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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
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 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.
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Table of Contents


Part I. Financial Information
Item 1. Financial Statements 3
Management’s Discussion and Analysis of Financial Condition and Results of
Item 2. 54
Operations
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, December 31,
2020 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)
Profit Accumulated
employed other
Common Treasury in the comprehensive Noncontrolling
stock stock business income (loss) 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 $ 14,993

Three Months Ended September 30, 2020
Balance at June 30, 2020.................................................................. $ 6,120 $ (25,412) $ 34,841 $ (1,815) $ 43 $ 13,777
Profit of consolidated and affiliated companies................................. — — 668 — 3 671
Foreign currency translation, net of tax............................................. — — — 291 — 291
Pension and other postretirement benefits, net of tax........................ — — — (8) — (8)
Derivative financial instruments, net of tax....................................... — — — 76 — 76
Available-for-sale securities, net of tax.............................................. — — — 8 — 8
Common shares issued from treasury stock for stock-based
compensation: 1,751,708.................................................................... 23 97 — — — 120
Stock-based compensation expense................................................... 55 — — — — 55
Other................................................................................................... 6 — (1) — (1) 4
Balance at September 30, 2020........................................................ $ 6,204 $ (25,315) $ 35,508 $ (1,448) $ 45 $ 14,994


1
See Note 12 for additional information.



See accompanying notes to Consolidated Financial Statements.




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Caterpillar Inc.
Consolidated Statement of Changes in Shareholders’ Equity
(Unaudited)
(Dollars in millions)
Profit Accumulated
employed other
Common Treasury in the comprehensive Noncontrolling
stock stock business income (loss) interests Total
Nine Months Ended September 30, 2019
Balance at December 31, 2018...................................................... $ 5,827 $ (20,531) $ 30,427 $ (1,684) $ 41 $ 14,080
Adjustments to adopt new accounting guidance
Lease accounting.......................................................................... — — 235 — — 235
Reclassification of certain tax effects from accumulated other
comprehensive income................................................................. — — (108) 108 — —
Balance at January 1, 2019........................................................... 5,827 (20,531) 30,554 (1,576) 41 14,315
Profit of consolidated and affiliated companies.............................. — — 4,995 — 2 4,997
Foreign currency translation, net of tax........................................... — — — (186) — (186)
Pension and other postretirement benefits, net of tax...................... — — — (22) — (22)
Derivative financial instruments, net of tax..................................... — — — (33) — (33)
Available-for-sale securities, net of tax........................................... — — — 34 — 34
Dividends declared 1........................................................................ — — (1,074) — — (1,074)
Distribution to noncontrolling interests........................................... — — — — (2) (2)
Common shares issued from treasury stock for stock-based
compensation: 2,907,710................................................................. (62) 121 — — — 59
Stock-based compensation expense................................................. 170 — — — — 170
Common shares repurchased: 25,792,061 2..................................... — (3,283) — — — (3,283)
Other................................................................................................ 16 — 2 — — 18
Balance at September 30, 2019..................................................... $ 5,951 $ (23,693) $ 34,477 $ (1,783) $ 41 $ 14,993

Nine Months Ended September 30, 2020
Balance at December 31, 2019...................................................... $ 5,935 $ (24,217) $ 34,437 $ (1,567) $ 41 $ 14,629
Adjustments to adopt new accounting guidance 3
Credit losses................................................................................. — — (25) — — (25)
Balance at January 1, 2020........................................................... 5,935 (24,217) 34,412 (1,567) 41 14,604
Profit of consolidated and affiliated companies.............................. — — 2,218 — 5 2,223
Foreign currency translation, net of tax........................................... — — — 106 — 106
Pension and other postretirement benefits, net of tax...................... — — — (20) — (20)
Derivative financial instruments, net of tax..................................... — — — 4 — 4
Available-for-sale securities, net of tax........................................... — — — 29 — 29
Dividends declared 1........................................................................ — — (1,121) — — (1,121)
Common shares issued from treasury stock for stock-based
compensation: 3,271,679................................................................. (43) 153 — — — 110
Stock-based compensation expense................................................. 169 — — — — 169
Common shares repurchased: 10,096,006 2 .................................... — (1,250) — — — (1,250)
Other................................................................................................ 143 (1) (1) — (1) 140
Balance at September 30, 2020..................................................... $ 6,204 $ (25,315) $ 35,508 $ (1,448) $ 45 $ 14,994


1
Dividends per share of common stock of $2.06 and $1.89 were declared in the nine months ended September 30, 2020 and 2019, respectively.
2
See Note 12 for additional information.
3
See Note 2 for additional information.

See accompanying notes to Consolidated Financial Statements.




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Caterpillar Inc.
Consolidated Statement of Cash Flow
(Unaudited)
(Millions of dollars)
Nine Months Ended September 30
2020 2019
Cash flow from operating activities:
Profit of consolidated and affiliated companies................................................................... $ 2,223 $ 4,997
Adjustments for non-cash items:
Depreciation and amortization...................................................................................... 1,815 1,933
Net gain on remeasurement of pension obligations...................................................... (55) —
Provision (benefit) for deferred income taxes.............................................................. (38) (13)
Other............................................................................................................................. 919 627
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other....................................................................................... 1,473 427
Inventories.................................................................................................................... (139) (676)
Accounts payable.......................................................................................................... (596) (669)
Accrued expenses......................................................................................................... (286) 114
Accrued wages, salaries and employee benefits........................................................... (547) (858)
Customer advances....................................................................................................... 13 169
Other assets – net.......................................................................................................... (15) 19
Other liabilities – net.................................................................................................... (512) (1,592)
Net cash provided by (used for) operating activities................................................................. 4,255 4,478

Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others.............................................. (686) (723)
Expenditures for equipment leased to others........................................................................ (805) (1,133)
Proceeds from disposals of leased assets and property, plant and equipment...................... 550 812
Additions to finance receivables........................................................................................... (9,278) (9,453)
Collections of finance receivables........................................................................................ 9,656 9,144
Proceeds from sale of finance receivables............................................................................ 37 183
Investments and acquisitions (net of cash acquired)............................................................ (93) (6)
Proceeds from sale of businesses and investments (net of cash sold).................................. 13 3
Proceeds from sale of securities........................................................................................... 239 281
Investments in securities....................................................................................................... (512) (425)
Other – net............................................................................................................................ (80) (37)
Net cash provided by (used for) investing activities................................................................. (959) (1,354)

Cash flow from financing activities:
Dividends paid...................................................................................................................... (1,683) (1,564)
Common stock issued, including treasury shares reissued................................................... 110 59
Common shares repurchased................................................................................................ (1,130) (3,283)
Proceeds from debt issued (original maturities greater than three months):
Machinery, Energy & Transportation........................................................................... 1,991 1,479
Financial Products........................................................................................................ 7,427 7,348
Payments on debt (original maturities greater than three months):
Machinery, Energy & Transportation........................................................................... (18) (8)
Financial Products........................................................................................................ (6,771) (6,054)
Short-term borrowings – net (original maturities three months or less)............................... (2,138) (1,006)
Other – net (1) (2)
Net cash provided by (used for) financing activities................................................................. (2,213) (3,031)
Effect of exchange rate changes on cash................................................................................... (56) (47)
Increase (decrease) in cash and short-term investments and restricted cash.................... 1,027 46
Cash and short-term investments and restricted cash at beginning of period........................... 8,292 7,890
Cash and short-term investments and restricted cash at end of period...................................... $ 9,319 $ 7,936

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.
See accompanying notes to Consolidated Financial Statements.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. A. Nature of operations

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

Machinery, Energy & Transportation (ME&T) – We define ME&T as Caterpillar Inc. and its subsidiaries,
excluding Financial Products. ME&T’s information relates to the design, manufacturing and marketing of our
products.

Financial Products – We define Financial Products as our finance and insurance subsidiaries, primarily
Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance
Services). Financial Products’ information relates to the financing to customers and dealers for the purchase and
lease of Caterpillar and other equipment.

B. Basis of presentation

In the opinion of management, the accompanying unaudited 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 months ended September 30, 2020 and 2019, (b) the consolidated comprehensive income for the three
and nine months ended September 30, 2020 and 2019, (c) the consolidated financial position at September 30, 2020
and December 31, 2019, (d) the consolidated changes in shareholders’ equity for the three and nine months ended
September 30, 2020 and 2019 and (e) the consolidated cash flow for the nine months ended September 30, 2020 and
2019. The financial statements have been prepared in conformity with generally accepted accounting principles in the
United States of America (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC).

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, 2019 (2019 Form 10-K).

The December 31, 2019 financial position data included herein is derived from the audited consolidated financial
statements included in the 2019 Form 10-K but does not include all disclosures required by U.S. GAAP. Certain
amounts for prior periods have been reclassified to conform to the current period financial statement presentation.

Unconsolidated Variable Interest Entities (VIEs)

We have affiliates, suppliers and dealers that are VIEs of which we are not the primary beneficiary. Although we have
provided financial support, we do not have the power to direct the activities that most significantly impact the
economic performance of each entity. Our maximum exposure to loss from these VIEs for which we are not the
primary beneficiary was $57 million and $133 million as of September 30, 2020 and December 31, 2019, respectively.

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




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2. New accounting guidance

A. Adoption of new accounting standards

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

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

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

B. Accounting standards issued but not yet adopted

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

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

3. Sales and revenue contract information

Trade receivables represent amounts due from dealers and end users for the sale of our products. In addition, Cat
Financial provides wholesale inventory financing for a dealer’s purchase of inventory. We include wholesale
inventory receivables in Receivables – trade and other and Long-term receivables – trade and other in the Consolidated
Statement of Financial Position. Trade receivables from dealers and end users were $6,048 million, $7,648 million
and $7,743 million as of September 30, 2020, December 31, 2019 and December 31, 2018, respectively. We
recognize trade receivables from dealers and end users in Receivables – trade and other in the Consolidated Statement
of Financial Position. Long-term trade receivables from dealers and end users were $674 million, $693 million and
$674 million as of September 30, 2020, December 31, 2019 and December 31, 2018, respectively. We recognize long-
term trade receivables from dealers and end users in Long-term receivables – trade and other in the Consolidated
Statement of Financial Position.




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We invoice in advance of recognizing the sale of certain products. We recognize advanced customer payments as a
contract liability in Customer advances and Other liabilities in the Consolidated Statement of Financial Position.
Contract liabilities were $1,659 million, $1,654 million and $1,680 million as of September 30, 2020, December 31,
2019 and December 31, 2018, respectively. We reduce the contract liability when revenue is recognized. During the
three and nine months ended September 30, 2020, we recognized $144 million and $843 million, respectively, of
revenue that was recorded as a contract liability at the beginning of 2020. During the three and nine months ended
September 30, 2019, we recognized $101 million and $976 million, respectively, of revenue that was recorded as a
contract liability at the beginning of 2019.

As of September 30, 2020, we have entered into contracts with dealers and end users for which sales have not been
recognized as we have not satisfied our performance obligations and transferred control of the products. The dollar
amount of unsatisfied performance obligations for contracts with an original duration greater than one year is $6.0
billion, of which $2.4 billion is expected to be completed and revenue recognized in the twelve months following
September 30, 2020. We have elected the practical expedient not to disclose unsatisfied performance obligations with
an original contract duration of one year or less. Contracts with an original duration of one year or less are primarily
sales to dealers for machinery, engines and replacement parts.

See Note 16 for further disaggregated sales and revenues information.

4. 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. Our stock-based compensation primarily
consists of stock options, restricted stock units (RSUs) and performance-based restricted stock units (PRSUs).

We recognized pretax stock-based compensation expense of $55 million and $169 million for the three and nine
months ended September 30, 2020, respectively, and $57 million and $170 million for the three and nine months
ended September 30, 2019, respectively.

The following table illustrates the type and fair value of the stock-based compensation awards granted during the nine
months ended September 30, 2020 and 2019, respectively:

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019
Weighted- Weighted- Weighted- Weighted-
Average Fair Average Grant Average Fair Average Grant
Shares Granted Value Per Share Date Stock Price Shares Granted Value Per Share Date Stock Price
Stock options........................ 1,913,888 $ 25.98 $ 127.60 1,499,524 $ 40.98 $ 138.35
RSUs.................................... 705,287 $ 127.60 $ 127.60 657,389 $ 138.35 $ 138.35
PRSUs.................................. 371,641 $ 127.60 $ 127.60 342,097 $ 138.35 $ 138.35


The following table provides the assumptions used in determining the fair value of the stock-based awards for the nine
months ended September 30, 2020 and 2019, respectively:


Grant Year
2020 2019
Weighted-average dividend yield........................................................................................ 2.47% 2.56%
Weighted-average volatility................................................................................................ 25.7% 29.1%
Range of volatilities............................................................................................................ 24.5% -29.7% 25.1% -38.7%
Range of risk-free interest rates.......................................................................................... 1.21% -1.39% 2.48% -2.68%
Weighted-average expected lives........................................................................................ 8 years 7 years


As of September 30, 2020, the total remaining unrecognized compensation expense related to nonvested stock-based
compensation awards was $170 million, which will be amortized over the weighted-average remaining requisite
service periods of approximately 1.8 years.




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5. 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 contracts and commodity forward and option contracts. Our
derivative activities are subject to the management, direction and control of our senior financial officers. We present
at least annually to the Audit Committee of the Board of Directors on our risk management practices, including our use
of financial derivative instruments.

We recognize all derivatives at their fair value on the Consolidated Statement of Financial Position. 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 (cash flow hedge) or
(3) an undesignated instrument. We record in current earnings changes in the fair value of a derivative that is
qualified, designated and highly effective as a fair value hedge, along with the gain or loss on the hedged recognized
asset or liability that is attributable to the hedged risk. We record in Accumulated other comprehensive income (loss)
(AOCI) changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge,
to the extent effective, on the Consolidated Statement of Financial Position until we reclassify them to earnings in the
same period or periods during which the hedged transaction affects earnings. We report changes in the fair value of
undesignated derivative instruments in current earnings. We classify cash flows from designated derivative financial
instruments within the same category as the item being hedged on the Consolidated Statement of Cash Flow. We
include cash flows from undesignated derivative financial instruments 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 ME&T 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. As of
September 30, 2020, the maximum term of these outstanding contracts was approximately 60 months.

We generally designate as cash flow hedges at inception of the contract any Australian dollar, Brazilian real, British
pound, Canadian dollar, Chinese yuan, Indian rupee, Japanese yen, Mexican peso, Norwegian Krona, Singapore dollar
or Thailand baht forward or option contracts that meet the requirements for hedge accounting and the maturity extends
beyond the current quarter-end. We perform designation on a specific exposure basis to support hedge accounting.
The remainder of ME&T foreign currency contracts are undesignated.




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As of September 30, 2020, $8 million of deferred net losses, net of tax, included in equity (AOCI in the Consolidated
Statement of Financial Position), are expected to be reclassified to current earnings over the next twelve months when
earnings are affected by the hedged transactions. The actual amount recorded in current earnings 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 assets and liabilities and exchange rate
risk associated with future transactions denominated in foreign currencies. Our foreign currency forward and option
contracts are primarily undesignated. We designate fixed-to-fixed cross currency contracts as cash flow hedges to
protect against movements in exchange rates on foreign currency fixed-rate assets and liabilities.

Interest Rate Risk

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

Our ME&T 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 contracts and forward rate
agreements to meet that objective. We designate fixed-to-floating interest rate contracts as fair value hedges at
inception of the contract, and we designate certain forward rate agreements as cash flow hedges at inception of the
contract.

Financial Products operations has a match-funding policy that addresses interest rate risk by aligning the interest rate
profile (fixed or floating rate and duration) of Cat Financial’s debt portfolio with the interest rate profile of our
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 contracts to meet
the match-funding objective. We designate fixed-to-floating interest rate contracts as fair value hedges to protect debt
against changes in fair value due to changes in the benchmark interest rate. We designate most floating-to-fixed
interest rate contracts as cash flow hedges to protect against the variability of cash flows due to changes in the
benchmark interest rate.

We have, at certain times, liquidated fixed-to-floating and floating-to-fixed interest rate contracts at both ME&T and
Financial Products. We amortize the gains or losses associated with these contracts at the time of liquidation 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 materials. Our
policy is to use commodity forward and option contracts to manage the commodity risk and reduce the cost of
purchased materials.

Our ME&T 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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The location and fair value of derivative instruments reported in the Consolidated Statement of Financial Position were
as follows:


(Millions of dollars) Consolidated Statement of Financial Asset (Liability) Fair Value
Position Location September 30, 2020 December 31, 2019
Designated derivatives
Foreign exchange contracts
Machinery, Energy & Transportation............. Receivables – trade and other....................... $ 29 $ 18
Machinery, Energy & Transportation............. Long-term receivables – trade and other...... 28 9
Machinery, Energy & Transportation............. Accrued expenses......................................... (40) (20)
Machinery, Energy & Transportation............. Other liabilities............................................. (21) —
Financial Products.......................................... Receivables – trade and other....................... 16 54
Financial Products.......................................... Long-term receivables – trade and other...... — 13
Financial Products.......................................... Accrued expenses......................................... (39) (3)
Interest rate contracts
Machinery, Energy & Transportation............. Long-term receivables – trade and other...... 1 —
Financial Products.......................................... Receivables – trade and other....................... 3 —
Financial Products.......................................... Long-term receivables – trade and other...... 60 5
Financial Products.......................................... Accrued expenses......................................... (12) (25)
$ 25 $ 51
Undesignated derivatives
Foreign exchange contracts
Machinery, Energy & Transportation............. Receivables – trade and other....................... $ 3 $ 1
Financial Products.......................................... Receivables – trade and other....................... 57 7
Financial Products.......................................... Long-term receivables – trade and other...... 12 5
Financial Products.......................................... Accrued expenses......................................... (18) (22)
Commodity contracts
Machinery, Energy & Transportation............. Receivables – trade and other....................... 9 4
Machinery, Energy & Transportation............. Long-term receivables – trade and other...... 1 —
Machinery, Energy & Transportation............. Accrued expenses......................................... (7) (1)
$ 57 $ (6)




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The total notional amounts of the derivative instruments were as follows:

(Millions of dollars) September 30, 2020 December 31, 2019

Machinery, Energy & Transportation........................................................................................ $ 3,479 $ 2,563
Financial Products...................................................................................................................... $ 11,538 $ 8,931



The notional amounts of the derivative financial instruments do not represent amounts exchanged by the parties. We
calculate the amounts exchanged by the parties by referencing the notional amounts and by other terms of the
derivatives, such as foreign currency exchange rates, interest rates or commodity prices.

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

Cash Flow Hedges
Three Months Ended September 30, 2020
Recognized in Earnings
Amount of Amount of
Gains Gains Amount of the line items
(Millions of dollars) (Losses) (Losses) in the Consolidated
Recognized Classification of Reclassified Statement of Results of
in AOCI Gains (Losses) from AOCI Operations
Foreign exchange contracts
Sales of Machinery, Energy &
Machinery, Energy & Transportation.... $ 66 $ (6) $ 9,228
Transportation.........................................
Cost of goods sold................................... (15) 6,919
Financial Products.................................. (64) Interest expense of Financial Products.... 8 137
Other income (expense).......................... (63) 14
Interest rate contracts
Interest expense excluding Financial
Machinery, Energy & Transportation.... 2 (1) 136
Products...................................................
Financial Products.................................. 1 Interest expense of Financial Products.... (16) 137
$ 5 $ (93)



Three Months Ended September 30, 2019
Recognized in Earnings

Amount of Amount of
Gains Gains Amount of the line items
(Losses) (Losses) in the Consolidated
Recognized Classification of Reclassified Statement of Results of
in AOCI Gains (Losses) from AOCI Operations
Foreign exchange contracts
(13) Sales of Machinery, Energy &
Machinery, Energy & Transportation.... $ $ 3 $ 11,974
Transportation.......................................
Financial Products.................................. 100 Interest expense of Financial Products. 9 189
Other income (expense)........................ 89 88
Interest rate contracts
Interest expense excluding Financial
Machinery, Energy & Transportation.... — (2) 103
Products.................................................
Financial Products.................................. (12) Interest expense of Financial Products. (3) 189
$ 75 $ 96




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Cash Flow Hedges
Nine Months Ended September 30, 2020
Recognized in Earnings
Amount of Amount of Amount of the line items
Gains Gains
Classification of in the Consolidated
(Millions of dollars) (Losses) (Losses)
Gains (Losses) Statement of Results of
Recognized Reclassified Operations
in AOCI from AOCI
Foreign exchange contracts

(58) Sales of Machinery, Energy &
Machinery, Energy & Transportation... $ $ 10 $ 28,452
Transportation.........................................
Cost of goods sold................................... (58) 21,298
Financial Products................................. 2 Interest expense of Financial Products.... 28 461
Other income (expense).......................... (35) 265
Interest rate contracts
(14) Interest expense excluding Financial
Machinery, Energy & Transportation... (3) 384
Products...................................................
Financial Products................................. (23) Interest expense of Financial Products.... (40) 461
$ (93) $ (98)


Nine Months Ended September 30, 2019
Recognized in Earnings
Amount of Amount of Amount of the line
Gains Gains items in the
Classification of
(Losses) (Losses) Consolidated Statement
Gains (Losses)
Recognized Reclassified of Results of
in AOCI from AOCI Operations
Foreign exchange contracts
Sales of Machinery, Energy &
Machinery, Energy & Transportation... $ 8 $ 4 $ 38,369
Transportation........................................
Cost of goods sold.................................. (4) 27,513
Financial Products................................ 132 Interest expense of Financial Products... 23 571
Other income (expense).......................... 91 316
Interest rate contracts
Interest expense excluding Financial
Machinery, Energy & Transportation... — (3) 309
Products..................................................
Financial Products................................ (72) Interest expense of Financial Products... (2) 571
$ 68 $ 109




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


(Millions of dollars) Three Months Ended Three Months Ended
Classification of Gains (Losses) September 30, 2020 September 30, 2019
Foreign exchange contracts
Machinery, Energy & Transportation.............. Other income (expense)........................ $ 8 $ (1)
Financial Products............................................ Other income (expense)........................ (73) 15
Commodity contracts
Machinery, Energy & Transportation.............. Other income (expense)........................ 6 (6)
$ (59) $ 8


Nine Months Ended Nine Months Ended
Classification of Gains (Losses) September 30, 2020 September 30, 2019
Foreign exchange contracts
Machinery, Energy & Transportation.............. Other income (expense)........................ $ 21 $ 12
Financial Products............................................ Other income (expense)........................ 12 (24)
Commodity contracts
Machinery, Energy & Transportation.............. Other income (expense)........................ (25) 10
$ 8 $ (2)



We enter into International Swaps and Derivatives Association (ISDA) master netting agreements within ME&T 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, 2020 and December 31, 2019, 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 was as follows:

Gross Amounts Not Offset in
the Statement of Financial
September 30, 2020 Position
Net Amount of
Gross Gross Amounts Assets Presented
(Millions of dollars) Amount of Offset in the in the Statement Cash Net
Recognized Statement of of Financial Financial Collateral Amount of
Assets Financial Position Position Instruments Received Assets
Derivatives
Machinery, Energy &
Transportation...................... $ 71 $ — $ 71 $ (55) $ — $ 16
Financial Products.................... 148 — 148 (37) — 111
Total.............................................. $ 219 $ — $ 219 $ (92) $ — $ 127

Gross Amounts Not Offset in
the Statement of Financial
September 30, 2020 Position
Net Amount of
Liabilities
(Millions of dollars) Gross Gross Amounts Presented in the
Amount of Offset in the Statement of Cash Net
Recognized Statement of Financial Financial Collateral Amount of
Liabilities Financial Position Position Instruments Pledged Liabilities
Derivatives
Machinery, Energy &
Transportation...................... $ (68) $ — $ (68) $ 55 $ — $ (13)
Financial Products.................... (69) — (69) 37 — (32)
Total.............................................. $ (137) $ — $ (137) $ 92 $ — $ (45)

Gross Amounts Not Offset in
the Statement of Financial
December 31, 2019 Position
Net Amount of
Gross Gross Amounts Assets Presented
(Millions of dollars) Amount of Offset in the in the Statement Cash Net
Recognized Statement of of Financial Financial Collateral Amount of
Assets Financial Position Position Instruments Received Assets
Derivatives
Machinery, Energy &
Transportation...................... $ 32 $ — $ 32 $ (13) $ — $ 19
Financial Products.................... 84 — 84 (21) — 63
Total.............................................. $ 116 $ — $ 116 $ (34) $ — $ 82

Gross Amounts Not Offset in
the Statement of Financial
December 31, 2019 Position
Net Amount of
Liabilities
(Millions of dollars) Gross Gross Amounts Presented in the
Amount of Offset in the Statement of Cash Net
Recognized Statement of Financial Financial Collateral Amount of
Liabilities Financial Position Position Instruments Pledged Liabilities
Derivatives
Machinery, Energy &
Transportation...................... $ (21) $ — $ (21) $ 13 $ — $ (8)
Financial Products.................... (50) — (50) 21 — (29)
Total.............................................. $ (71) $ — $ (71) $ 34 $ — $ (37)




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6. Inventories

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



(Millions of dollars) September 30, December 31,
2020 2019
Raw materials..................................................................................................................... $ 4,093 $ 4,263
Work-in-process................................................................................................................. 1,113 1,147
Finished goods.................................................................................................................... 5,984 5,598
Supplies.............................................................................................................................. 263 258
Total inventories................................................................................................................. $ 11,453 $ 11,266




7. Intangible assets and goodwill

A. Intangible assets

Intangible assets were comprised of the following:


September 30, 2020
(Millions of dollars) Weighted Gross
Amortizable Carrying Accumulated
Life (Years) Amount Amortization Net
Customer relationships............................................................................. 15 $ 2,453 $ (1,533) $ 920
Intellectual property................................................................................. 11 1,522 (1,131) 391
Other........................................................................................................ 13 181 (129) 52
Total finite-lived intangible assets........................................................... 14 $ 4,156 $ (2,793) $ 1,363
December 31, 2019
Weighted Gross
Amortizable Carrying Accumulated
Life (Years) Amount Amortization Net
Customer relationships............................................................................. 15 $ 2,450 $ (1,406) $ 1,044
Intellectual property................................................................................. 12 1,510 (1,055) 455
Other........................................................................................................ 13 191 (125) 66
Total finite-lived intangible assets........................................................... 14 $ 4,151 $ (2,586) $ 1,565


Amortization expense for the three and nine months ended September 30, 2020 was $78 million and $236 million,
respectively. Amortization expense for the three and nine months ended September 30, 2019 was $81 million and
$244 million, respectively. Amortization expense related to intangible assets is expected to be:


(Millions of dollars)

Remaining Three
Months of 2020 2021 2022 2023 2024 Thereafter
$76 $296 $278 $220 $162 $331


B. Goodwill

No goodwill was impaired during the nine months ended September 30, 2020 or 2019.




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The changes in carrying amount of goodwill by reportable segment for the nine months ended September 30, 2020
were as follows:


(Millions of dollars) December 31, Other September 30,
2019 Acquisitions Adjustments 1 2020
Construction Industries
Goodwill...................................................... $ 306 $ — $ 6 $ 312
Impairments................................................. (22) — — (22)
Net goodwill................................................ 284 — 6 290
Resource Industries
Goodwill...................................................... 4,156 — 40 4,196
Impairments................................................. (1,175) — — (1,175)
Net goodwill................................................ 2,981 — 40 3,021
Energy & Transportation
Goodwill...................................................... 2,875 41 19 2,935
2
All Other
Goodwill...................................................... 56 — 2 58
Consolidated total
Goodwill...................................................... 7,393 41 67 7,501
Impairments................................................. (1,197) — — (1,197)
Net goodwill................................................ $ 6,196 $ 41 $ 67 $ 6,304


1
Other adjustments are comprised primarily of foreign currency translation.
2
Includes All Other operating segment (See Note 16).




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8. Investments in debt and equity securities

We have investments in certain debt and equity securities, primarily at Insurance Services, which we record at fair
value and primarily include in Other assets in the Consolidated Statement of Financial Position.

We classify debt securities as available-for-sale, and we include the unrealized gains and losses arising from the
revaluation of these debt securities, net of applicable deferred income taxes, in equity (Accumulated other
comprehensive income (loss) in the Consolidated Statement of Financial Position). We include the unrealized gains
and losses arising from the revaluation of the equity securities in Other income (expense) in the Consolidated
Statement of Results of Operations. We generally determine realized gains and losses on sales of investments using
the specific identification method for debt and equity securities and include them in Other income (expense) in the
Consolidated Statement of Results of Operations.

The cost basis and fair value of debt securities with unrealized gains and losses included in equity (Accumulated other
comprehensive income (loss) in the Consolidated Statement of Financial Position) were as follows:

September 30, 2020 December 31, 2019
Unrealized Unrealized
(Millions of dollars) Pretax Net Pretax Net
Cost Gains Fair Cost Gains Fair
Basis (Losses) Value Basis (Losses) Value
Government debt
U.S. treasury bonds......................................... $ 16 $ — $ 16 $ 9 $ — $ 9
Other U.S. and non-U.S. government bonds... 50 1 51 54 — 54

Corporate bonds
Corporate bonds.............................................. 958 43 1,001 836 20 856
Asset-backed securities................................... 156 2 158 62 — 62

Mortgage-backed debt securities
U.S. governmental agency.............................. 351 13 364 327 4 331
Residential....................................................... 5 — 5 6 — 6
Commercial..................................................... 61 4 65 46 1 47
Total debt securities......................................... $ 1,597 $ 63 $ 1,660 $ 1,340 $ 25 $ 1,365


Available-for-sale investments in an unrealized loss position:

September 30, 2020
1
Less than 12 months 12 months or more 1 Total
(Millions of dollars) Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
Corporate bonds
Corporate bonds.................................... $ 65 $ 2 $ 6 $ — $ 71 $ 2
Total......................................................... $ 65 $ 2 $ 6 $ — $ 71 $ 2

December 31, 2019
1
Less than 12 months 12 months or more 1 Total
(Millions of dollars) Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
Corporate bonds
Corporate bonds.................................... $ 58 $ 1 $ 50 $ — $ 108 $ 1
Total......................................................... $ 58 $ 1 $ 50 $ — $ 108 $ 1
1
Indicates the length of time that individual securities have been in a continuous unrealized loss position.




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Corporate Bonds The unrealized losses on our investments in corporate bonds 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. In addition, we did not expect
credit-related losses on these investments as of September 30, 2020.

The cost basis and fair value of the available-for-sale debt securities at September 30, 2020, by contractual maturity,
are 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, 2020
(Millions of dollars) Cost Basis Fair Value
Due in one year or less................................................................................................................... $ 134 $ 135
Due after one year through five years............................................................................................ 715 748
Due after five years through ten years............................................................................................ 246 257
Due after ten years.......................................................................................................................... 85 86
U.S. governmental agency mortgage-backed securities................................................................. 351 364
Residential mortgage-backed securities......................................................................................... 5 5
Commercial mortgage-backed securities........................................................................................ 61 65
Total debt securities – available-for-sale........................................................................................ $ 1,597 $ 1,660



Sales of available-for-sale securities:
Three Months Ended Nine Months Ended
September 30 September 30
(Millions of dollars) 2020 2019 2020 2019
Proceeds from the sale of available-for-sale securities................ $ 74 $ 92 $ 197 $ 237
Gross gains from the sale of available-for-sale securities........... — — 1 1
Gross losses from the sale of available-for-sale securities.......... — — 1 1


For the three months ended September 30, 2020 and 2019, the net unrealized gains (losses) for equity securities held at
September 30, 2020 and 2019 were $9 million and $2 million, respectively. For the nine months ended September 30,
2020 and 2019, the net unrealized gains (losses) for equity securities held at September 30, 2020 and 2019 were $(1)
million and $54 million, respectively.




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Table of Contents

9. Postretirement benefits

A. Pension and postretirement benefit costs

Other
U.S. Pension Non-U.S. Pension Postretirement
Benefits Benefits Benefits
(Millions of dollars) September 30 September 30 September 30
2020 2019 2020 2019 2020 2019
For the three months ended:
Components of net periodic benefit cost:
Service cost.............................................................................. $ — $ 29 $ 13 $ 20 $ 24 $ 19
Interest cost.............................................................................. 120 150 17 23 26 34
Expected return on plan assets ................................................ (197) (180) (34) (37) (4) (4)
Amortization of prior service cost (credit)............................... — — — — (9) (10)
(Gain) loss on remeasurement of pension obligations 1........... (2) — 79 — — —
Curtailments, settlements and termination benefits 1............... — — 4 — — —
Net periodic benefit cost (benefit) 2......................................... $ (79) $ (1) $ 79 $ 6 $ 37 $ 39

For the nine months ended:
Components of net periodic benefit cost:
Service cost.............................................................................. $ — $ 86 $ 41 $ 61 $ 71 $ 60
Interest cost.............................................................................. 362 450 57 70 79 102
Expected return on plan assets ................................................ (593) (540) (107) (112) (10) (14)
Amortization of prior service cost (credit)............................... — — — — (28) (30)
(Gain) loss on remeasurement of pension obligations 1........... — — (55) — — —
Curtailments, settlements and termination benefits 1............... — — 25 — — —
Net periodic benefit cost (benefit) 2......................................... $ (231) $ (4) $ (39) $ 19 $ 112 $ 118


1
Total lump-sum transfers out of certain pension plans exceeded the service and interest cost for 2020, which required us to
follow settlement accounting and remeasure the plans' obligations as of March 31, 2020, June 30, 2020 and September 30, 2020.
2
The service cost component is included in Operating costs in the Consolidated Statement of Results of Operations. All other
components are included in Other income (expense) in the Consolidated Statement of Results of Operations.



We made $47 million and $217 million of contributions to our pension and other postretirement plans during the three
and nine months ended September 30, 2020, respectively. We currently anticipate full-year 2020 contributions of
approximately $250 million.

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) 2020 2019 2020 2019
U.S. Plans................................................................. $ 103 $ 68 $ 248 $ 298
Non-U.S. Plans......................................................... 22 22 65 64
$ 125 $ 90 $ 313 $ 362


The decrease in the U.S. defined contribution benefit costs for the nine months ended September 30, 2020 was
primarily due to the fair value adjustments related to our non-qualified deferred compensation plans.




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10. Leases

Revenues from finance and operating leases, primarily included in Revenues of Financial Products on the
Consolidated Statement of Results of Operations, were as follows:

(Millions of dollars)
Three Months Ended Nine Months Ended
September 30 September 30
2020 2019 2020 2019
Finance lease revenue............................................................... $ 125 $ 136 $ 369 $ 390
Operating lease revenue............................................................ 249 317 837 941
Total.......................................................................................... $ 374 $ 453 $ 1,206 $ 1,331


We present revenues net of sales and other related taxes.

11. Guarantees and product warranty

Caterpillar dealer performance guarantees
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 have varying terms and are issued to insure governmental agencies
against nonperformance by certain dealers. We also provided guarantees to third-parties related to the performance of
contractual obligations by certain Caterpillar dealers. These guarantees have varying terms and cover potential
financial losses incurred by the third parties resulting from the dealers’ nonperformance.

In 2016, we provided a guarantee to an end user related to the performance of contractual obligations by a Caterpillar
dealer. Under the guarantee, which expires in 2025, non-performance by the Caterpillar dealer could require
Caterpillar to satisfy the contractual obligations by providing goods, services or financial compensation to the end user
up to an annual designated cap.

Supplier consortium performance guarantee
We have provided a guarantee to a customer in Europe related to the performance of contractual obligations by a
supplier consortium to which one of our Caterpillar subsidiaries is a member. The guarantee covers potential damages
incurred by the customer resulting from the supplier consortium's non-performance. The damages are capped except
for failure of the consortium to meet certain obligations outlined in the contract in the normal course of business. The
guarantee will expire when the supplier consortium performs all of its contractual obligations, which is expected to be
completed in 2022.

We have dealer performance guarantees and third-party performance guarantees that do not limit potential payment to
end users related to indemnities and other commercial contractual obligations. In addition, we have entered into
contracts involving industry standard indemnifications that do not limit potential payment. For these unlimited
guarantees, we are unable to estimate a maximum potential amount of future payments that could result from claims
made.

No significant loss has been experienced or is anticipated under any of these guarantees. At both September 30, 2020
and December 31, 2019, the related recorded liability was $5 million. The maximum potential amount of future
payments (undiscounted and without reduction for any amounts that may possibly be recovered under recourse or
collateralized provisions) we could be required to make under the guarantees was as follows:



(Millions of dollars) September 30, December 31,
2020 2019
Caterpillar dealer performance guarantees..................................................................... $ 1,139 $ 1,150
Supplier consortium performance guarantee.................................................................. 257 238
Other guarantees............................................................................................................. 179 221
Total guarantees............................................................................................................. $ 1,575 $ 1,609




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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 its 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,
2020 and December 31, 2019, the SPC’s assets of $1,098 million and $1,453 million, respectively, were primarily
comprised of loans to dealers, and the SPC’s liabilities of $1,097 million and $1,452 million, respectively, were
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.

We determine our product warranty liability by applying historical claim rate experience to the current field population
and dealer inventory. Generally, we base historical claim rates on actual warranty experience for each product by
machine model/engine size by customer or dealer location (inside or outside North America). We develop specific
rates for each product shipment month and update them monthly based on actual warranty claim experience.

(Millions of dollars)
2020
Warranty liability, January 1......................................................................................................................................... $ 1,541
Reduction in liability (payments).................................................................................................................................. (652)
Increase in liability (new warranties) ........................................................................................................................... 678
Warranty liability, September 30.................................................................................................................................. $ 1,567




(Millions of dollars)
2019
Warranty liability, January 1......................................................................................................................................... $ 1,391
Reduction in liability (payments).................................................................................................................................. (903)
Increase in liability (new warranties)............................................................................................................................ 1,053
Warranty liability, December 31................................................................................................................................... $ 1,541


12. Profit per share


Computations of profit per share: Three Months Ended Nine Months Ended
September 30 September 30
(Dollars in millions except per share data) 2020 2019 2020 2019
Profit for the period (A) 1................................................................................ $ 668 $ 1,494 $ 2,218 $ 4,995
Determination of shares (in millions):
Weighted-average number of common shares outstanding (B)................... 542.3 556.3 543.9 565.2
Shares issuable on exercise of stock awards, net of shares assumed to be
purchased out of proceeds at average market price..................................... 4.1 4.9 3.9 5.6
2
Average common shares outstanding for fully diluted computation (C) .. 546.4 561.2 547.8 570.8
Profit per share of common stock:
Assuming no dilution (A/B)......................................................................... $ 1.23 $ 2.69 $ 4.08 $ 8.84
Assuming full dilution (A/C) 2..................................................................... $ 1.22 $ 2.66 $ 4.05 $ 8.75
Shares outstanding as of September 30 (in millions)...................................... 543.3 552.7

1
Profit attributable to common shareholders.
2
Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.




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For the three and nine months ended September 30, 2020 and 2019, we excluded 4.8 million and 3.0 million of
outstanding stock options, respectively, from the computation of diluted earnings per share because the effect would
have been antidilutive.

In July 2018, the Board approved a share repurchase authorization (the 2018 Authorization) of up to $10.0 billion of
Caterpillar common stock effective January 1, 2019, with no expiration. As of September 30, 2020, approximately
$4.8 billion remained available under the 2018 Authorization.

For the three months ended September 30, 2020, we did not repurchase any shares of Caterpillar common stock. For
the nine months ended September 30, 2020, we repurchased 10.1 million shares of Caterpillar common stock at an
aggregate cost of $1.3 billion. For the three and nine months ended September 30, 2019, we repurchased 10.3 million
and 25.8 million shares of Caterpillar common stock, respectively, at an aggregate cost of $1.3 billion and $3.3 billion,
respectively. We made these purchases through a combination of accelerated stock repurchase agreements with third-
party financial institutions and open market transactions.


13. Accumulated other comprehensive income (loss)

We present comprehensive income and its components 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 Shareholders’ Equity, consisted of the following:

Pension and
(Millions of dollars) Foreign other Derivative Available-
currency postretirement financial for-sale
translation benefits instruments securities Total


Three Months Ended September 30, 2020
Balance at June 30, 2020................................. $ (1,672) $ (15) $ (169) $ 41 $ (1,815)
Other comprehensive income (loss) before
reclassifications............................................ 291 (1) 3 8 301
Amounts reclassified from accumulated
other comprehensive (income) loss.............. — (7) 73 — 66
Other comprehensive income (loss)............. 291 (8) 76 8 367
Balance at September 30, 2020....................... $ (1,381) $ (23) $ (93) $ 49 $ (1,448)


Three Months Ended September 30, 2019
Balance at June 30, 2019................................. $ (1,426) $ 17 $ (105) $ 15 $ (1,499)
Other comprehensive income (loss) before
reclassifications............................................ (263) — 59 4 (200)
Amounts reclassified from accumulated
other comprehensive (income) loss.............. — (8) (76) — (84)
Other comprehensive income (loss)............. (263) (8) (17) 4 (284)
Balance at September 30, 2019....................... $ (1,689) $ 9 $ (122) $ 19 $ (1,783)




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Pension and
Foreign other Derivative Available-
currency postretirement financial for-sale
(Millions of dollars) translation benefits instruments securities Total


Nine Months Ended September 30, 2020
Balance at December 31, 2019........................ $ (1,487) $ (3) $ (97) $ 20 $ (1,567)
Other comprehensive income (loss) before
reclassifications...................................... 84 1 (72) 29 42
Amounts reclassified from accumulated
other comprehensive (income) loss........ 22 (21) 76 — 77
Other comprehensive income (loss)........... 106 (20) 4 29 119
Balance at September 30, 2020....................... $ (1,381) $ (23) $ (93) $ 49 $ (1,448)


Nine Months Ended September 30, 2019
Balance at December 31, 2018........................ $ (1,601) $ 12 $ (80) $ (15) $ (1,684)
Adjustment to adopt new accounting
guidance related to reclassification of
certain tax effects from accumulated other
comprehensive income............................... 98 19 (9) — 108

Balance at January 1, 2019..................... (1,503) 31 (89) (15) (1,576)
Other comprehensive income (loss) before
reclassifications...................................... (186) — 53 34 (99)
Amounts reclassified from accumulated
other comprehensive (income) loss........ — (22) (86) — (108)
Other comprehensive income (loss)...........
(186) (22) (33) 34 (207)
Balance at September 30, 2019....................... $ (1,689) $ 9 $ (122) $ 19 $ (1,783)




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

Three Months Ended September 30
(Millions of dollars) Classification of
income (expense) 2020 2019
Pension and other postretirement benefits:
Amortization of prior service credit (cost)........ Other income (expense).... $ 9 $ 10
Tax (provision) benefit.......................................................................................... (2) (2)
Reclassifications net of tax.................................................................................... $ 7 $ 8


Derivative financial instruments:
Sales of Machinery,
Foreign exchange contracts............................... Energy & Transportation.. $ (6) $ 3
Foreign exchange contracts............................... Cost of goods sold............. (15) —

Foreign exchange contracts............................... Other income (expense).... (63) 89
Interest expense of
Foreign exchange contracts............................... Financial Products............. 8 9
Interest expense excluding
Interest rate contracts......................................... Financial Products............. (1) (2)
Interest expense of
Interest rate contracts......................................... Financial Products............. (16) (3)
Reclassifications before tax................................................................................... (93) 96
Tax (provision) benefit.......................................................................................... 20 (20)
Reclassifications net of tax.................................................................................... $ (73) $ 76


Total reclassifications from Accumulated other comprehensive income (loss).... $ (66) $ 84




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Nine Months Ended September 30
Classification of
(Millions of dollars) income (expense) 2020 2019


Foreign currency translation
Gain (loss) on foreign currency translation........ Other income (expense)......... $ (22) $ —
Reclassifications net of tax.......................................................................................... $ (22) $ —


Pension and other postretirement benefits:
Amortization of prior service credit (cost)......... Other income (expense)......... $ 28 $ 30
Tax (provision) benefit................................................................................................ (7) (8)
Reclassifications net of tax.......................................................................................... $ 21 $ 22


Derivative financial instruments:
Sales of Machinery, Energy
Foreign exchange contracts................................ & Transportation.................... $ 10 $ 4

Foreign exchange contracts................................ Cost of goods sold.............. (58) (4)

Foreign exchange contracts................................ Other income (expense)......... (35) 91
Interest expense of
Foreign exchange contracts................................ Financial Products.............. 28 23

Interest expense excluding
Interest rate contracts......................................... Financial Products.............. (3) (3)
Interest expense of
Interest rate contracts......................................... Financial Products.............. (40) (2)
Reclassifications before tax......................................................................................... (98) 109
Tax (provision) benefit................................................................................................ 22 (23)
Reclassifications net of tax.......................................................................................... $ (76) $ 86


Total reclassifications from Accumulated other comprehensive income (loss).......... $ (77) $ 108




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14. Environmental and legal matters

The Company is regulated by federal, state and international environmental laws governing its 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, we
accrue the investigation, remediation, and operating and maintenance costs against our earnings. We accrue costs
based on consideration of currently available data and information with respect to each individual site, including
available technologies, current applicable laws and regulations, and prior remediation experience. Where no amount
within a range of estimates is more likely, we accrue the minimum. Where multiple potentially responsible parties are
involved, we consider our proportionate share of the probable costs. In formulating the estimate of probable costs, we
do not consider amounts expected to be recovered from insurance companies or others. We reassess these accrued
amounts on a quarterly basis. The amount recorded for environmental remediation is not material and is included in
Accrued expenses. We believe there is no more than a remote chance that a material amount for remedial activities at
any individual site, or at all the sites in the aggregate, will be required.

On January 27, 2020, the Brazilian Federal Environmental Agency (“IBAMA”) issued Caterpillar Brasil Ltda a notice
of violation regarding allegations around the requirements for use of imported oils at the Piracicaba, Brazil facility. We
have instituted processes to address the allegations. While we are still discussing resolution of these allegations with
IBAMA, the initial notice from IBAMA included a proposed fine of approximately $300,000. We do not expect this
fine or our response to address the allegations to have a material adverse effect on the Company's consolidated results
of operations, financial position or liquidity.

On January 7, 2015, the Company received a grand jury subpoena from the U.S. District Court for the Central District
of Illinois. The subpoena requested documents and information from the Company relating to, among other things,
financial information concerning U.S. and non-U.S. Caterpillar subsidiaries (including undistributed profits of non-
U.S. subsidiaries and the movement of cash among U.S. and non-U.S. subsidiaries). The Company has received
additional subpoenas relating to this investigation requesting additional documents and information relating to, among
other things, the purchase and resale of replacement parts by Caterpillar Inc. and non-U.S. Caterpillar subsidiaries,
dividend distributions of certain non-U.S. Caterpillar subsidiaries, and Caterpillar SARL (CSARL) and related
structures. On March 2-3, 2017, agents with the Department of Commerce, the Federal Deposit Insurance Corporation
and the Internal Revenue Service executed search and seizure warrants at three facilities of the Company in the Peoria,
Illinois area, including its former corporate headquarters. The warrants identify, and agents seized, documents and
information related to, among other things, the export of products from the United States, the movement of products
between the United States and Switzerland, the relationship between Caterpillar Inc. and CSARL, and sales outside the
United States. It is the Company’s understanding that the warrants, which concern both tax and export activities, are
related to the ongoing grand jury investigation. The Company is continuing to cooperate with this investigation. The
Company is unable to predict the outcome or reasonably estimate any potential loss; however, we currently believe
that this matter will not have a material adverse effect on the Company’s consolidated results of operations, financial
position or liquidity.

In addition, we are involved in other unresolved legal actions that arise in the normal course of business. The most
prevalent of these unresolved actions involve disputes related to product design, manufacture and performance liability
(including claimed asbestos exposure), contracts, employment issues, environmental matters, intellectual property
rights, taxes (other than income taxes) and securities laws. 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, we believe
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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15. Income taxes

The provision for income taxes for the first nine months of 2020 reflected an estimated annual tax rate of 31 percent,
compared with 26 percent for the first nine months of 2019, excluding the discrete items discussed in the following
paragraphs. The increase in the estimated annual tax rate was primarily related to changes in the expected geographic
mix of profits from a tax perspective for 2020, including the impact of U.S. tax on non-U.S. earnings as a result of
U.S. tax reform.

During the first nine months of 2020, we recorded discrete tax benefits of $80 million to adjust prior year U.S. taxes
including the impact of regulations received in 2020 and $21 million for the settlement of stock-based compensation
awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense. In addition, we
recorded a $10 million tax charge related to the $55 million of net remeasurement gain resulting from the settlements
of pension obligations. We excluded this net remeasurement gain and related tax from the estimated annual tax rate as
the future period remeasurement impacts cannot currently be estimated.

During the first nine months of 2019, we recorded discrete tax benefits of $178 million to adjust previously
unrecognized tax benefits as a result of receipt of additional guidance related to the calculation of the mandatory
deemed repatriation of non-U.S. earnings and $28 million for the settlement of stock-based compensation awards with
associated tax deductions in excess of cumulative U.S. GAAP compensation expense.

On January 31, 2018, we received a Revenue Agent’s Report from the Internal Revenue Service (IRS) indicating the
end of the field examination of our U.S. income tax returns for 2010 to 2012. In the audits of 2007 to 2012 including
the impact of a loss carryback to 2005, the IRS has proposed to tax in the United States profits earned from certain
parts transactions by Caterpillar SARL (CSARL), based on the IRS examination team’s application of the “substance-
over-form” or “assignment-of-income” judicial doctrines. We are vigorously contesting the proposed increases to tax
and penalties for these years of approximately $2.3 billion. We believe that the relevant transactions complied with
applicable tax laws and did not violate judicial doctrines. We have filed U.S. income tax returns on this same basis for
years after 2012. Based on the information currently available, we do not anticipate a significant change to our
unrecognized tax benefits for this position within the next 12 months. We currently believe the ultimate disposition of
this matter will not have a material adverse effect on our consolidated financial position, liquidity or results of
operations.




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16. Segment information

A. Basis for segment information

Our Executive Office is comprised of a Chief Executive Officer (CEO), four Group Presidents, a Chief Financial
Officer (CFO), a Chief Legal Officer, General Counsel and Corporate Secretary and a Chief Human Resources
Officer. The Group Presidents and CFO are accountable for a related set of end-to-end businesses that they manage.
The Chief Legal Officer, General Counsel and Corporate Secretary leads the Law, Security and Public Policy Division.
The Chief Human Resources Officer leads the Human Resources Organization. The CEO allocates resources and
manages performance at the Group President/CFO level. As such, the CEO serves as our Chief Operating Decision
Maker, and operating segments are primarily based on the Group President/CFO reporting structure.

Three of our operating segments, Construction Industries, Resource Industries and Energy & Transportation are led by
Group Presidents. One operating segment, Financial Products, is led by the CFO who also 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. One
Group President leads one smaller operating segment that is included in the All Other operating segment. The Law,
Security and Public Policy Division and the Human Resources Organization are cost centers and do not meet the
definition of an 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 asphalt pavers; backhoe loaders; compactors; cold planers; compact track and multi-terrain loaders; mini,
small, medium and large track excavators; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers;
small and medium track-type tractors; track-type loaders; utility vehicles; wheel excavators; compact, small and
medium wheel loaders; and related parts and work tools. Inter-segment sales are a source of revenue for this segment.

Resource Industries: A segment primarily responsible for supporting customers using machinery in mining, heavy
construction, quarry and aggregates, waste and material handling 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, hard rock vehicles, longwall
miners, electric rope shovels, draglines, hydraulic shovels, rotary drills, large wheel loaders, off-highway trucks,
articulated trucks, wheel tractor scrapers, wheel dozers, landfill compactors, soil compactors, select work tools,
machinery components, electronics and control systems, and related parts. In addition to equipment, Resource
Industries also develops and sells technology products and services to provide customers fleet management, equipment
management analytics and autonomous machine capabilities. Resource Industries also manages areas that provide
services to other parts of the company, including integrated manufacturing and research and development. Inter-
segment sales are a source of revenue for this segment.

Energy & Transportation: A segment primarily responsible for supporting customers using reciprocating engines,
turbines, diesel-electric locomotives and related parts across industries serving Oil and Gas, Power Generation,
Industrial and Transportation applications, including marine- and rail-related businesses. Responsibilities include
business strategy, product design, product management and development, manufacturing, marketing and sales, and
product support. The product portfolio includes turbine machinery and integrated systems and solutions and turbine-
related services, 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 oil and gas industries, and
reciprocating engines supplied to the industrial industry as well as Cat machinery. Responsibilities also include the
remanufacturing of Caterpillar engines and components and remanufacturing services for other companies; the
business strategy, product design, product management and development, manufacturing, remanufacturing, leasing and
service of diesel-electric locomotives and components and other rail-related products and services; and product support
of on-highway vocational trucks for North America. Inter-segment sales are a source of revenue for this segment.




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Financial Products Segment: Provides financing alternatives to customers and dealers around the world for
Caterpillar products, as well as financing for vehicles, power generation facilities and marine vessels that, in most
cases, incorporate Caterpillar products. Financing plans include operating and finance leases, installment sale
contracts, working capital loans and wholesale financing plans. The segment also provides insurance and risk
management products and services that help customers and dealers manage their business risk. Insurance and risk
management products offered include physical damage insurance, inventory protection plans, extended service
coverage for machines and engines, and dealer property and casualty insurance. The various forms of financing,
insurance and risk management products offered to customers and dealers help support the purchase and lease of
Caterpillar equipment. The segment also earns revenues from ME&T, but the related costs are not allocated to
operating segments. Financial Products’ segment profit is determined on a pretax basis and includes other income/
expense items.

All Other operating segment: Primarily includes activities such as: business strategy; product management and
development; manufacturing and sourcing of filters and fluids, undercarriage, ground-engaging tools, fluid transfer
products, precision seals, rubber sealing and connecting components primarily for Cat® products; parts distribution;
integrated logistics solutions; distribution services responsible for dealer development and administration, including
one wholly owned dealer in Japan; dealer portfolio management and ensuring the most efficient and effective
distribution of machines, engines and parts; brand management and marketing strategy; and digital investments for
new customer and dealer solutions that integrate data analytics with state-of-the-art digital technologies while
transforming the buying experience. 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:

• ME&T segment net assets generally include inventories, receivables, property, plant and equipment,
goodwill, intangibles, accounts payable and customer advances. Beginning in 2020, we revised how we
allocate certain assets between segments. We have recast all prior period amounts to align with the current
methodology. We generally manage at the corporate level liabilities other than accounts payable and
customer advances, and we do not include these in segment operations. Financial Products Segment assets
generally include all categories of assets.

• We value segment inventories and cost of sales using a current cost methodology.

• We amortize goodwill allocated to segments using a fixed amount based on a 20-year useful life. This
methodology difference only impacts segment assets. We do not include goodwill amortization expense in
segment profit. In addition, we have allocated to segments only a portion of goodwill for certain acquisitions
made in 2011 or later.

• We generally manage currency exposures for ME&T at the corporate level and do not include in segment
profit the effects of changes in exchange rates on results of operations within the year. We report 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 as a methodology difference.

• We do not include stock-based compensation expense in segment profit.

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

• We determine ME&T segment profit on a pretax basis and exclude interest expense and most other income/
expense items. We determine Financial Products Segment profit on a pretax basis and include other income/
expense items.




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Reconciling items are created based on accounting differences between segment reporting and our consolidated
external reporting. Please refer to pages 36 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 primarily for compliance and legal
functions for the benefit of the entire organization.

• Restructuring costs: May include costs for employee separation, long-lived asset impairments and contract
terminations. These costs are included in Other operating (income) expenses except for defined-benefit plan
curtailment losses and special termination benefits, which are included in Other income (expense).
Restructuring costs also include other exit-related costs, which may consist of accelerated depreciation,
inventory write-downs, building demolition, equipment relocation and project management costs and LIFO
inventory decrement benefits from inventory liquidations at closed facilities, all of which are primarily
included in Cost of goods sold. Only certain restructuring costs are excluded from segment profit. See Note
20 for more information.

• 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. For example, we report certain costs on the cash basis for segment reporting and the accrual basis
for consolidated external reporting.

For the three and nine months ended September 30, 2020 and 2019, sales and revenues by geographic region reconciled to
consolidated sales and revenues were as follows:

Sales and Revenues by Geographic Region
External Intersegment Total Sales
(Millions of dollars) North Latin Asia/ Sales and Sales and and
America America EAME Pacific Revenues Revenues Revenues
Three Months Ended September 30, 2020
Construction Industries............................... $ 1,781 $ 230 $ 796 $ 1,241 $ 4,048 $ 8 $ 4,056
Resource Industries..................................... 487 269 384 564 1,704 112 1,816
Energy & Transportation............................ 1,584 221 1,113 557 3,475 686 4,161
1
Financial Products Segment....................... 448 63 100 113 724 — 724
Total sales and revenues from reportable
segments.......................................................... 4,300 783 2,393 2,475 9,951 806 10,757
All Other operating segment....................... 10 1 1 13 25 81 106
Corporate Items and Eliminations.............. (59) (12) (10) (14) (95) (887) (982)
Total Sales and Revenues.............................. $ 4,251 $ 772 $ 2,384 $ 2,474 $ 9,881 $ — $ 9,881

Three Months Ended September 30, 2019
Construction Industries............................... $ 2,728 $ 413 $ 1,048 $ 1,086 $ 5,275 $ 14 $ 5,289
Resource Industries..................................... 789 349 396 645 2,179 131 2,310
Energy & Transportation............................ 2,129 378 1,224 831 4,562 890 5,452
1
Financial Products Segment....................... 560 79 102 124 865 — 865
Total sales and revenues from reportable
segments.......................................................... 6,206 1,219 2,770 2,686 12,881 1,035 13,916
All Other operating segment....................... 1 6 8 12 27 84 111
Corporate Items and Eliminations.............. (105) (14) (15) (16) (150) (1,119) (1,269)
Total Sales and Revenues.............................. $ 6,102 $ 1,211 $ 2,763 $ 2,682 $ 12,758 $ — $ 12,758


1
Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of $81 million and $131
million in the three months ended September 30, 2020 and 2019, respectively.




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Sales and Revenues by Geographic Region
External Intersegment Total
(Millions of dollars) North Latin Asia/ Sales and Sales and Sales and
America America EAME Pacific Revenues Revenues Revenues
Nine Months Ended September 30, 2020
Construction Industries............................... $ 5,470 $ 707 $ 2,618 $ 3,597 $ 12,392 $ 18 $ 12,410
Resource Industries..................................... 1,690 859 1,158 1,686 5,393 333 5,726
Energy & Transportation............................ 5,138 667 3,095 1,734 10,634 2,025 12,659
1
Financial Products Segment....................... 1,466 193 298 344 2,301 — 2,301
Total sales and revenues from reportable
segments.......................................................... 13,764 2,426 7,169 7,361 30,720 2,376 33,096
All Other operating segment....................... 22 4 17 38 81 249 330
Corporate Items and Eliminations.............. (169) (36) (32) (51) (288) (2,625) (2,913)
Total Sales and Revenues..............................
$ 13,617 $ 2,394 $ 7,154 $ 7,348 $ 30,513 $ — $ 30,513

Nine Months Ended September 30, 2019
Construction Industries............................... $ 9,206 $ 1,124 $ 3,162 $ 4,081 $ 17,573 $ 56 $ 17,629
Resource Industries..................................... 2,798 1,220 1,310 2,209 7,537 344 7,881
Energy & Transportation............................ 6,577 1,035 3,416 2,291 13,319 2,829 16,148
1
Financial Products Segment....................... 1,681 225 306 376 2,588 — 2,588
Total sales and revenues from reportable
segments.......................................................... 20,262 3,604 8,194 8,957 41,017 3,229 44,246
All Other operating segment....................... 23 7 23 45 98 259 357
Corporate Items and Eliminations.............. (326) (37) (41) (55) (459) (3,488) (3,947)
Total Sales and Revenues.............................. $ 19,959 $ 3,574 $ 8,176 $ 8,947 $ 40,656 $ — $ 40,656
1
Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of $274 million and $398
million in the nine months ended September 30, 2020 and 2019, respectively.



For the three and nine months ended September 30, 2020 and 2019, Energy & Transportation segment sales by end user
application were as follows:

Energy & Transportation External Sales
Three Months Ended September 30
(Millions of dollars) 2020 2019
Oil and gas............................................................................................................................................. $ 734 $ 1,246
Power generation................................................................................................................................... 1,034 1,123
Industrial................................................................................................................................................ 730 980
Transportation....................................................................................................................................... 977 1,213
Energy & Transportation External Sales......................................................................................... $ 3,475 $ 4,562



Nine Months Ended September 30
2020 2019
Oil and gas............................................................................................................................................. $ 2,622 $ 3,682
Power generation................................................................................................................................... 2,783 3,180
Industrial................................................................................................................................................ 2,209 2,841
Transportation....................................................................................................................................... 3,020 3,616
Energy & Transportation External Sales......................................................................................... $ 10,634 $ 13,319




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Reconciliation of Consolidated profit before taxes:


(Millions of dollars) Three Months Ended September 30 Nine Months Ended September 30
2020 2019 2020 2019
Profit from reportable segments:
Construction Industries....................................................... $ 585 $ 940 $ 1,743 $ 3,272
Resource Industries............................................................. 167 311 623 1,368
Energy & Transportation.................................................... 492 1,021 1,718 2,745
Financial Products Segment................................................ 142 218 395 622
Total profit from reportable segments..................................... 1,386 2,490 4,479 8,007
Profit from All Other operating segment................................. 27 (21) 31 15
Cost centers.............................................................................. 9 (9) 18 32
Corporate costs......................................................................... (122) (167) (409) (492)
Timing...................................................................................... (39) 6 (90) (118)
Restructuring costs................................................................... (87) (20) (211) (162)
Methodology differences:
Inventory/cost of sales........................................................ (7) 25 (25) 24
Postretirement benefit expense........................................... (32) 19 253 4
Stock-based compensation expense.................................... (55) (57) (169) (170)
Financing costs.................................................................... (125) (58) (324) (173)
Currency.............................................................................. (22) (62) (230) (110)
Other income/expense methodology differences................ (72) (124) (244) (374)
Other methodology differences........................................... 2 (17) (25) (36)
Total consolidated profit before taxes...................................... $ 863 $ 2,005 $ 3,054 $ 6,447




Reconciliation of Assets:


(Millions of dollars) September 30, 2020 December 31, 2019
Assets from reportable segments:
Construction Industries.......................................................................................................... $ 4,507 $ 4,601
Resource Industries................................................................................................................ 6,188 6,505
Energy & Transportation........................................................................................................ 8,752 8,548
Financial Products Segment................................................................................................... 34,014 35,813
Total assets from reportable segments........................................................................................ 53,461 55,467
Assets from All Other operating segment................................................................................... 1,610 1,728
Items not included in segment assets:
Cash and short-term investments........................................................................................... 8,512 7,299
Deferred income taxes............................................................................................................ 1,339 1,294
Goodwill and intangible assets............................................................................................... 4,737 4,435
Property, plant and equipment – net and other assets............................................................ 2,608 2,529
Inventory methodology differences............................................................................................ (2,560) (2,426)
Liabilities included in segment assets......................................................................................... 7,720 8,541
Other............................................................................................................................................ (686) (414)
Total assets.................................................................................................................................. $ 76,741 $ 78,453




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Reconciliation of Depreciation and amortization:
(Millions of dollars)
Three Months Ended Nine Months Ended
September 30 September 30
2020 2019 2020 2019
Depreciation and amortization from reportable segments:
Construction Industries.................................................................... $ 61 $ 73 $ 183 $ 220
Resource Industries.......................................................................... 105 113 312 337
Energy & Transportation................................................................. 147 157 442 464
Financial Products Segment............................................................. 174 209 577 622
Total depreciation and amortization from reportable segments............ 487 552 1,514 1,643
Items not included in segment depreciation and amortization:
All Other operating segment............................................................. 71 53 196 158
Cost centers....................................................................................... 31 35 96 100
Other................................................................................................. 4 5 9 32
Total depreciation and amortization...................................................... $ 593 $ 645 $ 1,815 $ 1,933




Reconciliation of Capital expenditures:
(Millions of dollars)
Three Months Ended Nine Months Ended
September 30 September 30
2020 2019 2020 2019
Capital expenditures from reportable segments:..................................
Construction Industries.................................................................... $ 37 $ 48 $ 85 $ 117
Resource Industries.......................................................................... 10 31 63 91
Energy & Transportation................................................................. 100 150 331 366
Financial Products Segment............................................................ 280 388 783 1,093
Total capital expenditures from reportable segments........................... 427 617 1,262 1,667
Items not included in segment capital expenditures:
All Other operating segment............................................................ 46 34 84 69
Cost centers...................................................................................... 8 22 23 71
Timing............................................................................................. 1 (21) 147 108
Other................................................................................................ 11 (21) (25) (59)
Total capital expenditures..................................................................... $ 493 $ 631 $ 1,491 $ 1,856




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17. Cat Financial financing activities

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

Allowance for credit losses

Portfolio segments
A portfolio segment is the level at which Cat Financial develops a systematic methodology for determining its
allowance for credit losses. Cat Financial's portfolio segments and related methods for estimating expected credit
losses are as follows:

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

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

Cat Financial estimates the allowance for credit losses related to its customer finance receivables based on loss forecast
models utilizing probabilities of default and the estimated loss given default based on past loss experience adjusted for
current conditions and reasonable and supportable forecasts capturing country and industry-specific macro-economic
factors.

Cat Financial's forecasts for the markets in which it operates slightly improved during the three months ended
September 30, 2020, but continued to reflect an overall decline in economic conditions resulting from a contracting
economy, elevated unemployment rates and an increase in delinquencies due to the COVID-19 pandemic. The
company believes the economic forecasts employed represent reasonable and supportable forecasts, followed by a
reversion to long term trends.

Dealer
Cat Financial provides financing to Caterpillar dealers in the form of wholesale financing plans. Cat Financial's
wholesale financing plans provide assistance to dealers by financing their mostly new Caterpillar equipment inventory
and rental fleets on a secured and unsecured basis. In addition, Cat Financial provides unsecured loans to Caterpillar
dealers for working capital.

Cat Financial estimates the allowance for credit losses for dealer finance receivables based on historical loss rates with
consideration of current economic conditions and reasonable and supportable forecasts.

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

Classes of finance receivables
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:



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• North America - Finance receivables originated in the United States and Canada.
• EAME - Finance receivables originated in Europe, Africa, the Middle East and the Commonwealth of
Independent States.
• Asia/Pacific - Finance receivables originated in Australia, New Zealand, China, Japan, Southeast Asia and
India.
• Mining - Finance receivables related to large mining customers worldwide.
• Latin America - Finance receivables originated in Mexico and Central and South American countries.
• Caterpillar Power Finance - Finance receivables originated worldwide related to marine vessels with
Caterpillar engines and Caterpillar electrical power generation, gas compression and co-generation systems
and non-Caterpillar equipment that is powered by these systems.

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

An analysis of the allowance for credit losses was as follows:

(Millions of dollars) September 30, 2020
Allowance for Credit Losses: Customer Dealer Total
Balance at beginning of year........................................................... $ 375 $ 45 $ 420
Adjustment to adopt new accounting guidance 1.......................... 12 — 12
Receivables written off................................................................. (212) — (212)
Recoveries on receivables previously written off......................... 27 — 27
Provision for credit losses............................................................. 213 — 213
Other............................................................................................. (3) — (3)
Balance at end of period.................................................................. $ 412 $ 45 $ 457

Individually evaluated..................................................................... $ 172 $ 39 $ 211
Collectively evaluated..................................................................... 240 6 246
Ending Balance................................................................................ $ 412 $ 45 $ 457

Finance Receivables:
Individually evaluated..................................................................... $ 612 $ 78 $ 690
Collectively evaluated..................................................................... 17,967 2,975 20,942
Ending Balance................................................................................ $ 18,579 $ 3,053 $ 21,632
1
See Note 2 regarding new accounting guidance related to credit losses.




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(Millions of dollars) December 31, 2019
Allowance for Credit Losses: Customer Dealer Total
Balance at beginning of year............................................................ $ 486 $ 21 $ 507
Receivables written off................................................................. (281) — (281)
Recoveries on receivables previously written off......................... 44 — 44
Provision for credit losses............................................................. 138 24 162
Other............................................................................................. (12) — (12)
Balance at end of year...................................................................... $ 375 $ 45 $ 420

Individually evaluated...................................................................... $ 178 $ 39 $ 217
Collectively evaluated...................................................................... 197 6 203
Ending Balance................................................................................ $ 375 $ 45 $ 420

Finance Receivables:
Individually evaluated...................................................................... $ 594 $ 78 $ 672
Collectively evaluated...................................................................... 18,093 3,632 21,725
Ending Balance................................................................................ $ 18,687 $ 3,710 $ 22,397


Credit quality of finance receivables

At origination, Cat Financial evaluates credit risk based on a variety of credit quality factors including prior payment
experience, customer financial information, credit-rating agency ratings, loan-to-value ratios, probabilities of default,
industry trends, macroeconomic factors and other internal metrics. On an ongoing basis, Cat Financial monitors credit
quality based on past-due status as there is a meaningful correlation between the past-due status of customers and the
risk of loss. In determining past-due status, Cat Financial considers the entire finance receivable past due when any
installment is over 30 days past due.




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Customer
The table below summarizes the aging category of Cat Financial's amortized cost of finance receivables in the
Customer portfolio segment by origination year:

(Millions of dollars) September 30, 2020


Revolving Total
Finance Finance
2020 2019 2018 2017 2016 Prior Receivables Receivables
North America
Current........................................ $ 2,697 $ 2,711 $ 1,588 $ 660 $ 288 $ 59 $ 89 $ 8,092
31-60 days past due..................... 41 57 39 21 9 3 1 171
61-90 days past due..................... 12 24 21 13 4 1 — 75
91+ days past due........................ 6 29 30 20 8 5 — 98
EAME
Current........................................ 903 1,049 684 313 92 28 — 3,069
31-60 days past due..................... 6 9 6 3 1 — — 25
61-90 days past due..................... 4 4 1 — 1 1 — 11
91+ days past due........................ 6 8 13 8 40 43 — 118
Asia/Pacific
Current........................................ 1,027 835 403 86 13 5 — 2,369
31-60 days past due..................... 9 24 23 7 1 — — 64
61-90 days past due..................... 3 9 7 4 — — — 23
91+ days past due........................ 3 21 12 2 — — — 38
Mining
Current........................................ 315 615 334 180 104 159 160 1,867
31-60 days past due..................... — — 1 — — — — 1
61-90 days past due..................... — 1 4 2 — — — 7
91+ days past due........................ 1 11 8 24 — — 1 45
Latin America
Current........................................ 402 393 182 64 18 38 — 1,097
31-60 days past due..................... — 3 3 2 — — — 8
61-90 days past due..................... 1 1 1 1 — — — 4
91+ days past due........................ — 13 45 25 7 5 — 95
Caterpillar Power Finance
Current........................................ 149 232 138 274 97 132 129 1,151
31-60 days past due..................... — — 18 — — 3 — 21
61-90 days past due..................... — — — — — — — —
91+ days past due........................ — — 3 8 29 90 — 130
Total Customer $ 5,585 $ 6,049 $ 3,564 $ 1,717 $ 712 $ 572 $ 380 $ 18,579




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

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

The table below summarizes Cat Financial's recorded investment in finance receivables by aging category.

December 31, 2019

31-60 61-90 91+
(Millions of dollars) Days Days Days Total Past Total Finance
Past Due Past Due Past Due Due Current Receivables
Customer
North America............................................. $ 72 $ 23 $ 55 $ 150 $ 8,002 $ 8,152
EAME.......................................................... 30 31 141 202 2,882 3,084
Asia/Pacific................................................. 40 14 29 83 2,181 2,264
Mining......................................................... 5 — 19 24 2,266 2,290
Latin America.............................................. 41 23 80 144 1,089 1,233
Caterpillar Power Finance........................... 10 10 225 245 1,419 1,664
Dealer
North America............................................. — — — — 2,136 2,136
EAME.......................................................... — — — — 342 342
Asia/Pacific................................................. — — — — 437 437
Mining......................................................... — — — — 4 4
Latin America.............................................. — — 78 78 712 790
Caterpillar Power Finance........................... — — — — 1 1
Total............................................................... $ 198 $ 101 $ 627 $ 926 $ 21,471 $ 22,397




Impaired finance receivables

A finance receivable 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. Impaired finance receivables
include finance receivables that have been restructured and are considered to be troubled debt restructures.




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In Cat Financial’s Customer portfolio segment, impaired finance receivables and the related unpaid principal balances
and allowance were as follows:


December 31, 2019
Unpaid
(Millions of dollars) Recorded Principal Related
Investment Balance Allowance

Impaired Finance Receivables With No Allowance Recorded
North America................................................................................................................ $ 6 $ 6 $ —
EAME............................................................................................................................. — — —
Asia/Pacific.................................................................................................................... — — —
Mining............................................................................................................................ 22 22 —
Latin America................................................................................................................. 8 8 —
Caterpillar Power Finance.............................................................................................. 58 58 —
Total.................................................................................................................................. $ 94 $ 94 $ —

Impaired Finance Receivables With An Allowance Recorded

North America................................................................................................................ $ 30 $ 30 $ 11
EAME............................................................................................................................. 61 61 29
Asia/Pacific.................................................................................................................... 8 8 2
Mining............................................................................................................................ 37 36 9
Latin America................................................................................................................. 58 58 20
Caterpillar Power Finance.............................................................................................. 306 319 107
Total.................................................................................................................................. $ 500 $ 512 $ 178

Total Impaired Finance Receivables
North America................................................................................................................ $ 36 $ 36 $ 11
EAME............................................................................................................................. 61 61 29
Asia/Pacific.................................................................................................................... 8 8 2
Mining............................................................................................................................ 59 58 9
Latin America................................................................................................................. 66 66 20
Caterpillar Power Finance.............................................................................................. 364 377 107
Total.................................................................................................................................. $ 594 $ 606 $ 178




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Three Months Ended September 30, Nine Months Ended September 30,
2019 2019
(Millions of dollars) Average Recorded Interest Income Average Recorded Interest Income
Investment Recognized Investment Recognized
Impaired Finance Receivables With No
Allowance Recorded
North America.......................................... $ 10 $ — $ 10 $ —
EAME....................................................... 15 — 7 —
Asia/Pacific.............................................. — — — —
Mining...................................................... 26 — 29 1
Latin America........................................... 22 — 22 1
Caterpillar Power Finance........................ 57 1 53 2
Total............................................................ $ 130 $ 1 $ 121 $ 4

Impaired Finance Receivables With An
Allowance Recorded
North America.......................................... $ 30 $ — $ 36 $ 1
EAME....................................................... 80 1 88 2
Asia/Pacific.............................................. 12 1 9 1
Mining...................................................... 65 1 49 2
Latin America........................................... 69 1 73 4
Caterpillar Power Finance........................ 376 1 422 8
Total............................................................ $ 632 $ 5 $ 677 $ 18

Total Impaired Finance Receivables
North America.......................................... $ 40 $ — $ 46 $ 1
EAME....................................................... 95 1 95 2
Asia/Pacific.............................................. 12 1 9 1
Mining...................................................... 91 1 78 3
Latin America........................................... 91 1 95 5
Caterpillar Power Finance........................ 433 2 475 10
Total............................................................ $ 762 $ 6 $ 798 $ 22


There were $78 million in impaired finance receivables with a related allowance of $39 million as of December 31,
2019 for the Dealer portfolio segment, all of which was in Latin America.

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




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

September 30, 2020
Amortized Cost

Non-accrual Non-accrual
(Millions of dollars) With an Without an 91+ Still
Allowance Allowance Accruing

North America............................................................................. $ 82 $ 1 $ 28
EAME.......................................................................................... 137 — 1
Asia/Pacific.................................................................................. 26 — 13
Mining......................................................................................... 38 1 10
Latin America.............................................................................. 95 2 —
Caterpillar Power Finance........................................................... 207 17 —
Total............................................................................................... $ 585 $ 21 $ 52


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

(Millions of dollars) December 31, 2019

Recorded Investment
Non-accrual Finance
Receivables 91+ Still Accruing
North America........................................................................................................ $ 44 $ 15
EAME..................................................................................................................... 165 4
Asia/Pacific............................................................................................................ 21 8
Mining.................................................................................................................... 47 —
Latin America......................................................................................................... 89 2
Caterpillar Power Finance...................................................................................... 361 —
Total.......................................................................................................................... $ 727 $ 29


As of September 30, 2020 and December 31, 2019, there were $78 million in finance receivables on non-accrual status
in Cat Financial's Dealer portfolio segment, all of which was in Latin America. There were no finance receivables in
Cat Financial's Dealer portfolio segment more than 90 days past due and still accruing income as of September 30,
2020 and no interest income was recognized on dealer finance receivables on non-accrual status during the three and
nine months ended September 30, 2020.


Troubled debt restructurings

A restructuring of a finance receivable constitutes a 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, payment deferrals and reduction of principal
and/or accrued interest.




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There were no finance receivables modified as TDRs during the three and nine months ended September 30, 2020 and
2019 for the Dealer portfolio segment. Cat Financial’s finance receivables in the Customer portfolio segment modified
as TDRs were as follows:

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019
Number Pre-TDR Post-TDR Number Pre-TDR Post-TDR
(Dollars in millions) of Amortized Amortized of Recorded Recorded
Contracts Cost Cost Contracts Investment Investment
North America....................... 3 $ 1 $ 1 4 $ — $ —
Asia/Pacific............................ 79 4 4 — — —
Mining.................................... 12 5 5 — — —
Latin America........................ 3 16 16 — — —
Caterpillar Power Finance...... 8 50 50 4 56 55
Total......................................... 105 $ 76 $ 76 8 $ 56 $ 55

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019
Number Pre-TDR Post-TDR Number Pre-TDR Post-TDR
of Amortized Amortized of Recorded Recorded
Contracts Cost Cost Contracts Investment Investment
North America....................... 13 $ 10 $ 10 12 $ 5 $ 4
EAME.................................... — — — 19 17 17
Asia/Pacific(1)......................... 183 12 12 — — —
(2)
Mining ................................. 52 22 22 1 6 6
Latin America........................ 9 18 18 4 2 2
Caterpillar Power Finance...... 14 87 87 19 154 152
Total ......................................... 271 $ 149 $ 149 55 $ 184 $ 181
(1)
During the nine months ended September 30, 2020, 183 contracts with a pre-TDR and post-TDR amortized cost of $12 million were related to
seven customers.
(2)
During the nine months ended September 30, 2020, 52 contracts with a pre-TDR and post-TDR amortized cost of $22 million were related to
three customers.



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


Three Months Ended September 30, 2020 Three Months Ended September 30, 2019
Post-TDR
(Dollars in millions) Number of Post-TDR Number of Recorded
Contracts Amortized Cost Contracts Investment
North America.............................. 1 $ 6 — $ —
Mining........................................... 1 1 — —
Caterpillar Power Finance............. 2 18 — —
Total................................................ 4 $ 25 — $ —


Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019
Post-TDR
Number of Post-TDR Number of Recorded
Contracts Amortized Cost Contracts Investment
North America.............................. 2 $ 6 — $ —
EAME........................................... 2 10 — —
Mining........................................... 1 1 — —
Latin America............................... 3 1 — —
Caterpillar Power Finance............. 2 18 — —
Total................................................ 10 $ 36 — $ —




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18. Fair value disclosures

A. Fair value measurements

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

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

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

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

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

We classify fair value measurements according to the lowest level input or value-driver that is significant to the
valuation. We may therefore classify a measurement 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.

Investments in debt and equity securities
We have investments in certain debt and equity securities, primarily at Insurance Services, that are recorded at fair
value. Fair values for our U.S. treasury bonds and large capitalization value and smaller company growth 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.

In addition, Insurance Services has an equity investment in a real estate investment trust (REIT) which is recorded at
fair value based on the net asset value (NAV) of the investment and is not classified within the fair value hierarchy.

See Note 8 for additional information on our investments in debt and equity securities.

Derivative financial instruments
The fair value of interest rate contracts 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.




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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, 2020 and December 31, 2019 were as follows:


September 30, 2020
Total
(Millions of dollars) Measured Assets / Liabilities,
Level 1 Level 2 Level 3 at NAV at Fair Value
Assets
Debt securities
Government debt
U.S. treasury bonds........................................... $ 16 $ — $ — $ — $ 16
Other U.S. and non-U.S. government bonds.... — 51 — — 51
Corporate bonds
Corporate bonds................................................ — 1,001 — — 1,001
Asset-backed securities..................................... — 158 — — 158
Mortgage-backed debt securities
U.S. governmental agency................................ — 364 — — 364
Residential......................................................... — 5 — — 5
Commercial....................................................... — 65 — — 65
Total debt securities.................................................... 16 1,644 — — 1,660
Equity securities
Large capitalization value................................. 173 — — — 173
Smaller company growth.................................. 32 — — — 32
REIT.................................................................. — — — 139 139
Total equity securities................................................. 205 — — 139 344
Derivative financial instruments, net.......................... — 82 — — 82
Total assets.................................................................. $ 221 $ 1,726 $ — $ 139 $ 2,086



December 31, 2019
Total
(Millions of dollars) Measured Assets / Liabilities,
Level 1 Level 2 Level 3 at NAV at Fair Value
Assets
Debt securities
Government debt
U.S. treasury bonds.......................................... $ 9 $ — $ — $ — $ 9
Other U.S. and non-U.S. government bonds... — 54 — — 54
Corporate bonds
Corporate bonds............................................... — 856 — — 856
Asset-backed securities.................................... — 62 — — 62
Mortgage-backed debt securities
U.S. governmental agency............................... — 331 — — 331
Residential........................................................ — 6 — — 6
Commercial...................................................... — 47 — — 47
Total debt securities................................................... 9 1,356 — — 1,365
Equity securities
Large capitalization value................................ 187 — — — 187
Smaller company growth................................. 29 — 4 — 33
REIT................................................................. — — — 126 126
Total equity securities................................................ 216 — 4 126 346
Derivative financial instruments, net......................... — 45 — — 45
Total assets................................................................. $ 225 $ 1,401 $ 4 $ 126 $ 1,756




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In addition to the amounts above, Cat Financial impaired loans are subject to measurement at fair value on a
nonrecurring basis and are classified as Level 3 measurements. A loan is considered impaired when management
determines that collection of contractual amounts due is not probable. In these cases, an allowance for credit losses
may be established based either on the present value of expected future cash flows discounted at the receivables’
effective interest rate, the fair value of the collateral for collateral-dependent receivables, or the observable market
price of the receivable. In determining collateral value, Cat Financial estimates the current fair market value of the
collateral less selling costs. Cat Financial had impaired loans with a fair value of $269 million and $343 million as of
September 30, 2020 and December 31, 2019, 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 use the following methods and assumptions to estimate the fair value of
our financial instruments:

Cash and short-term investments
Carrying amount approximates fair value.

Restricted cash and short-term investments
Carrying amount approximates fair value. We include restricted cash and short-term investments in Prepaid expenses
and other current assets in the Consolidated Statement of Financial Position.

Finance receivables
We estimate fair value by discounting the future cash flows using current rates, representative of receivables with
similar remaining maturities.

Wholesale inventory receivables
We estimate fair value by discounting the future cash flows using current rates, representative of receivables with
similar remaining maturities.

Short-term borrowings
Carrying amount approximates fair value.

Long-term debt
We estimate fair value for fixed and floating rate debt based on quoted market prices.

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.




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Fair values of our financial instruments were as follows:


Fair Value of Financial Instruments

September 30, 2020 December 31, 2019
Fair
(Millions of dollars) Carrying Fair Carrying Fair Value
Amount Value Amount Value Levels Reference
Assets
Cash and short-term investments................................. $ 9,315 $ 9,315 $ 8,284 $ 8,284 1
Restricted cash and short-term investments................ 4 4 8 8 1
Investments in debt and equity securities.................... 2,004 2,004 1,711 1,711 1, 2 & 3 Note 8
1
Finance receivables – net (excluding finance leases ) 13,817 14,145 14,473 14,613 3 Note 17
Wholesale inventory receivables – net (excluding
finance leases 1)....................................................... 1,000 975 1,105 1,076 3
Foreign currency contracts – net................................. 27 27 62 62 2 Note 5
Interest rate contracts – net.......................................... 52 52 — — 2 Note 5
Commodity contracts – net.......................................... 3 3 3 3 2 Note 5

Liabilities
Short-term borrowings................................................. 2,660 2,660 5,166 5,166 1
Long-term debt (including amounts due within one year)
Machinery, Energy & Transportation..................... 11,139 14,200 9,157 11,216 2
Financial Products.................................................. 24,327 24,982 23,334 23,655 2
Interest rate contracts – net.......................................... — — 20 20 2 Note 5
Guarantees................................................................... 5 5 5 5 3 Note 11

1
Represents finance leases and failed sales leasebacks of $7,644 million and $7,800 million at September 30, 2020 and December 31, 2019,
respectively.



19. Other income (expense)

Three Months Ended Nine Months Ended
September 30 September 30
(Millions of dollars) 2020 2019 2020 2019
Investment and interest income...................................................................... $ 21 $ 50 $ 91 $ 156
Foreign exchange gains (losses) 1................................................................... (43) (5) (122) (34)
License fee income......................................................................................... 27 31 75 87
Net periodic pension and OPEB income (cost), excluding service cost 2...... — 24 270 74
Gains (losses) on sale of securities and affiliated companies......................... 9 2 (12) 55
Miscellaneous income (loss).......................................................................... — (14) (37) (22)
Total................................................................................................................ $ 14 $ 88 $ 265 $ 316
1
Includes gains (losses) from foreign exchange derivative contracts. See Note 5 for further details.
2
Includes a net remeasurement loss of $(77) million and a net remeasurement gain of $55 million for the three and nine months ended
September 30, 2020, respectively, from the settlements of certain pension obligations. See Note 9 for further details.



20. Restructuring costs

Our accounting for employee separations is dependent upon how the particular program is designed. For voluntary
programs, we recognize eligible separation costs at the time of employee acceptance unless the acceptance requires
explicit approval by the company. For involuntary programs, we recognize eligible costs when management has
approved the program, the affected employees have been properly notified and the costs are estimable.



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Restructuring costs for the three and nine months ended September 30, 2020 and 2019 were as follows:

(Millions of dollars) Three Months Ended September 30
2020 2019
1
Employee separations .......................................................................................................... $ 98 $ 8
Long-lived asset impairments 1.............................................................................................. 2 3
2
Other .................................................................................................................................... 12 13
Total restructuring costs......................................................................................................... $ 112 $ 24


Nine Months Ended September 30
2020 2019
1
Employee separations .......................................................................................................... $ 232 $ 33
Contract terminations 1.......................................................................................................... 3 —
1
Long-lived asset impairments .............................................................................................. 25 39
2
Other .................................................................................................................................... 36 110
Total restructuring costs......................................................................................................... $ 296 $ 182
1
Recognized in Other operating (income) expenses.
2
Represents costs related to our restructuring programs, primarily for inventory write-downs, equipment relocation, project management,
accelerated depreciation and building demolition, all of which are primarily included in Cost of goods sold.




For the nine months ended September 30, 2020, the restructuring costs were primarily related to various voluntary and
involuntary employee separation programs implemented across the company and strategic actions to address certain
product lines, which were partially offset by a gain on the sale of a manufacturing facility that had been closed. For
the nine months ended September 30, 2019, the restructuring costs were primarily related to restructuring actions in
Construction Industries and Energy & Transportation.

The following table summarizes the 2019 and 2020 employee separation activity:

(Millions of dollars)
Liability balance at December 31, 2018.................................................................................................................... $ 85
Increase in liability (separation charges).............................................................................................................. 48
Reduction in liability (payments)......................................................................................................................... (85)
Liability balance at December 31, 2019.................................................................................................................... 48
Increase in liability (separation charges).............................................................................................................. 232
Reduction in liability (payments)......................................................................................................................... (131)
Liability balance at September 30, 2020................................................................................................................... $ 149


Most of the liability balance at September 30, 2020 is expected to be paid in 2020 and 2021.




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


This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction
with our unaudited financial statements and related notes included elsewhere in this report and our discussion of significant
risks to the company’s business under Part I, Item 1A. Risk Factors of the 2019 Form 10-K as supplemented by Part II, Item
1A. Risk Factors of the company's Quarterly Report on Form 10-Q filed on August 5, 2020.

Overview
Total sales and revenues for the third quarter of 2020 were $9.881 billion, a decrease of $2.877 billion, or 23 percent, compared
with $12.758 billion in the third quarter of 2019. The decline was due to lower sales volume driven by lower end-user demand
for equipment and services. Sales were lower across all regions and in the three primary segments. Third-quarter 2020 profit per
share was $1.22, compared with $2.66 profit per share in the third quarter of 2019. Profit per share in the third quarter of 2020
included a pre-tax net remeasurement loss of $77 million, or $0.12 per share, resulting from the settlements of pension
obligations. Profit for the third quarter of 2020 was $668 million, a decrease of $826 million, or 55 percent, compared with
$1.494 billion for the third quarter of 2019. The decrease was due to lower sales volume. Lower selling, general and
administrative (SG&A) and research and development (R&D) expenses were mostly offset by unfavorable price realization
and lower profit from Financial Products.
Total sales and revenues were $30.513 billion for the nine months ended September 30, 2020, a decrease of $10.143 billion, or
25 percent, compared with $40.656 billion for the nine months ended September 30, 2019. Profit per share for the nine months
ended September 30, 2020, was $4.05, a decrease of $4.70, or 54 percent, compared with $8.75 for the nine months ended
September 30, 2019. Profit per share for the nine months ended September 30, 2020, included a pre-tax net remeasurement gain
of $55 million, or $0.08 per share, resulting from the settlements of pension obligations. Profit per share for the nine months
ended September 30, 2019, included a discrete tax benefit related to U.S. tax reform of $178 million, or $0.31 per share. Profit
for the nine months ended September 30, 2020, was $2.218 billion, a decrease of $2.777 billion, or 56 percent, compared with
$4.995 billion for the nine months ended September 30, 2019.

Highlights for the third quarter of 2020 include:
• Total sales and revenues for the third quarter of 2020 were $9.881 billion, a decrease of $2.877 billion, or 23 percent,
compared with $12.758 billion in the third quarter of 2019. The decline was due to lower sales volume driven by lower
end-user demand for equipment and services. Sales were lower across all regions and in the three primary segments.
• Operating profit margin was 10.0 percent for the third quarter of 2020, compared with 15.8 percent for the third quarter of
2019.
• Third-quarter 2020 profit per share was $1.22, compared with $2.66 profit per share in the third quarter of 2019. Profit per
share in the third quarter of 2020 included a pre-tax net remeasurement loss of $77 million, or $0.12 per share, resulting
from the settlements of pension obligations.
• Enterprise operating cash flow was $1.734 billion in the third quarter of 2020. Caterpillar ended the third quarter with $9.3
billion of enterprise cash and more than $14 billion of available liquidity sources.

Highlights for the nine months ended September 30, 2020, include:
• Total sales and revenues were $30.513 billion for the nine months ended September 30, 2020, a decrease of $10.143
billion, or 25 percent, compared with $40.656 billion for the nine months ended September 30, 2019.
• Operating profit margin was 10.4 percent for the nine months ended September 30, 2020, compared with 15.8 percent for
the nine months ended September 30, 2019.
• Profit per share for the nine months ended September 30, 2020, was $4.05, a decrease of $4.70, or 54 percent, compared
with $8.75 for the nine months ended September 30, 2019. Profit per share for the nine months ended September 30, 2020,
included a pre-tax net remeasurement gain of $55 million, or $0.08 per share, resulting from the settlements of pension
obligations. Profit per share for the nine months ended September 30, 2019, included a discrete tax benefit related to U.S.
tax reform of $178 million, or $0.31 per share.
• Enterprise operating cash flow was $4.255 billion for the nine months ended September 30, 2020.




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Response to COVID-19 and Global Business Conditions:

Operational Status
Caterpillar continues to implement safeguards in its facilities to protect team members, including increased frequency of
cleaning and disinfecting, social distancing practices and other measures consistent with specific regulatory requirements and
guidance from health authorities.
As of mid-October 2020, globally and across Caterpillar’s three primary segments, nearly all of the company’s primary
production facilities continued to operate. This continues to fluctuate as conditions warrant, including the pace of economic
recovery and the potential for additional COVID-related temporary shutdowns.
The company has continued to take actions to reduce costs and prioritize its spending to provide for investment in services and
expanded offerings, key elements of its strategy for profitable growth, which was introduced in 2017.

Notes:
• Glossary of terms is included on pages 68 - 70; first occurrence of terms shown in bold italics.
• Information on non-GAAP financial measures is included on page 76.




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Consolidated Results of Operations

THREE MONTHS ENDED SEPTEMBER 30, 2020 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 2019

CONSOLIDATED SALES AND REVENUES




The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the third quarter of 2019 (at left) and the third quarter
of 2020 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s Board of Directors and employees.

Total sales and revenues for the third quarter of 2020 were $9.881 billion, a decrease of $2.877 billion, or 23 percent, compared
with $12.758 billion in the third quarter of 2019. The decline was mostly due to lower sales volume driven by lower end-user
demand for equipment and services and the impact from changes in dealer inventories. Dealers decreased inventories more
during the third quarter of 2020 than during the third quarter of 2019.
Sales were lower across all regions and the three primary segments.
North America sales declined 31 percent driven by lower end-user demand for equipment and services.
Sales decreased 37 percent in Latin America due to lower demand in most countries across the region and unfavorable
currency impacts from a weaker Brazilian real.
EAME sales decreased 14 percent due to lower sales volume in most countries across the region, driven by lower end-user
demand and the impact from changes in dealer inventories. Dealers decreased inventories more during the third quarter of 2020
than during the third quarter of 2019.
Asia/Pacific sales decreased 8 percent due to lower end-user demand and unfavorable price realization, partially offset by the
impact from changes in dealer inventories. Dealers decreased inventories during the third quarter of 2019, compared with an
increase during the third quarter of 2020. Sales were lower across the region, partially offset by higher sales in China driven by
higher demand.
Dealers decreased machine and engine inventories about $600 million during the third quarter of 2020, compared with a
decrease of about $400 million during the third quarter of 2019. Dealers are independent, and the reasons for changes in their
inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations
take into account seasonal changes, macroeconomic conditions, machine rental rates and other factors. Delivery times can vary
based on availability of product from Caterpillar factories and product distribution centers. We expect dealers to reduce their
inventories by about $2.5 billion for the full-year 2020.




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Sales and Revenues by Segment
Third Inter- Third
Quarter Sales Price Segment / Quarter $ %
(Millions of dollars) 2019 Volume Realization Currency Other 2020 Change Change

Construction Industries.................................... $ 5,289 $ (1,150) $ (60) $ (17) $ (6) $ 4,056 $ (1,233) (23%)
Resource Industries.......................................... 2,310 (425) (46) (4) (19) 1,816 (494) (21%)
Energy & Transportation................................. 5,452 (1,086) (16) 15 (204) 4,161 (1,291) (24%)
All Other Segment............................................. 111 (3) 1 — (3) 106 (5) (5%)
Corporate Items and Eliminations................... (1,188) 45 — — 232 (911) 277
Machinery, Energy & Transportation Sales.... 11,974 (2,619) (121) (6) — 9,228 (2,746) (23%)

Financial Products Segment............................ 865 — — — (141) 724 (141) (16%)
Corporate Items and Eliminations..................... (81) — — — 10 (71) 10
Financial Products Revenues.......................... 784 — — — (131) 653 (131) (17%)


Consolidated Sales and Revenues................... $ 12,758 $ (2,619) $ (121) $ (6) $ (131) $ 9,881 $ (2,877) (23%)




Sales and Revenues by Geographic Region
External Sales and Total Sales and
North America Latin America EAME Asia/Pacific Revenues Inter-Segment Revenues

(Millions of dollars) % % % % % % %
$ Chg $ Chg $ Chg $ Chg $ Chg $ Chg $ Chg
Third Quarter 2020
Construction Industries....................... $ 1,781 (35%) $ 230 (44%) $ 796 (24%) $ 1,241 14% $ 4,048 (23%) $ 8 (43%) $ 4,056 (23%)
Resource Industries............................. 487 (38%) 269 (23%) 384 (3%) 564 (13%) 1,704 (22%) 112 (15%) 1,816 (21%)
Energy & Transportation.................... 1,584 (26%) 221 (42%) 1,113 (9%) 557 (33%) 3,475 (24%) 686 (23%) 4,161 (24%)
All Other Segment.............................. 10 900% 1 (83%) 1 (88%) 13 8% 25 (7%) 81 (4%) 106 (5%)
Corporate Items and Eliminations...... (22) (2) — — (24) (887) (911)
Machinery, Energy &
Transportation Sales......................... 3,840 (31%) 719 (37%) 2,294 (14%) 2,375 (8%) 9,228 (23%) — — 9,228 (23%)


1
Financial Products Segment................ 448 (20%) 63 (20%) 100 (2%) 113 (9%) 724 (16%) — — 724 (16%)
Corporate Items and Eliminations...... (37) (10) (10) (14) (71) — (71)
Financial Products Revenues........... 411 (21%) 53 (17%) 90 (4%) 99 (9%) 653 (17%) — — 653 (17%)



Consolidated Sales and Revenues.... $ 4,251 (30%) $ 772 (36%) $ 2,384 (14%) $ 2,474 (8%) $ 9,881 (23%) $ — — $ 9,881 (23%)


Third Quarter 2019
Construction Industries....................... $ 2,728 $ 413 $ 1,048 $ 1,086 $ 5,275 $ 14 $ 5,289
Resource Industries............................. 789 349 396 645 2,179 131 2,310
Energy & Transportation.................... 2,129 378 1,224 831 4,562 890 5,452
All Other Segment.............................. 1 6 8 12 27 84 111
Corporate Items and Eliminations...... (62) 1 (7) (1) (69) (1,119) (1,188)
Machinery, Energy &
Transportation Sales......................... 5,585 1,147 2,669 2,573 11,974 — 11,974


1
Financial Products Segment................ 560 79 102 124 865 — 865
Corporate Items and Eliminations...... (43) (15) (8) (15) (81) — (81)

Financial Products Revenues........... 517 64 94 109 784 — 784



Consolidated Sales and Revenues.... $ 6,102 $ 1,211 $ 2,763 $ 2,682 $ 12,758 $ — $ 12,758

1
Includes revenues from Machinery, Energy & Transportation of $81 million and $131 million in the third quarter of 2020 and 2019, respectively.




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CONSOLIDATED OPERATING PROFIT




The chart above graphically illustrates reasons for the change in consolidated operating profit between the third quarter of 2019 (at left) and the third quarter of
2020 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s Board of Directors and employees. The bar
titled Other includes consolidating adjustments and Machinery, Energy & Transportation other operating (income) expenses.

Operating profit for the third quarter of 2020 was $985 million, a decrease of $1.035 billion, or 51 percent, compared with
$2.020 billion in the third quarter of 2019. The decrease was primarily due to lower sales volume. Favorable selling, general
and administrative (SG&A) and research and development (R&D) expenses were mostly offset by unfavorable price realization
and lower profit from Financial Products.
SG&A/R&D expenses benefited from reduced short-term incentive compensation expense and other cost reductions related to
lower sales volumes.
Short-term incentive compensation expense is directly related to financial and operational performance, measured against
targets set annually. In the first quarter, in response to the continued global economic uncertainty due to the COVID-19
pandemic, Caterpillar suspended 2020 short-term incentive compensation plans for many employees and all senior executives.
As a result, no short-term incentive compensation expense was recognized in the third quarter of 2020, compared with about
$130 million in the third quarter of 2019.
Operating profit margin was 10.0 percent for the third quarter of 2020, compared with 15.8 percent for the third quarter of
2019.

Profit (Loss) by Segment
$ %
(Millions of dollars) Third Quarter 2020 Third Quarter 2019 Change Change
Construction Industries.............................................................. $ 585 $ 940 $ (355) (38%)
Resource Industries.................................................................... 167 311 (144) (46%)
Energy & Transportation........................................................... 492 1,021 (529) (52%)
All Other Segment..................................................................... 27 (21) 48 n/a
Corporate Items and Eliminations............................................. (346) (363) 17
Machinery, Energy & Transportation................................... 925 1,888 (963) (51%)


Financial Products Segment...................................................... 142 218 (76) (35%)
Corporate Items and Eliminations............................................. (15) 21 (36)
Financial Products................................................................... 127 239 (112) (47%)
Consolidating Adjustments........................................................ (67) (107) 40
Consolidated Operating Profit............................................... $ 985 $ 2,020 $ (1,035) (51%)




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Other Profit/Loss and Tax Items
▪ Interest expense excluding Financial Products in the third quarter of 2020 was $136 million, compared with $103 million in
the third quarter of 2019. The increase was due to higher average debt outstanding during the third quarter of 2020,
compared with the third quarter of 2019.
▪ Other income (expense) in the third quarter of 2020 was income of $14 million, compared with income of $88 million in
the third quarter of 2019. The change was primarily due to the unfavorable impacts from foreign currency exchange gains
(losses) and lower investment and interest income.
▪ The provision for income taxes for the third quarter of 2020 reflected an estimated annual tax rate of 31 percent, excluding
the discrete items discussed below, compared with 26 percent for the third quarter of 2019. The increase in the estimated
annual tax rate was primarily related to changes in the expected geographic mix of profits from a tax perspective for 2020,
including the impact of U.S. tax on non-U.S. earnings as a result of U.S. tax reform.
In the third quarter of 2020, we recorded discrete tax benefits of $80 million to adjust prior year U.S. taxes including the
impact of regulations received in 2020 and $13 million for the settlement of stock-based compensation awards with
associated tax deductions in excess of cumulative U.S. GAAP compensation expense. In addition, we recorded a $12
million tax benefit related to the $77 million of net remeasurement loss resulting from the settlements of pension
obligations. We excluded this net remeasurement loss and related tax benefit from the estimated annual tax rate as the
future period remeasurement impacts cannot currently be estimated.

Construction Industries
Construction Industries’ total sales were $4.056 billion in the third quarter of 2020, a decrease of $1.233 billion, or 23 percent,
compared with $5.289 billion in the third quarter of 2019. The decrease was due to lower sales volume, driven by lower end-
user demand and the impact from changes in dealer inventories. During the third quarter of 2020, dealers decreased inventories
in all regions except for Asia/Pacific where dealers increased inventories, compared with the third quarter of 2019 when dealer
inventories were about flat in all regions except for Asia/Pacific where dealers decreased inventories. Overall, dealers decreased
inventories more during the third quarter of 2020 than during the third quarter of 2019.
▪ In North America, sales decreased mostly due to lower sales volume driven by lower end-user demand and the impact
from changes in dealer inventories. The lower end-user demand was driven primarily by pipeline and road
construction.
▪ Sales declined in Latin America primarily due to the impact from changes in dealer inventories and unfavorable
currency impacts from a weaker Brazilian real.
▪ In EAME, sales decreased mostly because of lower sales volume across the region, driven by lower end-user demand
and the impact from changes in dealer inventories.
▪ Sales increased in Asia/Pacific primarily due to the impact of changes in dealer inventories, partially offset by
unfavorable price realization. The increase in sales was primarily driven by China demand, which was partially offset
by lower sales in the rest of the region.
Construction Industries’ profit was $585 million in the third quarter of 2020, a decrease of $355 million, or 38 percent,
compared with $940 million in the third quarter of 2019. The decrease was mainly due to lower sales volume and unfavorable
price realization, partially offset by favorable manufacturing costs and lower SG&A/R&D expenses. Favorable manufacturing
costs were driven by lower period manufacturing costs and favorable variable labor and burden. SG&A/R&D expenses and
period manufacturing costs both benefited from cost reductions related to lower sales volumes.
Construction Industries’ profit as a percent of total sales was 14.4 percent in the third quarter of 2020, compared with 17.8
percent in the third quarter of 2019.

Resource Industries
Resource Industries’ total sales were $1.816 billion in the third quarter of 2020, a decrease of $494 million, or 21 percent,
compared with $2.310 billion in the third quarter of 2019. The decrease was due to lower sales volume driven by lower end-
user demand for equipment and aftermarket parts, partially offset by the impact of changes in dealer inventories. Dealers
decreased inventories more during the third quarter of 2019 than during the third quarter of 2020. End-user demand was lower
across non-residential construction and quarry and aggregates and mining, primarily in North America.




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Resource Industries’ profit was $167 million in the third quarter of 2020, a decrease of $144 million, or 46 percent, compared
with $311 million in the third quarter of 2019. The decrease was mainly because of lower sales volume and unfavorable price
realization, partially offset by favorable manufacturing costs and lower SG&A/R&D expenses. Favorable manufacturing costs
were driven by lower period manufacturing costs, favorable material costs and lower warranty expense, partially offset by
unfavorable cost absorption. Cost absorption was unfavorable as inventory increased in the third quarter of 2019, compared
with a decrease in the third quarter of 2020. SG&A/R&D expenses, along with period manufacturing costs, benefited from
lower short-term incentive compensation expense, other cost-reduction actions implemented in response to lower sales volumes
and benefits from prior restructuring programs.
Resource Industries’ profit as a percent of total sales was 9.2 percent in the third quarter of 2020, compared with 13.5 percent in
the third quarter of 2019.

Energy & Transportation

Sales by Application
Third Third
(Millions of dollars) Quarter Quarter $ %
2020 2019 Change Change
Oil and Gas..................................................................................................................... $ 734 $ 1,246 $ (512) (41%)
Power Generation........................................................................................................... 1,034 1,123 (89) (8%)
Industrial......................................................................................................................... 730 980 (250) (26%)
Transportation................................................................................................................ 977 1,213 (236) (19%)
External Sales............................................................................................................... 3,475 4,562 (1,087) (24%)
Inter-segment.................................................................................................................. 686 890 (204) (23%)
Total Sales..................................................................................................................... $ 4,161 $ 5,452 $ (1,291) (24%)


Energy & Transportation’s total sales were $4.161 billion in the third quarter of 2020, a decrease of $1.291 billion, or 24
percent, compared with $5.452 billion in the third quarter of 2019. Sales declined across all applications and inter-segment
engine sales.
▪ Oil and Gas – Sales decreased mainly due to lower demand in North America for reciprocating engines used in gas
compression and decreased sales of engine aftermarket parts. In addition, sales were lower for turbines and turbine-
related services.
▪ Power Generation – Sales decreased primarily due to lower sales volume in engine aftermarket parts, and small
reciprocating engine applications, as well as turbines and turbine-related services. The sales decrease was partially
offset by an increase in large reciprocating engine applications, mainly for data centers.
▪ Industrial – Sales decreased due to lower demand across all regions.
▪ Transportation – Sales declined in rail due to lower deliveries of locomotives and related services, primarily in North
America, and in marine due to lower sales of engine aftermarket parts, primarily in EAME.
Energy & Transportation’s profit was $492 million in the third quarter of 2020, a decrease of $529 million, or 52 percent,
compared with $1.021 billion in the third quarter of 2019. The decrease was due to lower sales volume, partially offset by lower
SG&A/R&D expenses and period manufacturing costs. SG&A/R&D expenses and period manufacturing costs were mostly
impacted by a reduction in short-term incentive compensation expense and other cost-reduction actions implemented in
response to lower sales volumes. In addition, segment profit was unfavorably impacted by other operating income/expense and
higher inventory write-downs during the third quarter of 2020.
Energy & Transportation’s profit as a percent of total sales was 11.8 percent in the third quarter of 2020, compared with 18.7
percent in the third quarter of 2019.

Financial Products Segment
Financial Products’ segment revenues were $724 million in the third quarter of 2020, a decrease of $141 million, or 16 percent,
from the third quarter of 2019. The decrease was primarily because of lower average financing rates across all regions and
lower average earning assets primarily in North America.




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Financial Products’ segment profit was $142 million in the third quarter of 2020, compared with $218 million in the third
quarter of 2019. The decrease was due to higher provision for credit losses, lower net yield on average earning assets and lower
average earning assets at Cat Financial. These unfavorable impacts were partially offset by a reduction in SG&A expenses
primarily due to lower short-term incentive compensation and employee benefit expenses.
At the end of the third quarter of 2020, past dues at Cat Financial were 3.81 percent, compared with 3.19 percent at the end of
the third quarter of 2019. Past dues increased primarily due to the impacts of the COVID-19 pandemic, partially offset by
decreases in the Caterpillar Power Finance and Latin American portfolios. Write-offs, net of recoveries, were $125 million for
the third quarter of 2020, compared with $103 million for the third quarter of 2019. As of September 30, 2020, Cat Financial's
allowance for credit losses totaled $460 million, or 1.74 percent of finance receivables, compared with $515 million, or 1.92
percent of finance receivables at June 30, 2020. The decrease in the allowance for credit losses was primarily driven by write-
offs of previously reserved accounts in the Caterpillar Power Finance portfolio. The allowance for credit losses at year-end
2019 was $424 million, or 1.50 percent of finance receivables.

Corporate Items and Eliminations
Expense for corporate items and eliminations was $361 million in the third quarter of 2020, an increase of $19 million from the
third quarter of 2019, primarily due to higher restructuring costs and an unfavorable change in fair value adjustments related to
deferred compensation plans, partially offset by lower corporate costs and segment reporting methodology differences.




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NINE MONTHS ENDED SEPTEMBER 30, 2020 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30,
2019

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, 2019 (at left)
and the nine months ended September 30, 2020 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s
Board of Directors and employees.

Total sales and revenues were $30.513 billion for the nine months ended September 30, 2020, a decrease of $10.143 billion, or
25 percent, compared with $40.656 billion for the nine months ended September 30, 2019. The decline was due to lower sales
volume driven by lower end-user demand for equipment and services and the impact from changes in dealer inventories.
Dealers decreased machine and engine inventories about $1.8 billion during the nine months ended September 30, 2020,
compared with an increase of about $1.4 billion during the nine months ended September 30, 2019. The changes in dealer
inventories came primarily in Construction Industries and Resource Industries.
Sales were lower across all regions and in the three primary segments.
North America sales declined 33 percent driven by lower end-user demand and the impact from changes in dealer inventories.
Dealers decreased inventories during the nine months ended September 30, 2020, compared with an increase during the nine
months ended September 30, 2019.
Sales decreased 34 percent in Latin America due to lower demand in most countries across the region, driven by lower end-user
demand and the impact from changes in dealer inventories. Dealers decreased inventories during the nine months ended
September 30, 2020, compared with dealer inventories that were about flat during the nine months ended September 30, 2019.
EAME sales decreased 13 percent due to lower sales volume in most countries across the region, driven by lower end-user
demand and the impact from changes in dealer inventories. Dealers increased inventories during the nine months ended
September 30, 2019, compared with dealer inventories that were about flat during the nine months ended September 30, 2020.
Asia/Pacific sales decreased 18 percent due to lower demand across the region. Lower demand was driven by the impact from
changes in dealer inventories and lower end-user demand. Dealers decreased inventories during the nine months ended
September 30, 2020, compared with dealer inventories that were about flat during the nine months ended September 30, 2019.
Dealers decreased machine and engine inventories about $1.8 billion during the nine months ended September 30, 2020,
compared with an increase of about $1.4 billion during the nine months ended September 30, 2019. Dealers are independent,
and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery
times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rental rates and
other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution
centers. We expect dealers to reduce their inventories by about $2.5 billion for the full-year 2020.




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Sales and Revenues by Segment
Nine Nine
Months Months
Ended Inter- Ended
September Sales Price Segment / September $ %
(Millions of dollars) 30, 2019 Volume Realization Currency Other 30, 2020 Change Change

Construction Industries..................................... $ 17,629 $ (4,628) $ (396) $ (157) $ (38) $ 12,410 $ (5,219) (30%)
Resource Industries........................................... 7,881 (1,967) (88) (89) (11) 5,726 (2,155) (27%)
Energy & Transportation.................................. 16,148 (2,630) 31 (86) (804) 12,659 (3,489) (22%)
All Other Segment............................................ 357 (17) 1 (1) (10) 330 (27) (8%)
Corporate Items and Eliminations.................... (3,646) 110 — — 863 (2,673) 973
Machinery, Energy & Transportation Sales 38,369 (9,132) (452) (333) — 28,452 (9,917) (26%)

Financial Products Segment.............................. 2,588 — — — (287) 2,301 (287) (11%)
Corporate Items and Eliminations.................... (301) — — — 61 (240) 61
Financial Products Revenues......................... 2,287 — — — (226) 2,061 (226) (10%)


Consolidated Sales and Revenues.................. $ 40,656 $ (9,132) $ (452) $ (333) $ (226) $ 30,513 $ (10,143) (25%)


Sales and Revenues by Geographic Region
External Sales and Total Sales and
North America Latin America EAME Asia/Pacific Revenues Inter-Segment Revenues

(Millions of dollars) % % % % % % %
$ Chg $ Chg $ Chg $ Chg $ Chg $ Chg $ Chg
Nine Months Ended September 30,
2020

Construction Industries........................ $ 5,470 (41%) $ 707 (37%) $ 2,618 (17%) $ 3,597 (12%) $ 12,392 (29%) $ 18 (68%) $ 12,410 (30%)
Resource Industries.............................. 1,690 (40%) 859 (30%) 1,158 (12%) 1,686 (24%) 5,393 (28%) 333 (3%) 5,726 (27%)
Energy & Transportation..................... 5,138 (22%) 667 (36%) 3,095 (9%) 1,734 (24%) 10,634 (20%) 2,025 (28%) 12,659 (22%)
All Other Segment............................... 22 (4%) 4 (43%) 17 (26%) 38 (16%) 81 (17%) 249 (4%) 330 (8%)
Corporate Items and Eliminations....... (35) (5) (4) (4) (48) (2,625) (2,673)
Machinery, Energy &
Transportation Sales.......................... 12,285 (33%) 2,232 (34%) 6,884 (13%) 7,051 (18%) 28,452 (26%) — —% 28,452 (26%)


1
Financial Products Segment................. 1,466 (13%) 193 (14%) 298 (3%) 344 (9%) 2,301 (11%) — —% 2,301 (11%)
Corporate Items and Eliminations....... (134) (31) (28) (47) (240) — (240)
Financial Products Revenues............ 1,332 (11%) 162 (14%) 270 (4%) 297 (8%) 2,061 (10%) — —% 2,061 (10%)



Consolidated Sales and Revenues..... $ 13,617 (32%) $ 2,394 (33%) $ 7,154 (13%) $ 7,348 (18%) $ 30,513 (25%) $ — —% $ 30,513 (25%)


Nine Months Ended September 30,
2019
Construction Industries........................ $ 9,206 $ 1,124 $ 3,162 $ 4,081 $ 17,573 $ 56 $ 17,629
Resource Industries.............................. 2,798 1,220 1,310 2,209 7,537 344 7,881
Energy & Transportation..................... 6,577 1,035 3,416 2,291 13,319 2,829 16,148
All Other Segment............................... 23 7 23 45 98 259 357
Corporate Items and Eliminations....... (142) — (15) (1) (158) (3,488) (3,646)
Machinery, Energy &
Transportation Sales.......................... 18,462 3,386 7,896 8,625 38,369 — 38,369


1
Financial Products Segment................. 1,681 225 306 376 2,588 — 2,588
Corporate Items and Eliminations....... (184) (37) (26) (54) (301) — (301)

Financial Products Revenues............ 1,497 188 280 322 2,287 — 2,287



Consolidated Sales and Revenues..... $ 19,959 $ 3,574 $ 8,176 $ 8,947 $ 40,656 $ — $ 40,656

1
Includes revenues from Machinery, Energy & Transportation of $274 million and $398 million in the nine months ended September 30, 2020 and 2019, respectively.




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CONSOLIDATED OPERATING PROFIT




The chart above graphically illustrates reasons for the change in consolidated operating profit between the nine months ended September 30, 2019 (at left) and
the nine months ended September 30, 2020 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s
Board of Directors and employees. The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation’s other operating (income)
expenses.

Operating profit for the nine months ended September 30, 2020, was $3.173 billion, a decrease of $3.267 billion, or 51 percent,
compared with $6.440 billion for the nine months ended September 30, 2019. The decrease was due to lower sales volume and
unfavorable price realization, partially offset by lower SG&A/R&D expenses and favorable manufacturing costs.
Lower SG&A/R&D expenses reflected reduced short-term incentive compensation expense, a favorable change in fair value
adjustments related to deferred compensation plans and other cost reductions related to lower sales volumes.
Favorable manufacturing costs were mostly driven by lower period manufacturing costs and material costs, partially offset by
higher warranty expense and the unfavorable impact of cost absorption. Period manufacturing costs declined primarily due to a
reduction in short-term incentive compensation expense and other cost reductions related to lower sales volumes. Cost
absorption was unfavorable as inventory increased more during the nine months ended September 30, 2019, than during the
nine months ended September 30, 2020.
Short-term incentive compensation expense is directly related to financial and operational performance, measured against
targets set annually. In the first quarter, in response to the continued global economic uncertainty due to the COVID-19
pandemic, Caterpillar suspended 2020 short-term incentive compensation plans for many employees and all senior executives.
As a result, no short-term incentive compensation expense was recognized during the nine months ended September 30, 2020,
compared with about $560 million during the nine months ended September 30, 2019.
Operating profit margin was 10.4 percent for the nine months ended September 30, 2020, compared with 15.8 percent for the
nine months ended September 30, 2019.

Profit by Segment
Nine Months Ended Nine Months Ended $ %
(Millions of dollars) September 30, 2020 September 30, 2019 Change Change
Construction Industries......................................................... $ 1,743 $ 3,272 $ (1,529) (47%)
Resource Industries............................................................... 623 1,368 (745) (54%)
Energy & Transportation....................................................... 1,718 2,745 (1,027) (37%)
All Other Segment................................................................. 31 15 16 107%
Corporate Items and Eliminations......................................... (1,100) (1,179) 79
Machinery, Energy & Transportation.............................. 3,015 6,221 (3,206) (52%)


Financial Products Segment.................................................. 395 622 (227) (36%)
Corporate Items and Eliminations......................................... (6) (75) 69
Financial Products.............................................................. 389 547 (158) (29%)
Consolidating Adjustments................................................... (231) (328) 97
Consolidated Operating Profit........................................... $ 3,173 $ 6,440 $ (3,267) (51%)




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Other Profit/Loss and Tax Items
▪ Interest expense excluding Financial Products for the nine months ended September 30, 2020, was $384 million, compared
with $309 million for the nine months ended September 30, 2019. The increase was due to higher average debt outstanding
during the nine months ended September 30, 2020, compared with the nine months ended September 30, 2019.
▪ Other income/expense for the nine months ended September 30, 2020, was income of $265 million, compared with income
of $316 million for the nine months ended September 30, 2019. The unfavorable change was primarily due to unfavorable
impacts from foreign currency exchange gains (losses), lower investment and interest income, unfavorable impacts of
equity securities at Insurance Services and commodity hedges. The company experienced higher foreign currency
exchange net losses in the nine months ended September 30, 2020, compared with the nine months ended September 30,
2019. The unfavorable impact of equity securities was due to unrealized gains in the nine months ended September 30,
2019, compared with unrealized losses in the nine months ended September 30, 2020. The unfavorable change was
partially offset by a favorable impact from pension and other postemployment benefit (OPEB) plans, including a $55
million net remeasurement gain resulting from the settlements of pension obligations.
▪ The provision for income taxes for the first nine months of 2020 reflected an estimated annual tax rate of 31 percent
compared with 26 percent for the first nine months of 2019, excluding the discrete items discussed in the following
paragraphs. The increase in the estimated annual tax rate was primarily related to changes in the expected geographic mix
of profits from a tax perspective for 2020, including the impact of U.S. tax on non-U.S. earnings as a result of U.S. tax
reform.
During the first nine months of 2020, we recorded discrete tax benefits of $80 million to adjust prior year U.S. taxes
including the impact of regulations received in 2020 and $21 million for the settlement of stock-based compensation
awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense. In addition, we
recorded a $10 million tax charge related to the $55 million of net remeasurement gain resulting from the settlements of
pension obligations. We excluded this net remeasurement gain and related tax from the estimated annual tax rate as the
future period remeasurement impacts cannot currently be estimated.
During the first nine months of 2019, we recorded discrete tax benefits of $178 million to adjust previously unrecognized
tax benefits as a result of receipt of additional guidance related to the calculation of the mandatory deemed repatriation of
non-U.S. earnings and $28 million for the settlement of stock-based compensation awards with associated tax deductions in
excess of cumulative U.S. GAAP compensation expense.

Construction Industries
Construction Industries’ total sales were $12.410 billion for the nine months ended September 30, 2020, a decrease of $5.219
billion, or 30 percent, compared with $17.629 billion for the nine months ended September 30, 2019. The decrease was due to
lower sales volume, driven by lower end-user demand and the impact from changes in dealer inventories. Dealers decreased
inventories during the nine months ended September 30, 2020, compared with an increase during the nine months ended
September 30, 2019.
• In North America, sales decreased mostly due to lower sales volume driven by lower end-user demand and the impact
from changes in dealer inventories. Dealers increased inventories during the nine months ended September 30, 2019,
compared with a decrease during the nine months ended September 30, 2020.
• Sales declined in Latin America primarily due to the impact from changes in dealer inventories and unfavorable
currency impacts from a weaker Brazilian real. Dealers decreased inventories during the nine months ended September
30, 2020, compared with about flat during the nine months ended September 30, 2019.
• In EAME, sales decreased mostly due to lower end-user demand and the impact from changes in dealer inventories
across most countries in the region. Dealers increased inventories more during the nine months ended September 30,
2019, than during the nine months ended September 30, 2020.
• Sales declined in Asia/Pacific primarily due to lower end-user demand across the region and unfavorable price
realization due to competitive market conditions in China.
Construction Industries’ profit was $1.743 billion for the nine months ended September 30, 2020, a decrease of $1.529 billion,
or 47 percent, compared with $3.272 billion for the nine months ended September 30, 2019. The decrease was mainly due to
lower sales volume and unfavorable price realization primarily due to geographic product mix, partially offset by favorable
manufacturing costs and lower SG&A/R&D expenses. Favorable manufacturing costs were primarily due to lower period
manufacturing costs and material costs, partially offset by higher warranty expense. Lower period manufacturing costs and
SG&A/R&D expenses both reflected a reduction in short-term incentive compensation expense and other cost reductions
related to lower sales volumes.



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Construction Industries’ profit as a percent of total sales was 14.0 percent for the nine months ended September 30, 2020,
compared with 18.6 percent for the nine months ended September 30, 2019.

Resource Industries
Resource Industries’ total sales were $5.726 billion for the nine months ended September 30, 2020, a decrease of $2.155 billion,
or 27 percent, compared with $7.881 billion for the nine months ended September 30, 2019. The decrease was due to lower
sales volume, driven by lower end-user demand for equipment and aftermarket parts, and the impact from changes in dealer
inventories. Dealers decreased inventories during the nine months ended September 30, 2020, compared with an increase
during the nine months ended September 30, 2019. Lower end-user demand was primarily driven by equipment supporting non-
residential construction and quarry and aggregates. Mining equipment end-user demand and aftermarket parts demand were
also down in the nine months ended September 30, 2020, though to a lesser extent. Mining equipment sales were impacted by
mining company delays in capital expenditures due to pricing in certain commodities and overall economic uncertainty.
Resource Industries’ profit was $623 million for the nine months ended September 30, 2020, a decrease of $745 million, or 54
percent, compared with $1.368 billion for the nine months ended September 30, 2019. The decrease was mainly due to lower
sales volume, partially offset by favorable manufacturing costs. Favorable manufacturing costs were mostly due to lower period
manufacturing costs and material costs, partially offset by the unfavorable impact of cost absorption. Lower period
manufacturing costs were driven by lower short-term incentive compensation expense, other cost-reduction actions
implemented in response to lower sales volumes and the benefits of prior restructuring programs. Cost absorption was
unfavorable as inventory increased during the nine months ended September 30, 2019, compared with inventory levels that
were about flat during the nine months ended September 30, 2020.
Resource Industries’ profit as a percent of total sales was 10.9 percent for the nine months ended September 30, 2020,
compared with 17.4 percent for the nine months ended September 30, 2019.

Energy & Transportation

Sales by Application

(Millions of dollars) Nine Months Nine Months
Ended September Ended September $ %
30, 2020 30, 2019 Change Change
Oil and Gas............................................................................................. $ 2,622 $ 3,682 $ (1,060) (29%)
Power Generation................................................................................... 2,783 3,180 (397) (12%)
Industrial................................................................................................. 2,209 2,841 (632) (22%)
Transportation........................................................................................ 3,020 3,616 (596) (16%)
External Sales....................................................................................... 10,634 13,319 (2,685) (20%)
Inter-Segment......................................................................................... 2,025 2,829 (804) (28%)
Total Sales............................................................................................. $ 12,659 $ 16,148 $ (3,489) (22%)


Energy & Transportation’s total sales were $12.659 billion for the nine months ended September 30, 2020, a decrease of $3.489
billion, or 22 percent, compared with $16.148 billion for the nine months ended September 30, 2019. Sales declined across all
applications and inter-segment engine sales.
• Oil and Gas – Sales decreased mainly due to lower demand in North America for reciprocating engines used in gas
compression and decreased sales of engine aftermarket parts and lower sales of turbines and turbine-related services.
• Power Generation – Sales decreased primarily due to lower sales volume for reciprocating engines and aftermarket
parts, as well as lower sales in turbines and turbine-related services.
• Industrial – Sales decreased due to lower demand across all regions.
• Transportation – Sales declined in rail due to lower deliveries of locomotives and related services and in marine
applications primarily in EAME and Asia/Pacific.
Energy & Transportation’s profit was $1.718 billion for the nine months ended September 30, 2020, a decrease of $1.027
billion, or 37 percent, compared with $2.745 billion for the nine months ended September 30, 2019. The decrease was due to
lower sales volume, partially offset by lower SG&A/R&D expenses and manufacturing costs. SG&A/R&D expenses and
manufacturing costs were both impacted by a reduction in short-term incentive compensation expense and other cost reductions
related to lower sales volumes. In addition, segment profit was unfavorably impacted by other operating income/expense and
higher inventory write-downs during the third quarter of 2020.


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Energy & Transportation’s profit as a percent of total sales was 13.6 percent for the nine months ended September 30, 2020,
compared with 17.0 percent for the nine months ended September 30, 2019.

Financial Products Segment
Financial Products’ segment revenues were $2.301 billion for the nine months ended September 30, 2020, a decrease of $287
million, or 11 percent, from the nine months ended September 30, 2019. The decrease was primarily because of lower average
financing rates across all regions and lower average earning assets primarily in North America.
Financial Products’ segment profit was $395 million for the nine months ended September 30, 2020, compared with $622
million for the nine months ended September 30, 2019. The decrease was due to higher provision for credit losses at Cat
Financial, an unfavorable impact from equity securities in Insurance Services, lower average earning assets and lower net yield
on average earning assets. These unfavorable impacts were partially offset by a reduction in SG&A expenses primarily due to
lower short-term incentive compensation and employee benefit expenses.

Corporate Items and Eliminations
Expense for corporate items and eliminations was $1.106 billion in the nine months ended September 30, 2020, a decrease of
$148 million from the nine months ended September 30, 2019, primarily due to lower corporate costs, segment reporting
methodology differences and a favorable change in fair value adjustments related to deferred compensation plans, partially
offset by higher restructuring costs.

RESTRUCTURING COSTS

Restructuring costs for the three and nine months ended September 30, 2020 and 2019 were as follows:

(Millions of dollars) Three Months Ended September 30
2020 2019
Employee separations 1..................................................................................................................... $ 98 $ 8
1
Long-lived asset impairments ......................................................................................................... 2 3
2
Other ............................................................................................................................................... 12 13
Total restructuring costs.................................................................................................................... $ 112 $ 24

Nine Months Ended September 30
2020 2019
1
Employee separations ..................................................................................................................... $ 232 $ 33
1
Contract terminations ...................................................................................................................... 3 —
Long-lived asset impairments 1......................................................................................................... 25 39
2
Other ................................................................................................................................................ 36 110
Total restructuring costs.................................................................................................................... $ 296 $ 182
1
Recognized in Other operating (income) expenses.
2
Represents costs related to our restructuring programs, primarily for inventory write-downs, equipment relocation, project management, accelerated
depreciation and building demolition, all of which are primarily included in Cost of goods sold.


For the nine months ended September 30, 2020, the restructuring costs were primarily related to various voluntary and
involuntary employee separation programs implemented across the company and strategic actions to address certain product
lines, which were partially offset by a gain on the sale of a manufacturing facility that had been closed. For the nine months
ended September 30, 2019, the restructuring costs were primarily related to restructuring actions in Construction Industries and
Energy & Transportation.




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The following table summarizes the 2019 and 2020 employee separation activity:

(Millions of dollars)
Liability balance at December 31, 2018.................................................................................................................................... $ 85
Increase in liability (separation charges).............................................................................................................................. 48
Reduction in liability (payments)......................................................................................................................................... (85)
Liability balance at December 31, 2019.................................................................................................................................... 48
Increase in liability (separation charges).............................................................................................................................. 232
Reduction in liability (payments)......................................................................................................................................... (131)
Liability balance at September 30, 2020................................................................................................................................... $ 149


Most of the liability balance at September 30, 2020 is expected to be paid in 2020 and 2021.

We expect that prior restructuring actions will result in an incremental benefit to operating costs, primarily Cost of goods sold
and SG&A expenses of about $200 million in 2020 compared with 2019.

GLOSSARY OF TERMS
1. All Other Segment – Primarily includes activities such as: business strategy; product management and development;
manufacturing and sourcing of filters and fluids, undercarriage, ground-engaging tools, fluid transfer products, precision
seals, rubber sealing and connecting components primarily for Cat® products; parts distribution; integrated logistics
solutions; distribution services responsible for dealer development and administration, including a wholly owned dealer in
Japan; dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and
parts; brand management and marketing strategy; and digital investments for new customer and dealer solutions that
integrate data analytics with state-of-the-art digital technologies while transforming the buying experience.
2. Consolidating Adjustments – Elimination of transactions between Machinery, Energy & Transportation and Financial
Products.
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 asphalt pavers;
backhoe loaders; compactors; cold planers; compact track and multi-terrain loaders; mini, small, medium and large track
excavators; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; small and medium track-type
tractors; track-type loaders; utility vehicles; wheel excavators; compact, small and medium wheel loaders; and related parts
and work tools.
4. Corporate Items and Eliminations – Includes corporate-level expenses, timing differences (as some expenses are
reported in segment profit on a cash basis), methodology differences between segment and consolidated external reporting,
certain restructuring costs, and inter-segment eliminations.
5. 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 only includes the impact on sales and operating profit for the Machinery, Energy & Transportation lines of
business; 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 (hedging) and the net
effect of changes in foreign currency exchange rates on our foreign currency assets and liabilities for consolidated results
(translation).
6. Dealer Inventories – Represents dealer machine and engine inventories, excluding aftermarket parts.
7. EAME – A geographic region including Europe, Africa, the Middle East and the Commonwealth of Independent States
(CIS).
8. Earning Assets – Assets consisting primarily of total finance receivables net of unearned income, plus equipment on
operating leases, less accumulated depreciation at Cat Financial.




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9. Energy & Transportation – A segment primarily responsible for supporting customers using reciprocating engines,
turbines, diesel-electric locomotives and related parts across industries serving Oil and Gas, Power Generation, Industrial
and Transportation applications, including marine- and rail-related businesses. Responsibilities include business strategy,
product design, product management and development, manufacturing, marketing and sales, and product support. The
product portfolio includes turbine machinery and integrated systems and solutions and turbine-related services,
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 oil and gas industries, and reciprocating
engines supplied to the industrial industry as well as Cat machinery. Responsibilities also include the remanufacturing of
Caterpillar engines and components and remanufacturing services for other companies; the business strategy, product
design, product management and development, manufacturing, remanufacturing, leasing and service of diesel-electric
locomotives and components and other rail-related products and services; and product support of on-highway vocational
trucks for North America.
10. Financial Products – The company defines Financial Products as our finance and insurance subsidiaries, primarily
Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance Services).
Financial Products’ information relates to the financing to customers and dealers for the purchase and lease of Caterpillar
and other equipment.
11. Financial Products Segment – Provides financing alternatives to customers and dealers around the world for Caterpillar
products, as well as financing for vehicles, power generation facilities and marine vessels that, in most cases, incorporate
Caterpillar products. Financing plans include operating and finance leases, installment sale contracts, working capital loans
and wholesale financing plans. The segment also provides insurance and risk management products and services that help
customers and dealers manage their business risk. Insurance and risk management products offered include physical
damage insurance, inventory protection plans, extended service coverage for machines and engines, and dealer property
and casualty insurance. The various forms of financing, insurance and risk management products offered to customers and
dealers help support the purchase and lease of Caterpillar equipment. The segment also earns revenues from Machinery,
Energy & Transportation, but the related costs are not allocated to operating segments. Financial Products’ segment profit
is determined on a pretax basis and includes other income/expense items.
12. Latin America – A geographic region including Central and South American countries and Mexico.
13. Machinery, Energy & Transportation (ME&T) – The company defines ME&T as Caterpillar Inc. and its subsidiaries,
excluding Financial Products. ME&T’s information relates to the design, manufacturing and marketing of its products.
14. Machinery, Energy & Transportation Other Operating (Income) Expenses – Comprised primarily of gains/losses on
disposal of long-lived assets, gains/losses on divestitures and legal settlements, and accruals.
15. 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.
16. Mark-to-market gains/losses – Represents the net gain or loss of actual results differing from the company’s assumptions
and the effects of changing assumptions for our defined benefit pension and OPEB plans. These gains and losses are
immediately recognized through earnings upon the annual remeasurement in the fourth quarter, or on an interim basis as
triggering events warrant remeasurement.
17. Pension and Other Postemployment Benefit (OPEB) – The company’s defined-benefit pension and postretirement
benefit plans.
18. Price Realization – The impact of net price changes excluding currency and new product introductions. Price realization
includes geographic mix of sales, which is the impact of changes in the relative weighting of sales prices between
geographic regions.




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19. Resource Industries – A segment primarily responsible for supporting customers using machinery in mining, heavy
construction, quarry and aggregates, waste and material handling 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, hard rock vehicles, longwall miners, electric rope
shovels, draglines, hydraulic shovels, rotary drills, large wheel loaders, off-highway trucks, articulated trucks, wheel tractor
scrapers, wheel dozers, landfill compactors, soil compactors, select work tools, machinery components, electronics and
control systems, and related parts. In addition to equipment, Resource Industries also develops and sells technology
products and services to provide customers fleet management, equipment management analytics and autonomous machine
capabilities. Resource Industries also manages areas that provide services to other parts of the company, including
integrated manufacturing and research and development.
20. Restructuring Costs – May include costs for employee separation, long-lived asset impairments and contract terminations.
These costs are included in Other operating (income) expenses except for defined-benefit plan curtailment losses and
special termination benefits, which are included in Other income (expense). Restructuring costs also include other exit-
related costs, which may consist of accelerated depreciation, inventory write-downs, building demolition, equipment
relocation and project management costs and LIFO inventory decrement benefits from inventory liquidations at closed
facilities, all of which are primarily included in Cost of goods sold.
21. Sales Volume – With respect to sales and revenues, sales volume represents the impact of changes in the quantities sold for
Machinery, Energy & Transportation as well as the incremental sales 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, Energy & Transportation 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, Energy & Transportation sales with respect to total sales.
The impact of sales volume on segment profit includes inter-segment sales.
22. Services – Enterprise services include, but are not limited to, aftermarket parts, Financial Products revenues and other
service-related revenues. Machinery, Energy & Transportation segments exclude most Financial Products revenues.

LIQUIDITY AND CAPITAL RESOURCES

Sources of funds

We generate significant capital resources from operating activities, which are the primary source of funding for our ME&T
operations. Funding for these businesses is also available from commercial paper and long-term debt issuances. Financial
Products’ operations are funded primarily from commercial paper, term debt issuances and collections from its existing
portfolio. Despite lower volume in most of the industries we serve, we had positive operating cash flow in the first nine months
of 2020 within both our ME&T and Financial Products' operations. On a consolidated basis, we ended the first nine months of
2020 with $9.32 billion of cash, an increase of $1.03 billion from year-end 2019. We intend to maintain a strong cash and
liquidity position.
Consolidated operating cash flow for the first nine months of 2020 was $4.26 billion, down $223 million compared to the same
period last year. The decrease was primarily due to lower profit adjusted for non-cash items, including lower accruals for short-
term incentive compensation and postretirement benefits. Partially offsetting lower profit were the absence of a discretionary
pension contribution, reduced working capital requirements and lower payments for short-term incentive compensation during
the first nine months of 2020 compared to the same period last year. Within working capital, changes in receivables and
inventory favorably impacted cash flow, but were partially offset by unfavorable changes in accrued expenses and customer
advances.
Total debt as of September 30, 2020 was $38.13 billion, an increase of $469 million from year-end 2019. Debt related to
Financial Products decreased $1.51 billion, primarily due to lower portfolio funding requirements. Debt related to ME&T
increased $1.98 billion in the first nine months of 2020. The increase was due to the issuance of new debt to maintain our strong
financial position and increase liquidity. In April 2020, we issued $800 million of ten-year bonds at 2.6 percent and $1.2 billion
of 30-year bonds at 3.25 percent.
As of September 30, 2020, we had three global credit facilities with a syndicate of banks totaling $10.50 billion (Credit
Facility) available in the aggregate to both Caterpillar and 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 ME&T as of
September 30, 2020 was $2.75 billion. Information on our Credit Facility is as follows:
• In September 2020, we entered into a new 364-day facility of $3.15 billion (of which $824 million is available to
ME&T) which expires in September 2021.


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• The three-year facility, as amended and restated in September of 2019, of $2.73 billion (of which $715 million is
available to ME&T) expires in September 2022.
• The five-year facility, as amended and restated in September of 2019, of $4.62 billion (of which $1.21 billion is
available to ME&T) expires in September 2024.
At September 30, 2020, Caterpillar’s consolidated net worth was $15.02 billion, which was above the $9.00 billion required
under the Credit Facility. The consolidated net worth is defined in the Credit Facility as the consolidated shareholders’ equity
including preferred stock but excluding the pension and other postretirement benefits balance within Accumulated other
comprehensive income (loss).
At September 30, 2020, Cat Financial’s covenant interest coverage ratio was 1.69 to 1. This was 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, 2020, Cat Financial’s six-month covenant leverage ratio was 6.76 to 1. This was 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 syndicate of banks 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, 2020, there were no borrowings under the Credit Facility.
Our total credit commitments and available credit as of September 30, 2020 were:

September 30, 2020
Machinery,
(Millions of dollars) Energy & Financial
Consolidated Transportation Products
Credit lines available:
Global credit facilities......................................................................................... $ 10,500 $ 2,750 $ 7,750
Other external...................................................................................................... 3,105 175 2,930
Total credit lines available...................................................................................... 13,605 2,925 10,680
Less: Commercial paper outstanding..................................................................... (1,890) — (1,890)
Less: Utilized credit................................................................................................ (827) — (827)
Available credit....................................................................................................... $ 10,888 $ 2,925 $ 7,963


The other external consolidated credit lines with banks as of September 30, 2020 totaled $3.11 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.
Since the outbreak of the COVID-19 global pandemic, Caterpillar has taken actions to maintain our strong financial position
and increase liquidity. During 2020, we raised $2.0 billion of incremental cash by issuing $800 million of ten-year bonds at 2.6
percent and $1.2 billion of 30-year bonds at 3.25 percent. We also entered into an incremental $3.9 billion short-term credit
facility that was set to expire on December 31, 2020 and registered for $4.2 billion in commercial paper support programs
available in the United States and Canada. In addition, Cat Financial issued $3.25 billion of medium-term notes in the quarter
to refinance maturing medium-term notes and supplement its liquidity position. Due to our strong liquidity position, we chose
to early terminate the $3.9 billion short-term credit facility on September 2, 2020. We also do not have any outstanding
borrowings under either commercial paper support program as of the date of this filing.




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We receive debt ratings from the major credit rating agencies. Moody’s currently rates our debt as “low-A”, while Fitch and
S&P maintain a “mid-A” debt rating. To date, this split rating has not had a material impact on our borrowing costs or our
overall financial health. However, a downgrade of our credit ratings by any of the major credit rating agencies would result in
increased borrowing costs and could make access to certain credit markets more difficult. In the event economic conditions
deteriorate such that access to debt markets becomes unavailable, ME&T’s operations would rely on cash flow from operations,
use of existing cash balances, borrowings from Cat Financial and access to our committed credit facilities. Our Financial
Products’ operations would rely on cash flow from its existing portfolio, existing cash balances, access to our committed credit
facilities and other credit line facilities of Cat Financial, commercial paper support facilities sponsored by the U.S. Federal
Reserve and the Bank of Canada, 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 may, under certain circumstances,
require Caterpillar to make payments to Cat Financial should Cat Financial fail to maintain certain financial ratios.

We facilitate voluntary supply chain finance programs (the “Programs”) through participating financial institutions. The
Programs are available to a wide range of suppliers and allows them the option to manage their cash flow. We are not a party to
the agreements between the participating financial institutions and the suppliers in connection with the Programs. The range of
payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the Programs.
The amounts payable to participating financial institutions for suppliers who voluntarily participate in the Programs and
included in Accounts payable in the Consolidated Statement of Financial Position were $468 million and $575 million at
September 30, 2020 and December 31, 2019, respectively. The amounts settled through the Programs and paid to participating
financial institutions were $2.4 billion and $3.1 billion during the first nine months of 2020 and 2019, respectively. We account
for payments made under the Programs, the same as our other Accounts payable, as a reduction to our cash flows from
operations. We do not believe that changes in the availability of supply chain financing will have a significant impact on our
liquidity.

Machinery, Energy & Transportation
Net cash provided by operating activities was $2.07 billion in the first nine months of 2020, compared with $2.63 billion for the
same period in 2019. The decrease was primarily due to lower profit adjusted for non-cash items, including lower accruals for
short-term incentive compensation and postretirement benefits. Partially offsetting lower profit were the absence of a
discretionary pension contribution, lower payments for short-term incentive compensation and reduced working capital
requirements during the first nine months of 2020 compared with the same period last year. Within working capital, changes in
inventory and receivables favorably impacted cash flow, but were partially offset by unfavorable changes in accrued expenses
and customer advances.
Net cash used for investing activities in the first nine months of 2020 was $66 million, compared with net cash provided of
$138 million in the first nine months of 2019. The change was primarily due to a decrease in activity related to intercompany
lending with Financial Products.
Net cash used for financing activities during the first nine months of 2020 was $742 million, compared with net cash used of
$3.32 billion in the same period of 2019. The change was primarily due to a decrease in share repurchases of $2.15 billion and
an increase in proceeds from the issuance of debt of $512 million in the first nine months of 2020 compared to the same period
last year.
While our short-term priorities for the use of cash may vary from time to time as business needs and conditions dictate, our
long-term cash deployment strategy is focused on the following priorities. Our top priority is to maintain a strong financial
position in support of a mid-A rating. Next, we intend to fund operational requirements and commitments. Then, we intend to
fund priorities that profitably grow the company and return capital to shareholders through dividend growth and share
repurchases. Additional information on cash deployment is as follows:

Strong financial position – Our top priority is to maintain a strong financial position in support of a mid-A rating. We
track a diverse group of financial metrics that focus on liquidity, leverage, cash flow and margins which align with our
cash deployment actions and the various methodologies used by the major credit rating agencies.
Operational excellence and commitments – Capital expenditures were $685 million during the first nine months of
2020, compared to $730 million for the same period in 2019. We expect ME&T’s capital expenditures in 2020 to be
about $1.0 billion. We made $217 million of contributions to our pension and other postretirement benefit plans during
the first nine months of 2020. We currently anticipate full-year 2020 contributions of approximately $250 million. In
comparison, we made $1.77 billion of contributions to our pension and other postretirement benefit plans during the
first nine months of 2019.




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Fund strategic growth initiatives and return capital to shareholders – We intend to utilize our liquidity and debt
capacity to fund targeted investments that drive long-term profitable growth focused in the areas of expanded offerings
and services, including acquisitions.
As part of our capital allocation strategy, ME&T free cash flow is a liquidity measure we use to determine the cash
generated and available for financing activities including debt repayments, dividends and share repurchases. We define
ME&T free cash flow as cash from ME&T operations excluding discretionary pension and other postretirement benefit
plan contributions less capital expenditures. A goal of our capital allocation strategy is to return substantially all
ME&T free cash flow to shareholders through the cycles in the form of dividends and share repurchases, while
maintaining our mid-A rating.
Our share repurchase plans are subject to the company’s cash deployment priorities and are evaluated on an ongoing
basis considering the financial condition of the company and the economic outlook, corporate cash flow, the
company’s liquidity needs, and the health and stability of global credit markets. The timing and amount of future
repurchases may vary depending on market conditions and investing priorities. In July 2018, the Board of Directors
approved an authorization to repurchase up to $10 billion of Caterpillar common stock (the 2018 Authorization)
effective January 1, 2019, with no expiration. In the first nine months of 2020, we repurchased $1.13 billion of
Caterpillar common stock, with $4.82 billion remaining under the 2018 Authorization as of September 30, 2020. Our
basic shares outstanding as of September 30, 2020 were approximately 543 million. Due to current economic
uncertainty, we have temporarily suspended our share repurchase program and do not expect to repurchase any
additional shares in 2020. The existing share repurchase program remains authorized by the Board, and we may
resume share repurchases in the future at any time depending upon market conditions, our capital needs and other
factors.
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. In October 2020, the Board of Directors approved maintaining our quarterly dividend representing
$1.03 per share and we continue to expect our strong financial position to support the dividend. Dividends paid totaled
$1.68 billion in the first nine months of 2020.

Financial Products
Financial Products operating cash flow was $1.04 billion in the first nine months of 2020, compared with $1.18 billion for the
same period a year ago. Net cash provided by investing activities was $885 million for the first nine months of 2020, compared
with net cash used of $101 million for the same period in 2019. The change was primarily due to higher collections of finance
receivables and other portfolio activity. Net cash used for financing activities was $2.10 billion for the first nine months of
2020, compared with net cash used of $433 million for the same period in 2019. The change was primarily due to lower
portfolio funding requirements.


RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements, see Part I, Item 1. Note 2 - “New accounting guidance.”

CRITICAL ACCOUNTING POLICIES

For a discussion of the company’s critical accounting policies, see Part II, Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations in our 2019 Annual Report on Form 10-K. We have revised the following
critical accounting policy since our 2019 Annual Report on Form 10-K:

Allowance for credit losses - The allowance for credit losses is management’s estimate of expected losses over the life of our
finance receivable portfolio calculated using loss forecast models that take into consideration historical credit loss experience,
current economic conditions and forecasts and scenarios that capture country and industry-specific economic factors. In
addition, qualitative factors not able to be fully captured in our loss forecast models, including borrower-specific and Company-
specific macro-economic factors, are considered in the evaluation of the adequacy of our allowance for credit losses. These
qualitative factors are subjective and require a degree of management judgment.




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The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist and on an
individual basis when it is determined that similar risk characteristics do not exist. Finance receivables are identified for
individual evaluation based on past-due status and information available about the customer, such as financial statements, news
reports and published credit ratings, as well as general information regarding industry trends and the economic environment in
which our customers operate. The allowance for credit losses attributable to finance receivables that are individually evaluated
is based on the present value of expected future cash flows discounted at the receivables' effective interest rate, the fair value of
the collateral for collateral-dependent receivables or the observable market price of the receivable. In determining collateral
value, we estimate the current fair market value of the collateral less selling costs. We also consider credit enhancements such
as additional collateral and contractual third-party guarantees.

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 customers deteriorates, the timing and level of payments received could be impacted
and therefore, could result in a change to our estimated losses.

OTHER MATTERS

Environmental and Legal Matters

The Company is regulated by federal, state and international environmental laws governing its 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, we accrue the
investigation, remediation, and operating and maintenance costs against our earnings. We accrue costs based on consideration
of currently available data and information with respect to each individual site, including available technologies, current
applicable laws and regulations, and prior remediation experience. Where no amount within a range of estimates is more likely,
we accrue the minimum. Where multiple potentially responsible parties are involved, we consider our proportionate share of the
probable costs. In formulating the estimate of probable costs, we do not consider amounts expected to be recovered from
insurance companies or others. We reassess these accrued amounts on a quarterly basis. The amount recorded for
environmental remediation is not material and is included in Accrued expenses. We believe there is no more than a remote
chance that a material amount for remedial activities at any individual site, or at all the sites in the aggregate, will be required.

On January 27, 2020, the Brazilian Federal Environmental Agency (“IBAMA”) issued Caterpillar Brasil Ltda a notice of
violation regarding allegations around the requirements for use of imported oils at the Piracicaba, Brazil facility. We have
instituted processes to address the allegations. While we are still discussing resolution of these allegations with IBAMA, the
initial notice from IBAMA included a proposed fine of approximately $300,000. We do not expect this fine or our response to
address the allegations to have a material adverse effect on the Company's consolidated results of operations, financial position
or liquidity.

On January 7, 2015, the Company received a grand jury subpoena from the U.S. District Court for the Central District of
Illinois. The subpoena requested documents and information from the Company relating to, among other things, financial
information concerning U.S. and non-U.S. Caterpillar subsidiaries (including undistributed profits of non-U.S. subsidiaries and
the movement of cash among U.S. and non-U.S. subsidiaries). The Company has received additional subpoenas relating to this
investigation requesting additional documents and information relating to, among other things, the purchase and resale of
replacement parts by Caterpillar Inc. and non-U.S. Caterpillar subsidiaries, dividend distributions of certain non-U.S.
Caterpillar subsidiaries, and Caterpillar SARL (CSARL) and related structures. On March 2-3, 2017, agents with the
Department of Commerce, the Federal Deposit Insurance Corporation and the Internal Revenue Service executed search and
seizure warrants at three facilities of the Company in the Peoria, Illinois area, including its former corporate headquarters. The
warrants identify, and agents seized, documents and information related to, among other things, the export of products from the
United States, the movement of products between the United States and Switzerland, the relationship between Caterpillar Inc.
and CSARL, and sales outside the United States. It is the Company’s understanding that the warrants, which concern both tax
and export activities, are related to the ongoing grand jury investigation. The Company is continuing to cooperate with this
investigation. The Company is unable to predict the outcome or reasonably estimate any potential loss; however, we currently
believe that this matter will not have a material adverse effect on the Company’s consolidated results of operations, financial
position or liquidity.


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In addition, we are involved in other unresolved legal actions that arise in the normal course of business. The most prevalent of
these unresolved actions involve disputes related to product design, manufacture and performance liability (including claimed
asbestos exposure), contracts, employment issues, environmental matters, intellectual property rights, taxes (other than income
taxes) and securities laws. 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, we believe 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 recognize mark-to-market gains and losses immediately through earnings upon the remeasurement of our pension and
OPEB plans. Mark-to-market gains and losses represent the effects of actual results differing from our assumptions and the
effects of changing assumptions. We will record the annual mark-to-market adjustment as of the measurement date, December
31, 2020. The discount rates for our U.S. pension plans were 2.6 percent and 3.2 percent as of September 30, 2020 and
December 31, 2019, respectively. Asset returns as of September 30, 2020 for our U.S. pension plans were 8.8 percent
compared to an expected return on plan assets for 2020 of 5.1 percent. It is difficult to predict the December 31, 2020
adjustment amount, as it is dependent on several factors including discount rate, actual returns on plan assets and other actuarial
assumptions.

Order Backlog

At the end of the third quarter of 2020, the dollar amount of backlog believed to be firm was approximately $13.4 billion, about
$500 million higher than the second quarter of 2020. The order backlog increased in Construction Industries, while Energy &
Transportation and Resource Industries were about flat. Compared with the third quarter of 2019, the order backlog decreased
about $1.2 billion with decreases across the three primary segments. Of the total backlog at September 30, 2020, approximately
$3.8 billion was not expected to be filled in the following twelve months.




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NON-GAAP FINANCIAL MEASURES

We provide the following definitions for the non-GAAP financial measures used in this report. 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 for these items to be considered in isolation
or as a substitute for the related GAAP measures.

We believe it is important to separately quantify the profit impact of two significant items in order for our results to be
meaningful to our readers. These items consist of (i) remeasurement (gain) loss resulting from the settlements of pension
obligations in 2020 and (ii) a discrete tax benefit related to U.S. tax reform in the first quarter of 2019. We do not consider
these items indicative of earnings from ongoing business activities and believe the non-GAAP measure provides investors with
useful perspective on underlying business results and trends and aids with assessing our period-over-period results. In addition,
we provide a calculation of ME&T free cash flow as we believe it is an important measure for investors to determine the cash
generation available for financing activities including debt repayments, dividends and share repurchases.

Reconciliations of adjusted profit per share to the most directly comparable GAAP measure, profit per share - diluted are as
follows:

Three Months Ended Nine Months Ended
September 30 September 30
2020 2019 2020 2019
Profit per share - diluted....................................................................... $ 1.22 $ 2.66 $ 4.05 $ 8.75
1
Per share remeasurement (gain) loss of pension obligations .............. $ 0.12 $ — $ (0.08) $ —
Per share U.S. tax reform impact.......................................................... $ — $ — $ — $ (0.31)
Adjusted profit per share....................................................................... $ 1.34 $ 2.66 $ 3.97 $ 8.44
1
At statutory tax rates.



Reconciliations of ME&T free cash flow to the most directly comparable GAAP measure, net cash provided by operating
activities are as follows:

Nine Months Ended
(Millions of dollars) September 30
2020 2019
1
ME&T net cash provided by operating activities ........................................................................................... $ 2,065 $ 2,632
ME&T discretionary pension contributions..................................................................................................... $ — $ 1,500
ME&T capital expenditures.............................................................................................................................. $ (685) $ (730)
ME&T free cash flow....................................................................................................................................... $ 1,380 $ 3,402
1
See reconciliation of ME&T net cash provided by operating activities to consolidated net cash provided by operating activities on pages 84 - 85.




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Supplemental Consolidating Data

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

Consolidated – Caterpillar Inc. and its subsidiaries.

Machinery, Energy & Transportation – We define ME&T as it is presented in the supplemental data as Caterpillar Inc. and
its subsidiaries, excluding Financial Products. ME&T’s information relates to the design, manufacturing and marketing of our
products.

Financial Products – We define Financial Products as it is presented in the supplemental data as our finance and insurance
subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc.
(Insurance Services). Financial Products’ information relates to the financing to customers and dealers for the purchase and
lease of Caterpillar and other equipment.

Consolidating Adjustments – Eliminations of transactions between ME&T and Financial Products.

The nature of the ME&T and Financial Products 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 believe this
presentation will assist readers in understanding our business.

Pages 78 to 92 reconcile ME&T and Financial Products to Caterpillar Inc. consolidated financial information. Certain amounts
for prior periods have been reclassified to conform to the current period presentation.




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Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended September 30, 2020
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation Products Adjustments
Sales and revenues:
Sales of Machinery, Energy & Transportation.......................... $ 9,228 $ 9,228 $ — $ —
1
Revenues of Financial Products................................................. 653 — 740 (87)
Total sales and revenues............................................................ 9,881 9,228 740 (87)

Operating costs:
2
Cost of goods sold...................................................................... 6,919 6,921 — (2)
2
Selling, general and administrative expenses............................ 1,126 943 189 (6)
Research and development expenses......................................... 344 344 — —
Interest expense of Financial Products...................................... 137 — 137 —
2
Other operating (income) expenses........................................... 370 95 287 (12)
Total operating costs.................................................................. 8,896 8,303 613 (20)

Operating profit.............................................................................. 985 925 127 (67)

Interest expense excluding Financial Products.......................... 136 136 — —
3
Other income (expense)............................................................. 14 (62) 9 67

Consolidated profit before taxes.................................................... 863 727 136 —

Provision (benefit) for income taxes.......................................... 187 133 54 —
Profit of consolidated companies............................................... 676 594 82 —

4
Equity in profit (loss) of unconsolidated affiliated companies.. (5) (4) — (1)

Profit of consolidated and affiliated companies........................... 671 590 82 (1)

5
Less: Profit (loss) attributable to noncontrolling interests................ 3 — 4 (1)

Profit 6.............................................................................................. $ 668 $ 590 $ 78 $ —

1
Elimination of Financial Products’ revenues earned from ME&T.
2
Elimination of net expenses recorded by ME&T paid to Financial Products.
3
Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between
ME&T and Financial Products as well as dividends paid by Financial Products to ME&T.
4
Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.
5
Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by
ME&T subsidiaries.
6
Profit attributable to common shareholders.




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Caterpillar Inc.
Supplemental Data for Results of Operations
For the Nine Months Ended September 30, 2020
(Unaudited)
(Millions of dollars)


Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation Products Adjustments
Sales and revenues:
Sales of Machinery, Energy & Transportation.......................... $ 28,452 $ 28,452 $ — $ —
1
Revenues of Financial Products................................................. 2,061 — 2,350 (289)
Total sales and revenues............................................................ 30,513 28,452 2,350 (289)

Operating costs:
2
Cost of goods sold...................................................................... 21,298 21,302 — (4)
2
Selling, general and administrative expenses............................ 3,426 2,867 572 (13)
Research and development expenses......................................... 1,041 1,041 — —
3
Interest expense of Financial Products...................................... 461 — 462 (1)
2
Other operating (income) expenses........................................... 1,114 227 927 (40)
Total operating costs.................................................................. 27,340 25,437 1,961 (58)

Operating profit.............................................................................. 3,173 3,015 389 (231)

3
Interest expense excluding Financial Products.......................... 384 383 — 1
4
Other income (expense)............................................................. 265 60 (7) 212

Consolidated profit before taxes.................................................... 3,054 2,692 382 (20)

Provision (benefit) for income taxes.......................................... 839 720 119 —
Profit of consolidated companies............................................... 2,215 1,972 263 (20)

5
Equity in profit (loss) of unconsolidated affiliated companies.. 8 18 — (10)

Profit of consolidated and affiliated companies........................... 2,223 1,990 263 (30)

6
Less: Profit (loss) attributable to noncontrolling interests................ 5 2 13 (10)

Profit 7.............................................................................................. $ 2,218 $ 1,988 $ 250 $ (20)


1
Elimination of Financial Products’ revenues earned from ME&T.
2
Elimination of net expenses recorded by ME&T paid to Financial Products.
3
Elimination of interest expense recorded between Financial Products and ME&T.
4
Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between
ME&T and Financial Products as well as dividends paid by Financial Products to ME&T.
5
Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.
6
Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by
ME&T subsidiaries.
7
Profit attributable to common shareholders.




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Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended September 30, 2019
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation Products Adjustments
Sales and revenues:
Sales of Machinery, Energy & Transportation.......................... $ 11,974 $ 11,974 $ — $ —
1
Revenues of Financial Products................................................. 784 — 920 (136)
Total sales and revenues............................................................ 12,758 11,974 920 (136)

Operating costs:
Cost of goods sold...................................................................... 8,569 8,569 — —
2
Selling, general and administrative expenses............................ 1,251 1,095 163 (7)
Research and development expenses......................................... 431 431 — —
3
Interest expense of Financial Products...................................... 189 — 198 (9)
2
Other operating (income) expenses........................................... 298 (9) 320 (13)
Total operating costs.................................................................. 10,738 10,086 681 (29)

Operating profit.............................................................................. 2,020 1,888 239 (107)

Interest expense excluding Financial Products.......................... 103 103 — —
4
Other income (expense)............................................................. 88 (27) 8 107

Consolidated profit before taxes.................................................... 2,005 1,758 247 —

Provision (benefit) for income taxes.......................................... 518 457 61 —
Profit of consolidated companies............................................... 1,487 1,301 186 —

5
Equity in profit (loss) of unconsolidated affiliated companies.. 7 12 — (5)

Profit of consolidated and affiliated companies........................... 1,494 1,313 186 (5)

6
Less: Profit (loss) attributable to noncontrolling interests................ — (1) 6 (5)

Profit 7............................................................................................... $ 1,494 $ 1,314 $ 180 $ —

1
Elimination of Financial Products’ revenues earned from ME&T.
2
Elimination of net expenses recorded by ME&T paid to Financial Products.
3
Elimination of interest expense recorded between Financial Products and ME&T.
4
Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between
ME&T and Financial Products as well as dividends paid by Financial Products to ME&T.
5
Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.
6
Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by
ME&T subsidiaries.
7
Profit attributable to common shareholders.




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Caterpillar Inc.
Supplemental Data for Results of Operations
For the Nine Months Ended September 30, 2019
(Unaudited)
(Millions of dollars)


Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation Products Adjustments
Sales and revenues:
Sales of Machinery, Energy & Transportation.......................... $ 38,369 $ 38,369 $ — $ —
1
Revenues of Financial Products................................................. 2,287 — 2,684 (397)
Total sales and revenues............................................................ 40,656 38,369 2,684 (397)

Operating costs:
2
Cost of goods sold...................................................................... 27,513 27,515 — (2)
2
Selling, general and administrative expenses............................ 3,879 3,324 564 (9)
Research and development expenses......................................... 1,307 1,307 — —
3
Interest expense of Financial Products...................................... 571 — 599 (28)
2
Other operating (income) expenses........................................... 946 2 974 (30)
Total operating costs.................................................................. 34,216 32,148 2,137 (69)

Operating profit.............................................................................. 6,440 6,221 547 (328)

3
Interest expense excluding Financial Products.......................... 309 318 — (9)
4
Other income (expense)............................................................. 316 (71) 68 319

Consolidated profit before taxes.................................................... 6,447 5,832 615 —

Provision (benefit) for income taxes.......................................... 1,470 1,294 176 —
Profit of consolidated companies............................................... 4,977 4,538 439 —

5
Equity in profit (loss) of unconsolidated affiliated companies.. 20 36 — (16)

Profit of consolidated and affiliated companies........................... 4,997 4,574 439 (16)

6
Less: Profit (loss) attributable to noncontrolling interests................ 2 1 17 (16)

Profit 7............................................................................................... $ 4,995 $ 4,573 $ 422 $ —

1
Elimination of Financial Products’ revenues earned from ME&T.
2
Elimination of net expenses recorded by ME&T paid to Financial Products.
3
Elimination of interest expense recorded between Financial Products and ME&T.
4
Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T
and Financial Products as well as dividends paid by Financial Products to ME&T.
5
Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.
6
Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T
subsidiaries.
7
Profit attributable to common shareholders.




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Caterpillar Inc.
Supplemental Data for Financial Position
At September 30, 2020
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation Products Adjustments
Assets
Current assets:
Cash and short-term investments....................................................... $ 9,315 $ 8,512 $ 803 $ —
1,2
Receivables – trade and other............................................................. 6,969 2,484 497 3,988
2
Receivables – finance......................................................................... 8,966 — 13,120 (4,154)
3
Prepaid expenses and other current assets.......................................... 1,831 1,372 634 (175)
Inventories.......................................................................................... 11,453 11,453 — —
Total current assets.................................................................................. 38,534 23,821 15,054 (341)

Property, plant and equipment – net........................................................ 12,232 8,156 4,076 —
1,2
Long-term receivables – trade and other................................................. 1,149 294 181 674
2
Long-term receivables – finance.............................................................. 12,209 — 12,900 (691)
4
Noncurrent deferred and refundable income taxes.................................. 1,440 1,979 101 (640)
Intangible assets....................................................................................... 1,363 1,363 — —
Goodwill.................................................................................................. 6,304 6,304 — —
5
Other assets.............................................................................................. 3,510 2,887 1,815 (1,192)
Total assets................................................................................................. $ 76,741 $ 44,804 $ 34,127 $ (2,190)

Liabilities
Current liabilities:
Short-term borrowings....................................................................... $ 2,660 $ — $ 2,660 $ —
Short-term borrowings with consolidated companies........................ — — — —
6
Accounts payable............................................................................... 5,193 5,174 187 (168)
Accrued expenses............................................................................... 3,510 3,131 379 —
Accrued wages, salaries and employee benefits................................ 1,069 1,055 14 —
Customer advances............................................................................. 1,209 1,209 — —
Dividends payable.............................................................................. — — — —
4,7
Other current liabilities....................................................................... 1,978 1,509 666 (197)
Long-term debt due within one year.................................................. 9,359 1,397 7,962 —
Total current liabilities............................................................................. 24,978 13,475 11,868 (365)
8
Long-term debt due after one year........................................................... 26,107 9,757 16,365 (15)
Liability for postemployment benefits..................................................... 6,254 6,253 1 —
4
Other liabilities......................................................................................... 4,408 3,739 1,384 (715)
Total liabilities........................................................................................... 61,747 33,224 29,618 (1,095)
Commitments and contingencies
Shareholders’ equity
9
Common stock......................................................................................... 6,204 6,204 919 (919)
Treasury stock.......................................................................................... (25,315) (25,315) — —
9
Profit employed in the business............................................................... 35,508 31,285 4,214 9
Accumulated other comprehensive income (loss)................................... (1,448) (636) (812) —
9
Noncontrolling interests........................................................................... 45 42 188 (185)
Total shareholders’ equity........................................................................ 14,994 11,580 4,509 (1,095)
Total liabilities and shareholders’ equity................................................ $ 76,741 $ 44,804 $ 34,127 $ (2,190)

1
Elimination of receivables between ME&T and Financial Products.
2
Reclassification of ME&T’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables.
3
Elimination of ME&T’s insurance premiums that are prepaid to Financial Products.
4
Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction.
5
Elimination of other intercompany assets between ME&T and Financial Products.
6
Elimination of payables between ME&T and Financial Products.
7
Elimination of prepaid insurance in Financial Products’ other liabilities.
8
Elimination of debt between ME&T and Financial Products.
9
Eliminations associated with ME&T’s investments in Financial Products’ subsidiaries.




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Caterpillar Inc.
Supplemental Data for Financial Position
At December 31, 2019
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation Products Adjustments
Assets
Current assets:
Cash and short-term investments................................................................ $ 8,284 $ 7,299 $ 985 $ —
1,2
Receivables – trade and other..................................................................... 8,568 3,737 451 4,380
2
Receivables – finance................................................................................. 9,336 — 14,489 (5,153)
3
Prepaid expenses and other current assets.................................................. 1,739 1,290 529 (80)
Inventories................................................................................................... 11,266 11,266 — —
Total current assets........................................................................................... 39,193 23,592 16,454 (853)

Property, plant and equipment – net................................................................. 12,904 8,606 4,298 —
1,2
Long-term receivables – trade and other.......................................................... 1,193 348 152 693
2
Long-term receivables – finance...................................................................... 12,651 — 13,354 (703)
4
Noncurrent deferred and refundable income taxes........................................... 1,411 2,002 117 (708)
Intangible assets................................................................................................ 1,565 1,565 — —
Goodwill........................................................................................................... 6,196 6,196 — —
5
Other assets....................................................................................................... 3,340 2,953 1,572 (1,185)
Total assets.......................................................................................................... $ 78,453 $ 45,262 $ 35,947 $ (2,756)

Liabilities
Current liabilities:
Short-term borrowings................................................................................ $ 5,166 $ 5 $ 5,161 $ —
6
Short-term borrowings with consolidated companies................................. — — 600 (600)
7
Accounts payable........................................................................................ 5,957 5,918 212 (173)
Accrued expenses........................................................................................ 3,750 3,415 335 —
Accrued wages, salaries and employee benefits......................................... 1,629 1,580 49 —
Customer advances..................................................................................... 1,187 1,187 — —
Dividends payable....................................................................................... 567 567 — —
4,8
Other current liabilities............................................................................... 2,155 1,689 566 (100)
Long-term debt due within one year........................................................... 6,210 16 6,194 —
Total current liabilities..................................................................................... 26,621 14,377 13,117 (873)
6
Long-term debt due after one year................................................................... 26,281 9,151 17,140 (10)
Liability for postemployment benefits............................................................. 6,599 6,599 — —
4
Other liabilities................................................................................................. 4,323 3,681 1,430 (788)
Total liabilities.................................................................................................... 63,824 33,808 31,687 (1,671)
Commitments and contingencies
Shareholders’ equity
9
Common stock.................................................................................................. 5,935 5,935 919 (919)
Treasury stock.................................................................................................. (24,217) (24,217) — —
9
Profit employed in the business........................................................................ 34,437 30,434 3,997 6
Accumulated other comprehensive income (loss)............................................ (1,567) (739) (828) —
9
Noncontrolling interests................................................................................... 41 41 172 (172)
Total shareholders’ equity................................................................................ 14,629 11,454 4,260 (1,085)
Total liabilities and shareholders’ equity........................................................ $ 78,453 $ 45,262 $ 35,947 $ (2,756)

1
Elimination of receivables between ME&T and Financial Products.
2
Reclassification of ME&T’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables.
3
Elimination of ME&T’s insurance premiums that are prepaid to Financial Products.
4
Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction.
5
Elimination of other intercompany assets between ME&T and Financial Products.
6
Elimination of debt between ME&T and Financial Products.
7
Elimination of payables between ME&T and Financial Products.
8
Elimination of prepaid insurance in Financial Products’ other liabilities.
9
Eliminations associated with ME&T’s investments in Financial Products’ subsidiaries.




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Caterpillar Inc.
Supplemental Data for Cash Flow
For the Nine Months Ended September 30, 2020
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation Products Adjustments
Cash flow from operating activities:
1, 5
Profit of consolidated and affiliated companies............................................... $ 2,223 $ 1,990 $ 263 $ (30)
Adjustments for non-cash items:
Depreciation and amortization.................................................................... 1,815 1,217 598 —
Net gain on remeasurement of pension obligations.................................... (55) (55) — —
Provision (benefit) for deferred income taxes............................................ (38) (5) (33) —
2
Other........................................................................................................... 919 494 167 258
Changes in assets and liabilities, net of acquisitions and divestitures:
2, 3
Receivables – trade and other..................................................................... 1,473 616 (54) 911
2
Inventories................................................................................................... (139) (130) — (9)
2
Accounts payable........................................................................................ (596) (599) (6) 9
Accrued expenses........................................................................................ (286) (314) 28 —
Accrued wages, salaries and employee benefits......................................... (547) (512) (35) —
Customer advances..................................................................................... 13 13 — —
2
Other assets – net........................................................................................ (15) (136) 26 95
2
Other liabilities – net................................................................................... (512) (514) 83 (81)
Net cash provided by (used for) operating activities........................................... 4,255 2,065 1,037 1,153

Cash flow from investing activities:
2
Capital expenditures – excluding equipment leased to others.......................... (686) (687) (11) 12
2
Expenditures for equipment leased to others.................................................... (805) 2 (823) 16
2
Proceeds from disposals of leased assets and property, plant and equipment.. 550 119 451 (20)
3
Additions to finance receivables...................................................................... (9,278) — (10,234) 956
3
Collections of finance receivables.................................................................... 9,656 — 10,822 (1,166)
3
Net intercompany purchased receivables......................................................... — — 971 (971)
Proceeds from sale of finance receivables........................................................ 37 — 37 —
4
Net intercompany borrowings.......................................................................... — 599 6 (605)
Investments and acquisitions (net of cash acquired)........................................ (93) (93) — —
Proceeds from sale of businesses and investments (net of cash sold).............. 13 13 — —
Proceeds from sale of securities....................................................................... 239 17 222 —
Investments in securities................................................................................... (512) (15) (497) —
Other – net........................................................................................................ (80) (21) (59) —
Net cash provided by (used for) investing activities............................................ (959) (66) 885 (1,778)

Cash flow from financing activities:
5
Dividends paid.................................................................................................. (1,683) (1,683) (20) 20
Common stock issued, including treasury shares reissued............................... 110 110 — —
Common shares repurchased............................................................................ (1,130) (1,130) — —
4
Net intercompany borrowings.......................................................................... — (6) (599) 605
Proceeds from debt issued (original maturities greater than three months)..... 9,418 1,991 7,427 —
Payments on debt (original maturities greater than three months)................... (6,789) (18) (6,771) —
Short-term borrowings – net (original maturities three months or less)........... (2,138) (5) (2,133) —
Other – net........................................................................................................ (1) (1) — —
Net cash provided by (used for) financing activities........................................... (2,213) (742) (2,096) 625
Effect of exchange rate changes on cash............................................................. (56) (47) (9) —
Increase (decrease) in cash and short-term investments and restricted
cash...................................................................................................................... 1,027 1,210 (183) —
Cash and short-term investments and restricted cash at beginning of period...... 8,292 7,302 990 —
Cash and short-term investments and restricted cash at end of period................ $ 9,319 $ 8,512 $ 807 $ —

1
Elimination of equity profit earned from Financial Products' subsidiaries partially owned by ME&T subsidiaries.
2
Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.
3
Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory.
4
Elimination of net proceeds and payments to/from ME&T and Financial Products.
5
Elimination of dividend activity between Financial Products and ME&T.




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Caterpillar Inc.
Supplemental Data for Cash Flow
For the Nine Months Ended September 30, 2019
(Unaudited)
(Millions of dollars)
Supplemental Consolidating Data
Machinery,
Energy & Financial Consolidating
Consolidated Transportation Products Adjustments
Cash flow from operating activities:
1
Profit of consolidated and affiliated companies................................................ $ 4,997 $ 4,574 $ 439 $ (16)
Adjustments for non-cash items:
Depreciation and amortization.................................................................... 1,933 1,283 650 —
Provision (benefit) for deferred income taxes............................................. (13) 9 (22) —
2
Other............................................................................................................ 627 379 (111) 359
Changes in assets and liabilities, net of acquisitions and divestitures:
2, 3
Receivables – trade and other...................................................................... 427 125 (16) 318
2
Inventories................................................................................................... (676) (702) — 26
2
Accounts payable........................................................................................ (669) (651) 6 (24)
2
Accrued expenses........................................................................................ 114 105 11 (2)
Accrued wages, salaries and employee benefits......................................... (858) (865) 7 —
2
Customer advances...................................................................................... 169 171 — (2)
2
Other assets – net......................................................................................... 19 (66) 63 22
2
Other liabilities – net................................................................................... (1,592) (1,730) 150 (12)
Net cash provided by (used for) operating activities............................................ 4,478 2,632 1,177 669

Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others.......................... (723) (709) (14) —
2
Expenditures for equipment leased to others.................................................... (1,133) (21) (1,151) 39
2
Proceeds from disposals of leased assets and property, plant and equipment.. 812 149 766 (103)
3
Additions to finance receivables....................................................................... (9,453) — (10,633) 1,180
3
Collections of finance receivables.................................................................... 9,144 — 10,166 (1,022)
3
Net intercompany purchased receivables.......................................................... — — 763 (763)
Proceeds from sale of finance receivables........................................................ 183 — 183 —
4
Net intercompany borrowings........................................................................... — 721 1 (722)
Investments and acquisitions (net of cash acquired)......................................... (6) (6) — —
Proceeds from sale of businesses and investments (net of cash sold).............. 3 3 — —
Proceeds from sale of securities........................................................................ 281 16 265 —
Investments in securities................................................................................... (425) (16) (409) —
Other – net......................................................................................................... (37) 1 (38) —
Net cash provided by (used for) investing activities............................................ (1,354) 138 (101) (1,391)

Cash flow from financing activities:
Dividends paid.................................................................................................. (1,564) (1,564) — —
Common stock issued, including treasury shares reissued............................... 59 59 — —
Common shares repurchased............................................................................ (3,283) (3,283) — —
4
Net intercompany borrowings........................................................................... — (1) (721) 722
Proceeds from debt issued (original maturities greater than three months)...... 8,827 1,479 7,348 —
Payments on debt (original maturities greater than three months)................... (6,062) (8) (6,054) —
Short-term borrowings – net (original maturities three months or less)........... (1,006) — (1,006) —
Other – net......................................................................................................... (2) (2) — —
Net cash provided by (used for) financing activities............................................ (3,031) (3,320) (433) 722
Effect of exchange rate changes on cash.............................................................. (47) (38) (9) —
Increase (decrease) in cash and short-term investments and restricted
cash...................................................................................................................... 46 (588) 634 —
Cash and short-term investments and restricted cash at beginning of period...... 7,890 6,994 896 —
Cash and short-term investments and restricted cash at end of period................ $ 7,936 $ 6,406 $ 1,530 $ —

1
Elimination of equity profit earned from Financial Products' subsidiaries partially owned by ME&T subsidiaries.
2
Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.
3
Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory.
4
Elimination of net proceeds and payments to/from ME&T and Financial Products.




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Reconciliation of Consolidated profit before taxes:
Machinery,
(Millions of dollars) Consolidated Energy & Financial
Total Transportation Products
Three Months Ended September 30, 2020
Profit from reportable segments:
Construction Industries............................................................ $ 585 $ 585 $ —
Resource Industries.................................................................. 167 167 —
Energy & Transportation......................................................... 492 492 —
Financial Products Segment.................................................... 142 — 142
Total profit from reportable segments.......................................... 1,386 1,244 142
Profit from all other operating segment........................................ 27 27 —
Cost centers................................................................................... 9 9 —
Corporate costs............................................................................. (122) (122) —
Timing.......................................................................................... (39) (39) —
Restructuring costs....................................................................... (87) (87) —
Methodology differences:
Inventory/cost of sales............................................................. (7) (7) —
Postretirement benefit expense................................................ (32) (32) —
Stock-based compensation expense......................................... (55) (53) (2)
Financing costs........................................................................ (125) (125) —
Currency.................................................................................. (22) (22) —
Other income/expense methodology differences.................... (72) (72) —
Other methodology differences............................................... 2 6 (4)
Total consolidated profit before taxes.......................................... $ 863 $ 727 $ 136

Three Months Ended September 30, 2019
Profit from reportable segments:
Construction Industries............................................................ $ 940 $ 940 $ —
Resource Industries.................................................................. 311 311 —
Energy & Transportation......................................................... 1,021 1,021 —
Financial Products Segment.................................................... 218 — 218
Total profit from reportable segments.......................................... 2,490 2,272 218
Profit from all other operating segment........................................ (21) (21) —
Cost centers................................................................................... (9) (9) —
Corporate costs............................................................................. (167) (168) 1
Timing.......................................................................................... 6 6 —
Restructuring costs....................................................................... (20) (20) —
Methodology differences:
Inventory/cost of sales............................................................. 25 25 —
Postretirement benefit expense................................................ 19 19 —
Stock-based compensation expense......................................... (57) (55) (2)
Financing costs........................................................................ (58) (58) —
Currency.................................................................................. (62) (62) —
Other income/expense methodology differences.................... (124) (124) —
Other methodology differences............................................... (17) (47) 30
Total consolidated profit before taxes.......................................... $ 2,005 $ 1,758 $ 247




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Reconciliation of Consolidated profit before taxes:
Machinery,
(Millions of dollars) Consolidated Energy & Financial
Total Transportation Products
Nine Months Ended September 30, 2020
Profit from reportable segments:.................................................
Construction Industries........................................................... $ 1,743 $ 1,743 $ —
Resource Industries................................................................. 623 623 —
Energy & Transportation........................................................ 1,718 1,718 —
Financial Products Segment................................................... 395 — 395
Total profit from reportable segments......................................... 4,479 4,084 395
Profit from all other operating segment....................................... 31 31 —
Cost centers.................................................................................. 18 18 —
Corporate costs............................................................................ (409) (403) (6)
Timing......................................................................................... (90) (90) —
Restructuring costs...................................................................... (211) (210) (1)
Methodology differences:
Inventory/cost of sales............................................................ (25) (25) —
Postretirement benefit expense............................................... 253 253 —
Stock-based compensation expense........................................ (169) (163) (6)
Financing costs....................................................................... (324) (324) —
Currency................................................................................. (230) (230) —
Other income/expense methodology differences................... (244) (224) —
Other methodology differences.............................................. (25) (25) —
Total consolidated profit before taxes......................................... $ 3,054 $ 2,692 $ 382

Nine Months Ended September 30, 2019
Profit from reportable segments:.................................................
Construction Industries........................................................... $ 3,272 $ 3,272 $ —
Resource Industries................................................................. 1,368 1,368 —
Energy & Transportation........................................................ 2,745 2,745 —
Financial Products Segment................................................... 622 — 622
Total profit from reportable segments......................................... 8,007 7,385 622
Profit from all other operating segment....................................... 15 15 —
Cost centers.................................................................................. 32 32 —
Corporate costs............................................................................ (492) (487) (5)
Timing......................................................................................... (118) (118) —
Restructuring costs...................................................................... (162) (131) (31)
Methodology differences:
Inventory/cost of sales............................................................ 24 24 —
Postretirement benefit expense............................................... 4 4 —
Stock-based compensation expense........................................ (170) (164) (6)
Financing costs....................................................................... (173) (173) —
Currency................................................................................. (110) (110) —
Other income/expense methodology differences................... (374) (374) —
Other methodology differences.............................................. (36) (71) 35
Total consolidated profit before taxes......................................... $ 6,447 $ 5,832 $ 615




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Reconciliation of Assets:
Machinery,
(Millions of dollars) Consolidated Energy & Financial Consolidating
Total Transportation Products Adjustments
September 30, 2020
Assets from reportable segments:
Construction Industries........................................................ $ 4,507 $ 4,507 $ — $ —
Resource Industries.............................................................. 6,188 6,188 — —
Energy & Transportation...................................................... 8,752 8,752 — —
Financial Products Segment................................................. 34,014 — 34,014 —
Total assets from reportable segments...................................... 53,461 19,447 34,014 —
Assets from All Other operating segment................................. 1,610 1,610 — —
Items not included in segment assets:
Cash and short-term investments......................................... 8,512 8,512 — —
Intercompany receivables..................................................... — 108 — (108)
Deferred income taxes.......................................................... 1,339 1,979 — (640)
Goodwill and intangible assets............................................. 4,737 4,737 — —
Property, plant and equipment – net and other assets.......... 2,608 3,704 — (1,096)
Inventory methodology differences.......................................... (2,560) (2,560) — —
Liabilities included in segment assets....................................... 7,720 7,720 — —
Other.......................................................................................... (686) (453) 113 (346)
Total assets................................................................................ $ 76,741 $ 44,804 $ 34,127 $ (2,190)

December 31, 2019
Assets from reportable segments:
Construction Industries........................................................ $ 4,601 $ 4,601 $ — $ —
Resource Industries.............................................................. 6,505 6,505 — —
Energy & Transportation...................................................... 8,548 8,548 — —
Financial Products Segment................................................. 35,813 — 35,813 —
Total assets from reportable segments...................................... 55,467 19,654 35,813 —
Assets from All Other operating segment................................. 1,728 1,728 — —
Items not included in segment assets:
Cash and short-term investments......................................... 7,299 7,299 — —
Intercompany receivables..................................................... — 758 — (758)
Deferred income taxes.......................................................... 1,294 2,002 — (708)
Goodwill and intangible assets............................................. 4,435 4,435 — —
Property, plant and equipment – net and other assets.......... 2,529 3,614 — (1,085)
Inventory methodology differences.......................................... (2,426) (2,426) — —
Liabilities included in segment assets....................................... 8,541 8,541 — —
Other.......................................................................................... (414) (343) 134 (205)
Total assets................................................................................ $ 78,453 $ 45,262 $ 35,947 $ (2,756)




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Reconciliation of Depreciation and amortization:
Machinery,
(Millions of dollars) Consolidated Energy & Financial
Total Transportation Products
Three Months Ended September 30, 2020
Depreciation and amortization from reportable segments:
Construction Industries.......................................................................... $ 61 $ 61 $ —
Resource Industries................................................................................ 105 105 —
Energy & Transportation....................................................................... 147 147 —
Financial Products Segment................................................................... 174 — 174
Total depreciation and amortization from reportable segments.................. 487 313 174
Items not included in segment depreciation and amortization:
All Other operating segment................................................................... 71 71 —
Cost centers............................................................................................. 31 31 —
Other....................................................................................................... 4 (3) 7
Total depreciation and amortization............................................................ $ 593 $ 412 $ 181

Three Months Ended September 30, 2019
Depreciation and amortization from reportable segments:..........................
Construction Industries.......................................................................... $ 73 $ 73 $ —
Resource Industries................................................................................ 113 113 —
Energy & Transportation....................................................................... 157 157 —
Financial Products Segment................................................................... 209 — 209
Total depreciation and amortization from reportable segments.................. 552 343 209
Items not included in segment depreciation and amortization:
All Other operating segment................................................................... 53 53 —
Cost centers............................................................................................. 35 35 —
Other....................................................................................................... 5 (3) 8
Total depreciation and amortization............................................................ $ 645 $ 428 $ 217




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Reconciliation of Depreciation and amortization:
Machinery,
(Millions of dollars) Consolidated Energy & Financial
Total Transportation Products
Nine Months Ended September 30, 2020
Depreciation and amortization from reportable segments:
Construction Industries............................................................................ $ 183 $ 183 $ —
Resource Industries.................................................................................. 312 312 —
Energy & Transportation......................................................................... 442 442 —
Financial Products Segment..................................................................... 577 — 577
Total depreciation and amortization from reportable segments.................... 1,514 937 577
Items not included in segment depreciation and amortization: 0 0




All Other operating segment..................................................................... 196 196 —
Cost centers............................................................................................... 96 96 —
Other......................................................................................................... 9 (12) 21
Total depreciation and amortization.............................................................. $ 1,815 $ 1,217 $ 598

Nine Months Ended September 30, 2019 0 0




Depreciation and amortization from reportable segments:
Construction Industries............................................................................ $ 220 $ 220 $ —
Resource Industries.................................................................................. 337 337 —
Energy & Transportation......................................................................... 464 464 —
Financial Products Segment..................................................................... 622 — 622
Total depreciation and amortization from reportable segments.................... 1,643 1,021 622
Items not included in segment depreciation and amortization:
All Other operating segment..................................................................... 158 158 —
Cost centers............................................................................................... 100 100 —
Other......................................................................................................... 32 4 28
Total depreciation and amortization.............................................................. $ 1,933 $ 1,283 $ 650




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Reconciliation of Capital expenditures:
Machinery,
(Millions of dollars) Consolidated Energy & Financial Consolidating
Total Transportation Products Adjustments
Three Months Ended September 30, 2020
Capital expenditures from reportable segments:.........................
Construction Industries.......................................................... $ 37 $ 37 $ — $ —
Resource Industries................................................................ 10 10 — —
Energy & Transportation........................................................ 100 100 — —
Financial Products Segment................................................... 280 — 280 —
Total capital expenditures from reportable segments................. 427 147 280 —
Items not included in segment capital expenditures:
All Other operating segment.................................................. 46 46 — —
Cost centers............................................................................ 8 8 — —
Timing.................................................................................... 1 1 — —
Other....................................................................................... 11 19 7 (15)
Total capital expenditures........................................................... $ 493 $ 221 $ 287 $ (15)

Three Months Ended September 30, 2019
Capital expenditures from reportable segments:.........................
Construction Industries.......................................................... $ 48 $ 48 $ — $ —
Resource Industries................................................................ 31 31 — —
Energy & Transportation........................................................ 150 150 — —
Financial Products Segment................................................... 388 — 388 —
Total capital expenditures from reportable segments................. 617 229 388 —
Items not included in segment capital expenditures:
All Other operating segment.................................................. 34 34 — —
Cost centers............................................................................ 22 22 — —
Timing.................................................................................... (21) (21) — —
Other....................................................................................... (21) (26) 41 (36)
Total capital expenditures........................................................... $ 631 $ 238 $ 429 $ (36)




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Reconciliation of Capital expenditures:
Machinery,
(Millions of dollars) Consolidated Energy & Financial Consolidating
Total Transportation Products Adjustments
Nine Months Ended September 30, 2020
Capital expenditures from reportable segments:...........................
Construction Industries............................................................ $ 85 $ 85 $ — $ —
Resource Industries.................................................................. 63 63 — —
Energy & Transportation.......................................................... 331 331 — —
Financial Products Segment..................................................... 783 — 783 —
Total capital expenditures from reportable segments................... 1,262 479 783 —
Items not included in segment capital expenditures:
All Other operating segment.................................................... 84 84 — —
Cost centers.............................................................................. 23 23 — —
Timing...................................................................................... 147 147 — —
Other......................................................................................... (25) (48) 51 (28)
Total capital expenditures............................................................. $ 1,491 $ 685 $ 834 $ (28)

Nine Months Ended September 30, 2019
Capital expenditures from reportable segments:...........................
Construction Industries............................................................ $ 117 $ 117 $ — $ —
Resource Industries.................................................................. 91 91 — —
Energy & Transportation.......................................................... 366 366 — —
Financial Products Segment..................................................... 1,093 — 1,093 —
Total capital expenditures from reportable segments................... 1,667 574 1,093 —
Items not included in segment capital expenditures:
All Other operating segment.................................................... 69 69 — —
Cost centers.............................................................................. 71 71 — —
Timing...................................................................................... 108 108 — —
Other......................................................................................... (59) (92) 72 (39)
Total capital expenditures............................................................. $ 1,856 $ 730 $ 1,165 $ (39)




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,” “forecast,” “target,” “guide,” “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 speak only as of the date they are made, and we do not
undertake to update our forward-looking statements.




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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 and regional economic conditions and economic conditions in the
industries we serve; (ii) commodity price changes, material price increases, fluctuations in demand for our products or
significant shortages of material; (iii) government monetary or fiscal policies; (iv) political and economic risks, commercial
instability and events beyond our control in the countries in which we operate; (v) international trade policies and their impact
on demand for our products and our competitive position, including the imposition of new tariffs or changes in existing tariff
rates; (vi) our ability to develop, produce and market quality products that meet our customers’ needs; (vii) the impact of the
highly competitive environment in which we operate on our sales and pricing; (viii) information technology security threats and
computer crime; (ix) inventory management decisions and sourcing practices of our dealers and our OEM customers; (x) a
failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xi)
union disputes or other employee relations issues; (xii) adverse effects of unexpected events; (xiii) disruptions or volatility in
global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xiv) failure to
maintain our credit ratings and potential resulting increases to our cost of borrowing and adverse effects on our cost of funds,
liquidity, competitive position and access to capital markets; (xv) our Financial Products segment’s risks associated with the
financial services industry; (xvi) changes in interest rates or market liquidity conditions; (xvii) an increase in delinquencies,
repossessions or net losses of Cat Financial’s customers; (xviii) currency fluctuations; (xix) our or Cat Financial’s compliance
with financial and other restrictive covenants in debt agreements; (xx) increased pension plan funding obligations; (xxi) alleged
or actual violations of trade or anti-corruption laws and regulations; (xxii) additional tax expense or exposure, including the
impact of U.S. tax reform; (xxiii) significant legal proceedings, claims, lawsuits or government investigations; (xxiv) new
regulations or changes in financial services regulations; (xxv) compliance with environmental laws and regulations; (xxvi) the
duration and geographic spread of, business disruptions caused by, and the overall global economic impact of, the COVID-19
pandemic; and (xxvii) other factors described in more detail in Caterpillar’s Forms 10-Q, 10-K and other filings with the
Securities and Exchange Commission.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information required by this Item is incorporated by reference from Note 5 – “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 CEO and CFO
concluded that the company’s disclosure controls and procedures were 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 2020, 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.


PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information required by this Item is incorporated by reference from Note 14 – “Environmental and legal matters” included
in Part I, Item 1 of this Form 10-Q.




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Item 1A. Risk Factors

There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the
year ended December 31, 2019, other than as updated in Part II, "Item 1A. Risk Factors," in our Quarterly Reports on Form 10-
Q for the quarters ended March 31, 2020 and June 30, 2020.

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

Issuer Purchases of Equity Securities

No shares were repurchased during the third quarter of 2020.



Non-U.S. Employee Stock Purchase Plans

As of September 30, 2020, we had 27 employee stock purchase plans (the “EIP Plans”) that are administered outside the United
States for our non-U.S. employees, which had approximately 13,000 active participants in the aggregate. During the third
quarter of 2020, approximately 96,000 shares of Caterpillar common stock were purchased by the EIP Plans pursuant to the
terms of such plans.




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Item 6. Exhibits

10.1 Credit Agreement (2020 364-Day Facility), dated September 3, 2020, by and among Caterpillar Inc., Caterpillar
Financial Services Corporation, Caterpillar International Finance Designated Activity Company, and Caterpillar
Finance Kabushiki Kaisha, certain financial institutions named therein, Citibank, N.A., BofA Securities, Inc. and
JPMorgan Chase Bank N.A. (incorporated by reference from Exhibit 10.1 to the Company's Current Report on
Form 8-K filed on September 8, 2020)

10.2 Local Currency Addendum, dated as of September3, 2020, to the Credit Agreement (2020 364-Day Facility)
(incorporated by reference from Exhibit 10.2 to the Company's Current Report on Form 8-K filed September 8,
2020)

10.3 Japan Local Currency Addendum, dated as of September 3, 2020, to the Credit Agreement (2020 364-Day
Facility) (incorporated by reference from Exhibit 10.3 to the Company's Current Report on Form 8-K filed
September 8, 2020)
31.1 Certification of Chief Executive Officer of Caterpillar Inc., as required pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002

31.2 Certification of Chief Financial Officer of Caterpillar Inc., as required pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002

32 Certification of Chief Executive Officer of Caterpillar Inc. and Chief Financial Officer of Caterpillar Inc., as
required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its
XBRL tags are embedded within the Inline XBRL document)

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive File (embedded within the Inline XBRL document and included in Exhibit 101)

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other
disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on
them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents
were made solely within the specific context of the relevant agreement or document and may not describe the actual state of
affairs as of the date they were made or at any other time.




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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 4, 2020 /s/ D. James Umpleby III Chairman of the Board & Chief Executive Officer
D. James Umpleby III



November 4, 2020 /s/ Andrew R.J. Bonfield Chief Financial Officer
Andrew R.J. Bonfield



Chief Legal Officer, General Counsel & Corporate
November 4, 2020 /s/ Suzette M. Long Secretary
Suzette M. Long



November 4, 2020 /s/ G. Michael Marvel Chief Accounting Officer
G. Michael Marvel




96
EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, D. James Umpleby III, 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 4, 2020 /s/ D. James Umpleby III Chief Executive Officer
D. James Umpleby III
EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, Andrew R.J. Bonfield, 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 4, 2020 /s/ Andrew R.J. Bonfield Chief Financial Officer
Andrew R.J. Bonfield
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,
2020 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 4, 2020 /s/ D. James Umpleby III Chief Executive Officer
D. James Umpleby III




November 4, 2020 /s/ Andrew R.J. Bonfield Chief Financial Officer
Andrew R.J. Bonfield

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.