 2019	$	5,951	$	(23,693)	$	34,477	$	(1,783)	$	41	$