CATERPILLAR INC | 2013 | FY | 3


Available-for-sale securities
 
We have investments in certain debt and equity securities, primarily at Insurance Services, that have been classified as available-for-sale and recorded at fair value based upon quoted market prices.  These investments are primarily included in Other assets in Statement 3.  Unrealized gains and losses arising from the revaluation of available-for-sale securities are included, net of applicable deferred income taxes, in equity (Accumulated other comprehensive income (loss) in Statement 3).  Realized gains and losses on sales of investments are generally determined using the FIFO (first-in, first-out) method for debt instruments and the specific identification method for equity securities.  Realized gains and losses are included in Other income (expense) in Statement 1.
 
 
 
December 31, 2013
 
December 31, 2012
 
December 31, 2011
(Millions of dollars)
 
Cost
Basis
 
Unrealized
Pretax Net
Gains
(Losses)
 
Fair
Value
 
Cost
Basis
 
Unrealized
Pretax Net
Gains
(Losses)
 
Fair
Value
 
Cost
Basis
 
Unrealized
Pretax Net
Gains
(Losses)
 
Fair
Value
Government debt
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. treasury bonds
 
$
10

 
$

 
$
10

 
$
10

 
$

 
$
10

 
$
10

 
$

 
$
10

Other U.S. and non-U.S. government bonds
 
119

 
1

 
120

 
144

 
2

 
146

 
90

 
2

 
92

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate bonds
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Corporate bonds
 
612

 
21

 
633

 
626

 
38

 
664

 
542

 
30

 
572

Asset-backed securities
 
72

 

 
72

 
96

 

 
96

 
112

 
(1
)
 
111

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed debt securities
 
 
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. governmental agency
 
322

 
(1
)
 
321

 
291

 
8

 
299

 
297

 
13

 
310

Residential
 
18

 

 
18

 
26

 
(1
)
 
25

 
33

 
(3
)
 
30

Commercial
 
87

 
6

 
93

 
117

 
10

 
127

 
142

 
3

 
145

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity securities
 
 
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Large capitalization value
 
173

 
81

 
254

 
147

 
38

 
185

 
127

 
21

 
148

Smaller company growth
 
25

 
24

 
49

 
22

 
12

 
34

 
22

 
7

 
29

Total
 
$
1,438

 
$
132

 
$
1,570

 
$
1,479

 
$
107

 
$
1,586

 
$
1,375

 
$
72

 
$
1,447

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

During 2013, 2012 and 2011, charges for other-than-temporary declines in the market values of securities were $1 million, $2 million and $5 million, respectively.  These charges were accounted for as realized losses and were included in Other income (expense) in Statement 1.  The cost basis of the impacted securities was adjusted to reflect these charges.

 
Investments in an unrealized loss position that are not other-than-temporarily impaired:
 
 
 
 
 
December 31, 2013
 
 
Less than 12 months 1
 
12 months or more 1
 
Total
(Millions of dollars)
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Corporate bonds
 
 

 
 

 
 

 
 

 
 

 
 

Corporate bonds
 
$
159

 
$
2

 
$
1

 
$

 
$
160

 
$
2

Asset-backed securities
 
6

 

 
20

 
1

 
26

 
1

 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed debt securities
 
 

 
 

 
 

 
 

 
 

 
 

U.S. governmental agency
 
140

 
4

 
65

 
2

 
205

 
6

Total
 
$
305

 
$
6

 
$
86

 
$
3

 
$
391

 
$
9

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

Investments in an unrealized loss position that are not other-than-temporarily impaired:
 
 
 
 
 
December 31, 2012
 
 
Less than 12 months 1
 
12 months or more 1
 
Total
(Millions of dollars)
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Corporate bonds
 
 

 
 

 
 

 
 

 
 

 
 

Asset-backed securities
 
$

 
$

 
$
20

 
$
3

 
$
20

 
$
3

 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed debt securities
 
 

 
 

 
 

 
 

 
 

 
 

U.S. governmental agency
 
84

 
1

 
15

 

 
99

 
1

Residential
 

 

 
14

 
1

 
14

 
1

 
 
 
 
 
 
 
 
 
 
 
 
 
Equity securities
 
 
 
 
 
 
 
 
 
 

 
 

Large capitalization value
 
25

 
2

 
10

 
1

 
35

 
3

Total
 
$
109

 
$
3

 
$
59

 
$
5

 
$
168

 
$
8

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


Investments in an unrealized loss position that are not other-than-temporarily impaired:
 
 
December 31, 2011
 
 
Less than 12 months 1
 
12 months or more 1
 
Total
(Millions of dollars)
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Corporate bonds
 
 

 
 

 
 

 
 

 
 

 
 

Corporate bonds
 
$
54

 
$
1

 
$
1

 
$

 
$
55

 
$
1

Asset-backed securities
 
1

 

 
20

 
5

 
21

 
5

 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed debt securities
 
 

 
 

 
 

 
 

 
 

 
 

U.S. governmental agency
 
51

 
1

 

 

 
51

 
1

Residential
 
3

 

 
18

 
3

 
21

 
3

Commercial
 
15

 

 
8

 
1

 
23

 
1

 
 
 
 
 
 
 
 
 
 
 
 
 
Equity securities
 
 

 
 

 
 

 
 

 
 

 
 

Large capitalization value
 
36

 
5

 
6

 
1

 
42

 
6

Smaller company growth
 
4

 
1

 

 

 
4

 
1

Total
 
$
164

 
$
8

 
$
53

 
$
10

 
$
217

 
$
18

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


Corporate Bonds.  The unrealized losses on our investments in corporate bonds and asset-backed securities relate to changes in interest rates and credit-related yield spreads since time of purchase.  We do not intend to sell the investments and it is not likely that we will be required to sell the investments before recovery of their amortized cost basis.  We do not consider these investments to be other-than-temporarily impaired as of December 31, 2013.
 
Mortgage-Backed Debt Securities.  The unrealized losses on our investments in mortgage-backed securities are a function of higher delinquencies, default rates and underlying market yields since time of purchase.  We do not intend to sell the investments and it is not likely that we will be required to sell these investments before recovery of their amortized cost basis.  We do not consider these investments to be other-than-temporarily impaired as of December 31, 2013.
 
The cost basis and fair value of the available-for-sale debt securities at December 31, 2013, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay and creditors may have the right to call obligations.
 
 
 
 
 
 
 
December 31, 2013
(Millions of dollars)
 
Cost Basis
 
Fair Value
Due in one year or less
 
$
187

 
$
188

Due after one year through five years
 
572

 
592

Due after five years through ten years
 
24

 
25

Due after ten years
 
30

 
30

U.S. governmental agency mortgage-backed securities
 
322

 
321

Residential mortgage-backed securities
 
18

 
18

Commercial mortgage-backed securities
 
87

 
93

Total debt securities – available-for-sale
 
$
1,240

 
$
1,267

 
 
 
 
 
  
 
 
 
 
 
 
 
Sales of Securities:
 
 
 
 
 
 
 
 
Years Ended December 31,
(Millions of dollars)
 
2013
 
2012
 
2011
Proceeds from the sale of available-for-sale securities
 
$
449

 
$
306

 
$
247

Gross gains from the sale of available-for-sale securities
 
$
22

 
$
6

 
$
4

Gross losses from the sale of available-for-sale securities
 
$
2

 
$

 
$
1

 
 
 
 
 
 
 

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