11-K 1 caterpillarglobalminingleg.htm 11-K Document

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 
 
 
FORM 11-K
 
(Mark
One)		 
[X]
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
[  ]
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
 
 
Commission File No. 1-768
 
 
 
 
 
CATERPILLAR GLOBAL MINING LEGACY HOURLY EMPLOYEES' SAVINGS PLAN
(Full title of the plan and the address of the plan, if different from that of the issuer named below)
 
 
 
 
CATERPILLAR INC.
510 Lake Cook Road, Suite 100, Deerfield, Illinois 60015
 (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office)
 
 
 
 
 
 











Caterpillar Global Mining Legacy Hourly Employees' Savings Plan
Financial Statements and Supplemental Schedule
December 31, 2020 and 2019



Caterpillar Global Mining Legacy Hourly Employees' Savings Plan 
Index
  
 
Page(s)
 
Report of Independent Registered Public Accounting Firm 
 
Financial Statements 
 
 
Supplemental Schedule
 
Exhibit Index
23.1 - Consent of Independent Registered Public Accounting Firm 
 
Note: Other schedules required by 29 CFR 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable. 
 



Report of Independent Registered Public Accounting Firm
To the Administrator and Plan Participants of Caterpillar
Global Mining Legacy Hourly Employees' Savings Plan

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for benefits of Caterpillar Global Mining Legacy Hourly Employees’ Savings Plan (the “Plan”) as of December 31, 2020 and 2019, and the related statement of changes in net assets available for benefits for the year ended December 31, 2020, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2020 and 2019, and the changes in net assets available for benefits for the year ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Supplemental Information

The supplemental Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2020 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental schedule is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental schedule reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the supplemental schedule, we evaluated whether the supplemental schedule, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental schedule is fairly stated, in all material respects, in relation to the financial statements as a whole.


/s/ PricewaterhouseCoopers LLP

Peoria, Illinois
June 25, 2021

We have served as the Plan’s auditor since 2013.


Caterpillar Global Mining Legacy Hourly Employees' Savings Plan
Statements of Net Assets Available for Benefits
December 31, 2020 and 2019
(in thousands of dollars)20202019
Investments  
Interest in the Master Trust$47,221 $44,643 
Other investments – participant directed brokerage accounts168 37 
Total investments47,389 44,680 
 
Receivables
  
Notes receivable from participants753 856 
Participant contributions receivable28 — 
Employer contributions receivable54 45 
Receivables for securities sold – participant directed brokerage accounts— 10 
Total receivables835 911 
Cash2 — 
Total assets48,226 45,591 
Liabilities
Payables for securities purchased – participant directed brokerage accounts(2)(10)
Net assets available for benefits$48,224 $45,581 
See accompanying notes to the financial statements.




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Caterpillar Global Mining Legacy Hourly Employees' Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2020
(in thousands of dollars)2020
Investment income (loss) 
Plan interest in net investment income (loss) of the Master Trust$5,652 
Net appreciation (depreciation) in fair value of investments from participant directed brokerage accounts 5 
Net investment income (loss)5,657 
Interest and dividend income 
Interest income on notes receivable from participants43 
Interest and dividend income from participant directed brokerage accounts6 
Total interest and dividend income49 
 
Contributions
 
Participant1,610 
Employer977 
Total contributions2,587 
 
Deductions
Participant withdrawals(5,602)
Administrative expenses(48)
Total deductions(5,650)
Net increase (decrease) in net assets available for benefits2,643 
Net assets available for benefits 
Beginning of year45,581 
End of year$48,224 
See accompanying notes to the financial statements.




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Caterpillar Global Mining Legacy Hourly Employees' Savings Plan
Notes to Financial Statements
December 31, 2020 and 2019

1.Plan Description
The following description of the Caterpillar Global Mining Legacy Hourly Employees' Savings Plan (the “Plan”) provides only general information. Participants should refer to the Plan documents for more complete information regarding the Plan.

General
The Plan is a profit sharing plan that includes a cash or deferred arrangement under Section 401(k) of the Internal Revenue Code ("IRC") and is an "employee stock ownership plan" within the meaning of IRC Section 4975(e)(7). The Plan is maintained and sponsored by Caterpillar Inc. (the "Company") for employees of Caterpillar Global Mining LLC, a 100 percent-owned subsidiary of the Company, and enables eligible employees to accumulate funds for retirement. The Plan is governed by the provisions of the Employee Retirement Income Security Act, as amended (“ERISA”).

Participation
Employees whose employment is governed by the collective bargaining agreement with the Steelworkers Union Local #1343 ("SMKE") and those whose employment is governed by the collective bargaining agreement certified by the National Labor Relations Board Case No. 16-RC-7210 ("Denison") are eligible to participate in the Plan. SMKE employees are eligible to participate in the Plan after they have completed 480 hours of service and Denison employees are generally eligible on the first day of employment. Plan participation is voluntary and participating eligible employees (the "participants") elect to defer a portion of their eligible compensation through pre-tax and after-tax contributions.

Contributions
All participants are eligible to make participant contributions up to 70 percent of their eligible compensation through a pre-tax deferral arrangement and an after-tax Roth 401(k) arrangement as elected by each participant. Participants who are at least 50 years old by the end of the calendar year are allowed to make a catch-up contribution for that year. Contributions are subject to certain limitations set by the IRC.

All participants also are eligible for employer matching contributions which are 100 percent of participant 401(k) contributions up to a maximum of 6 percent of eligible compensation.

Participants direct the investment of their contributions and employer matching contributions into various investment options offered by the Plan as discussed in Note 3. Participants generally may change their contribution elections and prospective investment elections on a daily basis and reallocate the investment of their existing account balances either daily or every seven business days (if subject to applicable trading restrictions) depending on the investment.

Newly eligible participants are subject to an automatic enrollment process. Unless electing otherwise, participants who become newly eligible will be enrolled with a default 6 percent deferral of their eligible compensation, and their default investment election is the Target Retirement Fund ("TRF") closest to the year in which the participant turns age 65. The salary deferral for Denison participants will increase by an additional 1 percent each subsequent year up to a maximum 15 percent, unless otherwise instructed by the participant. The salary deferral for SMKE participants will increase by an additional 1 percent each subsequent year up to a maximum established by the Plan Administrator, unless otherwise instructed by the participant.

Participant Accounts
Accounts are separately maintained for each participant. The participant's account is credited with the participant's contributions, employer matching contributions, Plan earnings/losses (based on each participant's investment elections) and charged with administrative expenses. Participants are entitled to the benefit that can be provided from the participant's vested account.

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Vesting and Distribution Provisions
Participants are fully vested in their participant contributions and related earnings thereon. SMKE participants also vest immediately in the employer matching contributions and the related earnings thereon. Denison participants fully vest in their employer matching contributions and the related earnings thereon as follows:

Years of ServicePercentage Vested
Less than one0%
120%
240%
360%
480%
5 and more100%

The Plan provides for 100 percent vesting of all contributions and the related earnings thereon upon a participant's death while actively employed or disabled or a participant's death while performing qualified military service.

Upon termination of employment for any reason, including death or retirement, the balance in a participant's vested account is distributable in a single lump sum cash payment. Historically, the Plan allowed the participant (or beneficiary) to elect periodic withdrawals. Any current benefits being paid as periodic withdrawals will continue to be paid in installments until participant's vested account balance is fully distributed. Participants also have the option to leave their vested account balances in the Plan, subject to certain limitations. A participant also may elect to receive a distribution of Company stock up to the amount of the participant's balance in the Caterpillar Stock Fund on date of election. The value of shares will be based upon the average price per share The Northern Trust Company (the “Trustee”) receives from the sale of Company shares for the purpose of making the distribution.

Company contributions forfeited by terminated participants are used to reduce future Company contributions to the Plan. The amount forfeited and used to reduce Company contributions for the year ended December 31, 2020 was $15 thousand.

On March 27, 2020, Congress enacted the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, which allows Plan participants who have been diagnosed with COVID (including a spouse or dependent), or participants who have suffered financial hardship due to the pandemic the ability to receive COVID-related distributions from their 401(k) accounts. This relief requires that a participant certify they have been impacted by COVID-19 in order to qualify. Qualified participants had the option to take a coronavirus (“CV”) distribution from June 2, 2020 to December 31, 2020 from their vested account balances. They were able to take as many CV distributions as they so chose; however, the aggregate amount was not to exceed the lesser of $100,000 or the participant’s vested account balances. The CV distributions were not subject to the early distribution penalty or mandatory income tax withholding. Participants still employed by the Company or a subsidiary may elect to repay all or a portion of the CV distribution(s) to the Plan within three years.

Additionally, the CARES Act waived the required minimum distributions from 401(k) accounts for 2020. As a result, the required minimum payments were not made automatically, however Plan participants had the option to elect to receive their minimum payment. Plan participants who had already received their required minimum distribution in 2020 prior to the enactment of the CARES Act had the opportunity to roll those funds back into their 401(k) account.









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Notes Receivable from Participants
The Plan provides for participant loans against eligible participant account balances. Eligible participants obtain loans by filing a loan application with the Plan's recordkeeper and receiving all requisite approvals. Loan amounts are generally limited to the lesser of $50,000 or 50 percent of the individual participant's vested account balance, with certain regulatory restrictions. The minimum loan permitted is $1,000 and participants may only have one outstanding loan at any time. Each loan specifies a repayment period that cannot extend beyond five years. Loans bear interest at the prime interest rate plus 1 percent, as determined at the time of loan origination. Loans that transferred to the Plan due to acquisitions are based upon the terms of the plan agreement in effect at the time of loan origination. Repayments, including interest, are made through payroll deductions and are credited to the individual participant's account balance. Participant loans are measured at their unpaid principal balance plus any accrued but unpaid interest. For participant loans that are in default, the amount of the unpaid loan principal and interest due to the Plan will be treated as a deemed distribution.  Deemed distributions are reported as a taxable distribution and remain part of the participant’s account balance until a distributable event occurs (i.e., termination of employment). 
 
Along with the changes listed above in the Vesting and Distribution Provisions section, the CARES Act also allowed a qualified participant the ability to suspend loan repayments for any existing loan due between June 2, 2020 through December 31, 2020. When loan payments recommenced on January 1, 2021, they were subsequently reamortized to reflect any suspended payments, adjusted for interest and the terms of the loan extended for one year.

Administration
The Plan is administered by the Company. Pursuant to procedures adopted by the Company, responsibility for the Plan's non-financial matters has been delegated to the Benefits Administrative Committee and responsibility for the Plan's financial matters has been delegated to the Caterpillar Inc. Benefit Funds Committee. The Company and the Benefit Funds Committee have entered into a trust agreement with the Trustee to receive contributions, administer the assets of the Plan and distribute withdrawals pursuant to the Plan. The Company has retained Alight Solutions to provide recordkeeping and administrative services as part of the administration of the Plan.

Plan Termination
The Company has the right under the Plan at any time to terminate the Plan, subject to provisions of ERISA and subject to the terms of any applicable collective bargaining agreement. In the event of Plan termination, participants will become fully vested in all benefits which have been accrued up to the date of Plan termination and Plan assets will be distributed in accordance with the provisions of the Plan.

Plan Qualification
The Plan obtained its latest determination letter on March 16, 2015, in which the Internal Revenue Service ("IRS") stated that the Plan and related trust, as then designed, were in compliance with the applicable requirements of the IRC. Although the Plan has been amended subsequent to the period covered by the determination letter, the Plan Administrator and the Plan's counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC, and therefore, believe that the Plan is qualified and the related trust is tax-exempt.

Accounting principles generally accepted in the United States of America require management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Company has analyzed the tax positions taken by the Plan and has concluded that, as of December 31, 2020 and 2019, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Company believes the Plan is no longer subject to income tax examinations for tax years prior to 2011.

2.Summary of Significant Accounting Policies

Basis of Accounting
The financial statements of the Plan are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
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Investments
The Plan's interest in the Caterpillar Investment Trust ("Master Trust") and investments included in the participant directed brokerage accounts are valued as described in Note 4. Interest on investments is recorded daily as earned. Dividends are recorded on the ex-dividend date. The Master Trust presents, in Note 4, in Net investment income (loss), the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains (losses) and the unrealized appreciation (depreciation) on those investments. Purchases and sales of securities are recorded on a trade-date basis.

Administrative Expenses
The Plan charges a $5 per month per participant fee, which is transferred monthly from the Master Trust into a holding account to pay expenses as they come due. If a participant has an account in more than one plan sponsored by the Company or an affiliate, they will only be charged one $5 per month fee. The amount accumulated in the holding account is used to pay certain administrative expenses that have been approved by the Benefit Funds Committee including recordkeeping fees, trustee fees, plan education and audit fees. The Company pays any administrative expenses which exceed amounts collected from participants annually by the Plan, excluding applicable expenses paid directly from participant accounts described below. If amounts collected from participants exceed certain administrative expenses, the Company determines whether a corrective action is appropriate which could include a reallocation of funds back to participant accounts or a structural change to the participant fees.

In addition, certain administrative expenses are paid directly from participant accounts. These administrative expenses include monthly fees for participants that utilize professional management services and processing fees for qualified domestic relations orders and participant loans.

Participant Withdrawals
Participant withdrawals are recorded when paid.

Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimated.

Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities could occur in the near term and that such changes could materially affect participant account balances and the amounts reported in the Statements of Net Assets Available for Benefits.

Subsequent Events
The Plan has evaluated subsequent events through June 25, 2021, the date the financial statements were available to be issued, and concluded there were no events or transactions that required recognition or disclosure in the Plan’s financial statements.

3.Investment Programs
Investment options that are currently available to participants consist of three main categories: TRFs, core investment options (including the Caterpillar Stock Fund) and a participant directed brokerage option.

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The TRFs are portfolios created primarily from the Plan’s core investment options. The goal of these funds is to give participants investment options that provide an age appropriate asset allocation. Each TRF contains a blend of stock and bond investments. The proportion of stocks and bonds in each fund is based on an anticipated retirement date and reduces exposure in equities and increases fixed income and other certain investments as the participant’s anticipated retirement date approaches or passes.

In addition to the TRFs, the Plan also provides participants with core investment options which are made up of actively managed investment funds and index funds. The following table presents the investment funds and index funds that were available to participants as of December 31, 2020 and 2019.

Menu of Core Investment Options
U.S. Large Cap Equity FundsCapital Preservation Funds
1 Caterpillar Stock Fund
2 U.S. Large Cap Equity Fund
3 U.S. Large Cap Equity Index Fund 		8 Stable Principal Fund
9 Money Market Fund
U.S. Small/Mid Cap Equity FundsFixed Income Funds
4 U.S. Small/Mid Cap Equity Fund
5 U.S. Small/Mid Cap Equity Index Fund 		10 Bond Fund
11 Bond Index Fund
International Equity Funds
6 International Equity Fund
7 International Equity Index Fund

The Caterpillar Stock Fund consists of Caterpillar Inc. common stock and a small amount of cash and/or cash equivalents.

The participant directed brokerage option allows participants to invest outside of the standard Plan options. Alight Financial Solutions is the introducing broker/dealer and Pershing, a division of BNY Mellon, is the custodian/clearing firm for the participant directed brokerage option. The types of investments offered through the participant directed brokerage option are individual company stocks (excluding Caterpillar Inc. common stock), exchange traded funds, registered investment companies and fixed income securities such as bonds.

Participants also have the option to enroll in professional account management services through the Plan’s recordkeeper for additional, separately charged fees.

4.    Master Trust
Substantially all of the Plan's investments are held in the Master Trust, which was established for the investment of the Plan and other Company sponsored retirement plans. The Northern Trust Company is the Trustee of the Master Trust and the custodian for funds invested through the core investments and the TRFs (the funds invested through the core investments and the TRFs are referred to as the Master Trust herein). The Plan and the other Company sponsored retirement plans pool their investments in the Master Trust in exchange for a percentage of participation in the Master Trust. The Plan has a specific interest in the Master Trust.

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The following table presents the net assets of the Master Trust and the Plan's interest in the net assets of the Master Trust as of December 31, 2020 and 2019.

(in thousands of dollars)Master TrustPlan’s Interest in Master Trust
2020201920202019
ASSETS
Investments, at fair value
Caterpillar Inc. common stock$2,398,869 $2,206,662 $150 $170 
Common stocks2,441,862 2,229,038 8,776 8,648 
Preferred stocks21,580 13,234 114 79 
Preferred corporate bonds and notes23,472 21,797 178 183 
Other corporate bonds and notes845,294 703,139 6,671 5,952 
U.S. government securities680,591 666,845 5,133 5,473 
Common collective trusts6,057,135 5,363,987 23,243 21,359 
Registered investment companies1,195 — 6 — 
Interest bearing cash157,970 72,065 1,198 547 
Other investments, net179,445 198,600 955 1,018 
12,807,413 11,475,367 46,424 43,429 
Investments, at contract value
Fully benefit-responsive synthetic guaranteed investment contracts832,144 680,612 1,819 1,593 
Other assets
Cash2,518 57 14 2 
Receivables for securities sold129,479 94,137 879 735 
Accrued income17,066 16,797 116 119 
149,063 110,991 1,009 856 
Total Master Trust assets13,788,620 12,266,970 49,252 45,878 
LIABILITIES
Payables for securities purchased(278,508)(196,154)(2,031)(1,235)
Net Master Trust assets$13,510,112 $12,070,816 $47,221 $44,643 

The fully benefit-responsive synthetic guaranteed investment contracts are valued at contract value as described in the Investment Contracts section of Note 4. All other investments are stated at fair value and are valued as described below:

•Common and preferred stocks: Primarily valued at quoted market prices.
•Preferred and other corporate bonds and notes: Valued based on matrices or models from reputable pricing vendors and may be determined by factors which include, but are not limited to market quotations, yields, maturities, call features, ratings, institutional size trading in similar groups of securities and developments related to specific securities.
•U.S. government securities: Valued based on matrices or models from reputable pricing vendors.
•Common collective trusts: Primarily stated at net asset value ("NAV") of units held. The Plan's management elected the practical expedient to use NAV in measuring the fair value of the underlying investments.
•Registered investment companies: Valued at quoted market prices that represent the net asset value of shares held by the Master Trust.
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•Interest bearing cash: Stated at cost which approximates fair value.
•Other investments, net: Primarily valued at quoted market prices, when available, or valued based on matrices or models from reputable pricing vendors.
The preceding methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following tables summarize Master Trust investments measured at fair value based on NAV per share using the practical expedient, the unfunded commitments and redemption restrictions as of December 31, 2020 and 2019.

(in thousands of dollars)
December 31, 2020Fair ValueUnfunded CommitmentsRedemption RestrictionsRedemption Frequency (if currently eligible)Redemption Notice Period
Common collective trusts:
Stocks$4,669,624 — NoneDailyNone
Short-term investments$519,645 — NoneDailyNone
U.S. Government securities$830,711 — NoneDailyNone
Private placement - Mortgages$37,155 — 
Yes 1
Monthly 1
Yes 1
1 Redemptions allowed once per month and are restricted to available cash on hand as determined by the trustee of the fund. A notice of redemptions required five days prior to the last business day of the month.

(in thousands of dollars)
December 31, 2019Fair ValueUnfunded CommitmentsRedemption RestrictionsRedemption Frequency (if currently eligible)Redemption Notice Period
Common collective trusts:
Stocks$4,162,018 — NoneDailyNone
Short-term investments$483,285 — NoneDailyNone
U.S. Government securities$682,692 — NoneDailyNone
Private placement - Mortgages$35,992 — 
Yes 1
Monthly 1
Yes 1
1 Redemptions allowed once per month and are restricted to available cash on hand as determined by the trustee of the fund. A notice of redemptions required five days prior to the last business day of the month.

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The following table presents the changes in net assets for the Master Trust for the year ended December 31, 2020.

(in thousands of dollars)2020
Changes in Net Assets:
Caterpillar Inc. common stock net appreciation (depreciation) in fair value of investments$478,896 
Net appreciation (depreciation) in fair value of investments1,222,756 
Interest69,946 
Caterpillar Inc. common stock dividends60,624 
Dividends40,112 
Other income5,300 
Net investment income (loss)1,877,634 
Transfers, net 1
(425,803)
Administrative expenses not directly allocated to the plans and other expenses 2
(12,535)
Increase (decrease) in net assets1,439,296 
Net assets
Beginning of the year12,070,816 
End of the year$13,510,112 
1 Represents items recorded at the plan level such as contributions, benefit payments, plan transfers and plan specific administrative expenses.
2 Primarily related to fees and expenses paid to professional money managers who manage the investment funds.

Investment Contracts
The Master Trust holds fixed income fully benefit-responsive investment contracts, referred to as synthetic guaranteed investment contracts (“synthetic GICs”), in which an investment contract is issued by an insurance company or a financial services institution (Metropolitan Life Insurance Company, Transamerica Premier Life Insurance Company and The Prudential Insurance Company of America). The Plan measures the synthetic GICs at contract value in the Plan's Interest in the Master Trust in the Statements of Net Assets Available for Benefits. The synthetic GICs, which are designed to help preserve principal and provide a stable crediting rate of interest, are fully benefit-responsive and provide that participant initiated withdrawals will be paid at contract value. The synthetic GICs are primarily backed by a portfolio of fixed income investments, which are effectively owned by the Plan. The assets underlying the synthetic GICs are maintained by a third party custodian, separate from the contract issuer's general assets. The synthetic GICs are obligated to provide an interest rate not less than zero. These contracts provide that realized and unrealized gains and losses of the underlying assets are not reflected immediately in the assets of the fund, but rather are amortized, usually over the duration of the underlying assets, through adjustments to the future interest crediting rate. The future interest crediting rate can be adjusted periodically and is primarily based on the current yield-to-maturity of the covered investments, plus or minus amortization of the difference between the market value and contract value of the covered investments over the duration of the covered investments at the time of computation. The issuers guarantee that all qualified participant withdrawals will occur at contract value. There are no reserves against contract value for credit risks of the contract issuers or otherwise.

Employer initiated events, if material, may affect the underlying economics of the investment contracts. These events include plant closings, layoffs, plan termination, bankruptcy or reorganization, merger, early retirement incentive programs, tax disqualification of a trust or other events. The occurrence of one or more employer initiated events could limit the Plan's ability to transact at contract value with the issuers. Except for the employer initiated events above, the synthetic GICs do not permit the issuers to terminate the agreement prior to the scheduled maturity date at an amount different from contract value. As of December 31, 2020, the Company does not believe that the occurrence of an event that would limit the ability of the Plan to transact at contract value with the issuers is probable.
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Fair Value Measurements
The guidance on fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. This guidance also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally-developed market assumptions. In accordance with this guidance, fair value measurements are classified under the following hierarchy:

•Level 1 - Quoted prices for identical instruments in active markets.    
•Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.    
•Level 3 - Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.

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

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

The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the end of the reporting period.

The significance of transfers between levels was evaluated based upon the nature of the financial instrument and size of the transfer relative to total net Master Trust assets. For the year ended December 31, 2020, there were no significant transfers into or out of Levels 1, 2 or 3.

Master Trust assets that are measured at fair value as of December 31, 2020 and 2019 are summarized below. Investments measured at net asset value per share using the practical expedient have not been classified in the fair value hierarchy, but are presented in order to permit reconciliation to the table that presents the net assets of the Master Trust.

 Fair Value Measurements as of December 31, 2020
(in thousands of dollars)Level 1Level 2Measured at NAVTotal
   
Stocks$4,854,837 $7,474 $— $4,862,311 
Corporate bonds and notes— 868,766 — 868,766 
U.S. government securities— 680,591 — 680,591 
Common collective trusts— — 6,057,135 6,057,135 
Registered investment companies1,195 — — 1,195 
Interest bearing cash157,970 — — 157,970 
Other investments, net89,847 89,598 — 179,445 
Total assets$5,103,849 $1,646,429 $6,057,135 $12,807,413 
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 Fair Value Measurements as of December 31, 2019
(in thousands of dollars)Level 1Level 2Measured at NAVTotal
 
Stocks$4,445,289 $3,645 $— $4,448,934 
Corporate bonds and notes— 724,936 — 724,936 
U.S. government securities— 666,845 — 666,845 
Common collective trusts— — 5,363,987 5,363,987 
Interest bearing cash72,065 — — 72,065 
Other investments, net130,944 67,656 — 198,600 
Total assets$4,648,298 $1,463,082 $5,363,987 $11,475,367 

Within the Master Trust, certain investment managers may use derivative financial instruments to meet fund objectives and manage exposure to foreign currency, interest rate and market fluctuations. The following is a description of the types of derivative contracts the Master Trust may use:

•Credit contracts: Credit default swaps are used to manage exposure to credit risk. A credit default swap is a contract in which, for a fee, a protection seller agrees to pay a protection buyer an amount resulting from a credit event on a reference entity. If there is no credit default event or settlement trigger, as defined by the contract, then the protection seller makes no payment to the protection buyer and receives only the contractually specified fee. However, if a credit event occurs, the protection seller will be required to make a payment to the protection buyer.
•Equity contracts: Equity index futures contracts are used by investment managers to invest excess cash into equity benchmarks, such as the MSCI EAFE (developing countries), S&P 500 and S&P MidCap 400. These contracts are settled in cash daily. Investment managers may also invest in equity rights and warrants which gives the holder the right to purchase securities from the issuer at a specific price within a certain time frame.
•Foreign exchange contracts: Foreign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of instruments denominated in foreign currencies. Forward contracts are used by investment managers to manage foreign exchange rate risks associated with certain investments. These contracts are presented gross (buy side of the contract as a receivable and sell side of the contract as a payable) in the table that presents the net assets of the Master Trust.
•Interest rate contracts: Interest rate movements create a degree of risk by affecting the amount of interest payments and the value of debt instruments. Investment managers use interest rate swaps, total return swaps, futures contracts, options and swaptions to manage interest rate risk.

The fair value of these derivative contracts are included in Other investments, net, Receivables for securities sold and Payables for securities purchased in the tabular presentation of the Net Master Trust assets. The related appreciation (depreciation) is included in Net appreciation (depreciation) in fair value of investments in the tabular presentation of the Net investment income (loss) of the Master Trust. As of December 31, 2020 and 2019, the fair value of these derivative financial instruments was $6.0 million and $4.2 million, respectively. In 2020, the effect of these derivatives on Net investment income (loss) of the Master Trust was $15.4 million, which is primarily related to equity contracts and interest rate contracts.

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Participant Directed Brokerage Accounts
The participant directed brokerage account Plan assets are not included in the Master Trust and are primarily related to investments in registered investment companies. The participant directed brokerage account assets that are measured at fair value as of December 31, 2020 and 2019 are summarized below:

Participant directed brokerage accountsFair Value Measurements as of December 31
(in thousands of dollars)20202019
Level 1$139 $19 
Level 229 18 
Total assets$168 $37 

5.    Related-Parties and Parties in Interest
The Trustee is authorized, under contract provisions and by exemption under 29 CFR 408(b) of ERISA regulations, to invest in securities under its control and in securities of the Company.

The investment options available to the participants, as summarized in Note 3, include the Caterpillar Stock Fund (related-party and party in interest). The Master Trust also invests in the U.S. Large Cap Equity Index Fund, U.S. Small/Mid Cap Equity Index Fund, International Equity Index Fund, Money Market Fund, and the Bond Index Fund, which are sponsored and managed by The Northern Trust Company, the Trustee for the Master Trust.

The Northern Trust Company also invests excess cash in equitization accounts and manages liquidity pools for the actively managed investment funds. The custodian of the funds invested in the participant directed brokerage option is Pershing, a division of BNY Mellon, which currently provides third party administrative and other plan related services to the Plan on behalf of Alight Financial Solutions. These transactions, and related fees, as well as participant loans, qualify as exempt party in interest transactions.

6.    Reconciliation of Financial Statements to Form 5500
The following table reconciles the Net assets available for benefits per the audited financial statements to the Form 5500 Annual Report:

 (in thousands of dollars)20202019
 Net assets available for benefits per financial statements$48,224 $45,581 
 Certain deemed distributions of participant loans(45)(105)
Adjustment from contract value to fair value for fully benefit-responsive synthetic guaranteed investment contracts66 17 
 Net assets per Form 5500$48,245 $45,493 

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The following table reconciles the Plan's Net increase (decrease) in net assets available for benefits per the audited financial statements to the Form 5500 Annual Report:

 (in thousands of dollars)2020
 Plan's Net increase (decrease) in net assets available for benefits per financial statements$2,643 
Change in certain deemed distributions of participant loans60 
Change in adjustment from contract value to fair value for fully benefit-responsive synthetic guaranteed investment contracts49 
 Net income (loss) per Form 5500$2,752 

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Supplemental Schedule


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Caterpillar Global Mining Legacy Hourly Employees' Savings Plan
EIN 37-0602744
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2020
(a)
 
(b)
 
(c)
 
(d)
 
(e)
 
 Identity of issue,
borrower, lessor
or similar party		Description of investment, including
maturity date, rate of interest,
collateral, par or maturity value
 
 
Cost
 
Current
value
 
*
 
Plan's interest in the Caterpillar Investment Trust		 
Master Trust – at fair value
 
**
$47,286,412 
*Caterpillar Global Mining Legacy Hourly Emp Savings Plan Self Directed Brokerage CGH - Alight Financial SolutionsParticipant directed brokerage accounts**168,388 
*Notes receivable from participantsParticipant loans net of deemed distributions (various maturity dates through August 28, 2026, various interest rates ranging from 4.25% to 6.50%)—709,782 
  Total Investments $48,164,582 
*   Denotes party in interest.
** Cost information is not applicable for participant directed investments.


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EXHIBIT INDEX


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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
  
CATERPILLAR GLOBAL MINING LEGACY HOURLY EMPLOYEES' SAVINGS PLAN
    
June 25, 2021  
By:		/s/Stephen G. Robertson
   Name:Stephen G. Robertson
   Title:Member, Caterpillar Inc. Benefit Administrative Committee


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