form10k_2009.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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FORM
10-K
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(Mark
One)
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[X]
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended December 31, 2009
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OR
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[ ]
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the
transition period from __________ to __________.
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Commission
File No. 1-768
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CATERPILLAR
INC.
(Exact name
of Registrant as specified in its charter)
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Delaware
(State or
other jurisdiction of incorporation)
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37-0602744
(IRS Employer
I.D. No.)
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100 NE Adams
Street, Peoria, Illinois
(Address of
principal executive offices)
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61629
(Zip
Code)
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Registrant’s
telephone number, including area code: (309)
675-1000
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Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name
of each exchange
on which
registered
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Common Stock
($1.00 par value)(1)
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Chicago Stock
Exchange
New York Stock
Exchange
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9 3/8%
Debentures due August 15, 2011
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New York Stock
Exchange
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9 3/8%
Debentures due March 15, 2021
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New York Stock
Exchange
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8% Debentures
due February 15, 2023
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New York Stock
Exchange
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5.3%
Debentures due September 15, 2035
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New York Stock
Exchange
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(1)In
addition to the exchanges in the United States, Caterpillar common stock
is also listed on stock exchanges in Belgium, France, Germany, Great
Britain and Switzerland.
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Securities
registered pursuant to Section 12(g) of the
Act: None
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Indicate by check
mark whether the Registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes [ ü ] No
[ ]
Indicate by check
mark if the Registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes
[ ] No [ ü ]
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 [ü] No
[ ]
Indicate by a check
mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes [ ü ] No
[ ]
Indicate by check
mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
is not contained herein, and will not be contained, to the best of Registrant’s
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[ ]
Indicate by check
mark whether the Registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer or a smaller reporting company. See definitions of
“large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated
filer [ ü ] Accelerated
filer [ ] Non-accelerated filer [
] Smaller Reporting Company [
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Indicate by check
mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes
[ ] No [ ü ]
As of June 30,
2009, there were 621,293,542 shares of common stock of the Registrant
outstanding, and the aggregate market value of the voting stock held by
non-affiliates of the Registrant (assuming only for purposes of this computation
that directors and executive officers may be affiliates) was approximately $20.3
billion.
As of December 31,
2009, there were 624,722,719 shares of common stock of the Registrant
outstanding, and the aggregate market value of the voting stock held by
non-affiliates of the Registrant (assuming only for purposes of the computation
that directors and executive officers may be affiliates) was approximately $35.2
billion.
Documents
Incorporated by Reference
Portions of the
documents listed below have been incorporated by reference into the indicated
parts of this Form 10-K, as specified in the responses to the item numbers
involved.
Part
III
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2010 Annual
Meeting Proxy Statement (Proxy Statement) to be filed with the Securities
and Exchange Commission (SEC) within 120 days after the end of the
calendar year.
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Parts I, II,
IV
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General and
Financial Information for 2009 containing the information required by SEC
Rule 14a-3 for an annual report to security holders filed as Exhibit 13 to
this Form 10-K (Exhibit 13).
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TABLE
OF CONTENTS
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Business
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Risk
Factors
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Unresolved
Staff Comments as of December 31, 2009
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Executive
Officers of the Registrant as of December 31, 2009
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Properties
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Legal
Proceedings
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Submission of
Matters to a Vote of Security Holders
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Market for
Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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Selected
Financial Data
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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Quantitative
and Qualitative Disclosures About Market Risk
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Financial
Statements and Supplementary Data
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Changes in
and Disagreements With Accountants on Accounting and Financial
Disclosure
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Controls and
Procedures
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Other
Information
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Directors,
Executive Officers and Corporate Governance
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Executive
Compensation
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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Certain
Relationships and Related Transactions, and Director
Independence
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Principal
Accountant Fees and Services
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Exhibits and
Financial Statement Schedules
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General
The company was
originally organized as Caterpillar Tractor Co. in 1925 in the State of
California. In 1986, the company reorganized as Caterpillar Inc. in
the State of Delaware. As used herein, the term “Caterpillar,” “we,”
“us,” “our,” or “the company” refers to Caterpillar Inc. and its subsidiaries
unless designated or identified otherwise.
Principal Lines of Business
/ Nature of Operations
We operate in three
principal lines of business:
1.
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Machinery— A principal line of business which includes the
design, manufacture, marketing and sales of construction, mining and
forestry machinery—track and wheel tractors, track and wheel loaders,
pipelayers, motor graders, wheel tractor-scrapers, track and wheel
excavators, backhoe loaders, log skidders, log loaders, off-highway
trucks, articulated trucks, paving products, skid steer loaders,
underground mining equipment, tunnel boring equipment and related parts.
Also includes logistics services for other companies and the design,
manufacture, remanufacture, maintenance and services of rail-related
products.
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2.
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Engines— A principal line of business including the design,
manufacture, marketing and sales of engines for Caterpillar machinery,
electric power generation systems, locomotives, marine, petroleum,
construction, industrial, agricultural and other applications and related
parts. Also includes remanufacturing of Caterpillar engines and
a variety of Caterpillar machine and engine components and remanufacturing
services for other companies. Reciprocating engines meet power
needs ranging from 10 to 21,800 horsepower (8 to over 16 000
kilowatts). Turbines range from 1,600 to 30,000 horsepower (1
200 to 22 000 kilowatts).
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3.
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Financial Products— A
principal line of business consisting primarily of Caterpillar Financial
Services Corporation (Cat Financial), Caterpillar Insurance Holdings, Inc.
(Cat Insurance) and their respective subsidiaries. Cat
Financial provides a wide range of financing alternatives to customers and
dealers for Caterpillar machinery and engines, Solar gas turbines as well
as other equipment and marine vessels. Cat Financial also
extends loans to customers and dealers. Cat Insurance provides
various forms of insurance to customers and dealers to help support the
purchase and lease of our equipment.
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Due to financial
information required by accounting guidance on segment reporting, we have also divided our
business into 11 reportable segments for financial reporting
purposes. Information about our reportable segments, including
geographic information, appears in Note 24 – “Segment information” of Exhibit
13.
Other information
about our operations in 2009 and our outlook for 2010, including certain risks
associated with foreign operations, is incorporated by reference
from “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” of Exhibit 13.
Company Strengths
Caterpillar is the
leader in construction and mining equipment, and diesel and natural gas engines
and industrial gas turbines in our size range. The company is also a leading
services provider through Cat Financial, Caterpillar Logistics Services Inc.
(Cat Logistics), Caterpillar Remanufacturing Services and Progress Rail Services
Corporation (Progress Rail). Annual sales and revenues were $32.396
billion in 2009, making Caterpillar the largest manufacturer in its
industry. Caterpillar is also a leading U.S.
exporter. Through direct sales of certain products and a global
network of independent dealers, Caterpillar builds long-term relationships with
customers around the world. For almost 85 years, the Caterpillar name
has been associated with the highest level of quality products and
services. More information is available at www.CAT.com.
Competitive
Environment
Caterpillar
products and product support services are sold worldwide into a variety of
highly competitive markets. In all markets, we compete on the basis
of product performance, customer service, quality and price. From
time to time, the intensity of competition results in price discounting in a
particular industry or region. Such price discounting puts pressure
on margins and can negatively impact operating profit.
Outside of the
United States, certain competitors enjoy competitive advantages inherent to
operating in their home countries or regions.
The competitive
environment for Caterpillar’s machinery business consists of some global
competitors and many regional and specialized local
competitors. Examples of global competitors include, but are not
limited to, Komatsu Ltd., Volvo Construction Equipment (part of the Volvo Group
AB), CNH Global N.V., Deere & Co., Hitachi Construction Machinery Co., Terex
Corporation, J.C. Bamford Ltd. (JCB) and Doosan Infracore Co.,
Ltd. Each of these companies have varying numbers of product lines
that compete with Caterpillar products and each have varying degrees of regional
focus. John Deere Construction and Forestry Division (part of Deere
& Co.), for example, has numerous product lines that compete with
Caterpillar primarily in North America and Latin America. Others,
like JCB, offer a limited range of products that compete globally against
Caterpillar.
The world economy
experienced its worst postwar recession in 2009, causing construction spending
to decline in many countries and mining companies to reduce
production. End users significantly reduced purchases of equipment
and dealers reduced their reported inventories by over $3.3
billion. As a result, machinery sales volume declined at an
unprecedented rate. Governments responded with large infrastructure
programs and central banks reduced interest rates to record lows. As
a result, the world economy began recovering in the third quarter of 2009 and
the year-on-year decline in sales volume in the fourth quarter was less than in
the prior two quarters.
Caterpillar’s
logistics business provides integrated supply chain services for Caterpillar and
50 other companies worldwide. It competes with global, regional and
local competitors, including companies such as DHL International, CEVA and
United Parcel Service, Inc. The unit has grown signifcantly
since its inception in 1987.
Since its
acquisition by Caterpillar in June 2006, wholly owned subsidiary Progress Rail
has continued its position in North America as a leading provider of a broad
range of products. Based in Albertville, Alabama, Progress Rail is a
leading provider of remanufactured locomotive, railcar and track products and
services to the North American railroad industry. The company also
has one of the most extensive rail service and supply networks in North
America. Expansion into the railroad aftermarket business is a good
fit with our strategic direction and leverages Caterpillar’s global
remanufacturing capabilities.
Caterpillar
operates in a very competitive engine/turbine manufacturing and packaging
environment. The company designs, manufactures, markets and sells diesel, heavy
fuel and natural gas reciprocating engines for Caterpillar machinery, electric
power generation systems, locomotives, marine, petroleum, construction,
industrial, agricultural and other applications. In addition,
Caterpillar provides industrial turbines and turbine related services for oil
and gas and power generation applications.
The competitive environment for reciprocating engines in
marine, petroleum, construction, industrial, agriculture and electric power
generation systems along with turbines consists of a few global competitors who
compete in a variety of markets that Caterpillar serves, and a larger set of
companies who compete in a limited size range and/or application. Principal
global competitors include, but are not limited to, Cummins Inc., MTU
Friedrichshafen and MTU Detroit Diesel (both are Tognum Group companies), GE
Energy Infrastructure, Siemens Energy and Wartsila Corp. Other competitors, such
as John Deere Power Systems, MAN Diesel SE, MAN Turbo, Mitsubishi Heavy
Industries Ltd., Volvo Penta (part of Volvo Group AB), Kawasaki Heavy Industries
and Rolls Royce Group plc compete in certain markets in which Caterpillar
competes. An additional set of competitors, including Generac Power Systems,
Inc., Kohler Co., and others, are packagers who source engines and/or
other components from domestic and international suppliers and market products
regionally and internationally through a variety of distribution
channels.
As previously
announced, Caterpillar no longer provides new engines to truck and other
on-highway original equipment manufacturers (OEMs). Caterpillar will
continue to service our previous on-highway engine customers through Caterpillar
and truck OEM dealer channels.
Since the
introduction of Caterpillar’s ACERT® Technology in 2003, Caterpillar has
continued to focus investment and resources on leveraging this technology. The
building blocks for ACERT Technology are flexible and scalable and are being
applied as needed based on engine platform and application. Caterpillar will add
several new technologies to our portfolio of ACERT Technologies to meet upcoming
Tier 4 Interim/Stage IIIB non-road emissions regulations. We believe ACERT
provides Caterpillar with a valuable foundation to meet emissions and
performance requirements.
Caterpillar’s
remanufacturing business provides services for a variety of products and
services to Caterpillar and other external clients. The
remanufacturing business competes on a regional basis with similarly sized or
smaller companies. The company launched the remanufacturing
business in the 1970s with engines/turbines and is
now one of the world’s largest remanufacturers, processing more than two million
units annually and recycling more than 140 million pounds of remanufactured
products each year. The business continues to grow at rates
well above that of the global economy as a whole.
Our financial
products business is primarily conducted by Cat Financial. Cat Financial,
incorporated in Delaware, is a wholly owned finance subsidiary of
Caterpillar. Cat Financial’s primary business is to provide retail
and wholesale financing alternatives for Caterpillar products to customers
around the world. Retail financing is primarily comprised of
financing of Caterpillar equipment, machinery and engines. In addition, Cat
Financial also provides financing for vehicles, power generation facilities and
marine vessels that, in most cases, incorporate Caterpillar products. In addition to retail financing, Cat Financial
provides wholesale financing to Caterpillar dealers and purchases short-term
dealer receivables from Caterpillar and its subsidiaries. The various financing plans offered by Cat Financial are
designed to increase the opportunity for sales of Caterpillar products and
generate financing income for Cat Financial. A significant portion of
Cat Financial’s activities is conducted in North America. However,
Cat Financial has additional offices and subsidiaries in Asia, Australia, Europe
and Latin America.
For over 25 years,
Cat Financial has been providing financing in the various markets in which it
participates, contributing to its knowledge of asset values, industry trends,
product structuring and customer needs.
In certain
instances, Cat Financial’s operations are subject to supervision and regulation
by state, federal and various foreign governmental authorities, and may be
subject to various laws and judicial and administrative decisions imposing
requirements and restrictions which, among other things, (i) regulate credit
granting activities and the administration of loans, (ii) establish maximum
interest rates, finance charges and other charges, (iii) require disclosures to
customers and investors, (iv) govern secured transactions, (v) set collection,
foreclosure, repossession and other trade practices and (vi) regulate the use
and reporting of information related to a borrower’s credit
experience. Cat Financial’s ability to comply with these governmental
and legal requirements and restrictions affects its operations.
Cat Financial’s
retail leases and installment sale contracts (totaling 60 percent*)
include:
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Tax leases
that are classified as either operating or finance leases for financial
accounting purposes, depending on the characteristics of the
lease. For tax purposes, Cat Financial is considered the owner
of the equipment (18 percent*).
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Finance
(non-tax) leases, where the lessee for tax purposes is considered to be
the owner of the equipment during the term of the lease, that either
require or allow the customer to purchase the equipment for a fixed price
at the end of the term (22
percent*).
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Installment
sale contracts, which are equipment loans that enable customers to
purchase equipment with a down payment or trade-in and structure payments
over time (19 percent*).
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Governmental
lease-purchase plans in the U.S. that offer low interest rates and
flexible terms to qualified non-federal government agencies (1
percent*).
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Cat Financial’s
wholesale notes receivable, finance leases and installment sale contracts
(totaling 8 percent*) include:
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Inventory/rental
programs, which provide assistance to dealers by financing their new
Caterpillar inventory and rental fleets (4
percent*).
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Short-term
dealer receivables we purchase from Caterpillar at a discount (4
percent*).
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Cat Financial’s
retail notes receivables (32 percent*) include:
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Loans that
allow customers and dealers to use their Caterpillar equipment as
collateral to obtain financing.
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The retail
financing business is highly competitive, with financing for users of
Caterpillar equipment available through a variety of sources, principally
commercial banks and finance and leasing companies. Cat Financial’s competitors
include Wells Fargo Equipment Finance Inc., General Electric Capital Corporation
and various local banks and finance companies. In addition, many of
our manufacturing competitors own financial subsidiaries such as Volvo Financial
Services, Komatsu Financial L.P. and John Deere Credit Corporation that utilize
below-market interest rate programs (subsidized by the manufacturer) to assist
machine sales. Caterpillar and Cat Financial work together to provide
a broad array of financial merchandising programs around the world to meet these
competitive offers.
Cat Financial’s
financial results are largely dependent upon the ability of Caterpillar dealers
to sell equipment and customers’ willingness to enter into financing or leasing
agreements. It is also affected by, among other things, the
availability of funds from its financing sources, general economic conditions
such as inflation and market interest rates and its cost of funds relative to
its competitors.
Cat Financial has a
“match funding” policy that addresses interest rate risk by aligning the
interest rate profile (fixed rate or floating rate) of its debt portfolio with
the interest rate profile of its receivables portfolio (loans and leases with
customers and dealers) within predetermined ranges on an ongoing
basis. In connection with that policy, Cat Financial issues debt with
a similar interest rate profile to its receivables, and also uses interest rate
swap agreements to manage its interest rate risk exposure to interest rate
changes and in some cases to lower its cost of borrowed funds. For
more information regarding match funding, please see Note 3 “Derivative
financial instruments and risk management” of Exhibit 13. See also
the risk factor titled “Risks to Financial Products Line of Business”
for general risk associated with our financial products business included in
Item 1A. of this Form 10-K.
In managing foreign
currency risk for Cat Financial’s operations, the objective is to minimize
earnings volatility resulting from conversion and the remeasurement of net
foreign currency balance sheet positions. This policy allows the use
of foreign currency forward and option contracts to address the risk of currency
mismatch between the receivable and debt portfolios. None of these
foreign currency forward and option contracts are designated as a
hedge.
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*Indicates the
percentage of Cat Financial’s total portfolio at December 31,
2009. We define total portfolio as total finance receivables (net of
unearned income and allowance for credit losses) plus equipment on operating
leases, less accumulated depreciation. For more information on the above and Cat
Financial’s concentration of credit risk, please refer to Note 8 – “Finance
receivables” of Exhibit 13.
Cat Financial
provides financing only when certain criteria are met. Credit decisions are
based on, among other factors, the customer’s credit history, financial strength
and equipment application. Cat Financial typically maintains a
security interest in retail-financed equipment and requires physical damage
insurance coverage on financed equipment. Cat Financial finances a
significant portion of Caterpillar dealers’ sales and inventory of Caterpillar
equipment throughout the world. Cat Financial’s competitive position
is improved by marketing programs offered in conjunction with Caterpillar and/or
Caterpillar dealers. Under these programs, Caterpillar, or the
dealer, subsidizes an amount at the outset of the transaction, which Cat
Financial then recognizes as revenue over the term of the
financing. These marketing programs provide Cat Financial with a
significant competitive advantage in financing Caterpillar products. Transaction
processing time and supporting technologies continue to drive Cat Financial in
its efforts to respond quickly to customers and improve internal processing
efficiencies. We believe Cat Financial’s web-based Cat FinancExpressSM
transaction processing and information tool currently available in the United
States, France, Canada and Australia provides Cat Financial a competitive
advantage in those areas. Cat FinancExpressSM is a
web-based tool that provides finance quotes, credit decisions and the ability to
print the appropriate financial documents for end-user signature, all within a
reasonably short time frame.
Caterpillar
Insurance Company, a wholly owned subsidiary of Cat Insurance, is a U.S.
insurance company domiciled in Missouri and primarily regulated by the Missouri
Department of Insurance. Caterpillar Insurance Company is licensed to
conduct property and casualty insurance business in 49 states and the District
of Columbia and, as such, is regulated in those jurisdictions as
well. The State of Missouri acts as the lead regulatory authority and
monitors Caterpillar Insurance Company’s financial status to ensure that it is
in compliance with minimum solvency requirements, as well as other financial
ratios prescribed by the National Association of Insurance
Commissioners. Caterpillar Insurance Company is also licensed to
conduct insurance business through a branch in Zurich, Switzerland and, as such,
is regulated by the Swiss Financial Market Supervisory Authority.
Caterpillar Life
Insurance Company, a wholly owned subsidiary of Caterpillar, is a U.S. insurance
company domiciled in Missouri and primarily regulated by the Missouri Department
of Insurance. Caterpillar Life Insurance Company is licensed to
conduct life and accident and health insurance business in 26 states and the
District of Columbia and, as such, is regulated in those jurisdictions as well.
The State of Missouri acts as the lead regulatory authority and it monitors the
financial status to ensure that it is in compliance with minimum solvency
requirements, as well as other financial ratios prescribed by the National
Association of Insurance Commissioners. Caterpillar Life Insurance
Company also provides stop loss insurance protection to a Missouri Voluntary
Employees’ Beneficiary Association (VEBA) trust used to fund medical claims of
salaried retirees of Caterpillar under the VEBA.
Caterpillar
Insurance Co. Ltd., a wholly owned subsidiary of Cat Insurance, is a captive
insurance company domiciled in Bermuda and regulated by the Bermuda Monetary
Authority. Caterpillar Insurance Co.
Ltd. is a Class 2 insurer (as defined by the Bermuda Insurance Amendment Act of
1995), which primarily insures affiliates and, as such, the Bermuda Monetary
Authority requires an Annual Financial Filing for purposes of monitoring
compliance with solvency requirements.
Caterpillar Product
Services Corporation, a wholly owned subsidiary of Caterpillar, is a warranty
company domiciled in Missouri. It conducts a machine extended service contract
program in Germany by providing machine extended warranty reimbursement
protection to dealers in Germany.
Caterpillar
Insurance Services Corporation, a wholly owned subsidiary of Cat Insurance, is a
Tennessee insurance brokerage company licensed in all 50 states and the District
of Columbia. It provides brokerage services for all property and
casualty and life and health lines of business.
Caterpillar’s
insurance group provides protection for claims under the following
programs:
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Contractual
Liability Insurance to Caterpillar, Caterpillar S.A.R.L and affiliates,
Caterpillar dealers and OEMs for extended service contracts (parts and
labor) offered by third party dealers and
OEMs.
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Cargo
insurance for the worldwide cargo risks of Caterpillar
products.
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Contractors’
Equipment Physical Damage Insurance for equipment manufactured by
Caterpillar or OEMs, which is leased, rented or sold by third party
dealers to customers.
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General
liability, employer’s liability, auto liability and property insurance for
Caterpillar.
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Retiree
Medical Stop Loss Insurance for medical claims under the
VEBA.
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Brokerage
services for property and casualty and life and health
business.
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Business Developments in
2009
Economic
and Market Conditions
Our business,
results of operations and financial condition were materially affected by the
conditions in the global economy during 2009. The continuing global economic
crisis and the volatility in the credit and capital markets had a significant
impact on our 2009 sales and revenues and profitability. Overall, the company’s
sales and revenues decreased 37 percent from 2008, and profit in 2009 was down
75 percent from 2008.
In response to the
on-going recession in 2009, we continued executing our “trough” plans, which we
had commenced implementing in 2008, and taking other actions to deal with the
effects of the recession and to reduce costs. These actions resulted in
full-year redundancy costs of $0.75 per share. In addition, we
focused on maintaining solid profitability and cash flow and improving our
balance sheet. These efforts contributed to our ability to maintain our credit
ratings, maintain our dividend rate, make pension contributions and continue
selective investment in new products and capacity.
During the second
half of 2009, market conditions in developing economies showed signs of
improvement; the more developed economies also showed signs of improvement but
at a slower pace. Many countries responded to the recession by
adopting various forms of economic stimulus packages, including allocations for
infrastructure spending, a positive factor for sales of our Machinery and
Engines. However, the economic recovery remained uneven at the end of
2009 and beginning of 2010.
Financial
Results and Stockholder Value
Full year 2009
results marked a significant decline in sales and revenues and profit for
Caterpillar. The company realized 2009 sales and revenues of $32.396 billion and
profit of $895 million. Our profit per share in 2009 was $1.43
including redundancy costs of $0.75 per share. In spite of the severe
economic conditions, we improved our balance sheet and maintained our dividend
rate. The company has not resumed its stock repurchase program since temporarily
suspending it on January 26, 2009.
Sustainability
In 2009, the
company continued its efforts in sustainable development and its commitment to
make sustainable development a “strategic area of improvement” in our enterprise
strategy. The company was selected as a member of the Dow Jones
Sustainability World Index (DJSI World) for the ninth consecutive year and has
retained its Sustainable Asset Management (SAM) Gold Class position in the
Industrial Engineering sector. DJSI World uses a best-in-class
approach designed to identify best practices across the economic, social and
environmental dimensions of corporate sustainability.
Caterpillar
Production System (CPS)
We have continued
our focus on deploying CPS with 6 Sigma. Through the implementation
of CPS, we have made continued progress on our safety and quality goals, reduced
inventory and improved cost performance. CPS continues to be a
fundamental component to help us achieve our near-term goals and our Vision
2020.
Growth
Initiatives
In 2009, the company made selective
investments in growth and expansion opportunities as we focused on positioning
ourselves for economic recovery. In spite of the challenging economic
conditions, we made progress toward our goals of expanding our business in the People’s Republic
of China (PRC) and other emerging markets and moving towards
achieving market leadership positions. In support of our overall
enterprise strategy and Vision 2020, Caterpillar took the following actions
during 2009:
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In September 2009, Caterpillar
and Navistar International Corporation (Navistar) finalized a joint
venture transaction resulting in a new company, NC2
Global LLC
(NC2). Plans to form the 50/50 joint
venture were first announced in June 2008. NC2
will develop,
manufacture, market, distribute and provide product support for on-highway
medium- and heavy-duty commercial trucks outside of North America, the
Indian subcontinent, Myanmar (Burma) and Malaysia. Initially,
NC2
will focus its
activities in Australia, Brazil, PRC, Russia, South Africa and Turkey.
NC2’s product line will feature both
conventional and cab-over truck designs and will be sold under both the
Caterpillar and International (Navistar)
brands.
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In September
2009, NC2
and Anhui Jianghuai Automobile Co. Ltd. (Jianghuai) signed a framework
agreement to potentially establish a joint venture in the PRC that would
develop, manufacture and sell trucks and truck parts primarily in the PRC
and certain export markets. Jianghuai is a manufacturer of
automobiles and trucks and related parts based in Anhui
Province, PRC. The framework agreement contemplates finalizing
a joint venture by mid-2010.
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In November
2009, Caterpillar entered into an agreement to acquire JCS Co. Ltd. (JCS),
a subsidiary of Jinsung T.E.C. Co., Ltd., a South Korea-based manufacturer
that specializes in producing undercarriage components for earthmoving and
other off-road machinery. The acquisition of JCS will provide Caterpillar
proprietary technology to produce engineered seals for undercarriages. The
JCS manufacturing facility is the first factory for Caterpillar in South
Korea. The acquisition, subject to regulatory approval, is expected to be
finalized in early 2010.
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In December
2009, Caterpillar opened the Wuxi multi-functional research and
development center in Wuxi, located in Jiangsu Province,
PRC. The facility was announced in August 2008 to increase
technical support for products serving markets in the PRC and the rest of
the Asia Pacific Region. The Wuxi facility also performs engine and
component product and process development, validation, localization and
technological training. Among its many functions, the new facility will
have an engine test facility with performance and emissions development
capability, an advanced materials laboratory, an electronics laboratory, a
system and machine integration facility and validation
capability. The Wuxi facility is strategically located near
Caterpillar’s component manufacturing facility and its engine campus. It
is also near the medium wheel loader and motor grader manufacturing
facility in Suzhou, PRC.
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In December
2009, Caterpillar signed a joint venture agreement with China Yuchai
Machinery Co. Ltd. through its main operating subsidiary, Guangxi Yuchai
Machinery Co. Ltd. (Yuchai) to establish a company to provide
remanufacturing services for Yuchai diesel engines and components and
certain Caterpillar diesel engines and components. The new
company will provide remanufactured engines and components to customers
worldwide. Yuchai is a key diesel engine manufacturer and the
largest producer of internal combustion engines in the PRC. Its engine
product line family includes mini, light, medium and heavy-duty engines
for the truck, commercial bus, generator and passenger car markets. This
joint venture, once approved by the applicable regulatory authority, will
be the first remanufacturing joint venture for Caterpillar in the
PRC.
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Other
2009 Developments
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In December
2009, Caterpillar, through its wholly owned subsidiary Cat Logistics,
announced plans to open a new parts distribution center in Clayton, Ohio.
The new facility will extend more than 1,000,000 square feet and is part
of the multi-year expansion and enhancement of the North American Cat
Parts distribution network. The new facility will provide inbound
receiving capability close to suppliers and align outbound shipments to
improve delivery to dealers and customers. It is expected to be fully
operational in 2011 and is expected to employ 500 to 600
people.
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In June 2008,
Caterpillar announced a multi-year $1 billion capacity expansion for key
facilities in Illinois and other areas. This included planned
investments of more than $1 billion from 2008 through 2010 in five of our
existing facilities in Illinois (East Peoria, Joliet, Decatur, Aurora and
Mossville). Through 2009, we have invested about two-thirds of
this planned $1 billion in those five facilities. In addition,
during this period we have also made significant capital investments at
other Illinois facilities.
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Business
Combinations
Information related
to acquisitions and alliances appears in Note 25 – “Business combinations and
alliances” of Exhibit
13.
Raw Materials and Component
Products
We source our raw
materials and manufactured components from leading suppliers both domestically
and internationally. These purchases include unformed materials, rough and
finished parts. Unformed materials include a variety of steel
products which are then cut or formed to shape and machined in our facilities.
Rough parts include various sized steel and iron castings and forgings which are
machined to final specification levels inside our facilities. Finished parts are
ready to assemble components which are made to either Caterpillar specifications
or to the supplier developed specifications. We machine and assemble
some of the components used in our machines, engines and power generation units
and to support our after-market dealer parts sales. We also purchase various
goods and services used in production, logistics, offices and product
development processes. We maintain global strategic sourcing models
to meet our global facilities’ production needs while building long-term
supplier relationships and leveraging enterprise spend. We expect our
suppliers to maintain, at all times, industry-leading levels of quality and the
ability to timely deliver raw materials and component products for our machine
and engine products. We use a variety of agreements with suppliers to
protect our intellectual property and processes to monitor and mitigate risks of
the supply base causing a business disruption. The risks monitored
include supplier financial viability, the ability to increase or decrease
production levels, business continuity, quality and delivery.
Order
Backlog
Much of our backlog
is in large engines, gas turbines and mining products. The dollar amount of
backlog believed to be firm was approximately $9.6 billion at December 31, 2009,
$14.7 billion at December 31, 2008 and $17.8 billion at December 31,
2007. Of the total backlog, approximately $2.5 billion at December
31, 2009, $2.2 billion at December 31, 2008 and $2.5 billion at December 31,
2007, was not expected to be filled in the following year. The
decrease during 2009 reflects the impact of weak global economic conditions and
our decision, beginning in late 2008 and continuing through 2009, to allow
dealers to cancel orders. Our backlog is generally highest in the first and
second quarters because of seasonal buying trends in our industry.
Dealers
Our machines are distributed
principally through a worldwide organization of dealers (dealer network),
51 located in the
United States and 127 located outside the United States, serving 182 countries
and operating 3,518 places of business, including
dealer rental outlets. Reciprocating engines are sold principally through
the dealer network and to other manufacturers for use in their products. Some of
the reciprocating engines manufactured by Perkins Engines Company Limited
(Perkins) are also sold through its worldwide network of 129 distributors
located in 165 countries. Most of the electric power generation systems
manufactured by F.G. Wilson Engineering Limited (FG Wilson) are sold through its
worldwide network of 157 dealers located in 180 countries. Some of the
large, medium speed reciprocating engines are also sold under the MaK brand
through a worldwide network of 19 dealers located in 130 countries.
Our dealers do not
deal exclusively with our products; however, in most cases sales and servicing
of our products are the dealers’ principal
business. Turbines are sold through sales forces employed by the
company. At times, these employees are assisted by independent sales
representatives.
The company’s
relationship with each of its independent dealers is memorialized in a standard
sales and service agreement. Pursuant to this agreement, the company
grants the dealer the right to purchase and sell its products and to service the
products in a specified geographic service territory. Prices to
dealers are established by the company after receiving input from dealers on
transactional pricing in the marketplace. The company also agrees to
defend its intellectual property and to provide warranty and technical support
to the dealer. The agreement further grants the dealer a
non-exclusive license to use the company’s trademarks, service marks and brand
names. In some instances a separate trademark agreement exists
between the company and a dealer.
In exchange for
these rights, the agreement obligates the dealer to develop and promote the sale
of the company’s products to current and prospective customers in the dealer’s
service territory. Each dealer specifically agrees to employ adequate
sales and support personnel to market, sell and promote the company’s products,
demonstrate and exhibit the products, perform the company’s product improvement
programs, inform the company concerning any features that might affect the safe
operation of any of the company’s products and maintain detailed books and
records of the dealer’s financial condition, sales and inventories and make
these books and records available at the company’s reasonable
request.
These sales and
service agreements are terminable at will by either party upon 90 days written
notice and provide for termination automatically if the dealer files for
bankruptcy protection or upon the occurrence of comparable action seeking
protection from creditors.
Patents
and Trademarks
Our products are
sold primarily under the brands “Caterpillar,” “CAT,” design versions of “CAT”
and “Caterpillar,” “Solar Turbines,” “MaK,” “Perkins,” “FG Wilson,” “Olympian”
and “Progress Rail.” We own a number of patents and trademarks, which
have been obtained over a period of years and relate to the products we
manufacture and the services we provide. These patents and trademarks
have been of value in the growth of our business and may continue to be of value
in the future. We do not regard any of our business as being
dependent upon any single patent or group of patents.
Research and
Development
We have always
placed strong emphasis on product-oriented research and development relating to
the development of new or improved machines, engines and major
components. In 2009, 2008 and 2007, we spent $1,421 million, $1,728 million and $1,404 million, or
4.4 percent, 3.4 percent and 3.1 percent of our sales and revenues,
respectively, on our research and development programs. R&D expense is
expected to increase about 20 percent in 2010, primarily to support product
development programs related to the U.S. Environmental Protection Agency (EPA)
Tier 4 emissions requirements.
Employment
As of December 31,
2009, we employed 93,813 persons of whom 50,562 were located outside the United
States. From a global enterprise perspective, we believe our
relationship with our employees is very good. We build and maintain a
productive, motivated workforce by striving to treat all employees fairly and
equitably.
In the United
States, most of our 43,251 employees are at-will employees and, therefore, not
subject to any type of employment contract or agreement. At select
business units, certain highly specialized employees have been hired under
employment contracts that specify a term of employment and specify pay and other
benefits.
As of December 31,
2009, there were 9,728 U.S. hourly production employees who were covered by
collective bargaining agreements with various labor unions. The
United Automobile, Aerospace and Agricultural Implement Workers of America
represents 7,570 Caterpillar employees under a six-year central labor agreement
that will expire March 1, 2011. The International Association of
Machinists represents 1,627 employees under labor agreements that expire on May
23, 2010 and April 30, 2012.
Outside the United
States, the company enters into employment contracts and agreements in those
countries in which such relationships are mandatory or customary. The
provisions of these agreements correspond in each case with the required or
customary terms in the subject jurisdiction.
Sales
Sales outside the United States were 69 percent of
consolidated sales for 2009, 67 percent for 2008 and 63 percent for
2007.
Environmental
Matters
The company is
regulated by federal, state and international environmental laws governing our
use, transport and disposal of substances and control of emissions. In addition
to governing our manufacturing and other operations, these laws often impact the
development of our products, including, but not limited to, required compliance
with air emissions standards applicable to internal combustion engines.
Compliance with these existing laws has not had a material impact on our capital
expenditures, earnings or global competitive position.
We are engaged in remedial activities at a number of
locations, often with other companies, pursuant to federal and state
laws. When it is reasonably probable we will pay remedial costs at a
site, and those costs can be reasonably estimated, the costs are charged against
our earnings. In formulating that estimate, we do not consider
amounts expected to be recovered from insurance companies or
others. The amount recorded for environmental remediation is not
material and is included in the line item “Accrued expenses” in Statement
2 – “Consolidated Financial Position at December 31” of Exhibit 13.
We cannot
reasonably estimate costs at sites in the very early stages of
remediation. Currently, we have a few sites in the very early stages
of remediation, and there is no more than a remote chance that a material amount
for remedial activities at any individual site, or at all sites in the
aggregate, will be required.
Available
Information
The company files
electronically with the Securities and Exchange Commission (SEC) required
reports on Form 8-K, Form 10-Q, Form 10-K and Form 11-K; proxy materials;
ownership reports for insiders as required by Section 16 of the Securities
Exchange Act of 1934; and registration statements on Forms S-3 and S-8, as
necessary; and any other form or report as required. The public may
read and copy any materials the company has filed with the SEC at the SEC’s
Public Reference Room at 100 F Street, N.E., Washington,
DC 20549. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at (800)
SEC-0330. The SEC maintains an Internet site (www.sec.gov) that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The company maintains
an Internet site (www.CAT.com) and copies of our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments
to these reports filed or furnished with the SEC are available free of charge
through our Internet site (www.CAT.com/secfilings)
as soon as reasonably practicable after filing with the SEC. Copies
of our board committee charters, our board’s Guidelines on Corporate Governance
Issues, Worldwide Code of Conduct and other corporate governance information are
available on our Internet site (www.CAT.com/governance).
The information contained on the company’s website is not included in, or
incorporated by reference into, this annual report on Form 10-K.
Additional company
information may be obtained as follows:
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phone our
Information Hotline - (800) 228-7717 (U.S. or Canada) or (858) 244-2080
(outside U.S. or Canada) to request company publications by mail, listen
to a summary of Caterpillar’s latest financial results and current
outlook, or to request a copy of results by facsimile or mail
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request,
view, or download materials on-line or register for email alerts at www.CAT.com/materialsrequest
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view/download
on-line at www.CAT.com/historical
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The statements in
this section describe the most significant risks to our business and should be
considered carefully in conjunction with “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and the “Notes to Consolidated
Financial Statements” of Exhibit 13 to this Form 10-K. In addition,
these statements constitute our cautionary statements under the Private
Securities Litigation Reform Act of 1995. The discussion and analysis
contained in the “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and other items in this Form 10-K is forward-looking
and involves uncertainties that could significantly impact
results. From time to time, we also provide forward-looking
statements in other materials we issue to the public or in the form of oral
presentations to the public. Forward-looking statements give current
expectations or forecasts of future events about the company. You can
identify these statements by the fact they do not relate to historical or
current facts and by the use of words such as “believe,” “expect,” “estimate,”
“anticipate,” “will be,” “should,” “plan,” “project,” “intend,” “could” and
similar words or expressions that identify forward-looking statements made on
behalf of Caterpillar.
In particular,
these forward-looking statements include statements relating to future actions,
prospective products, products’ approvals, future performance or results of
current and anticipated products, sales efforts, expenses, interest rates,
foreign exchange rates, the outcome of contingencies, economic conditions,
potential returns, financial condition and financial results. The statements are
based on assumptions or on known or unknown risks and uncertainties. Although we
believe we have been prudent in our assumptions, we cannot guarantee the
realization of these statements. Achievement of future results is subject to
risks, uncertainties and potentially inaccurate assumptions. Should known or
unknown risks or uncertainties materialize or underlying assumptions prove
inaccurate, actual results could materially differ from past results and/or
those anticipated, estimated or projected. Uncertainties include factors that
affect international businesses, as well as matters specific to the company and
the markets it serves.
The company
undertakes no obligation to publicly update forward-looking statements, whether
as a result of new information, future events or otherwise. You may, however,
consult any future related disclosures we make on our Form 10-Q or any Form 8-K
report to the SEC.
The following is a
cautionary discussion of risks, uncertainties and assumptions that we believe
are significant to our business. These are factors that, individually or in the
aggregate, we believe could make our actual results differ materially from
expected or past results. You should note it is impossible to predict or
identify all such factors and, as a result, you should not consider the
following factors to be a complete discussion of risks and
uncertainties.
Economic Volatility, Global
Economic Conditions and the Economic Conditions of Industries or Markets We
Serve
Our results of
operations are materially affected by the conditions in the global economy
generally and various capital markets. Global economic conditions may cause
volatility and disruptions in the capital and credit markets. In some
cases, the markets have decreased availability of liquidity, credit and credit
capacity for certain issuers, customers, dealers and suppliers.
Although we
generally generate funds from our operations to pay our operating expenses, fund
our capital expenditures, buy back stock, pay dividends and fund our employee
retirement benefit programs, continuing to meet these cash requirements over the
long-term will require substantial liquidity and access to sources of funds,
including capital and credit markets. Changes in global economic conditions,
including material cost increases and decreases in economic activity in many of
the markets that we serve, and the success of plans to manage cost increases,
inventory and other important elements of our business may significantly impact
our ability to generate funds from operations. Market volatility,
changes in counterparty credit risk, the impact of government intervention in
financial markets and general economic conditions may also adversely impact the
ability of the company to access capital and credit markets to fund operating
needs. Inability to access capital and credit markets may have an
adverse effect on our business, results of operations, financial condition and
competitive position.
The energy and
mining industries are major users of our machines and
engines. Decisions to purchase our machines and engines are dependent
upon performance of these industries. If demand or output in these industries
increases, the demand for our products would likely
increase. Likewise, if demand or output in these industries declines,
the demand for our products would likely decrease. Prices of commodities in
these industries are frequently volatile and change in response to general
economic conditions, economic growth, commodity inventories and any disruptions
in production. We assume certain prices for key commodities in
preparing our outlooks. Commodity prices lower than those assumed in
our outlooks have the potential to negatively impact our business, results of
operations and financial condition.
The rates of
infrastructure spending, housing starts and commercial construction play a
significant role in our results. Our products are an integral
component of these activities, and as these activities increase or decrease
inside or outside of the U.S., demand for our products may be significantly
impacted, which could negatively impact our results.
After declining for three
years, U.S. residential housing starts began a modest recovery in the second
quarter of 2009, but remain at historic lows. Housing permits in the
euro-zone have continued to decline since late 2006, although U.K. housing
orders increased in the fourth quarter of 2009. The situation has been
compounded by a deterioration of mortgage and financial markets and has
negatively impacted our sales in North America and Europe. Historically, housing
starts have been volatile, and these downturns could continue or become more
severe. Although the U.S. Government, and governments of many other
countries, including countries in Europe, Japan and Australia, has adopted
initiatives to help restore and stabilize mortgage and real estate markets and
the economy generally, there is no assurance that these measures will achieve
the intended effect.
We expect that the developing
markets (i.e. Africa, Asia/Pacific, Latin America, the Middle East and Russia),
which accounted for a significant portion of our 2009 sales and revenues will
experience growth during 2010. However, a slower rate of economic
growth in developing markets than anticipated in our outlooks could adversely
impact our business, results of operations and financial
condition.
Changes in Government
Monetary and Fiscal Policies
Most countries have
established central banks to regulate monetary systems and influence economic
activities, generally by adjusting interest rates. Interest rate
changes affect overall economic growth, which alter demand for residential and
nonresidential structures, energy and mined products, which in turn affect sales
of our products that serve these activities. Also, interest rates
affect customers’ abilities to finance machine purchases, can change the optimal
time to keep machines in a fleet and can impact the ability of our suppliers to
finance the production of parts and components necessary to manufacture and
support our products. Our outlooks typically include assumptions
about interest rates in a number of countries. Interest rates higher
than those contained in our assumptions could result in lower sales than
anticipated and supply chain inefficiencies.
Economic events
have reduced the availability of liquidity to fund investments in many markets
that we serve. Central banks and other policy arms of many countries
have implemented various actions to restore liquidity and increase the
availability of credit. The continuing effectiveness of these and
related government actions is uncertain and could have a material impact on the
customers and markets we serve and our business, results of operations and
financial condition. Government policies on taxes and spending affect
our business. Throughout the world, government spending finances much
infrastructure development, such as highways, airports, sewer and water systems
and dams. Tax regulations determine depreciation lives and the amount
of money users can retain, both of which influence investment
decisions. Developments more unfavorable than anticipated, such as
declines in government revenues, decisions to reduce public spending or
increases in taxes, could negatively impact our results.
Changes in Price and
Significant Shortages of Component Products
We are a
significant user of steel and many other commodities required for the
manufacture of our products. As a result, unanticipated increases in
the prices of such commodities would increase our costs more than expected,
negatively impacting our business, results of operations and financial condition
if we are unable to fully offset the effect of these increased costs through
price increases, productivity improvements or cost reduction
programs.
We rely on
suppliers to secure component products, particularly steel, required for the
manufacture of our products. During the global economic
downturn, we reduced our own production levels and, as a result, our suppliers
experienced significant decreases in demand for their products. We
anticipate significant volume increases in 2010 and are currently reviewing the
ability of key suppliers to ramp up production. A disruption in
deliveries to or from suppliers or decreased availability of such components or
commodities could have an adverse effect on our ability to meet our commitments
to customers or increase our operating costs. We believe our sources of raw
materials and components products will be generally sufficient for our needs in
the foreseeable future. However, our business, results of operations or
financial condition could be negatively impacted should supply turn out to be
insufficient for our operations.
In addition, global
economic conditions and the volatility in the credit and capital markets have
caused a significant decline in sales and revenues and restricted access to
liquidity and financing for many businesses. If these conditions continue or
worsen, many of our suppliers’ financial viability could be adversely impacted.
As a result, their ability to continue supplying component products for the
manufacture of our products could be significantly undermined, which, in turn,
could negatively impact our ability to meet our customers’ demand for our
products and our business, results of operations and financial
condition.
Environmental
Regulations
Regulatory Compliance in
General
Our facilities,
operations and products are subject to increasingly stringent environmental laws
and regulations, including laws and regulations governing emissions to air,
discharges to water and the generation, handling, storage, transportation,
treatment and disposal of general, non-hazardous and hazardous waste materials.
While we believe we are in compliance in all material respects with these
environmental laws and regulations, we cannot provide assurances that we will
not be adversely affected by costs, liabilities or claims with respect to
existing or subsequently acquired operations or under present laws and
regulations or those that may be adopted or imposed in the future.
In particular, our
engines are subject to extensive statutory and regulatory requirements governing
exhaust emissions and noise, including standards imposed by the EPA, state
regulatory agencies in the U.S. and other regulatory agencies around the world.
For instance, national, state or local governments may set new emissions
standards that could impact our products and operations in ways that are
difficult to anticipate with accuracy. Thus, significant changes in standards,
or the adoption of new standards, have the potential to negatively impact our
business, results of operations, financial condition and competitive
position.
Tier 4 Emissions
Requirements
The EPA has adopted
new and more stringent emission standards, including Tier 4 nonroad diesel
emission requirements applicable to the majority of our nonroad machinery and
engine products commencing in 2011. We previously announced our
intent to make our nonroad engines compliant with the new emission standards,
including the Tier 4 emission requirements, by the stated deadline. We intend to
use certain technology with state of the art integrated systems, as well as the
transitional provisions provided by the regulations in order to comply with
the Tier 4 emissions requirements.
Although we are
executing comprehensive plans designed to meet Tier 4 emissions requirements,
these plans are subject to many variables, including the timing of our Tier 4
engine development and new machine product introduction. If we are
unable to meet our plans as projected, it could delay or inhibit our ability to
continue placing certain products on the market, which could negatively impact
our financial results and competitive position. We are incurring
research and development costs to design products to meet Tier 4
requirements. We plan to include costs associated with Tier 4
development and production in prices of our products. The level of
market acceptance of prices for products that meet Tier 4 requirements could
negatively impact our financial results and competitive position.
Regulation of Carbon
Emissions
The potential for
government-mandated reductions of carbon emissions from our facilities and
products is increasing. Mandatory reductions being considered by many
jurisdictions may take the form of new legislation and/or
regulations. For example, in the U.S., the EPA has stated that it
plans to promulgate regulations governing carbon emissions from automobiles,
which may lead to regulation of other mobile sources, as well as stationary
sources. Additionally, the American Clean Energy and Security Act has
passed the U.S. House of Representatives, and similar legislation has been
introduced in the U.S. Senate. This legislation is also designed to
restrict and reduce carbon emissions from U.S. stationary and mobile sources.
The final details and scope of these legislative and regulatory measures are
unclear and their potential impact is still uncertain, so we cannot fully
predict the impact on the company. Should final legislation or regulations be
adopted imposing significant operational restrictions and compliance
requirements upon us or our products, they could have a material impact upon the
company’s capital expenditures, results of operations and competitive
position.
Failure to Maintain Credit
Ratings
Caterpillar’s and
Cat Financial’s costs of borrowing and ability to access the capital markets are
affected not only by market conditions but also by the short- and long-term debt
ratings assigned to their debt by the major credit rating
agencies. These ratings are based, in significant part, on
Caterpillar’s and Cat Financial’s performance as measured by credit metrics such
as interest coverage and leverage ratios, as well as transparency with rating
agencies and timeliness of financial reporting. On January 26, 2009,
Moody’s Investment Services (Moody's) changed its outlook for the long-term
ratings of the company and Cat Financial to negative from
stable. Moody’s did not alter the ‘A2’ long-term ratings or the
‘Prime-1’ short-term ratings of the two companies. On April 21, 2009,
Standard & Poor’s Ratings Services (S&P) revised its outlook for
the company and Cat Financial to negative from stable, while affirming the ‘A’
long-term corporate credit rating and ‘A-1’ short-term ratings on the company
and its related entities. On April 22, 2009, Fitch Ratings, which had
previously rated Caterpillar and Cat Financial slightly higher than Moody’s and
S&P, downgraded the company and Cat Financial to ‘A’ from ‘A+’ and assigned
a stable rating outlook. On May 6, 2009, DBRS, which had similarly
rated Caterpillar and Cat Financial slightly higher than Moody’s and S&P,
downgraded the company and Cat Financial to ‘A’ from ‘A (high)’ and stated that
the trend for the rating was stable.
Although the company and Cat
Financial have committed credit facilities to provide liquidity, any downgrades
of our credit ratings may increase our cost of borrowing and could have a
further adverse effect on our access to the capital markets, including
restricting, in whole or in part, our access to the commercial paper
market. There can be no assurance that the commercial paper market
will continue to be a reliable source of short-term financing for the
company. An inability to access the capital markets could have a
material adverse effect on our business, results of operations and financial
condition.
Risks to Financial Products
Line of Business
Inherent in the
operation of Cat Financial is the credit risk associated with its
customers. The creditworthiness of each customer, and the rate of
delinquencies, repossessions and net losses on customer obligations are directly
impacted by several factors, including, but not limited to, relevant industry
and economic conditions, the availability of capital, the experience and
expertise of the customer’s management team, commodity prices, political events
and the sustained value of the underlying collateral.
Changes in interest
rates, foreign currency exchange rates and market liquidity conditions could
have a material adverse effect on Cat Financial’s and our earnings and cash
flows. Because a significant amount of the loans made by Cat
Financial are made at fixed interest rates, its business is subject to
fluctuations in interest rates. Changes in market interest rates may
influence its financing costs, returns on financial investments and the
valuation of derivative contracts and could reduce its and our earnings and cash
flows. In addition, since Cat Financial makes a significant amount of
loans in currencies other than the U.S. dollar, fluctuations in foreign currency
exchange rates could also reduce its and our earnings and cash
flows. Cat Financial also relies on a number of diversified global
debt markets and funding programs to provide liquidity for its global
operations, including commercial paper, medium term notes, retail notes,
variable denomination floating rate demand notes, asset-backed securitizations
and bank loans. Significant changes in market liquidity conditions
could impact Cat Financial’s access to funding, increase the associated funding
costs and reduce its and our earnings and cash flows. Although Cat
Financial manages interest rate, foreign currency exchange rate and market
liquidity risks through a variety of techniques, including a match funding
program, the selective use of derivatives and a broadly diversified funding
program, there can be no assurance that fluctuations in interest rates, currency
exchange rates and market liquidity conditions will not have a material adverse
effect on its and our earnings and cash flows. If any of the variety
of instruments and strategies Cat Financial uses to hedge its exposure to these
various types of risk is ineffective, we may incur losses. With respect to Cat
Financial’s insurance and investment management operations, changes in the
equity and bond markets could cause an impairment of the value of its investment
portfolio, thus requiring a negative adjustment to earnings.
The recent
difficult and volatile market conditions have adversely affected the financial
industry in which Cat Financial operates. Cat Financial is significant to our
operations and provides financing support to a significant share of our global
sales. The inability of Cat Financial to access funds to support its financing
activities to our customers could have a material adverse effect on our
business, results of operations and financial condition.
Cat Financial’s
liquidity and ongoing profitability are, in large part, dependent upon its
timely access to capital and the costs associated with raising funds in
different segments of the capital markets. Cat Financial depends and
will continue to depend on its ability to access diversified funding
alternatives to meet future cash flows requirements and to continue to fund its
operations. A large portion of Cat Financial’s borrowings have been
issued in the medium term note and commercial paper markets. While
Cat Financial has maintained access to key global medium term note and
commercial paper markets, there can be no assurance that such markets will
continue to represent a reliable source of financing for Cat
Financial. Should global economic conditions deteriorate or access to
debt markets be reduced, Cat Financial could experience materially higher
financing costs and become unable to access adequate funding to operate and grow
its business and/or meet its debt service obligations as they mature, or it
could be required to draw upon contractually committed lending agreements
primarily provided by global banks and/or by seeking other funding sources.
However, under extreme market conditions, there can be no assurance such
agreements and other funding sources would be available or
sufficient. Any of these events could negatively impact Cat
Financial’s business, results of operations and financial condition. The extent
of any impact on our ability to meet funding or liquidity needs will depend on
several factors, including our operating cash flows, the duration of any future
market disruptions, the effects of governmental intervention in the financial
markets including the effects of any programs or legislation designed to
increase or restrict liquidity for certain areas of the market, general credit
conditions, the volatility of equity and debt markets, our credit ratings and
credit capacity and the cost of financing and other general economic and
business conditions.
Should current
levels of market disruption and volatility continue or worsen, we may also face
a number of other risks in connection with these events, including:
|
§
|
Market
developments that may affect customer confidence levels and may cause
declines in credit applications and adverse changes in payment patterns,
causing increases in delinquencies and default rates, which could impact
Cat Financial’s write-offs and provision for credit
losses.
|
|
§
|
The process
Cat Financial uses to estimate losses inherent in its credit exposure
requires a high degree of management’s judgment regarding numerous
subjective qualitative factors, including forecasts of economic conditions
and how economic predictors might impair the ability of its borrowers to
repay their loans. Ongoing financial market disruption and
volatility may impact the accuracy of these
judgments.
|
|
§
|
Cat
Financial’s ability to engage in routine funding transactions or borrow
from other financial institutions on acceptable terms or at all could be
adversely affected by further disruptions in the capital markets or other
events, including actions by rating agencies and deteriorating investor
expectations.
|
|
§
|
Since Cat
Financial’s counterparties are primarily financial institutions, their
ability to perform in accordance with any of its underlying agreements
could be adversely affected by market volatility and/or disruptions in the
equity and credit markets.
|
Market Acceptance of
Products
Our business relies
on continued global demand for our brands and products. To achieve
business goals, we must develop and sell products that appeal to our dealers,
OEMs and customers. This is dependent on a number of factors,
including our ability to manage and maintain key dealer relationships, our
ability to produce products that meet the quality expectations of our customers
and our ability to develop effective sales, advertising and marketing
programs. In addition, our continued success in selling products that
appeal to our customers is dependent on leading-edge innovation, with respect to
both products and operations, and on the availability and effectiveness of legal
protection for our innovation. Failure to continue to deliver quality
and competitive products to the marketplace, to supply products that meet
applicable regulatory requirements or to predict market demands for, or gain
market acceptance of, our products, could have a material impact on our
business, results of operations and financial condition.
In addition, the
global demand for our products generally depends on our customers’ ability to
pay for our products, which, in turn, depends on their access to funds. Due to
global economic conditions many of our customers may be experiencing increased
difficulty in generating funds from operations. Further, due to
capital and credit market volatility and uncertainty, many financial
institutions have revised their lending standards, thereby decreasing access to
capital. If the capital and credit market volatility continues or worsens, the
liquidity of our customers may decline which, in turn, would reduce their
ability to purchase our products.
Competition
We operate in a
highly competitive environment, and our outlook depends on a forecast of the
company’s share of industry sales based on our ability to compete with others in
the marketplace. The company competes on the basis of product
performance, customer service, quality and price. There can be no assurance that
our products will be able to compete successfully with these other companies.
Thus, our share of industry sales could be reduced due to aggressive pricing or
product strategies pursued by competitors, unanticipated product or
manufacturing difficulties, our failure to price our products competitively, our
failure to produce our products at a competitive cost or an unexpected buildup
in competitors’ new machine or dealer-owned rental fleets, leading to severe
downward pressure on machine rental rates and/or used equipment
prices.
The environment
remains competitive from a pricing standpoint. Our sales outlook assumes certain
price increases that we announce from time to time will hold in the
marketplace. Changes in market acceptance of price increases, changes
in market requirements for price discounts or changes in our competitors’
behavior could have a material impact on the company’s business, results of
operations and financial condition.
In addition, our
results and ability to compete may be impacted positively or negatively by
changes in our sales mix. Our outlook assumes a certain geographic
mix of sales as well as a product mix of sales. If actual results
vary from this projected geographic and product mix of sales, our results could
be negatively impacted.
Caterpillar Production
System
In 2006, we
launched a significant productivity initiative, CPS to improve our
order-to-delivery processes and factory efficiency. CPS aims to
reduce waste and maximize value for our customers. Inability or
failure to implement and utilize CPS or other productivity initiatives would
have an adverse impact on our business and our results of
operations. There can be no assurance that this initiative will be
completed or beneficial to the company, or that any estimated cost savings from
CPS will be realized.
International Trade
Policy
Government policies
on international trade and investment such as import quotas, capital controls or
tariffs, whether adopted by individual governments or addressed by regional
trade blocs, can affect the demand for our products and services, impact the
competitive position of our products or prevent us from being able to sell
products in certain countries. The implementation of more restrictive
trade policies, such as more detailed inspections, higher tariffs or new
barriers to entry, in countries in which we sell large quantities of products
and services could negatively impact our business, results of operations and
financial condition. For example, a government’s adoption of “buy
national” policies or retaliation by another government against such policies
could have a negative impact on our results of operations.
Risks Due to Debt
Covenants
We maintain a
number of credit facilities to support (i) our commercial paper program and (ii)
general corporate purposes (facilities) and have issued debt securities to
manage liquidity and fund operations (debt securities). The
agreements relating to a number of the facilities and the debt securities
contain certain restrictive covenants applicable to us and certain of our
subsidiaries, including Cat Financial. These covenants include
maintaining a consolidated net worth (defined as the consolidated stockholder’s
equity including preferred stock but excluding the pension and other
post-retirement benefits balance within accumulated other comprehensive income
(loss)) of not less than $9 billion, limitations on the incurrence of liens and
certain restrictions on consolidation and merger. Cat Financial has also agreed
under certain of these agreements to maintain a leverage ratio (consolidated
debt to consolidated net worth, 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) not greater than 10.0 to 1, to
maintain a minimum interest coverage ratio (profit excluding income taxes,
interest expense and net gain/(loss) from interest rate derivatives to interest
expense, calculated at the end of each calendar quarter for the rolling four
quarter period then most recently ended) of not less than 1.15 to 1 and not to
terminate, amend or modify its support agreement with us.
Although we do not
believe any of these covenants presently materially restrict our operations, a
breach of one or more of the covenants could result in material adverse
consequences that could negatively impact our business, results of operations
and financial condition. These consequences may include the acceleration of
amounts outstanding under certain of the facilities, triggering of an obligation
to redeem certain debt securities, termination of existing unused commitments by
our lenders, refusal by our lenders to extend further credit under one or more
of the facilities or to enter into new facilities or the lowering or
modification of our credit ratings or those of one or more of our
subsidiaries.
In 2008, we
received the consent of lenders under certain of our facilities to our lower
consolidated net worth of $6.087 billion as of December 31, 2008 and to Cat
Financial’s lower quarterly interest coverage ratio of 0.97 as of December 31,
2008. In consideration of these consents, we agreed to increase the
upper range of interest rates applicable to amounts that may be drawn by us and
Cat Financial under certain of our facilities.
Dealer/Original Equipment
Manufacturers Sourcing Practices
We sell finished
products through an independent dealer network and directly to
OEMs. Both carry inventories of finished products as part of ongoing
operations and adjust those inventories based on their assessments of future
needs. Such adjustments can impact our results either positively or
negatively.
In particular, some
of our engine customers are OEMs that manufacture or could in the future
manufacture engines for their own products. Despite their engine
manufacturing abilities, these customers have chosen to outsource certain types
of engine production to us due to the quality of our engine products and in
order to reduce costs, eliminate production risks and maintain company
focus. However, we cannot assure that these customers will continue
to outsource engine manufacture in the future. Increased levels of production
insourcing by these customers could result from a number of factors, such as
shifts in our customers’ business strategies, acquisition by a customer of
another engine manufacturer, the inability of third-party suppliers to meet
specifications and the emergence of low-cost production opportunities in foreign
countries. A significant reduction in the level of engine production
outsourcing from our OEM customers could significantly impact our revenues and,
accordingly, have a material adverse effect on our business, results of
operations and financial condition.
Additional Tax Expense or
Additional Tax Exposure
We are subject to
income taxes in the United States and numerous foreign jurisdictions, and our
domestic and international tax liabilities are dependent upon the distribution
of income among these different jurisdictions. Our provision for
income taxes and cash tax liability in the future could be adversely affected by
numerous factors including, but not limited to, income before taxes being lower
than anticipated in countries with lower statutory tax rates and higher than
anticipated in countries with higher statutory tax rates, changes in the
valuation of deferred tax assets and liabilities and changes in tax laws and
regulations. We are also subject to the continuous examination of our
income tax returns by the U.S. Internal Revenue Service and other tax
authorities. The results of audits and examinations of previously
filed tax returns and continuing assessments of our tax exposures may have an
adverse effect on the company’s provision for income taxes and cash tax
liability.
Risks to Global
Operations
Our global
operations are dependent upon products manufactured, purchased and sold in the
U.S. and internationally and in countries with political and economic
instability including, without limitation, Brazil, PRC and India, which exposes
our business operations to certain political and economic risks inherent in
operating globally. These risks include:
|
§
|
changes in
local government laws, regulations and
policies;
|
|
§
|
imposition of
currency restrictions, restrictions on repatriation of earnings or other
restraints;
|
|
§
|
imposition of
burdensome tariffs or quotas;
|
|
§
|
national and
international conflict, including terrorist acts;
and
|
|
§
|
political and
economic instability or civil unrest may severely disrupt economic
activity in affected countries.
|
As a normal
practice, we do not assume such events in our outlooks unless they are already
happening when the outlook is issued. As a result, the occurrence of
one or more of these events has the potential to negatively impact our business,
results of operations and financial condition.
Currency
Fluctuations
The reporting
currency for our financial statements is the U.S. dollar. Certain of our assets,
liabilities, expenses and revenues, are denominated in currencies other than the
U.S. dollar. To prepare our consolidated financial statements, we must translate
those assets, liabilities, expenses and revenues into U.S. dollars at the
applicable exchange rates. As a result, increases and decreases in the value of
the U.S. dollar vis-à-vis other currencies will affect the U.S. dollar amounts
of these items in our consolidated financial statements, even if their value has
not changed in their original currency. This could have a significant impact on
our results of operations and financial condition if such increases or decreases
in the value of the U.S. dollar are substantial.
Risk Due to Funding
Obligations Under Pension Plans
We maintain certain
defined benefit pension plans for our employees, which impose on us certain
funding obligations. In determining our future payment obligations under the
plans, we assume certain rates of return on the plan assets and growth rates of
certain costs. Significant adverse changes in credit or capital markets could
result in actual rates of return being materially lower than
projected. Our cost growth rates may also be materially higher than
projected. These factors could significantly increase our payment
obligations under the plans, require us to take a significant charge on our
balance sheet and, as a result, adversely affect our business, results of
operations and financial condition.
Impact of
Acquisitions
We may from time to
time engage in acquisitions involving risks, including failure to successfully
integrate and realize the expected benefits of such acquisitions. For
example, with any past or future acquisitions, there is the possibility
that:
|
§
|
The business
culture of the acquired business may not match well with our
culture;
|
|
§
|
Technological
and product synergies, economies of scale and cost reductions may not
occur as expected;
|
|
§
|
The company
may acquire or assume unexpected
liabilities;
|
|
§
|
Unforeseen
difficulties may arise in integrating operations and
systems;
|
|
§
|
The company
may fail to retain and assimilate employees of the acquired
business;
|
|
§
|
Higher than
expected finance costs may arise due to unforeseen changes in tax, trade,
environmental, labor, safety, payroll or pension policies in any
jurisdiction in which the acquired business conducts its operations;
and
|
|
§
|
The company
may experience problems in retaining customers and integrating customer
bases.
|
Failure to continue
implementing the company’s acquisition strategy, including successfully
integrating acquired businesses, could have a material adverse effect on our
business, financial condition and results of operations.
In addition, in
order to conserve cash for operations, we may undertake acquisitions that would
be financed in part through public offerings or private placements of debt or
equity securities, or other arrangements. Such acquisition financing could
result in a decrease of our ratio of earnings to fixed charges and adversely
affect other leverage measures. We cannot guarantee any such acquisition
financing would be available to us on acceptable terms if and when required. If
we were to undertake an acquisition by issuing equity securities or
equity-linked securities, the issued securities may have a dilutive effect on
the interests of the holders of our common shares.
Litigation and
Contingency
We face an inherent
business risk of exposure to various types of claims and lawsuits. We are
involved in various intellectual property, product liability, product warranty
and environmental claims and lawsuits and other legal proceedings that arise in
and outside of the ordinary course of our business. Although it is not possible
to predict with certainty the outcome of every claim and lawsuit, we believe
these lawsuits and claims will not individually or in the aggregate have a
material impact on our business, results of operations and financial condition.
However, we could in the future incur judgments or enter into settlements of
lawsuits and claims that could have a material adverse effect on our business,
results of operations and financial condition in any particular period. In
addition, while we maintain insurance coverage with respect to certain claims,
we may not be able to obtain such insurance on acceptable terms in the future,
if at all, and any such insurance may not provide adequate coverage against any
such claims.
As required by U.S.
generally accepted accounting principles (GAAP), we establish reserves based on
our assessment of such contingencies. Subsequent developments in
legal proceedings may affect our assessment and estimates of the loss
contingency recorded as a reserve, requiring us to make additional material
payments, which could have an adverse effect on our results of
operations.
Healthcare Reform
Legislation
Healthcare reform
is currently a high priority for the U.S. Presidential Administration
and U.S. Congress. Both the U.S. House and the U.S. Senate have passed
healthcare reform bills. However, this legislation remains subject to
modification during the process of harmonizing the House and Senate bills and
its content and potential impact remain uncertain. Should any final
legislation impose significant costs on the company, including, without
limitation, by making government subsidies received for Medicare-equivalent
prescription drug coverage taxable, this could have a material impact upon the
company’s results of operations and competitive position.
Changes in Accounting
Standards
Our financial
statements are subject to the application of GAAP, which are periodically
revised and/or expanded. Accordingly, from time to time we are
required to adopt new or revised accounting standards issued by recognized
authoritative bodies, including the Financial Accounting Standards
Board. Market conditions have prompted accounting standard setters to
issue new guidance which further interprets or seeks to revise accounting
pronouncements related to financial instruments, structures or transactions as
well as to issue new standards expanding disclosures. The impact of
accounting pronouncements that have been issued but not yet implemented is
disclosed in our annual and quarterly reports on Form 10-K and Form
10-Q. An assessment of proposed standards is not provided, as such
proposals are subject to change through the exposure process and, therefore,
their effects on our financial statements cannot be meaningfully
assessed. It is possible that future accounting standards we are
required to adopt could change the current accounting treatment that we apply to
our consolidated financial statements and that such changes could have a
material adverse effect on our business, results of operations and financial
condition.
The occurrence of
one or more natural disasters, such as tornadoes, hurricanes, earthquakes and
other forms of severe weather in the U.S. or in a country in which we operate or
in which our suppliers are located could adversely affect our operations and
financial performance. Such events could result in physical damage to
and complete or partial closure of one or more of our manufacturing facilities
or distribution centers, temporary or long-term disruption in the supply of
component products from some local and overseas suppliers, disruption in the
transport of our products to dealers and end-users and delay in the delivery of
our products to our distribution centers.
Item
1B. Unresolved Staff
Comments as of December 31,
2009.
|
Not
applicable.
Item
1C. Executive
Officers of the Registrant as of December 31,
2009.
|
Name
|
Present
Caterpillar Inc. position and date of initial
election
|
Principal
positions held during the past
five years if other than Caterpillar
Inc. position currently held
|
James W.
Owens1
(63)
|
Chairman and
Chief Executive Officer (2004)
|
|
|
Douglas R.
Oberhelman (56)
|
Vice Chairman
and Chief Executive Officer-Elect (2010)2
Group
President (2001)
|
|
|
Richard P.
Lavin (57)
|
Group
President (2007)
|
·
|
Vice President
(2004-2007)
|
Stuart L.
Levenick (56)
|
Group
President (2004)
|
|
|
Edward J. Rapp
(52)
|
Group
President (2007)
|
·
|
Vice President
(2000-2007)
|
Gérard R.
Vittecoq (61)
|
Group
President (2004)
|
|
|
Steven H.
Wunning (58)
|
Group
President (2004)
|
|
|
James B. Buda
(62)
|
Vice
President, General Counsel and Secretary (2001)
|
|
|
David B.
Burritt (54)
|
Vice President
and Chief Financial Officer (2004)
|
|
|
Bradley M.
Halverson (49)
|
Controller
(2004)
|
|
|
Jananne A.
Copeland (47)
|
Chief
Accounting Officer (2007)
|
·
|
Corporate
Financial Reporting Manager, Corporate Services Division
(2004–2006)
|
·
|
Corporate
Financial Reporting Manager, Global Finance & Strategic Support
Division (2006–2007)
|
1 Will
retire as CEO effective July 1, 2010 and as Chairman effective October 31,
2010.
2 Effective
January 1, 2010. Will become CEO effective July 1, 2010 and Chairman
effective October 31, 2010.
General
Information
Caterpillar’s
operations are highly integrated. Although the majority of our plants
are involved primarily in production relating to our Machinery or
Engines lines of business, several plants are involved in manufacturing relating
to both lines of business. In addition, several plants are involved
in the manufacturing of components which are used in the assembly of both
machines and engines. Caterpillar’s parts distribution centers are
involved in the storage and distribution of parts for machines and
engines. Also, the research and development activities carried on at
our Technical Center involve both machines and engines.
Properties we own
are believed to be generally well maintained and adequate for present
use. Through planned capital expenditures, we expect these properties
to remain adequate for future needs. Properties we lease are covered
by leases expiring over terms of generally one to ten years. We
anticipate no difficulty in retaining occupancy of any leased facilities, either
by renewing leases prior to expiration or by replacing them with equivalent
leased facilities.
Headquarters and Other Key
Offices
Our corporate headquarters are in Peoria,
Illinois. Additional marketing and operating headquarters are located
both inside and outside the United States including Miami, Florida, San Diego,
California, Geneva, Switzerland, Beijing, PRC, Singapore, Piracicaba,
Brazil and Tokyo, Japan. The Financial
Products Division is headquartered in leased offices located in Nashville,
Tennessee.
Parts Distribution
Centers
Distribution of our
parts is conducted from parts distribution centers inside and outside the United
States. Cat Logistics distributes other companies’ products, using both
Caterpillar and non-Caterpillar facilities located both inside and outside the
United States. We also own or lease other storage facilities that
support distribution activities.
Technical Center, Training
Centers, Demonstration Areas and Proving Grounds
We own a Technical
Center located in Mossville, Illinois, and various other technical and training
centers, demonstration areas and proving grounds located both inside and outside
the United States.
Manufacturing,
Remanufacturing and Overhaul
Manufacturing,
remanufacturing and overhaul of our products are conducted primarily at the
following locations. These facilities are believed to be suitable for
their intended purposes with adequate capacities for current and projected needs
for existing products.
|
Inside
the U.S.
|
|
|
|
|
Alabama
|
Kansas
|
Pennsylvania
|
· Montreal
|
Japan
|
· Albertville
|
· Fort
Scott
|
· Chambersburg
|
· Surrey
|
· Akashi
|
· Montgomery
|
· Lawrence
|
· Steelton
|
· Toronto
|
· Sagamihara
|
Arkansas
|
· Wamego
|
South
Carolina
|
· Winnipeg
|
Malaysia
|
· Little
Rock
|
Kentucky
|
· Greenville
|
England
|
· Kuala
Lumpur1
|
California
|
· Ashland
|
· Jackson
|
· Barwell
|
Mexico
|
· Gardena
|
· Corbin
|
· Lexington
|
· Desford
|
· Monterrey
|
· Mohave
|
· Danville
|
· Newberry
|
· Ferndown
|
· Nuevo
Laredo
|
· Rocklin
|
· Decoursey
|
· Summerville
|
· Peterborough
|
· Reynosa
|
· San
Diego
|
· Louisville
|
· Sumter
|
· Peterlee
|
· Saltillo
|
Colorado
|
· Mayfield
|
Tennessee
|
· Rushden
|
· Santa
Catarina
|
· Pueblo
|
· Raceland
|
· Dyersburg
|
· Shrewsbury
|
· Tijuana
|
Florida
|
Michigan
|
· Knoxville
|
· Skinningrove
|
· Torreon
|
· Jacksonville
|
· Menominee
|
Texas
|
· Slough
|
· Veracruz
|
· Miami
Lakes
|
Minnesota
|
· Amarillo
|
· Stafford
|
The
Netherlands
|
· Wildwood
|
· Minneapolis
|
· Channelview
|
· Stockton
|
· Almere
|
Georgia
|
· Owatonna
|
· De
Soto
|
· Wimborne
|
· s’-Hertogenbosch
|
· Alpharetta
|
Mississippi
|
· Mabank
|
· Wolverhampton
|
Nigeria
|
· Griffin
|
· Corinth
|
· San
Antonio
|
France
|
· Port
Harcourt2
|
· LaGrange
|
· Oxford
|
· Sherman
|
· Arras
|
Northern
Ireland
|
· Patterson
|
· Prentiss
County
|
· Waco
|
· Chaumont
|
· Belfast
|
· Thomasville
|
Missouri
|
· Waskom
|
· Echirolles
|
· Larne
|
· Toccoa
|
· Boonville
|
Virginia
|
· Grenoble
|
People’s
Republic
|
Illinois
|
· Kansas
City
|
· Petersburg
|
· Rantigny
|
of
China
|
· Alorton
|
· West
Plains
|
· Roanoke
|
Germany
|
· Erliban1
|
· Aurora
|
Montana
|
Wisconsin
|
· Kiel
|
· Foshan
|
· Champaign1
|
· Laurel
|
· Hudson
|
· Rostock
|
· Qingzhou2
|
· Chicago
|
Nebraska
|
· Prentice
|
Hungary
|
· Shanghai
|
· Decatur
|
· Alliance
|
Wyoming
|
· Gödöllö
|
· Suzhou
|
· Dixon
|
· Gering
|
· Bill
|
India
|
· Tianjin2
|
· East
Peoria
|
· Lincoln
|
· Laramie
|
· Hosur
|
· Wuxi
|
· Granite
City
|
· Northport
|
· Rock
Springs
|
· Pondicherry
|
· Xuzhou2
|
· Joliet
|
· Sidney
|
Outside
the U.S.
|
· Thiruvallur
|
Poland
|
· Mapleton
|
· South
Morrill
|
Australia
|
Indonesia
|
· Janow
Lubelski
|
· Mossville
|
Nevada
|
· Burnie
|
· Bandung2
|
· Radom1
|
· Peoria
|
· Sparks
|
· Melbourne
|
· Jakarta
|
· Sosnowiec
|
· Pontiac
|
North
Carolina
|
· Wivenhoe
|
Italy
|
Russia
|
· Rochelle
|
· Clayton
|
Belgium
|
· Anagni
|
· Tosno
|
· Sterling
|
· Franklin
|
· Gosselies
|
· Atessa
|
Scotland
|
· Woodridge1
|
· Goldsboro
|
Brazil
|
· Bazzano
|
· Aberdeen
|
Indiana
|
· Morganton
|
· Curitiba
|
· Fano
|
Switzerland
|
· Charlestown
|
· Sanford
|
· Diadema
|
· Frosinone
|
· Riazzino
|
· East
Chicago
|
North
Dakota
|
· Hortolandia
|
· Jesi
|
Tunisia
|
· Franklin
|
· West
Fargo
|
· Piracicaba
|
· Marignano
|
· Sfax
|
· Lafayette
|
Ohio
|
Canada
|
· Milan
|
|
|
· Dayton1
|
· Edmonton
|
· Minerbio
|
|
1
|
Facility of
affiliated company (50 percent or less owned)
|
2
|
Facility of
partially owned subsidiary (more than 50 percent, less than 100
percent)
|
We have disclosed certain individual legal proceedings
in this filing. Additionally, we are involved in other unresolved
legal actions that arise in the normal course of business. The most prevalent
of these unresolved actions involve
disputes related to product design, manufacture and performance liability
(including claimed asbestos and welding fumes exposure), contracts, employment
issues or intellectual property rights. Although it is not
possible to predict with certainty the outcome of these unresolved legal
actions, we believe that these actions will not individually or in the aggregate
have a material adverse impact on our consolidated results of
operations, financial position or liquidity.
On May 14, 2007,
the EPA issued a Notice of Violation to Caterpillar Inc. alleging various
violations of Clean Air Act Sections 203, 206 and 207. The EPA claims
that Caterpillar violated such sections by shipping engines and catalytic
converter after-treatment devices separately, introducing into commerce a number
of uncertified and/or misbuilt engines, and failing to timely report
emissions-related defects. Caterpillar is currently engaging in
negotiations with the EPA to resolve these issues, but it is too early in the
process to place precise estimates on the potential exposure to
penalties. However, Caterpillar is cooperating with the EPA and,
based upon initial discussions, and although penalties could potentially exceed
$100,000, management does not believe that this issue will have a material
adverse impact on our consolidated results of operations, financial position or
liquidity.
On February 8,
2009, an incident at Caterpillar’s Joliet, Illinois facility resulted in the
release of approximately 3,000 gallons of wastewater into the Des Plaines River.
In coordination with state and federal authorities, appropriate remediation
measures have been taken. On February 23, 2009 the Illinois Attorney General
filed a Complaint in Will County Circuit Court containing seven counts of
violations of state environmental laws and regulations. Each count
seeks injunctive relief, as well as statutory penalties of $50,000 per violation
and $10,000 per day of violation. In addition, on March 5, 2009 the EPA served
Caterpillar with a Notice of Intent to file a Civil Administrative Action
(notice), indicating the EPA’s intent to seek civil penalties for violations of
the Clean Water Act and Oil Pollution Act. On January 25, 2010, the
EPA issued a revised notice seeking civil penalties in the amount of $167,800,
and Caterpillar is preparing a response to the revised notice. At
this time, we do not believe these proceedings will have a material adverse
impact on our consolidated results of operations, financial position or
liquidity.
Item 4. Submission of
Matters to a Vote of Security
Holders.
|
Not
applicable.
Item 5. Market for
Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity
Securities.
|
Information
required by Item 5 regarding our stock is incorporated by reference from the
Supplemental Stockholder Information section of Exhibit 13 under "Common Stock
(NYSE:CAT) —
Listing Information,” “— Price Ranges,”
"— Number of
Stockholders” and “Performance Graph: Total Cumulative Stockholder Return for
Five-Year Period Ending December 31, 2009” and from the “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” section of
Exhibit 13 under “Dividends paid per common share.”
Sale of Unregistered
Securities
Non-U.S. Employee
Stock Purchase Plans
We have 30 employee
stock purchase plans administered outside the United States for our non-U.S.
employees. As of December 31, 2009, those plans had approximately
10,700 active participants in the aggregate. During the fourth
quarter of 2009, approximately 151,000 shares of Caterpillar common stock or
foreign denominated equivalents were distributed under the
plans. Participants in some foreign plans have the option of
receiving non-U.S. share certificates (foreign-denominated equivalents) in lieu
of U.S. shares of Caterpillar common stock upon withdrawal from the
plan. These equivalent certificates are tradable only on the local
stock market and are included in our determination of shares
outstanding.
Distributions of
Caterpillar stock under the plans are exempt from registration under the
Securities Act of 1933 (Act) pursuant to 17 CFR 230.903.
Issuer
Purchases of Equity Securities
No
shares were repurchased during the fourth quarter 2009.
Other
Purchases of Equity Securities
|
|
Total
number
of
Shares
|
|
Average
Price
|
|
Total
Number
of
Shares Purchased
|
|
Approximate
Dollar Value of Shares that may yet be Purchased
|
Period
|
|
Purchased
(1)
|
|
Paid
per Share
|
|
Under
the Program
|
|
under
the Program
|
October 1-31,
2009
|
|
6,042
|
|
|
$
|
49.95
|
|
|
N/A
|
|
|
N/A
|
|
November 1-30,
2009
|
|
10,145
|
|
|
|
54.71
|
|
|
N/A
|
|
|
N/A
|
|
December 1-31,
2009
|
|
5,719
|
|
|
|
59.39
|
|
|
N/A
|
|
|
N/A
|
|
Total
|
|
21,906
|
|
|
$
|
54.62
|
|
|
|
|
|
|
|
|
(1)
|
Represents
shares delivered back to issuer for the payment of taxes resulting from
the exercise of stock options by employees and
Directors.
|
Item 6. Selected Financial
Data.
|
Information
required by Item 6 is incorporated by reference from the “Five-year Financial
Summary” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” of Exhibit 13.
Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
|
Information
required by Item 7 is incorporated by reference from “Management’s Discussion
and Analysis of Financial Condition
and Results of
Operations” of Exhibit 13.
This Management’s
Discussion and Analysis of Financial Condition and Results of Operations should
be read in conjunction with our discussion of cautionary statements and
significant risks to the company’s business under Item 1A. Risk Factors of this
Form 10-K.
Item
7A. Quantitative and Qualitative Disclosures About Market
Risk
|
Information
required by Item 7A appears in Note 1 – “Operations and summary of significant
accounting policies,” Note 3 – “Derivative financial
instruments and risk management,” Note 19 – “Fair values disclosures” and Note
20 – “Concentration of credit risk” of Exhibit 13. Other information
required by Item 7A is incorporated by reference from “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” of Exhibit
13.
Item 8. Financial
Statements and Supplementary
Data.
|
Information
required by Item 8 is incorporated by reference from the “Report of Independent
Registered Public Accounting Firm” and from the “Financial Statements and Notes
to Consolidated Financial Statements” of Exhibit 13. Other
information required by Item 8 is included in “Computation of Ratios of Earnings
to Fixed Charges” filed as Exhibit 12 to this Form 10-K.
Page
23
Item 9.
Changes in and Disagreements with Accountants on Accounting and
Financial
Disclosure.
|
Not
Applicable.
Item
9A. Controls and
Procedures.
|
Disclosure Controls and
Procedures
Under the
supervision and with the participation of our chief executive officer and
our chief financial officer, our management conducted an evaluation of
the effectiveness of our disclosure controls and procedures; as such term
is defined under Exchange Act Rule 13a-15(e). Based on this
evaluation, our chief executive officer and our chief financial officer
concluded that our disclosure controls and procedures were effective as of the
end of the period covered by this annual report.
Management’s Report on
Internal Control Over Financial Reporting
The management of
Caterpillar Inc. is responsible for establishing and maintaining adequate
internal control over financial reporting. Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of our financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles. Our internal control over financial reporting includes
those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
company's assets that could have a material effect on the financial
statements.
Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management assessed
the effectiveness of the company's internal control over financial reporting as
of December 31, 2009. In making this assessment, we used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal
Control—Integrated Framework. Based on our assessment we concluded that,
as of December 31, 2009, the company's internal control over financial
reporting was effective based on those criteria.
The effectiveness
of the company's internal control over financial reporting as of
December 31, 2009 has been audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm. Their report appears on
page A-4 of Exhibit 13.
Changes in Internal Control
over Financial Reporting
During the last
fiscal quarter, there has been no significant 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.
Item
9B. Other
Information.
|
Not
Applicable.
Item
10. Directors,
Executive Officers and Corporate
Governance.
|
Identification of Directors
and Business Experience
Information
required by this Item is incorporated by reference from the 2010 Proxy
Statement.
Identification of Executive
Officers and Business Experience
Information
required by this Item appears in Item 1C of this Form 10-K.
Family
Relationships
There are no family
relationships between the officers and directors of the company. All
officers serve at the pleasure of the board of directors and are elected
annually at a meeting of the board.
Legal Proceedings Involving
Officers and Directors
Information
required by this Item is incorporated by reference from the 2010 Proxy
Statement.
Audit Committee Financial
Expert
Information
required by this Item is incorporated by reference from the 2010 Proxy
Statement.
Identification of Audit
Committee
Information
required by this Item is incorporated by reference from the 2010 Proxy
Statement.
Stockholder Recommendation
of Board Nominees
Information
required by this Item is incorporated by reference from the 2010 Proxy
Statement.
Compliance with Section
16(a) of the Exchange Act
Information
required by this Item relating to compliance with Section 16(a) of the
Securities Exchange Act of 1934 is incorporated by reference from the 2010 Proxy
Statement.
Code of
Ethics
Our Worldwide Code of Conduct (Code), first published in
1974 and most recently amended in 2005, sets a high standard for honesty and
ethical behavior by every employee, including the principal executive officer,
principal financial officer, controller and principal accounting
officer. The Code is posted on our website at www.CAT.com/code and is incorporated by reference as Exhibit 14 to this
Form 10-K. To obtain a copy of the Code at no charge, submit a
written request to the Corporate Secretary at 100 NE Adams Street, Peoria,
Illinois 61629-7310. We will post on our website any required
amendments to or waivers granted under our Code pursuant to SEC or New York
Stock Exchange disclosure rules.
Item
11. Executive
Compensation.
|
Information
required by this Item is incorporated by reference from the 2010 Proxy
Statement.
Item
12. Security Ownership
of Certain Beneficial Owners and Management and Related Stockholders
Matters.
|
Information
required by this Item relating to security ownership of certain beneficial
owners and management is incorporated by reference from the 2010 Proxy
Statement.
Information
required by this item relating to securities authorized for issuance under
equity compensation plans is included in the following table:
Equity
Compensation Plan Information
(as
of December 31, 2009)
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
|
Number of
securities to be issued upon exercise of outstanding options,
warrants
|
|
Weighted-average
exercise price of outstanding options, warrants
|
|
Number of
securities remaining available for future issuance under equity
compensation plans (excluding securities
|
|
Plan
category
|
|
and
rights1
|
|
and
rights
|
|
reflected in
column (a))
|
|
Equity
compensation plans approved by
security holders
|
|
68,021,668
|
|
|
$44.2440
|
|
|
16,229,601
|
|
|
Equity
compensation plans not approved
by security holders
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
Total
|
|
68,021,668
|
|
|
$44.2440
|
|
|
16,229,601
|
|
|
|
1
|
Excludes any
cash payments in-lieu-of stock.
|
Item
13. Certain
Relationships and Related Transactions, and Director
Independence.
|
Information
required by this Item is incorporated by reference from the 2010 Proxy
Statement.
Item
14. Principal
Accountant Fees and
Services.
|
Information
required by this Item is incorporated by reference from the 2010 Proxy
Statement.
Item
15. Exhibits and
Financial Statement
Schedules.
|
(a) The
following documents are incorporated by reference from Exhibit 13:
1. Financial
Statements:
|
·
|
Report of
Independent Registered Public Accounting
Firm
|
|
·
|
Statement 1
- Consolidated Results of
Operations
|
|
·
|
Statement 2
- Consolidated Financial
Position
|
|
·
|
Statement 3
- Changes in Consolidated Stockholders’
Equity
|
|
·
|
Statement 4
- Consolidated Statement of Cash
Flow
|
|
·
|
Notes to
Consolidated Financial Statements
|
2. Financial Statement
Schedules:
|
·
|
All schedules are
omitted because the required information is shown in the financial
statements or the notes thereto incorporated by reference from Exhibit 13
or considered to be
immaterial.
|
(b)
|
Exhibits:
|
|
3.1
|
Restated
Certificate of Incorporation (incorporated by reference from Exhibit 3(i)
to the Form 10-Q filed for the quarter ended March 31, 1998).
|
|
3.2
|
Bylaws amended and restated as of December 9, 2009
(incorporated by reference from Exhibit 3.2 to Form 8-K filed December 15,
2009).
|
|
4.1
|
Indenture
dated as of May 1, 1987, between Caterpillar Inc. and The
First National Bank of Chicago, as Trustee (incorporated by reference from
Exhibit 4.1 to Form S-3 (Registration No. 333-22041) filed
February 19, 1997).
|
|
4.2
|
First
Supplemental Indenture, dated as of June 1, 1989, between Caterpillar
Inc. and The First National Bank of Chicago, as Trustee (incorporated by
reference from Exhibit 4.2 to Form S-3 (Registration
No. 333-22041) filed February 19, 1997).
|
|
4.3
|
Appointment of
Citibank, N.A. as Successor Trustee, dated October 1, 1991, under the
Indenture, as supplemented, dated as of May 1, 1987 (incorporated by
reference from Exhibit 4.3 to Form S-3 (Registration
No. 333-22041) filed February 19, 1997).
|
|
4.4
|
Second
Supplemental Indenture, dated as of May 15, 1992, between Caterpillar
Inc. and Citibank, N.A., as Successor Trustee (incorporated by reference
from Exhibit 4.4 to Form S-3 (Registration No. 333-22041)
filed February 19, 1997).
|
|
4.5
|
Third
Supplemental Indenture, dated as of December 16, 1996, between
Caterpillar Inc. and Citibank, N.A., as Successor Trustee (incorporated by
reference from Exhibit 4.5 to Form S-3 (Registration
No. 333-22041) filed February 19, 1997).
|
|
4.6
|
Tri-Party
Agreement, dated as of November 2, 2006, between Caterpillar Inc.,
Citibank, N.A. and U.S. Bank National Association appointing U.S. Bank as
Successor Trustee under the Indenture dated as of May 1, 1987, as
amended and supplemented (incorporated by reference from Exhibit 4.6 to
the 2006 Form 10-K).
|
|
10.1
|
Caterpillar
Inc. 1996 Stock Option and Long-Term Incentive Plan amended and restated
through fourth amendment (incorporated by reference from Exhibit 10.1 to
the 2008 Form 10-K).*
|
|
10.2
|
Caterpillar
Inc. 2006 Long-Term Incentive Plan as amended and restated through fifth
amendment (incorporated by reference from Exhibit 10.2 to the 2008 Form
10-K).*
|
|
10.3
|
Supplemental
Pension Benefit Plan, as amended and restated January 2003 (incorporated
by reference from Exhibit 10.3 to the 2004 Form 10-K).*
|
|
10.4
|
Supplemental
Employees’ Investment Plan, as amended and restated through June 1,
2009.*
|
|
10.5
|
Caterpillar
Inc. Executive Short-Term Incentive Plan, as amended and restated through
first amendment effective as of February 14, 2007.*
|
|
10.6
|
Directors’
Deferred Compensation Plan, as amended and restated through January 1,
2005 (incorporated by reference from Exhibit 10.6 to the 2006 Form
10-K).*
|
|
10.7
|
Directors’
Charitable Award Program, as amended and restated through April 1, 2008
(incorporated by reference from Exhibit 10.7 to the 2008 Form 10-K).*
|
|
10.8
|
Deferred
Employees’ Investment Plan, as amended and restated through June 1,
2009.*
|
|
10.9
|
Solar Turbines
Incorporated Managerial Retirement Objective Plan, as amended and restated
through first amendment effective July 16, 2009.*
|
|
10.10
|
Solar Turbines
Incorporated Pension Plan for European Foreign Service Employees, as
amended and restated effective January 1, 2005.*
|
|
10.11
|
Five-Year
Credit Agreement dated September 21, 2006 (2006 Five-Year Credit
Agreement) among Caterpillar Inc., Caterpillar Financial Services
Corporation, Caterpillar International Finance p.l.c. and Caterpillar
Finance Corporation, the Banks named therein, Citibank, N.A., The Bank of
Tokyo-Mitsubishi UFJ, Ltd., Citibank International plc, ABN AMRO Bank
N.V., Bank of America, N.A., Barclays Bank PLC, J.P. Morgan Securities,
Inc., Société Générale and Citigroup Global Markets Inc. (incorporated by
reference from Exhibit 99.1 to Form 8-K filed September 26,
2006).
|
|
10.12
|
Amendment No.
1 to the 2006 Five-Year Credit Agreement (incorporated by reference from
Exhibit 10.12 to Form 10-Q filed October 31, 2008).
|
|
10.13
|
Omnibus
Amendment and Waiver Agreement (Amendment No. 2) to the 2006 Five-Year
Credit Agreement (incorporated by reference from Exhibit 10.13 to Form
10-Q filed October 31, 2008).
|
|
10.14
|
Amendment No.
3 to the 2006 Five-Year Credit Agreement (incorporated by reference from
Exhibit 99.4 to Form 8-K filed September 23, 2008).
|
|
10.15
|
Amendment No.
4 to the 2006 Five-Year Credit Agreement (incorporated by reference from
Exhibit 99.3 to Form 8-K filed January 26, 2009).
|
|
10.16
|
Amendment No.
5 to the 2006 Five-Year Credit Agreement (incorporated by reference from
Exhibit 99.5 to the Form 8-K filed September 23,
2009).
|
|
10.17
|
Japan Local
Currency Addendum to the 2006 Five-Year Credit Agreement (2006 Japan Local
Currency Addendum) (incorporated by reference from Exhibit 99.2 to
Form 8-K filed September 26, 2006).
|
|
10.18
|
Amendment No.
1 to 2006 Japan Local Currency Addendum among Caterpillar Financial
Services Corporation, Caterpillar Finance Corporation, The Bank of
Tokyo-Mitsubishi UFJ, Ltd. and Citibank, N.A. (incorporated by reference
from Exhibit 99.5 to Form 8-K filed January 26, 2009).
|
|
10.19
|
Local Currency
Addendum to the 2006 Five-Year Credit Agreement (2006 Local Currency
Addendum) (incorporated by reference from Exhibit 99.3 to Form 8-K filed
September 26, 2006).
|
|
10.20
|
Amendment No.
1 to 2006 Local Currency Addendum among Caterpillar Financial Services
Corporation, Caterpillar Finance Corporation, The Bank of Tokyo-Mitsubishi
UFJ, Ltd. and Citibank, N.A. (incorporated by reference from Exhibit 99.6
to
Form 8-K filed
January 26, 2009).
|
|
10.21
|
Five-Year
Credit Agreement dated September 20, 2007 (2007 Five-Year Credit
Agreement) among Caterpillar Inc., Caterpillar Financial Services
Corporation and Caterpillar Finance Corporation, certain financial
institutions named therein, Citibank, N.A., The Bank of Tokyo-Mitsubishi
UFJ, Ltd., ABN AMRO Bank N.V., Bank of America, N.A., Barclays Bank PLC,
J.P. Morgan Securities, Inc., Société Générale and Citigroup Global
Markets Inc. (incorporated by reference from Exhibit 99.1 to Form 8-K
filed September 25, 2007).
|
|
10.22
|
Amendment No.
1 to the 2007 Five-Year Credit Agreement (incorporated by reference from
Exhibit 99.3 to Form 8-K filed September 23, 2008).
|
|
10.23
|
Amendment No.
2 to the 2007 Five-Year Credit Agreement (incorporated by reference from
Exhibit 99.2 to Form 8-K filed January 26, 2009).
|
|
10.24
|
Amendment No.
3 to the 2007 Five-Year Credit Agreement (incorporated by reference from
Exhibit 99.4 to the Form 8-K filed September 23, 2009).
|
|
10.25
|
Japan Local
Currency Addendum to the 2007 Five-Year Credit Agreement (2007 Japan Local
Currency Addendum) (incorporated by reference from Exhibit 99.2 to
Form 8-K filed September 25, 2007).
|
|
10.26
|
Amendment No.
1 to 2007 Japan Local Currency Addendum (incorporated by reference from
Exhibit 99.4 to Form 8-K filed January 26, 2009).
|
|
10.27
|
364-Day Credit
Agreement dated March 31, 2009 (2009 364-Day Backup Facility) among
Caterpillar Inc., Caterpillar Financial Services Corporation, the Banks
named therein and Citibank, N.A. (incorporated by reference from Exhibit
99.1 to Form 8-K/A filed April 8, 2009) and Notice of Bank Addition and
Assumption and Acceptance dated April 7, 2009 (incorporated by reference
from Exhibit 99.2 to Form 8-K/A filed April 8, 2009).
|
|
10.28
|
Amendment No.
1 to the 2009 364-Day Backup Facility (incorporated by reference from
Exhibit 99.3 to the Form 8-K filed September 23, 2009).
|
|
10.29
|
364-Day Credit
Agreement dated September 17, 2009 (2009 364-Day Credit Agreement) among
Caterpillar Inc., Caterpillar Financial Services Corporation,
Caterpillar Finance Corporation, the Banks named therein, Citibank, N.A.,
The Bank of Tokyo-Mitsubishi UFJ, Ltd., The Royal Bank of Scotland PLC,
Bank of America, N.A., Barclays Bank PLC, J.P. Morgan Securities, Inc.,
Société Générale and Citigroup Global Markets Inc. (incorporated by
reference from Exhibit 99.1 to the Form 8-K filed September 23,
2009).
|
|
10.30
|
Joint Venture
Operating Agreement dated September 9, 2009 by and among Caterpillar Inc.
and Navistar Inc. (incorporated by reference from Exhibit 10.1 to the Form
8-K filed September 15, 2009).
|
|
11
|
Computations
of Earnings per Share.
|
|
12
|
Computation of
Ratios of Earnings to Fixed Charges.
|
|
13
|
General and
Financial Information for 2009 containing the information required by SEC
Rule 14a-3 for an annual report to security holders.
|
|
14
|
Caterpillar
Worldwide Code of Conduct (incorporated by reference from Exhibit 14 to
the 2005 Form 10-K).
|
|
21
|
Subsidiaries
and Affiliates of the Registrant.
|
|
23
|
Consent of
Independent Registered Public Accounting Firm.
|
|
31.1
|
Certification
of James W. Owens, Chairman and Chief Executive Officer of Caterpillar
Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certification
of David B. Burritt, Vice President and Chief Financial Officer of
Caterpillar Inc., pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
32
|
Certification
of James W. Owens, Chairman and Chief Executive Officer of Caterpillar
Inc. and David B. Burritt, Vice President and Chief Financial Officer of
Caterpillar Inc., pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
* |
Management contracts and
compensatory plans and arrangements required to be filed as exhibits
pursuant to Item 15(b) of this report. |
Form
10-K
SIGNATURES
|
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
|
|
|
|
CATERPILLAR
INC.
(Registrant)
|
February 19,
2010
|
|
By:
|
/s/James
B. Buda
|
|
|
|
James B.
Buda, Secretary
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
|
|
|
|
|
February 19,
2010
|
/s/James
W. Owens
|
|
Chairman of
the Board, Director
and Chief
Executive Officer
|
|
(James W.
Owens)
|
|
Vice Chairman
and Chief
|
February 19,
2010
|
/s/Douglas
R. Oberhelman
|
|
Executive
Officer-
Elect/
Group President
|
|
(Douglas R.
Oberhelman)
|
|
|
February 19,
2010
|
/s/
Richard P. Lavin
|
|
Group
President
|
|
(Richard P.
Lavin)
|
|
|
February 19,
2010
|
/s/Stuart
L. Levenick
|
|
Group
President
|
|
(Stuart L.
Levenick)
|
|
|
February
19, 2010
|
/s/Edward
J. Rapp
|
|
Group
President
|
|
(Edward J.
Rapp)
|
|
|
February 19,
2010
|
/s/Gerard
R. Vittecoq
|
|
Group
President
|
|
(Gerard R.
Vittecoq)
|
|
|
February 19,
2010
|
/s/Steven
H. Wunning
|
|
Group
President
|
|
(Steven H.
Wunning)
|
|
|
February 19,
2010
|
/s/David
B. Burritt
|
|
Vice
President and Chief Financial Officer
|
|
(David B.
Burritt)
|
|
|
February 19,
2010
|
/s/Bradley
M. Halverson
|
|
Controller
|
|
(Bradley M.
Halverson)
|
|
|
February 19,
2010
|
/s/Jananne
A. Copeland
|
|
Chief Accounting
Officer |
|
(Jananne A.
Copeland)
|
|
|
February 19,
2010
|
/s/W.
Frank Blount
|
|
Director
|
|
(W. Frank
Blount)
|
|
|
February 19,
2010
|
/s/John
R. Brazil
|
|
Director
|
|
(John R.
Brazil)
|
|
|
February 19,
2010
|
/s/Daniel
M. Dickinson
|
|
Director
|
|
(Daniel M.
Dickinson)
|
|
|
February 19,
2010
|
/s/John
T.Dillon
|
|
Director
|
|
(John T.
Dillon)
|
|
|
February 19,
2010
|
/s/Eugene
V. Fife
|
|
Director
|
|
(Eugene V.
Fife)
|
|
|
February 19,
2010
|
/s/Gail
D. Fosler
|
|
Director
|
|
(Gail D.
Fosler)
|
|
|
February 19,
2010
|
/s/Juan
Gallardo
|
|
Director
|
|
(Juan
Gallardo)
|
|
|
February 19,
2010
|
/s/David
R. Goode
|
|
Director
|
|
(David R.
Goode)
|
|
|
February 19,
2010
|
/s/Peter
A. Magowan
|
|
Director
|
|
(Peter A.
Magowan)
|
|
|
February 19,
2010
|
/s/William
A. Osborn
|
|
Director
|
|
(William A.
Osborn)
|
|
|
February 19,
2010
|
/s/Charles
D. Powell
|
|
Director
|
|
(Charles D.
Powell)
|
|
|
February 19,
2010
|
/s/Edward
B. Rust, Jr.
|
|
Director
|
|
(Edward B.
Rust, Jr.)
|
|
|
February 19,
2010
|
/s/Susan
C. Schwab
|
|
Director
|
|
(Susan C.
Schwab)
|
|
|
February 19,
2010
|
Joshua
I. Smith
|
|
Director
|
|
(Joshua I.
Smith)
|
|
|