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Segment Information
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Segment Information Segment information
 
A.    Basis for segment information
 
Our Executive Office is comprised of a Chief Executive Officer (CEO), four Group Presidents, a Chief Financial Officer (CFO), a Chief Legal Officer and General Counsel and a Chief Human Resources Officer. The Group Presidents and CFO are accountable for a related set of end-to-end businesses that they manage.  The Chief Legal Officer and General Counsel leads the Law, Security and Public Policy Division. The Chief Human Resources Officer leads the Human Resources Organization. The CEO allocates resources and manages performance at the Group President/CFO level.  As such, the CEO serves as our Chief Operating Decision Maker, and operating segments are primarily based on the Group President/CFO reporting structure.
 
Three of our operating segments, Construction Industries, Resource Industries and Energy & Transportation are led by Group Presidents.  One operating segment, Financial Products, is led by the CFO who also has responsibility for Corporate Services. Corporate Services is a cost center primarily responsible for the performance of certain support functions globally and to provide centralized services; it does not meet the definition of an operating segment. One Group President leads one smaller operating segment that is included in the All Other operating segment.  The Law, Security and Public Policy Division and the Human Resources Organization are cost centers and do not meet the definition of an operating segment.

Segment information for 2021 has been recast due to a methodology change related to how we assign intersegment sales and segment profit from our technology products and services to Construction Industries, Resource Industries and Energy & Transportation. This methodology change did not have a material impact on our segment results.

B.    Description of segments
 
We have five operating segments, of which four are reportable segments. Following is a brief description of our reportable segments and the business activities included in the All Other operating segment:
 
Construction Industries: A segment primarily responsible for supporting customers using machinery in infrastructure and building construction applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes asphalt pavers; backhoe loaders; compactors; cold planers; compact track and multi-terrain loaders; mini, small, medium and large track excavators; forestry machines; material handlers; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; small and medium track-type tractors; track-type loaders; wheel excavators; compact, small and medium wheel loaders; and related parts and work tools. Inter-segment sales are a source of revenue for this segment.
Resource Industries:  A segment primarily responsible for supporting customers using machinery in mining, heavy construction and quarry and aggregates. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes large track-type tractors; large mining trucks; hard rock vehicles; longwall miners; electric rope shovels; draglines; hydraulic shovels; rotary drills; large wheel loaders; off-highway trucks; articulated trucks; wheel tractor scrapers; wheel dozers; landfill compactors; soil compactors; select work tools; machinery components; electronics and control systems and related parts. In addition to equipment, Resource Industries also develops and sells technology products and services to provide customers fleet management, equipment management analytics, autonomous machine capabilities, safety services and mining performance solutions. Resource Industries also manages areas that provide services to other parts of the company, including strategic procurement, lean center of excellence, integrated manufacturing, research and development for hydraulic systems, automation, electronics and software for Cat machines and engines. Inter-segment sales are a source of revenue for this segment.

Energy & Transportation:  A segment primarily responsible for supporting customers using reciprocating engines, turbines, diesel-electric locomotives and related services across industries serving Oil and Gas, Power Generation, Industrial and Transportation applications, including marine- and rail-related businesses. Responsibilities include business strategy, product design, product management, development and testing manufacturing, marketing and sales and product support. The product and services portfolio includes turbines, centrifugal gas compressors, and turbine-related services; reciprocating engine-powered generator sets; integrated systems and solutions used in the electric power generation industry; reciprocating engines, drivetrain and integrated systems and solutions for the marine and oil and gas industries; reciprocating engines, drivetrain and integrated systems and solutions supplied to the industrial industry as well as Cat machinery; electrified powertrain and zero-emission power sources and service solutions development; and diesel-electric locomotives and components and other rail-related products and services, including remanufacturing and leasing. Responsibilities also include the remanufacturing of Caterpillar reciprocating engines and components and remanufacturing services for other companies; and product support of on-highway vocational trucks for North America. Inter-segment sales are a source of revenue for this segment.
 
Financial Products Segment:  Provides financing alternatives to customers and dealers around the world for Caterpillar products and services, as well as financing for vehicles, power generation facilities and marine vessels that, in most cases, incorporate Caterpillar products. Financing plans include operating and finance leases, installment sale contracts, repair/rebuild financing, working capital loans and wholesale financing plans. The segment also provides insurance and risk management products and services that help customers and dealers manage their business risk. Insurance and risk management products offered include physical damage insurance, inventory protection plans, extended service coverage and maintenance plans for machines and engines, and dealer property and casualty insurance. The various forms of financing, insurance and risk management products offered to customers and dealers help support the purchase and lease of Caterpillar equipment. The segment also earns revenues from ME&T, but the related costs are not allocated to operating segments. Financial Products’ segment profit is determined on a pretax basis and includes other income/expense items.
 
All Other operating segment:  Primarily includes activities such as: business strategy; product management and development; manufacturing and sourcing of filters and fluids, undercarriage, ground-engaging tools, fluid transfer products, precision seals, rubber sealing and connecting components primarily for Cat® products; parts distribution; integrated logistics solutions; distribution services responsible for dealer development and administration, including a wholly owned dealer in Japan; dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts; brand management and marketing strategy; and digital investments for new customer and dealer solutions that integrate data analytics with state-of-the-art digital technologies while transforming the buying experience. Results for the All Other operating segment are included as a reconciling item between reportable segments and consolidated external reporting.
 
C.    Segment measurement and reconciliations
 
There are several methodology differences between our segment reporting and our external reporting.  The following is a list of the more significant methodology differences:
 
•ME&T segment net assets generally include inventories, receivables, property, plant and equipment, goodwill, intangibles, accounts payable and customer advances. We generally manage at the corporate level liabilities other than accounts payable and customer advances, and we do not include these in segment operations.  Financial Products Segment assets generally include all categories of assets.
 
•We value segment inventories and cost of sales using a current cost methodology.

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

•We generally manage currency exposures for ME&T at the corporate level and do not include in segment profit the effects of changes in exchange rates on results of operations within the year.  We report the net difference created in the translation of revenues and costs between exchange rates used for U.S. GAAP reporting and exchange rates used for segment reporting as a methodology difference.

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

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

•We determine ME&T segment profit on a pretax basis and exclude interest expense and most other income/expense items.  We determine Financial Products Segment profit on a pretax basis and include other income/expense items.
Reconciling items are created based on accounting differences between segment reporting and our consolidated external reporting. Please refer to pages 30 to 33 for financial information regarding significant reconciling items.  Most of our reconciling items are self-explanatory given the above explanations.  For the reconciliation of profit, we have grouped the reconciling items as follows:
 
•Corporate costs:  These costs are related to corporate requirements primarily for compliance and legal functions for the benefit of the entire organization.

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

•Methodology differences:  See previous discussion of significant accounting differences between segment reporting and consolidated external reporting.

•Timing:   Timing differences in the recognition of costs between segment reporting and consolidated external reporting. For example, we report certain costs on the cash basis for segment reporting and the accrual basis for consolidated external reporting.
For the three and nine months ended September 30, 2022 and 2021, sales and revenues by geographic region reconciled to consolidated sales and revenues were as follows:
Sales and Revenues by Geographic Region
(Millions of dollars)
North
 America
Latin
 America
EAME
Asia/
 Pacific
External Sales and RevenuesIntersegment Sales and RevenuesTotal Sales and Revenues
Three Months Ended September 30, 2022    
Construction Industries$3,106 $799 $1,247 $1,084 $6,236 $40 $6,276 
Resource Industries1,122 472 526 893 3,013 74 3,087 
Energy & Transportation2,422 468 1,280 827 4,997 1,189 6,186 
Financial Products Segment522 90 100 107 819 
1
— 819 
Total sales and revenues from reportable segments7,172 1,829 3,153 2,911 15,065 1,303 16,368 
All Other operating segment16 — 4 15 35 68 103 
Corporate Items and Eliminations(53)(20)(12)(21)(106)(1,371)(1,477)
Total Sales and Revenues$7,135 $1,809 $3,145 $2,905 $14,994 $— $14,994 
Three Months Ended September 30, 2021    
Construction Industries$2,417 $528 $1,240 $1,076 $5,261 $(6)$5,255 
Resource Industries674 417 456 744 2,291 75 2,366 
Energy & Transportation1,924 329 1,144 744 4,141 936 5,077 
Financial Products Segment478 68 105 111 762 
1
— 762 
Total sales and revenues from reportable segments5,493 1,342 2,945 2,675 12,455 1,005 13,460 
All Other operating segment18 — 3 14 35 84 119 
Corporate Items and Eliminations(56)(13)(9)(15)(93)(1,089)(1,182)
Total Sales and Revenues$5,455 $1,329 $2,939 $2,674 $12,397 $— $12,397 
1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of $124 million and $87 million in the three months ended September 30, 2022 and 2021, respectively.
Sales and Revenues by Geographic Region
(Millions of dollars)
North
 America
Latin
 America
EAME
Asia/
 Pacific
External Sales and RevenuesIntersegment Sales and RevenuesTotal Sales and Revenues
Nine Months Ended September 30, 2022    
Construction Industries$8,832 $2,061 $3,726 $3,694 $18,313 $111 $18,424 
Resource Industries3,167 1,337 1,609 2,554 8,667 211 8,878 
Energy & Transportation6,637 1,160 3,679 2,193 13,669 3,260 16,929 
Financial Products Segment1,530 250 293 327 2,400 
1
— 2,400 
Total sales and revenues from reportable segments20,166 4,808 9,307 8,768 43,049 3,582 46,631 
All Other operating segment52 — 14 46 112 227 339 
Corporate Items and Eliminations(175)(59)(33)(64)(331)(3,809)(4,140)
Total Sales and Revenues$20,043 $4,749 $9,288 $8,750 $42,830 $— $42,830 
Nine Months Ended September 30, 2021    
Construction Industries$7,041 $1,350 $3,612 $4,302 $16,305 $65 $16,370 
Resource Industries2,130 1,309 1,455 1,965 6,859 232 7,091 
Energy & Transportation5,698 835 3,433 1,953 11,919 2,640 14,559 
Financial Products Segment1,442 195 301 359 2,297 
1
— 2,297 
Total sales and revenues from reportable segments16,311 3,689 8,801 8,579 37,380 2,937 40,317 
All Other operating segment42 1 10 54 107 270 377 
Corporate Items and Eliminations(188)(36)(27)(63)(314)(3,207)(3,521)
Total Sales and Revenues$16,165 $3,654 $8,784 $8,570 $37,173 $— $37,173 
1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of $332 million and $263 million in the nine months ended September 30, 2022 and 2021, respectively.
For the three and nine months ended September 30, 2022 and 2021, Energy & Transportation segment sales by end user application were as follows:
Energy & Transportation External Sales
Three Months Ended September 30Nine Months Ended September 30
(Millions of dollars)2022202120222021
Oil and gas$1,323 $1,088 $3,503 $3,140 
Power generation1,320 1,010 3,518 3,025 
Industrial1,158 948 3,295 2,660 
Transportation1,196 1,095 3,353 3,094 
Energy & Transportation External Sales$4,997 $4,141 $13,669 $11,919 


Reconciliation of Consolidated profit before taxes:  
(Millions of dollars)Three Months Ended September 30Nine Months Ended September 30
2022202120222021
Profit from reportable segments:
Construction Industries$1,209 $866 $3,255 $2,937 
Resource Industries506 280 1,222 941 
Energy & Transportation935 706 2,132 2,119 
Financial Products Segment220 173 675 660 
Total profit from reportable segments2,870 2,025 7,284 6,657 
Profit from All Other operating segment8 5 42 (2)
Cost centers(37)19 1 51 
Corporate costs(168)(189)(670)(576)
Timing(84)(40)(129)(230)
Restructuring costs(49)(35)(90)(124)
Methodology differences:
Inventory/cost of sales138 73 407 80 
Postretirement benefit expense82 116 293 270 
Stock-based compensation expense(55)(58)(162)(169)
Financing costs(75)(103)(269)(342)
Currency53 19 315 255 
Other income/expense methodology differences(109)(80)(287)(201)
Other methodology differences(16)23 (82)(27)
Total consolidated profit before taxes$2,558 $1,775 $6,653 $5,642 
Reconciliation of Assets:
(Millions of dollars)September 30, 2022December 31, 2021
Assets from reportable segments:
Construction Industries$5,439 $4,547 
Resource Industries5,841 5,962 
Energy & Transportation9,394 9,253 
Financial Products Segment33,982 34,860 
Total assets from reportable segments54,656 54,622 
Assets from All Other operating segment1,729 1,678 
Items not included in segment assets:  
Cash and cash equivalents5,403 8,428 
Deferred income taxes2,112 1,735 
Goodwill and intangible assets4,681 4,859 
Property, plant and equipment – net and other assets3,714 4,056 
Inventory methodology differences(2,833)(2,656)
Liabilities included in segment assets11,973 10,777 
Other(528)(706)
Total assets$80,907 $82,793 


Reconciliation of Depreciation and amortization:
(Millions of dollars)
Three Months Ended September 30Nine Months Ended September 30
2022202120222021
Depreciation and amortization from reportable segments:
   Construction Industries$57 $60 $172 $178 
   Resource Industries92 101 275 301 
   Energy & Transportation136 144 405 428 
   Financial Products Segment183 195 556 582 
Total depreciation and amortization from reportable segments468 500 1,408 1,489 
Items not included in segment depreciation and amortization:
All Other operating segment56 59 172 181 
Cost centers20 24 63 74 
Other7 10 18 22 
Total depreciation and amortization$551 $593 $1,661 $1,766 
Reconciliation of Capital expenditures:    
(Millions of dollars)
Three Months Ended September 30Nine Months Ended September 30
2022202120222021
Capital expenditures from reportable segments:
Construction Industries$74 $56 $149 $120 
Resource Industries65 44 129 101 
Energy & Transportation167 115 444 339 
Financial Products Segment295 311 870 900 
Total capital expenditures from reportable segments601 526 1,592 1,460 
Items not included in segment capital expenditures:
All Other operating segment54 59 116 106 
Cost centers16 15 41 34 
Timing(35)(13)173 96 
Other(19)— (31)(9)
Total capital expenditures$617 $587 $1,891 $1,687