10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 FORM 10-Q 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to

Commission File Number:  1-768

CATERPILLAR INC.

(Exact name of registrant as specified in its charter)

Delaware				37-0602744
(State or other jurisdiction of incorporation)				(IRS Employer I.D. No.)
5205 N. O'Connor Boulevard,	Suite 100,	Irving,	Texas	75039
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code: (972) 891-7700 

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common Stock ($1.00 par value)	CAT	New York Stock Exchange	¹
5.3% Debentures due September 15, 2035	CAT35	New York Stock Exchange

¹    In addition to the New York Stock Exchange, Caterpillar common stock is also listed on stock exchanges in France and Switzerland.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

At March 31, 2023, 515,920,061 shares of common stock of the registrant were outstanding.

Table of Contents

Part I. Financial Information
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	63
Item 4.	Controls and Procedures	63
Part II. Other Information
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	*
Item 4.	Mine Safety Disclosures	*
Item 5.	Other Information	*
Item 6.	Exhibits	65

* Item omitted because no answer is called for or item is not applicable.

2

Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

Caterpillar Inc.

Consolidated Statement of Results of Operations

(Unaudited)

(Dollars in millions except per share data)

	Three Months Ended March 31
	2023		2022
Sales and revenues:
Sales of Machinery, Energy & Transportation	$	15,099	$	12,886
Revenues of Financial Products	763		703
Total sales and revenues	15,862		13,589
Operating costs:
Cost of goods sold	10,103		9,559
Selling, general and administrative expenses	1,463		1,346
Research and development expenses	472		457
Interest expense of Financial Products	217		106
Other operating (income) expenses	876		266
Total operating costs	13,131		11,734
Operating profit	2,731		1,855
Interest expense excluding Financial Products	129		109
Other income (expense)	32		253
Consolidated profit before taxes	2,634		1,999
Provision (benefit) for income taxes	708		469
Profit of consolidated companies	1,926		1,530
Equity in profit (loss) of unconsolidated affiliated companies	16		7
Profit of consolidated and affiliated companies	1,942		1,537
Less: Profit (loss) attributable to noncontrolling interests	(1)		—
Profit 1	$	1,943	$	1,537
Profit per common share	$	3.76	$	2.88
Profit per common share – diluted 2	$	3.74	$	2.86
Weighted-average common shares outstanding (millions)
– Basic	516.2		534.5
– Diluted 2	519.4		538.3

1    Profit attributable to common shareholders.

2   Diluted by assumed exercise of stock-based compensation awards using the treasury stock method. 

See accompanying notes to Consolidated Financial Statements.

3

Caterpillar Inc.

Consolidated Statement of Comprehensive Income

(Unaudited)

(Dollars in millions)

	Three Months Ended March 31
	2023		2022
Profit of consolidated and affiliated companies	$	1,942	$	1,537
Other comprehensive income (loss), net of tax (Note 13):
Foreign currency translation:	607		(115)
Pension and other postretirement benefits:	(2)		(1)
Derivative financial instruments:	84		23
Available-for-sale securities:	22		(64)
Total other comprehensive income (loss), net of tax	711		(157)
Comprehensive income	2,653		1,380
Less: comprehensive income attributable to the noncontrolling interests	(1)		—
Comprehensive income attributable to shareholders	$	2,654	$	1,380

See accompanying notes to Consolidated Financial Statements.

4

Caterpillar Inc.

Consolidated Statement of Financial Position

(Unaudited)

(Dollars in millions) 

	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	6,789	$	7,004
Receivables – trade and other	9,230		8,856
Receivables – finance	9,119		9,013
Prepaid expenses and other current assets	2,889		2,642
Inventories	17,633		16,270
Total current assets	45,660		43,785
Property, plant and equipment – net	11,973		12,028
Long-term receivables – trade and other	1,209		1,265
Long-term receivables – finance	11,845		12,013
Noncurrent deferred and refundable income taxes	2,405		2,213
Intangible assets	694		758
Goodwill	5,309		5,288
Other assets	4,554		4,593
Total assets	$	83,649	$	81,943
Liabilities
Current liabilities:
Short-term borrowings:
Machinery, Energy & Transportation	$	—	$	3
Financial Products	5,841		5,954
Accounts payable	8,951		8,689
Accrued expenses	4,121		4,080
Accrued wages, salaries and employee benefits	1,368		2,313
Customer advances	2,202		1,860
Dividends payable	—		620
Other current liabilities	3,035		2,690
Long-term debt due within one year:
Machinery, Energy & Transportation	37		120
Financial Products	6,287		5,202
Total current liabilities	31,842		31,531
Long-term debt due after one year:
Machinery, Energy & Transportation	9,558		9,498
Financial Products	15,315		16,216
Liability for postemployment benefits	4,069		4,203
Other liabilities	4,695		4,604
Total liabilities	65,479		66,052
Commitments and contingencies (Notes 11 and 14)
Shareholders’ equity
Common stock of $1.00 par value:
Authorized shares: 2,000,000,000 Issued shares: (3/31/23 and 12/31/22 – 814,894,624) at paid-in amount	6,546		6,560
Treasury stock: (3/31/23 – 298,974,563 shares; 12/31/22 – 298,549,134 shares) at cost	(32,108)		(31,748)
Profit employed in the business	45,457		43,514
Accumulated other comprehensive income (loss)	(1,746)		(2,457)
Noncontrolling interests	21		22
Total shareholders’ equity	18,170		15,891
Total liabilities and shareholders’ equity	$	83,649	$	81,943

See accompanying notes to Consolidated Financial Statements.

5

Caterpillar Inc.

Consolidated Statement of Changes in Shareholders’ Equity

(Unaudited)

(Dollars in millions) 

	Common stock		Treasury stock		Profit employed in the business		Accumulated other comprehensive income (loss)		Noncontrolling interests		Total
Three Months Ended March 31, 2022
Balance at December 31, 2021	$	6,398	$	(27,643)	$	39,282	$	(1,553)	$	32	$	16,516
Profit of consolidated and affiliated companies	—		—		1,537		—		—		1,537
Foreign currency translation, net of tax	—		—		—		(115)		—		(115)
Pension and other postretirement benefits, net of tax	—		—		—		(1)		—		(1)
Derivative financial instruments, net of tax	—		—		—		23		—		23
Available-for-sale securities, net of tax	—		—		—		(64)		—		(64)
Dividends declared	—		—		1		—		—		1
Common shares issued from treasury stock for stock-based compensation: 1,037,468	(65)		37		—		—		—		(28)
Stock-based compensation expense	40		—		—		—		—		40
Common shares repurchased: 3,571,684 1	—		(720)		—		—		—		(720)
Other	(92)		—		—		—		—		(92)
Balance at March 31, 2022	$	6,281	$	(28,326)	$	40,820	$	(1,710)	$	32	$	17,097
Three Months Ended March 31, 2023
Balance at December 31, 2022	$	6,560	$	(31,748)	$	43,514	$	(2,457)	$	22	$	15,891
Profit of consolidated and affiliated companies	—		—		1,943		—		(1)		1,942
Foreign currency translation, net of tax	—		—		—		607		—		607
Pension and other postretirement benefits, net of tax	—		—		—		(2)		—		(2)
Derivative financial instruments, net of tax	—		—		—		84		—		84
Available-for-sale securities, net of tax	—		—		—		22		—		22
Common shares issued from treasury stock for stock-based compensation: 1,276,331	(66)		41		—		—		—		(25)
Stock-based compensation expense	44		—		—		—		—		44
Common shares repurchased: 1,701,760 1	—		(400)		—		—		—		(400)
Other	8		(1)		—		—		—		7
Balance at March 31, 2023	$	6,546	$	(32,108)	$	45,457	$	(1,746)	$	21	$	18,170

1 See Note 12 for additional information.

See accompanying notes to Consolidated Financial Statements.

6

Caterpillar Inc.

Consolidated Statement of Cash Flow

(Unaudited)

(Millions of dollars)

	Three Months Ended March 31
	2023		2022
Cash flow from operating activities:
Profit of consolidated and affiliated companies	$	1,942	$	1,537
Adjustments for non-cash items:
Depreciation and amortization	532		557
Provision (benefit) for deferred income taxes	(191)		(99)
Loss on divestiture	572		—
Other	117		(52)
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other	(329)		(372)
Inventories	(1,403)		(1,032)
Accounts payable	477		452
Accrued expenses	38		(74)
Accrued wages, salaries and employee benefits	(950)		(965)
Customer advances	365		311
Other assets – net	107		99
Other liabilities – net	296		(49)
Net cash provided by (used for) operating activities	1,573		313
Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others	(422)		(346)
Expenditures for equipment leased to others	(328)		(333)
Proceeds from disposals of leased assets and property, plant and equipment	184		269
Additions to finance receivables	(3,020)		(2,988)
Collections of finance receivables	3,169		2,966
Proceeds from sale of finance receivables	24		9
Investments and acquisitions (net of cash acquired)	(5)		(8)
Proceeds from sale of businesses and investments (net of cash sold)	(14)		—
Proceeds from sale of securities	239		571
Investments in securities	(536)		(1,438)
Other – net	26		(15)
Net cash provided by (used for) investing activities	(683)		(1,313)
Cash flow from financing activities:
Dividends paid	(620)		(595)
Common stock issued, including treasury shares reissued	(25)		(28)
Common shares repurchased	(400)		(820)
Proceeds from debt issued (original maturities greater than three months):
Machinery, Energy & Transportation	—		—
Financial Products	1,517		2,131
Payments on debt (original maturities greater than three months):
Machinery, Energy & Transportation	(90)		(6)
Financial Products	(1,385)		(1,381)
Short-term borrowings – net (original maturities three months or less)	(103)		(1,016)
Net cash provided by (used for) financing activities	(1,106)		(1,715)
Effect of exchange rate changes on cash	(1)		(16)
Increase (decrease) in cash, cash equivalents and restricted cash	(217)		(2,731)
Cash, cash equivalents and restricted cash at beginning of period	7,013		9,263
Cash, cash equivalents and restricted cash at end of period	$	6,796	$	6,532

 Cash equivalents primarily represent short-term, highly liquid investments with original maturities of generally three months or less.

See accompanying notes to Consolidated Financial Statements.

7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.                                   A.  Nature of operations

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

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

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

B.  Basis of presentation

In the opinion of management, the accompanying unaudited financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of (a) the consolidated results of operations for the three months ended March 31, 2023 and 2022, (b) the consolidated comprehensive income for the three months ended March 31, 2023 and 2022, (c) the consolidated financial position at March 31, 2023 and December 31, 2022, (d) the consolidated changes in shareholders’ equity for the three months ended March 31, 2023 and 2022 and (e) the consolidated cash flow for the three months ended March 31, 2023 and 2022.  The financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).

Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in our company’s annual report on Form 10-K for the year ended December 31, 2022 (2022 Form 10-K).

The December 31, 2022 financial position data included herein is derived from the audited consolidated financial statements included in the 2022 Form 10-K but does not include all disclosures required by U.S. GAAP. Certain amounts for prior periods have been reclassified to conform to the current period financial statement presentation.

Cat Financial has end-user customers and dealers that are variable interest entities (VIEs) of which we are not the primary beneficiary. Our maximum exposure to loss from our involvement with these VIEs is limited to the credit risk inherently present in the financial support that we have provided. Credit risk was evaluated and reflected in our financial statements as part of our overall portfolio of finance receivables and related allowance for credit losses. See Note 11 for further discussions on a consolidated VIE.

2.                                   New accounting guidance

A. Adoption of new accounting standards

Supplier finance programs (ASU 2022-04) - In September 2022, the Financial Accounting Standards Board (FASB) issued guidance to enhance the transparency of supplier finance programs. The new standard requires annual disclosure of the key terms of the program, a description of where in the financial statements amounts outstanding under the program are presented, a rollforward of such amounts, and interim disclosure of amounts outstanding as of the end of each period. The guidance does not affect recognition, measurement, or financial statement presentation of supplier finance programs. The ASU was effective on January 1, 2023, except for the rollforward, which is effective on January 1, 2024. Our adoption of this guidance results in the following disclosures relating to our supplier finance programs and related obligations.

8

We facilitate voluntary supplier finance programs (the “Programs”) through participating financial institutions. The Programs are available to a wide range of suppliers and allow them the option to manage their cash flow. We are not a party to the agreements between the participating financial institutions and the suppliers in connection with the Programs. The range of payment terms, typically 60-90 days, we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the Programs. The amount of obligations outstanding that are confirmed as valid to the participating financial institutions for suppliers who voluntarily participate in the Programs, included in Accounts payable in the Consolidated Statement of Financial Position, were $970 million and $862 million at March 31, 2023 and December 31, 2022, respectively.

We consider the applicability and impact of all ASUs. We adopted the following ASUs effective January 1, 2023, none of which had a material impact on our financial statements:

ASU	Description
2021-08	Business combinations
2022-02	Financial instruments - Credit losses
2022-06	Reference rate reform

B. Accounting standards issued but not yet adopted

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

3.                                   Sales and revenue contract information

Trade receivables represent amounts due from dealers and end users for the sale of our products, and include amounts due from wholesale inventory financing provided by Cat Financial for a dealer’s purchase of inventory. We recognize trade receivables from dealers and end users in Receivables – trade and other and Long-term receivables – trade and other in the Consolidated Statement of Financial Position. Trade receivables from dealers and end users were $7,854 million, $7,551 million and $7,267 million as of March 31, 2023, December 31, 2022 and December 31, 2021, respectively. Long-term trade receivables from dealers and end users were $472 million, $506 million and $624 million as of March 31, 2023, December 31, 2022 and December 31, 2021, respectively.

For certain contracts, we invoice for payment when contractual milestones are achieved. We recognize a contract asset when a sale is recognized prior to invoicing. We reduce the contract asset when we invoice for payment and recognize a corresponding trade receivable. Contract assets are included in Prepaid expenses and other current assets in the Consolidated Statement of Financial Position. Contract assets were $195 million, $247 million and $187 million as of March 31, 2023, December 31, 2022 and December 31, 2021, respectively.

We invoice in advance of recognizing the sale of certain products. We recognize advanced customer payments as a contract liability in Customer advances and Other liabilities in the Consolidated Statement of Financial Position. Contract liabilities were $2,664 million, $2,314 million and $1,557 million as of March 31, 2023, December 31, 2022 and December 31, 2021, respectively. We reduce the contract liability when revenue is recognized. During the three months ended March 31, 2023 and 2022, we recognized $737 million and $437 million, respectively, of revenue that was recorded as a contract liability at the beginning of 2023 and 2022.

As of March 31, 2023, we have entered into contracts with dealers and end users for which sales have not been recognized as we have not satisfied our performance obligations and transferred control of the products. The dollar amount of unsatisfied performance obligations for contracts with an original duration greater than one year is $12.6 billion, with about one-half of the amount expected to be completed and revenue recognized in the twelve months following March 31, 2023. We have elected the practical expedient not to disclose unsatisfied performance obligations with an original contract duration of one year or less. Contracts with an original duration of one year or less are primarily sales to dealers for machinery, engines and replacement parts.

See Note 16 for further disaggregated sales and revenues information.

9

4.                                    Stock-based compensation

Accounting for stock-based compensation requires that the cost resulting from all stock-based payments be recognized in the financial statements based on the grant date fair value of the award.  Our stock-based compensation consists of stock options, restricted stock units (RSUs) and performance-based restricted stock units (PRSUs).

We recognized pretax stock-based compensation expense of $44 million and $40 million for the three months ended March 31, 2023 and 2022, respectively.

The following table illustrates the type and fair value of the stock-based compensation awards granted during the three months ended March 31, 2023 and 2022, respectively:

	Three Months Ended March 31, 2023					Three Months Ended March 31, 2022
	Shares Granted	Weighted-Average Fair Value Per Share		Weighted-Average Grant Date Stock Price		Shares Granted	Weighted-Average Fair Value Per Share		Weighted-Average Grant Date Stock Price
Stock options	777,275	$	75.79	$	253.98	1,029,202	$	51.69	$	196.70
RSUs	379,426	$	253.98	$	253.98	484,025	$	196.70	$	196.70
PRSUs	221,869	$	253.98	$	253.98	258,900	$	196.70	$	196.70

The following table provides the assumptions used in determining the fair value of the stock-based awards for the three months ended March 31, 2023 and 2022, respectively:

	Grant Year
	2023	2022
Weighted-average dividend yield	2.60%	2.60%
Weighted-average volatility	31.0%	31.7%
Range of volatilities	28.5% - 35.5%	25.3% - 36.8%
Range of risk-free interest rates	3.92% - 5.03%	1.03% - 2.00%
Weighted-average expected lives	7 years	8 years

As of March 31, 2023, the total remaining unrecognized compensation expense related to nonvested stock-based compensation awards was $305 million, which will be amortized over the weighted-average remaining requisite service periods of approximately 1.8 years.

5.                                     Derivative financial instruments and risk management

Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates, interest rates and commodity prices.  Our Risk Management Policy (policy) allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate, interest rate and commodity price exposures.  Our policy specifies that derivatives are not to be used for speculative purposes.  Derivatives that we use are primarily foreign currency forward, option and cross currency contracts, interest rate contracts and commodity forward and option contracts.  Our derivative activities are subject to the management, direction and control of our senior financial officers.  We present at least annually to the Audit Committee of the Board of Directors on our risk management practices, including our use of financial derivative instruments.

10

We recognize all derivatives at their fair value on the Consolidated Statement of Financial Position. On the date the derivative contract is entered into, we designate the derivative as (1) a hedge of the fair value of a recognized asset or liability (fair value hedge), (2) a hedge of a forecasted transaction or the variability of cash flow (cash flow hedge) or (3) an undesignated instrument. We record in current earnings changes in the fair value of a derivative that is qualified, designated and highly effective as a fair value hedge, along with the gain or loss on the hedged recognized asset or liability that is attributable to the hedged risk. We record in AOCI changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge, to the extent effective, on the Consolidated Statement of Financial Position until we reclassify them to earnings in the same period or periods during which the hedged transaction affects earnings.  We report changes in the fair value of undesignated derivative instruments in current earnings. We classify cash flows from designated derivative financial instruments within the same category as the item being hedged on the Consolidated Statement of Cash Flow.  We include cash flows from undesignated derivative financial instruments in the investing category on the Consolidated Statement of Cash Flow.

We formally document all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions.  This process includes linking all derivatives that are designated as fair value hedges to specific assets and liabilities on the Consolidated Statement of Financial Position and linking cash flow hedges to specific forecasted transactions or variability of cash flow.

We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the designated derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flow of hedged items.  When a derivative is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, we discontinue hedge accounting prospectively, in accordance with the derecognition criteria for hedge accounting.

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of sales made and costs incurred in foreign currencies. Movements in foreign currency rates also affect our competitive position as these changes may affect business practices and/or pricing strategies of non-U.S.-based competitors. Additionally, we have balance sheet positions denominated in foreign currencies, thereby creating exposure to movements in exchange rates.

Our ME&T operations purchase, manufacture and sell products in many locations around the world. As we have a diversified revenue and cost base, we manage our future foreign currency cash flow exposure on a net basis. We use foreign currency forward and option contracts to manage unmatched foreign currency cash inflow and outflow. Our objective is to minimize the risk of exchange rate movements that would reduce the U.S. dollar value of our foreign currency cash flow. Our policy allows for managing anticipated foreign currency cash flow for up to approximately five years. As of March 31, 2023, the maximum term of these outstanding contracts at inception was approximately 60 months.

We generally designate as cash flow hedges at inception of the contract any foreign currency forward or option contracts that meet the requirements for hedge accounting and the maturity extends beyond the current quarter-end. We perform designation on a specific exposure basis to support hedge accounting. The remainder of ME&T foreign currency contracts are undesignated.  

In managing foreign currency risk for our Financial Products operations, our objective is to minimize earnings volatility resulting from conversion and the remeasurement of net foreign currency balance sheet positions and future transactions denominated in foreign currencies. Our policy allows the use of foreign currency forward, option and cross currency contracts to offset the risk of currency mismatch between our assets and liabilities and exchange rate risk associated with future transactions denominated in foreign currencies. Our foreign currency forward and option contracts are primarily undesignated. We designate fixed-to-fixed cross currency contracts as cash flow hedges to protect against movements in exchange rates on foreign currency fixed-rate assets and liabilities.

Interest Rate Risk

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

11

Our ME&T operations generally use fixed-rate debt as a source of funding.  Our objective is to minimize the cost of borrowed funds.  Our policy allows us to enter into fixed-to-floating interest rate contracts and forward rate agreements to meet that objective. We designate fixed-to-floating interest rate contracts as fair value hedges at inception of the contract, and we designate certain forward rate agreements as cash flow hedges at inception of the contract.

Financial Products operations has a match-funding policy that addresses interest rate risk by aligning the interest rate profile (fixed or floating rate and duration) of Cat Financial’s debt portfolio with the interest rate profile of our receivables portfolio within predetermined ranges on an ongoing basis. In connection with that policy, we use interest rate derivative instruments to modify the debt structure to match assets within the receivables portfolio. This matched funding reduces the volatility of margins between interest-bearing assets and interest-bearing liabilities, regardless of which direction interest rates move.

Our policy allows us to use fixed-to-floating, floating-to-fixed and floating-to-floating interest rate contracts to meet the match-funding objective.  We designate fixed-to-floating interest rate contracts as fair value hedges to protect debt against changes in fair value due to changes in the benchmark interest rate.  We designate most floating-to-fixed interest rate contracts as cash flow hedges to protect against the variability of cash flows due to changes in the benchmark interest rate.

We have, at certain times, liquidated fixed-to-floating and floating-to-fixed interest rate contracts at both ME&T and Financial Products. We amortize the gains or losses associated with these contracts at the time of liquidation into earnings over the original term of the previously designated hedged item.

Commodity Price Risk

Commodity price movements create a degree of risk by affecting the price we must pay for certain raw materials. Our policy is to use commodity forward and option contracts to manage the commodity risk and reduce the cost of purchased materials.

Our ME&T operations purchase base and precious metals embedded in the components we purchase from suppliers.  Our suppliers pass on to us price changes in the commodity portion of the component cost. In addition, we are subject to price changes on energy products such as natural gas and diesel fuel purchased for operational use.

Our objective is to minimize volatility in the price of these commodities. Our policy allows us to enter into commodity forward and option contracts to lock in the purchase price of a portion of these commodities within a five-year horizon. All such commodity forward and option contracts are undesignated.

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

12

(Millions of dollars)	Fair Value
	March 31, 2023				December 31, 2022
	Assets 1		Liabilities 2		Assets 1		Liabilities 2
Designated derivatives
Foreign exchange contracts	$	452	$	(106)	$	462	$	(152)
Interest rate contracts	86		(221)		93		(288)
Total	$	538	$	(327)	$	555	$	(440)
Undesignated derivatives
Foreign exchange contracts	$	30	$	(67)	$	65	$	(47)
Commodity contracts	27		(10)		24		(9)
Total	$	57	$	(77)	$	89	$	(56)
1 Assets are classified on the Consolidated Statement of Financial Position as Receivables - trade and other or Long-term receivables - trade and other.
2 Liabilities are classified on the Consolidated Statement of Financial Position as Accrued expenses or Other liabilities.

The total notional amounts of the derivative instruments as of March 31, 2023 and December 31, 2022 were $22.8 billion and $24.3 billion, respectively. The notional amounts of the derivative financial instruments do not represent amounts exchanged by the parties. We calculate the amounts exchanged by the parties by referencing the notional amounts and by other terms of the derivatives, such as foreign currency exchange rates, interest rates or commodity prices.

Gains (Losses) on derivative instruments are categorized as follows:

(Millions of dollars)	Three Months Ended March 31
	Fair Value / Undesignated Hedges				Cash Flow Hedges
	Gains (Losses) Recognized on the Consolidated Statement of Results of Operations 1				Gains (Losses) Recognized in AOCI				Gains (Losses) Reclassified from AOCI 2
	2023		2022		2023		2022		2023		2022
Foreign exchange contracts	$	(28)	$	(63)	$	58	$	(9)	$	(65)	$	26
Interest rate contracts	(27)		7		(2)		56		13		(7)
Commodity contract	8		93		—		—		—		—
Total	$	(47)	$	37	$	56	$	47	$	(52)	$	19
1 Foreign exchange contract and Commodity contract gains (losses) are included in Other income (expense). Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products.
2 Foreign exchange contract gains (losses) are primarily included in Other income (expense). Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products.

13

The following amounts were recorded on the Consolidated Statement of Financial Position related to cumulative basis adjustments for fair value hedges:

(Millions of dollars)	Carrying Value of the Hedged Liabilities				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Liabilities
	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Long-term debt due within one year	$	194	$	—	$	(6)	$	—
Long-term debt due after one year	4,115		4,173		(189)		(280)
Total	$	4,309	$	4,173	$	(195)	$	(280)

We enter into International Swaps and Derivatives Association (ISDA) master netting agreements within ME&T and Financial Products that permit the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement generally permits the company or the counterparty to determine the net amount payable for contracts due on the same date and in the same currency for similar types of derivative transactions. The master netting agreements may also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event.

Collateral is typically not required of the counterparties or of our company under the master netting agreements. As of March 31, 2023 and December 31, 2022, no cash collateral was received or pledged under the master netting agreements.

The effect of the net settlement provisions of the master netting agreements on our derivative balances upon an event of default or termination event was as follows:

(Millions of dollars)	March 31, 2023				December 31, 2022
	Assets		Liabilities		Assets		Liabilities
Gross Amounts Recognized	$	595	$	(404)	$	644	$	(496)
Financial Instruments Not Offset	(164)		164		(233)		233
Net Amount	$	431	$	(240)	$	411	$	(263)

6.                                     Inventories

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

(Millions of dollars)	March 31, 2023		December 31, 2022
Raw materials	$	6,776	$	6,370
Work-in-process	1,656		1,452
Finished goods	8,868		8,138
Supplies	333		310
Total inventories	$	17,633	$	16,270

14

7.                                     Intangible assets and goodwill

A.  Intangible assets

Intangible assets were comprised of the following:

		March 31, 2023
(Millions of dollars)	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	16	$	2,241	$	(1,717)	$	524
Intellectual property	13	1,470		(1,345)		125
Other	17	121		(76)		45
Total finite-lived intangible assets	15	$	3,832	$	(3,138)	$	694

		December 31, 2022
	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	16	$	2,233	$	(1,675)	$	558
Intellectual property	12	1,473		(1,320)		153
Other	16	132		(85)		47
Total finite-lived intangible assets	14	$	3,838	$	(3,080)	$	758

Amortization expense for the three months ended March 31, 2023 and 2022 was $66 million and $72 million, respectively. Amortization expense related to intangible assets is expected to be:

(Millions of dollars)
Remaining Nine Months of 2023	2024	2025	2026	2027	Thereafter
$151	$171	$161	$91	$27	$93

B.  Goodwill

No goodwill was impaired during the three months ended March 31, 2023 or 2022.

15

The changes in carrying amount of goodwill by reportable segment for the three months ended March 31, 2023 were as follows: 

(Millions of dollars)	December 31, 2022		Other Adjustments 1		March 31, 2023
Construction Industries
Goodwill	$	287	$	(3)	$	284
Impairments	(22)		—		(22)
Net goodwill	265		(3)		262
Resource Industries
Goodwill	4,130		18		4,148
Impairments	(1,175)		—		(1,175)
Net goodwill	2,955		18		2,973
Energy & Transportation
Goodwill	2,947		6		2,953
Impairments	(925)		—		(925)
Net goodwill	2,022		6		2,028
All Other 2
Goodwill	46		—		46
Impairments	—		—		—
Net goodwill	46		—		46
Consolidated total
Goodwill	7,410		21		7,431
Impairments	(2,122)		—		(2,122)
Net goodwill	$	5,288	$	21	$	5,309

1 Other adjustments are comprised primarily of foreign currency translation.

2 Includes All Other operating segment (See Note 16).

8.                                     Investments in debt and equity securities

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

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

The cost basis and fair value of available-for-sale debt securities with unrealized gains and losses included in equity (AOCI in the Consolidated Statement of Financial Position) were as follows:

16

Available-for-sale debt securities	March 31, 2023						December 31, 2022
(Millions of dollars)	Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value		Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value
Government debt securities
U.S. treasury bonds	$	10	$	(1)	$	9	$	9	$	—	$	9
Other U.S. and non-U.S. government bonds	61		(4)		57		60		(5)		55
Corporate debt securities
Corporate bonds and other debt securities	2,594		(75)		2,519		2,561		(95)		2,466
Asset-backed securities	189		(5)		184		187		(5)		182
Mortgage-backed debt securities
U.S. governmental agency	366		(25)		341		364		(31)		333
Residential	3		(1)		2		3		(1)		2
Commercial	135		(10)		125		127		(10)		117
Total available-for-sale debt securities	$	3,358	$	(121)	$	3,237	$	3,311	$	(147)	$	3,164

Available-for-sale debt securities in an unrealized loss position:
	March 31, 2023
	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
Government debt securities
Other U.S. and non-U.S. government bonds	$	13	$	1	$	26	$	4	$	39	$	5
Corporate debt securities
Corporate bonds	990		19		931		61		1,921		80
Asset-backed securities	67		2		86		4		153		6
Mortgage-backed debt securities
U.S. governmental agency	107		3		226		22		333		25
Commercial	42		2		83		8		125		10
	$	1,219	$	27	$	1,352	$	99	$	2,571	$	126

	December 31, 2022
	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
Government debt securities
Other U.S. and non-U.S. government bonds	$	19	$	1	$	20	$	4	$	39	$	5
Corporate debt securities
Corporate bonds	1,815		46		357		50		2,172		96
Asset-backed securities	75		2		55		3		130		5
Mortgage-backed debt securities
U.S. governmental agency	229		16		98		15		327		31
Residential	2		—		1		1		3		1
Commercial	63		5		54		5		117		10
Total	$	2,203	$	70	$	585	$	78	$	2,788	$	148
1 Indicates the length of time that individual securities have been in a continuous unrealized loss position.

17

The unrealized losses on our investments in government debt securities, corporate debt securities, and mortgage-backed debt 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 respective amortized cost basis. In addition, we did not expect credit-related losses on these investments as of March 31, 2023.

The cost basis and fair value of available-for-sale debt securities at March 31, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay and creditors may have the right to call obligations.        

	March 31, 2023
(Millions of dollars)	Cost Basis		Fair Value
Due in one year or less	$	961	$	950
Due after one year through five years	1,571		1,511
Due after five years through ten years	257		245
Due after ten years	65		63
U.S. governmental agency mortgage-backed securities	366		341
Residential mortgage-backed securities	3		2
Commercial mortgage-backed securities	135		125
Total debt securities – available-for-sale	$	3,358	$	3,237

Sales of available-for-sale debt securities:
	Three Months Ended March 31
(Millions of dollars)	2023		2022
Proceeds from the sale of available-for-sale securities	$	223	$	96
Gross gains from the sale of available-for-sale securities	—		—
Gross losses from the sale of available-for-sale securities	—		—

In addition, we had $250 million of investments in time deposits classified as held-to-maturity debt securities as of March 31, 2023. We did not have any investments classified as held-to-maturity debt securities as of December 31, 2022. All these investments mature within one year and we include them in Prepaid expenses and other current assets in the Consolidated Statement of Financial Position. We record held-to-maturity debt securities at amortized cost, which approximates fair value.

For the three months ended March 31, 2023 and 2022, the net unrealized gains (losses) for equity securities held at March 31, 2023 and 2022 were $(8) million and $(12) million, respectively.

18

9.                                     Postretirement benefits

A.  Pension and postretirement benefit costs    

	U.S. Pension Benefits				Non-U.S. Pension Benefits				Other Postretirement Benefits
	March 31				March 31				March 31
(Millions of dollars)	2023		2022		2023		2022		2023		2022
For the three months ended:
Components of net periodic benefit cost:
Service cost	$	—	$	—	$	10	$	13	$	17	$	25
Interest cost	164		100		31		18		36		20
Expected return on plan assets	(172)		(167)		(40)		(34)		(3)		(4)
Amortization of prior service cost (credit)	—		—		—		—		(3)		(1)
Net periodic benefit cost (benefit) 1	$	(8)	$	(67)	$	1	$	(3)	$	47	$	40

1 The service cost component is included in Operating costs in the Consolidated Statement of Results of Operations. All other components are included in Other income (expense) in the Consolidated Statement of Results of Operations.

We made $208 million of contributions to our pension and other postretirement plans during the three months ended March 31, 2023. We currently anticipate full-year 2023 contributions of approximately $372 million.

B.  Defined contribution benefit costs

Total company costs related to our defined contribution plans, which are included in Operating Costs in the Consolidated Statement of Results of Operations, were as follows:

	Three Months Ended March 31
(Millions of dollars)	2023		2022
U.S. Plans	$	149	$	114
Non-U.S. Plans	29		29
	$	178	$	143

The increase in the U.S. defined contribution benefit costs for the three months ended March 31, 2023 was primarily due to the fair value adjustments related to our non-qualified deferred compensation plans.

10.                              Leases

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

	Three Months Ended March 31
(Millions of dollars)	2023		2022
Finance lease revenue	$	104	$	112
Operating lease revenue	275		278
Total	$	379	$	390

We present revenues net of sales and other related taxes.

19

11.                              Guarantees and product warranty

Caterpillar dealer performance guarantees

Dealer performance guarantees mainly consists of an indemnity to a third-party insurance company for potential losses related to performance bonds issued on behalf of Caterpillar dealers.  The bonds have varying terms and are issued to insure governmental agencies against nonperformance by certain dealers.  

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

No significant loss has been experienced or is anticipated under any of these guarantees.  At March 31, 2023 and December 31, 2022, the related recorded liability was $4 million and $2 million, respectively. The maximum potential amount of future payments that we can estimate (undiscounted and without reduction for any amounts that may possibly be recovered under recourse or collateralized provisions) and we could be required to make under the guarantees was as follows:

(Millions of dollars)	March 31, 2023		December 31, 2022
Caterpillar dealer performance guarantees	$	191	$	188
Other guarantees	381		323
Total guarantees	$	572	$	511

Cat Financial provides guarantees to purchase certain loans of Caterpillar dealers from a special-purpose corporation (SPC) that qualifies as a variable interest entity.  The purpose of the SPC is to provide short-term working capital loans to Caterpillar dealers.  This SPC issues commercial paper and uses the proceeds to fund its loan program. Cat Financial receives a fee for providing this guarantee.  Cat Financial is the primary beneficiary of the SPC as its guarantees result in Cat Financial having both the power to direct the activities that most significantly impact the SPC’s economic performance and the obligation to absorb losses, and therefore Cat Financial has consolidated the financial statements of the SPC.  As of March 31, 2023 and December 31, 2022, the SPC’s assets of $1.13 billion and $971 million, respectively, were primarily comprised of loans to dealers, and the SPC’s liabilities of $1.13 billion and $970 million, respectively, were primarily comprised of commercial paper.  The assets of the SPC are not available to pay Cat Financial’s creditors. Cat Financial may be obligated to perform under the guarantee if the SPC experiences losses. No loss has been experienced or is anticipated under this loan purchase agreement.

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

The reconciliation of the change in our product warranty liability balances for the quarters ended March 31 was as follows:

	First Three Months
(Millions of dollars)	2023		2022
Warranty liability, beginning of period	$	1,761	$	1,689
Reduction in liability (payments)	(213)		(194)
Increase in liability (new warranties)	246		168
Warranty liability, end of period	$	1,794	$	1,663

20

12.                               Profit per share

Computations of profit per share:	Three Months Ended March 31
(Dollars in millions except per share data)	2023		2022
Profit for the period (A) 1	$	1,943	$	1,537
Determination of shares (in millions):
Weighted-average number of common shares outstanding (B)	516.2		534.5
Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price	3.2		3.8
Average common shares outstanding for fully diluted computation (C) 2	519.4		538.3
Profit per share of common stock:
Assuming no dilution (A/B)	$	3.76	$	2.88
Assuming full dilution (A/C) 2	$	3.74	$	2.86
Shares outstanding as of March 31 (in millions)	515.9		533.4
1 Profit attributable to common shareholders.
2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

For the three months ended March 31, 2023 and 2022, we excluded 0.8 million and 2.1 million of outstanding stock options, respectively, from the computation of diluted earnings per share because the effect would have been antidilutive.

For the three months ended March 31, 2023 and 2022, we repurchased 1.7 million and 3.6 million shares of Caterpillar common stock, respectively, at an aggregate cost of $400 million and $720 million, respectively. We made these purchases through open market transactions in 2023 and the combination of an accelerated stock repurchase agreement with a third-party financial institution and open market transactions in 2022.

13.                         Accumulated other comprehensive income (loss)

We present comprehensive income and its components in the Consolidated Statement of Comprehensive Income. Changes in the balances for each component of AOCI were as follows:

21

	Three Months Ended March 31
(Millions of dollars)	2023		2022
Foreign currency translation:
Beginning balance	$	(2,328)	$	(1,508)
Gains (losses) on foreign currency translation	103		(104)
Less: Tax provision /(benefit)	(10)		11
Net gains (losses) on foreign currency translation	113		(115)
(Gains) losses reclassified to earnings	494		—
Less: Tax provision /(benefit)	—		—
Net (gains) losses reclassified to earnings	494		—
Other comprehensive income (loss), net of tax	607		(115)
Ending balance	$	(1,721)	$	(1,623)
Pension and other postretirement benefits
Beginning balance	$	(39)	$	(62)
Current year prior service credit (cost)	—		—
Less: Tax provision /(benefit)	—		—
Net current year prior service credit (cost)	—		—
Amortization of prior service (credit) cost	(3)		(1)
Less: Tax provision /(benefit)	(1)		—
Net amortization of prior service (credit) cost	(2)		(1)
Other comprehensive income (loss), net of tax	(2)		(1)
Ending balance	$	(41)	$	(63)
Derivative financial instruments
Beginning balance	$	28	$	(3)
Gains (losses) deferred	56		47
Less: Tax provision /(benefit)	12		10
Net gains (losses) deferred	44		37
(Gains) losses reclassified to earnings	52		(19)
Less: Tax provision /(benefit)	12		(5)
Net (gains) losses reclassified to earnings	40		(14)
Other comprehensive income (loss), net of tax	84		23
Ending balance	$	112	$	20
Available-for-sale securities
Beginning balance	$	(118)	$	20
Gains (losses) deferred	26		(79)
Less: Tax provision /(benefit)	4		(15)
Net gains (losses) deferred	22		(64)
(Gains) losses reclassified to earnings	—		—
Less: Tax provision /(benefit)	—		—
Net (gains) losses reclassified to earnings	—		—
Other comprehensive income (loss), net of tax	22		(64)
Ending balance	$	(96)	$	(44)
Total AOCI Ending Balance at March 31	$	(1,746)	$	(1,710)

22

14.                              Environmental and legal matters

The Company is regulated by federal, state and international environmental laws governing its use, transport and disposal of substances and control of emissions. In addition to governing our manufacturing and other operations, these laws often impact the development of our products, including, but not limited to, required compliance with air emissions standards applicable to internal combustion engines. We have made, and will continue to make, significant research and development and capital expenditures to comply with these emissions standards.

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

On January 7, 2015, the U.S. Attorney’s Office for the Central District of Illinois issued a grand jury subpoena to the Company and thereafter issued additional subpoenas; these subpoenas sought information regarding, among other things, movements of cash among U.S. and non-U.S. Caterpillar subsidiaries, the purchase and resale of replacement parts by Caterpillar Inc. and non-U.S. Caterpillar subsidiaries, and Caterpillar SARL (CSARL) and related structures. On March 2-3, 2017, federal agents executed search and seizure warrants, which concerned both tax and export activities, at three facilities of the Company in the Peoria, Illinois area, including its former corporate headquarters. The Tax Division of the U.S. Department of Justice conducted a review of the grand jury investigation and informed the Company on November 28, 2022 that it does not have a pending criminal tax matter involving the Company. In January 2023, the government began returning to the Company the documents and information seized under the search warrants, which, as noted, related to both tax and export issues, as well as the documents and information the Company produced under the grand jury subpoenas.

In addition, we are involved in other unresolved legal actions that arise in the normal course of business. The most prevalent of these unresolved actions involve disputes related to product design, manufacture and performance liability (including claimed asbestos exposure), contracts, employment issues, environmental matters, intellectual property rights, taxes (other than income taxes) and securities laws. The aggregate range of reasonably possible losses in excess of accrued liabilities, if any, associated with these unresolved legal actions is not material. In some cases, we cannot reasonably estimate a range of loss because there is insufficient information regarding the matter. However, we believe there is no more than a remote chance that any liability arising from these matters would be material. Although it is not possible to predict with certainty the outcome of these unresolved legal actions, we believe that these actions will not individually or in the aggregate have a material adverse effect on our consolidated results of operations, financial position or liquidity.

15.                              Income taxes

The effective tax rate for the three months ended March 31, 2023 was 26.9 percent compared to 23.4 percent for the three months ended March 31, 2022.

The provision for income taxes for the three months ended March 31, 2023, reflected an estimated annual tax rate of 23 percent, compared with 24 percent for the three months ended March 31, 2022, excluding the discrete items discussed below. The comparative tax rate for full-year 2022 was approximately 23.2 percent.

The estimated annual tax rate excludes the impact of the nondeductible loss of $586 million related to the divestiture of the company's Longwall business in the three months ended March 31, 2023. In addition, the company recorded a discrete tax benefit of $32 million for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense, compared with a $12 million benefit for the three months ended March 31, 2022.

23

16.                              Segment information

A.    Basis for segment information

Our Executive Office is comprised of a Chief Executive Officer (CEO), four Group Presidents, a Chief Financial Officer (CFO), a Chief Legal Officer 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.

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; cold planers; compactors; compact track loaders; forestry machines; material handlers; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; track-type loaders; track-type tractors (small, medium); track excavators (mini, small, medium, large); wheel excavators; wheel loaders (compact, small, medium); 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.

24

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 power generation facilities that, in most cases, incorporate Caterpillar products. Financing plans include operating and finance leases, revolving charge accounts, 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.

25

•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 27 to 29 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, contract terminations and divestiture impacts. 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.

26

For the three months ended March 31, 2023 and 2022, 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 Revenues			Intersegment Sales and Revenues		Total Sales and Revenues
Three Months Ended March 31, 2023
Construction Industries	$	3,608	$	599	$	1,336	$	1,161	$	6,704		$	42	$	6,746
Resource Industries	1,308		474		599		978		3,359			68		3,427
Energy & Transportation	2,572		380		1,384		719		5,055			1,199		6,254
Financial Products Segment	575		104		114		109		902		1	—		902
Total sales and revenues from reportable segments	8,063		1,557		3,433		2,967		16,020			1,309		17,329
All Other operating segment	18		—		4		13		35			76		111
Corporate Items and Eliminations	(131)		(18)		(19)		(25)		(193)			(1,385)		(1,578)
Total Sales and Revenues	$	7,950	$	1,539	$	3,418	$	2,955	$	15,862		$	—	$	15,862
Three Months Ended March 31, 2022
Construction Industries	$	2,720	$	627	$	1,277	$	1,462	$	6,086		$	29	$	6,115
Resource Industries	1,018		399		594		748		2,759			71		2,830
Energy & Transportation	1,938		310		1,184		600		4,032			1,006		5,038
Financial Products Segment	503		73		96		111		783		1	—		783
Total sales and revenues from reportable segments	6,179		1,409		3,151		2,921		13,660			1,106		14,766
All Other operating segment	18		—		5		16		39			79		118
Corporate Items and Eliminations	(60)		(16)		(11)		(23)		(110)			(1,185)		(1,295)
Total Sales and Revenues	$	6,137	$	1,393	$	3,145	$	2,914	$	13,589		$	—	$	13,589

1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of $162 million and $100 million in the three months ended March 31, 2023 and 2022, respectively.

For the three months ended March 31, 2023 and 2022, Energy & Transportation segment sales by end user application were as follows:

Energy & Transportation External Sales
	Three Months Ended March 31
(Millions of dollars)	2023		2022
Oil and gas	$	1,314	$	948
Power generation	1,284		1,012
Industrial	1,255		1,020
Transportation	1,202		1,052
Energy & Transportation External Sales	$	5,055	$	4,032

27

Reconciliation of Consolidated profit before taxes:
(Millions of dollars)	Three Months Ended March 31
	2023		2022
Profit from reportable segments:
Construction Industries	$	1,790	$	1,057
Resource Industries	764		361
Energy & Transportation	1,057		538
Financial Products Segment	232		238
Total profit from reportable segments	3,843		2,194
Profit from All Other operating segment	11		3
Cost centers	30		10
Corporate costs	(238)		(198)
Timing	(206)		(98)
Restructuring costs	(611)		(13)
Methodology differences:
Inventory/cost of sales	126		168
Postretirement benefit expense	(31)		81
Stock-based compensation expense	(44)		(40)
Financing costs	(50)		(100)
Currency	(26)		106
Other income/expense methodology differences	(146)		(81)
Other methodology differences	(24)		(33)
Total consolidated profit before taxes	$	2,634	$	1,999

Reconciliation of Assets:
(Millions of dollars)	March 31, 2023		December 31, 2022
Assets from reportable segments:
Construction Industries	$	5,584	$	5,168
Resource Industries	5,719		5,775
Energy & Transportation	9,513		9,455
Financial Products Segment	34,591		34,269
Total assets from reportable segments	55,407		54,667
Assets from All Other operating segment	1,795		1,828
Items not included in segment assets:
Cash and cash equivalents	6,017		6,042
Deferred income taxes	2,287		2,098
Goodwill and intangible assets	4,437		4,248
Property, plant and equipment – net and other assets	4,523		4,234
Inventory methodology differences	(3,441)		(3,063)
Liabilities included in segment assets	13,118		12,519
Other	(494)		(630)
Total assets	$	83,649	$	81,943

28

Reconciliation of Depreciation and amortization:
(Millions of dollars)
	Three Months Ended March 31
	2023		2022
Depreciation and amortization from reportable segments:
Construction Industries	$	54	$	58
Resource Industries	87		92
Energy & Transportation	129		134
Financial Products Segment	178		188
Total depreciation and amortization from reportable segments	448		472
Items not included in segment depreciation and amortization:
All Other operating segment	57		58
Cost centers	20		21
Other	7		6
Total depreciation and amortization	$	532	$	557

Reconciliation of Capital expenditures:
(Millions of dollars)
	Three Months Ended March 31
	2023		2022
Capital expenditures from reportable segments:
Construction Industries	$	32	$	32
Resource Industries	26		22
Energy & Transportation	169		177
Financial Products Segment	279		241
Total capital expenditures from reportable segments	506		472
Items not included in segment capital expenditures:
All Other operating segment	26		16
Cost centers	22		9
Timing	212		192
Other	(16)		(10)
Total capital expenditures	$	750	$	679

17.                             Cat Financial financing activities

Allowance for credit losses

Portfolio segments

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

Customer

Cat Financial provides loans and finance leases to end-user customers primarily for the purpose of financing new and used Caterpillar machinery, engines and equipment for commercial use. Cat Financial also provides financing for power generation facilities that, in most cases, incorporate Caterpillar products. The average original term of Cat Financial's customer finance receivable portfolio was approximately 51 months with an average remaining term of approximately 28 months as of March 31, 2023.

29

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

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

During the three months ended March 31, 2023, Cat Financial's forecasts for the markets in which it operates reflected a continuation of the trend of relatively low unemployment rates and delinquencies. However, delinquencies show an increasing trend as persistently high inflation rates and consequent central bank actions are weakening global economic growth. The company believes the economic forecasts employed represent reasonable and supportable forecasts, followed by a reversion to long-term trends.

Dealer

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

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

In general, Cat Financial's Dealer portfolio segment has not historically experienced large increases or decreases in credit losses based on changes in economic conditions due to its close working relationships with the dealers and their financial strength. Therefore, Cat Financial made no adjustments to historical loss rates during the three months ended March 31, 2023.

Classes of finance receivables

Cat Financial further evaluates portfolio segments by the class of finance receivables, which is defined as a level of information (below a portfolio segment) in which the finance receivables have the same initial measurement attribute and a similar method for assessing and monitoring credit risk. Cat Financial's classes, which align with management reporting for credit losses, are as follows:

•North America - Finance receivables originated in the United States and Canada.

•EAME - Finance receivables originated in Europe, Africa, the Middle East and the Commonwealth of Independent States.

•Asia/Pacific - Finance receivables originated in Australia, New Zealand, China, Japan, Southeast Asia and India.

•Mining - Finance receivables related to large mining customers worldwide.

•Latin America - Finance receivables originated in Mexico and Central and South American countries.

•Power Finance - Finance receivables originated worldwide related to Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems.

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

30

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

(Millions of dollars)	Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
Allowance for Credit Losses:	Customer		Dealer		Total		Customer		Dealer		Total
Beginning balance	$	277	$	65	$	342	$	251	$	82	$	333
Write-offs	(20)		—		(20)		(20)		—		(20)
Recoveries	10		—		10		12		—		12
Provision for credit losses 1	10		—		10		26		(1)		25
Other	1		—		1		2		—		2
Ending balance	$	278	$	65	$	343	$	271	$	81	$	352
Finance Receivables	$	19,573	$	1,721	$	21,294	$	20,289	$	1,722	$	22,011
1 Excludes provision for credit losses on unfunded commitments and other miscellaneous receivables.

Gross write-offs by origination year for the Customer portfolio segment were as follows:

(Millions of dollars)	March 31, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Finance Receivables		Total
North America	$	—	$	3	$	3	$	—	$	—	$	—	$	4	10
EAME	—		1		—		1		—		—		—		2
Asia/Pacific	—		—		2		1		1		—		—		4
Latin America	—		—		1		2		1		—		—		4
Total	$	—	$	4	$	6	$	4	$	2	$	—	$	4	$	20

Credit quality of finance receivables

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

31

Customer

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

(Millions of dollars)	March 31, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Finance Receivables		Total Finance Receivables
North America
Current	$	886	$	3,585	$	2,931	$	1,308	$	525	$	168	$	255	$	9,658
31-60 days past due	3		29		30		18		8		2		3		93
61-90 days past due	—		11		8		5		2		1		2		29
91+ days past due	—		12		19		12		5		5		3		56
EAME
Current	310		1,198		864		423		234		189		—		3,218
31-60 days past due	2		15		12		4		2		1		—		36
61-90 days past due	—		7		5		3		2		—		—		17
91+ days past due	—		8		23		14		3		2		—		50
Asia/Pacific
Current	248		896		568		230		48		14		—		2,004
31-60 days past due	—		9		12		9		2		—		—		32
61-90 days past due	—		4		4		3		1		—		—		12
91+ days past due	—		4		6		5		3		1		—		19
Mining
Current	318		837		520		186		137		98		56		2,152
31-60 days past due	—		5		—		4		1		—		—		10
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		—		1		—		—		—		—		1
Latin America
Current	182		716		339		124		51		28		—		1,440
31-60 days past due	—		17		32		4		9		9		—		71
61-90 days past due	—		4		4		1		—		3		—		12
91+ days past due	—		5		14		8		2		1		—		30
Power Finance
Current	12		76		78		140		32		159		133		630
31-60 days past due	—		—		—		—		—		2		—		2
61-90 days past due	—		—		—		—		—		1		—		1
91+ days past due	—		—		—		—		—		—		—		—
Totals by Aging Category
Current	$	1,956	$	7,308	$	5,300	$	2,411	$	1,027	$	656	$	444	$	19,102
31-60 days past due	5		75		86		39		22		14		3		244
61-90 days past due	—		26		21		12		5		5		2		71
91+ days past due	—		29		63		39		13		9		3		156
Total Customer	$	1,961	$	7,438	$	5,470	$	2,501	$	1,067	$	684	$	452	$	19,573

32

(Millions of dollars)	December 31, 2022
	2022		2021		2020		2019		2018		Prior		Revolving Finance Receivables		Total Finance Receivables
North America
Current	$	3,915	$	3,276	$	1,525	$	653	$	206	$	34	$	240	$	9,849
31-60 days past due	25		26		18		12		4		1		4		90
61-90 days past due	9		15		7		3		1		—		3		38
91+ days past due	11		16		12		6		4		3		4		56
EAME
Current	1,270		953		477		280		155		68		—		3,203
31-60 days past due	10		12		7		1		1		—		—		31
61-90 days past due	8		4		3		1		—		—		—		16
91+ days past due	6		25		16		4		1		1		—		53
Asia/Pacific
Current	1,033		684		313		69		18		2		—		2,119
31-60 days past due	10		12		8		1		1		—		—		32
61-90 days past due	2		5		4		2		—		—		—		13
91+ days past due	2		6		6		4		—		—		—		18
Mining
Current	863		575		220		171		93		108		80		2,110
31-60 days past due	—		1		—		—		—		—		—		1
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		—		—		—		—		1		—		1
Latin America
Current	770		400		150		69		26		20		—		1,435
31-60 days past due	7		8		4		2		—		1		—		22
61-90 days past due	2		5		1		1		—		—		—		9
91+ days past due	2		13		11		2		1		—		—		29
Power Finance
Current	78		85		142		33		18		161		125		642
31-60 days past due	—		—		—		—		—		—		—		—
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		—		—		—		—		5		—		5
Totals by Aging Category
Current	$	7,929	$	5,973	$	2,827	$	1,275	$	516	$	393	$	445	$	19,358
31-60 days past due	52		59		37		16		6		2		4		176
61-90 days past due	21		29		15		7		1		—		3		76
91+ days past due	21		60		45		16		6		10		4		162
Total Customer	$	8,023	$	6,121	$	2,924	$	1,314	$	529	$	405	$	456	$	19,772

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

33

Dealer

As of March 31, 2023 and December 31, 2022, Cat Financial's total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $58 million that were 91+ days past due in Latin America, all of which were originated in 2017.

Non-accrual finance receivables

Recognition of income is suspended and the finance receivable is placed on non-accrual status when management determines that collection of future income is not probable. Contracts on non-accrual status are generally more than 120 days past due. Recognition is resumed and previously suspended income is recognized when collection is considered probable. Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms. Interest earned but uncollected prior to the receivable being placed on non-accrual status is written off through Provision for credit losses when, in the judgment of management, it is considered uncollectible.

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

	March 31, 2023						December 31, 2022
	Amortized Cost						Amortized Cost
(Millions of dollars)	Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing		Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing
North America	$	48	$	—	$	12	$	52	$	4	$	11
EAME	44		—		6		43		—		10
Asia/Pacific	12		—		7		11		—		7
Mining	2		—		—		—		1		—
Latin America	77		—		—		45		—		—
Power Finance	8		—		—		5		11		—
Total	$	191	$	—	$	25	$	156	$	16	$	28

Interest income recognized for customer finance receivables on non-accrual status was not material during the three months ended March 31, 2023 and 2022.

There were $58 million in finance receivables in Cat Financial's Dealer portfolio segment on non-accrual status as of March 31, 2023 and December 31, 2022, all of which was in Latin America.

Modifications

Cat Financial periodically modifies loan terms in response to borrowers’ financial difficulty. Typically, the types of modifications granted are payment deferrals, interest only payment periods and/or term extensions. During the three months ended March 31, 2023, loan modifications granted to borrowers experiencing financial difficulty were not material.

The effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses based on the methodologies used to estimate the allowance; therefore, a change to the allowance for credit losses is generally not recorded upon modification. On rare occasions when principal forgiveness is provided, the amount forgiven is written off against the allowance for credit losses.

34

18.                              Fair value disclosures

    A. Fair value measurements

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

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

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

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

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

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

Fair value measurement includes the consideration of nonperformance risk.  Nonperformance risk refers to the risk that an obligation (either by a counterparty or Caterpillar) will not be fulfilled.  For financial assets traded in an active market (Level 1 and certain Level 2), the nonperformance risk is included in the market price.  For certain other financial assets and liabilities (certain Level 2 and Level 3), our fair value calculations have been adjusted accordingly.

Investments in debt and equity securities

We have investments in certain debt and equity securities that are recorded at fair value.  Fair values for our U.S. treasury bonds and large capitalization value and smaller company growth equity securities are based upon valuations for identical instruments in active markets.  Fair values for other government debt securities, corporate debt securities and mortgage-backed debt securities are based upon models that take into consideration such market-based factors as recent sales, risk-free yield curves and prices of similarly rated bonds.

We also have investments in time deposits classified as held-to-maturity debt securities. The fair value of these investments is based upon valuations observed in less active markets than Level 1. These investments have a maturity of less than one year and are recorded at amortized costs, which approximate fair value.

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

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

Derivative financial instruments

The fair value of interest rate contracts is primarily based on a standard industry accepted valuation model that utilizes the appropriate market-based forward swap curves and zero-coupon interest rates to determine discounted cash flows.  The fair value of foreign currency and commodity forward, option and cross currency contracts is based on standard industry accepted valuation models that discount cash flows resulting from the differential between the contract price and the market-based forward rate.

35

See Note 5 for additional information.

Assets and liabilities measured on a recurring basis at fair value included in our Consolidated Statement of Financial Position as of March 31, 2023 and December 31, 2022 were as follows:

	March 31, 2023
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets / Liabilities, at Fair Value
Assets
Debt securities
Government debt securities
U.S. treasury bonds	$	9	$	—	$	—	$	—	$	9
Other U.S. and non-U.S. government bonds	—		57		—		—		57
Corporate debt securities
Corporate bonds and other debt securities	—		2,469		50		—		2,519
Asset-backed securities	—		184		—		—		184
Mortgage-backed debt securities
U.S. governmental agency	—		341		—		—		341
Residential	—		2		—		—		2
Commercial	—		125		—		—		125
Total debt securities	9		3,178		50		—		3,237
Equity securities
Large capitalization value	200		—		—		—		200
Smaller company growth	32		—		—		—		32
REIT	—		—		—		200		200
Total equity securities	232		—		—		200		432
Derivative financial instruments - assets
Foreign currency contracts - net	—		309		—		—		309
Commodity contracts - net	—		17		—		—		17
Total assets	$	241	$	3,504	$	50	$	200	$	3,995
Liabilities
Derivative financial instruments - liabilities
Interest rate contracts - net	$	—	$	135	$	—	$	—	$	135
Total liabilities	$	—	$	135	$	—	$	—	$	135

36

	December 31, 2022
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets / Liabilities, at Fair Value
Assets
Debt securities
Government debt securities
U.S. treasury bonds	$	9	$	—	$	—	$	—	$	9
Other U.S. and non-U.S. government bonds	—		55		—		—		55
Corporate debt securities
Corporate bonds and other debt securities	—		2,416		50		—		2,466
Asset-backed securities	—		182		—		—		182
Mortgage-backed debt securities
U.S. governmental agency	—		333		—		—		333
Residential	—		2		—		—		2
Commercial	—		117		—		—		117
Total debt securities	9		3,105		50		—		3,164
Equity securities
Large capitalization value	203		—		—		—		203
Smaller company growth	31		—		—		—		31
REIT	—		—		—		207		207
Total equity securities	234		—		—		207		441
Derivative financial instruments - assets
Foreign currency contracts - net	—		328		—		—		328
Commodity contracts - net	—		15		—		—		15
Total Assets	$	243	$	3,448	$	50	$	207	$	3,948
Liabilities
Derivative financial instruments - liabilities
Interest rate contracts - net	$	—	$	195	$	—	$	—	$	195
Total liabilities	$	—	$	195	$	—	$	—	$	195

In addition to the amounts above, certain Cat Financial loans are subject to measurement at fair value on a nonrecurring basis and are classified as Level 3 measurements. A loan is measured at fair value when management determines that collection of contractual amounts due is not probable and the loan is individually evaluated.  In these cases, an allowance for credit losses may be established based either on the present value of expected future cash flows discounted at the receivables’ effective interest rate, the fair value of the collateral for collateral-dependent receivables, or the observable market price of the receivable.  In determining collateral value, Cat Financial estimates the current fair market value of the collateral less selling costs. Cat Financial had loans carried at fair value of $61 million and $68 million as of March 31, 2023 and December 31, 2022, respectively.  

    B. Fair values of financial instruments

In addition to the methods and assumptions we use to record the fair value of financial instruments as discussed in the Fair value measurements section above, we use the following methods and assumptions to estimate the fair value of our financial instruments:

Cash and cash equivalents

Carrying amount approximates fair value. We classify cash and cash equivalents as Level 1. See Consolidated Statement of Financial Position.

Restricted cash and short-term investments

Carrying amount approximates fair value.  We include restricted cash and short-term investments in Prepaid expenses and other current assets in the Consolidated Statement of Financial Position. We classify these instruments as Level 1 except for time deposits which are Level 2, and certain corporate debt securities which are Level 3. See Note 8 for additional information.

37

Finance receivables

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

Wholesale inventory receivables

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

Short-term borrowings

Carrying amount approximates fair value. We classify short-term borrowings as Level 1. See Consolidated Statement of Financial Position.

Long-term debt

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

Guarantees

The fair value of guarantees is based upon our estimate of the premium a market participant would require to issue the same guarantee in a stand-alone arms-length transaction with an unrelated party. If quoted or observable market prices are not available, fair value is based upon internally developed models that utilize current market-based assumptions. We classify guarantees as Level 3. See Note 11 for additional information.

Our financial instruments not carried at fair value were as follows:

	March 31, 2023				December 31, 2022
(Millions of dollars)	Carrying  Amount		Fair  Value		Carrying  Amount		Fair  Value		Fair Value Levels	Reference
Assets
Finance receivables – net (excluding finance leases 1 )	$	14,010	$	13,488	$	13,965	$	13,377	3	Note 17
Wholesale inventory receivables – net (excluding finance leases 1)	1,024		967		827		778		3
Liabilities
Long-term debt (including amounts due within one year)
Machinery, Energy & Transportation	9,595		9,542		9,618		9,240		2
Financial Products	21,602		21,066		21,418		20,686		2

1    Represents finance leases and failed sale leasebacks of $7,198 million and $7,325 million at March 31, 2023 and December 31, 2022, respectively.

38

19.                         Other income (expense)

	Three Months Ended March 31
(Millions of dollars)	2023		2022
Investment and interest income	$	93	$	21
Foreign exchange gains (losses) 1	(72)		47
License fee income	31		32
Net periodic pension and OPEB income (cost), excluding service cost	(13)		68
Gains (losses) on securities	(11)		(12)
Miscellaneous income (loss)	4		97
Total	$	32	$	253

1 Includes gains (losses) from foreign exchange derivative contracts. See Note 5 for further details.

20.                              Restructuring costs

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

Restructuring costs for the three months ended March 31, 2023 and 2022 were as follows:

(Millions of dollars)	Three Months Ended March 31
	2023		2022
Employee separations 1	$	12	$	5
Longwall divestiture 1	586		—
Other 2	13		8
Total restructuring costs	$	611	$	13
1 Recognized in Other operating (income) expenses.
2 Represents costs related to our restructuring programs, primarily for accelerated depreciation, project management, equipment relocation and inventory write-downs, all of which are primarily included in Cost of goods sold.

The restructuring costs for the three months ended March 31, 2023 were primarily related to the divestiture of the company's Longwall business within Resource Industries. The divestiture closed on February 1, 2023 and resulted in a pre-tax loss of approximately $586 million, primarily a non-cash item driven by the release of $494 million of accumulated foreign currency translation. The transaction is subject to certain post-closing adjustments. For the three months ended March 31, 2022, the restructuring costs were primarily related to actions across the company including strategic actions to address a small number of products.

In 2023 and 2022, all restructuring costs are excluded from segment profit.

39

The following table summarizes the 2023 and 2022 employee separation activity:

(Millions of dollars)	Three Months Ended March 31
	2023		2022
Liability balance, beginning of period	$	39	$	61
Increase in liability (separation charges)	12		5
Reduction in liability (payments)	(28)		(19)
Liability balance, end of period	$	23	$	47

Most of the liability balance at March 31, 2023 is expected to be paid in 2023.

40

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

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide information that will assist the reader in understanding the company’s Consolidated Financial Statements, the changes in certain key items in those financial statements between select periods and the primary factors that accounted for those changes. In addition, we discuss how certain accounting principles, policies and critical estimates affect our Consolidated Financial Statements. Our discussion also contains certain forward-looking statements related to future events and expectations as well as a discussion of the many factors that we believe may have an impact on our business on an ongoing basis. This MD&A should be read in conjunction with our discussion of cautionary statements and significant risks to the company’s business under Part I, Item 1A. Risk Factors of the 2022 Form 10-K.

Highlights for the first quarter of 2023 include:

•Total sales and revenues for the first quarter of 2023 were $15.862 billion, an increase of $2.273 billion, or 17 percent, compared with $13.589 billion in the first quarter of 2022. Sales were higher across the three primary segments.

•Operating profit margin was 17.2 percent for the first quarter of 2023, compared with 13.7 percent for the first quarter of 2022. Adjusted operating profit margin was 21.1 percent for the first quarter of 2023, compared with 13.7 percent for the first quarter of 2022.

•First-quarter 2023 profit per share was $3.74, and excluding the items in the table below, adjusted profit per share was $4.91. First-quarter 2022 profit per share was $2.86, and excluding the items in the table below, adjusted profit per share was $2.88.

•Caterpillar ended the first quarter of 2023 with $6.8 billion of enterprise cash.

•Enterprise operating cash flow was $1.6 billion in the first quarter of 2023.

•In order for our results to be more meaningful to our readers, we have separately quantified the impact of several significant items. A detailed reconciliation of GAAP to non-GAAP financial measures is included on page 55.

	Three Months Ended March 31, 2023				Three Months Ended March 31, 2022
(Dollars in millions except per share data)	Profit Before Taxes		Profit Per Share		Profit Before Taxes		Profit Per Share
Profit	$	2,634	$	3.74	$	1,999	$	2.86
Restructuring costs - Longwall divestiture	586		1.13		—		—
Other restructuring costs	25		0.04		13		0.02
Adjusted profit	$	3,245	$	4.91	$	2,012	$	2.88

Overview

Total sales and revenues for the first quarter of 2023 were $15.862 billion, an increase of $2.273 billion, or 17 percent, compared with $13.589 billion in the first quarter of 2022. The increase was due to favorable price realization and higher sales volume, partially offset by unfavorable currency impacts primarily related to the euro, Japanese yen and Australian dollar. The increase in sales volume was driven by higher sales of equipment to end users, partially offset by lower services volume. Sales were higher across the three primary segments.

First-quarter 2023 profit per share was $3.74, compared with $2.86 profit per share in the first quarter of 2022. In the first quarter of 2023 and 2022, profit per share included restructuring costs. First-quarter 2023 restructuring costs included the impact of the divestiture of the company's Longwall business. Profit for the first quarter of 2023 was $1.943 billion, an increase of $406 million, or 26 percent compared with $1.537 billion for the first quarter of 2022. The increase was primarily due to favorable price realization, higher sales volume and higher investment and interest income, partially offset by the impact of the divestiture of the company's Longwall business, higher manufacturing costs and unfavorable impacts from foreign currency exchange, commodity hedges and pension and other postemployment benefit (OPEB) plan costs.

41

Trends and Economic Conditions

Outlook for Key End Markets

In Construction Industries, we see positive momentum in 2023 for North America. We expect non-residential construction in North America to grow due to the positive impact of government-related infrastructure investments and a healthy pipeline of construction projects. Although residential construction housing starts have softened, the growth rate of our residential construction equipment remains positive as the supply chain pressures alleviate. In Asia Pacific, excluding China, we expect growth due to public infrastructure spending and supportive commodity prices. We expect continued weakness in China in the excavator industry above 10-tons, which we anticipate to remain below 2022 levels due to low construction activity. In EAME, business activity is now expected increase versus 2022 based on healthy construction project activity, particularly strong construction demand in the Middle East. Although uncertain economic conditions remain in Europe, it is more resilient than we previously anticipated. Construction activity in Latin America is expected to be slightly down versus a strong 2022 performance.

In Resource Industries, we expect healthy mining demand to continue as commodity prices remain above investment thresholds; however, customers continue to remain capital disciplined. We anticipate production and utilization levels will remain elevated. We expect the aging of the fleet and a lower level of parked trucks to support future demand for our equipment and services. The energy transition is expected to support increased commodity demand, expanding our total addressable market and providing opportunities for long-term profitable growth. In heavy construction and quarry and aggregates, we anticipate continued growth supported by infrastructure and major non-residential construction projects.

In Energy & Transportation, we expect sales growth to follow our normal seasonal pattern with higher sales in the second half of 2023 versus the first half of 2023. In Oil & Gas reciprocating engines, although customers remain disciplined, we are encouraged by continued strength in demand for both well servicing and gas compression. Power Generation reciprocating engine demand is expected to remain healthy, including data center strength. New equipment orders and services for turbines and turbine-related services in both Oil & Gas and Power Generation are robust. Industrial remains healthy. In Transportation, we anticipate strength in high-speed marine as customers continue to upgrade aging fleets.

Company Trends and Expectations

For the full-year 2023, we expect a strong top line supported by price realization and higher sales of equipment to end users. We do not anticipate a significant change in dealer inventory at year-end 2023 versus year-end 2022. The environment remains positive with improving supply chain dynamics, a strong backlog and healthy underlying end markets.

We expect higher sales in the second quarter of 2023, compared to the second quarter of 2022 on strong sales of equipment to end users and favorable price realization. Following typical seasonality, we expect higher sales in the second quarter of 2023, compared to the first quarter of 2023. In the second quarter of 2022, we saw a decrease in dealer inventory of $400 million. We expect a smaller decrease in the second quarter of 2023.

We expect operating profit to increase in 2023, compared to 2022. We expect price realization to continue to be favorable in 2023. Throughout 2023, we expect to see moderation of price realization and input cost inflation. Increases in selling, general and administrative (SG&A) and research and development (R&D) expenses are expected throughout 2023 as we continue to invest in strategic initiatives such as services growth and technology, including digital, electrification and autonomy. We continue to anticipate higher pension expense within other income (expense) in 2023, compared to 2022, due to higher interest costs from higher interest rates. The change is estimated to be just over $300 million for the full year as compared to 2022, or about $80 million per quarter. Second quarter 2023 operating profit is expected to be substantially stronger than the second quarter of 2022 on favorable price realization and sales volume. We expect the year-over-year benefit of price realization in the second quarter of 2023 to moderate compared to the benefit we saw in the first quarter of 2023 as we lap prior price year increases.

Global Business Conditions

We continue to monitor a variety of external factors around the world, such as supply chain disruptions, inflationary cost and labor pressures. Areas of particular focus include certain components, transportation and raw materials. Transportation shortages have resulted in delays and increased costs. In addition, our suppliers are dealing with availability issues and freight delays, which could impact production in our facilities. Contingency plans have been developed and continue to be modified to minimize supply chain challenges that may impact our ability to meet increasing customer demand. We continue to assess the environment and are taking appropriate price actions in response to rising costs.

Risk Factors

Risk factors are disclosed within Item 1A. Risk Factors of the 2022 Form 10-K.

42

Notes:

•Glossary of terms is included on pages 49 - 51; first occurrence of terms shown in bold italics.

•Information on non-GAAP financial measures is included on page 55.

•Certain amounts may not add due to rounding.

43

Consolidated Results of Operations

THREE MONTHS ENDED MARCH 31, 2023 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2022

CONSOLIDATED SALES AND REVENUES

The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the first quarter of 2022 (at left) and the first quarter of 2023 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees.

Total sales and revenues for the first quarter of 2023 were $15.862 billion, an increase of $2.273 billion, or 17 percent, compared with $13.589 billion in the first quarter of 2022. The increase was due to favorable price realization and higher sales volume, partially offset by unfavorable currency impacts primarily related to the euro, Japanese yen and Australian dollar. The increase in sales volume was driven by higher sales of equipment to end users, partially offset by lower services sales volume.

Sales were higher across the three primary segments.

North America sales increased 32 percent due to favorable price realization, higher sales of equipment to end users and the impact from changes in dealer inventories, partially offset by lower services sales volume. Dealer inventory increased more during the first quarter of 2023 than during the first quarter of 2022.

Sales increased 9 percent in Latin America due to favorable price realization, partially offset by the impact from changes in dealer inventories. Dealer inventory increased during the first quarter of 2022, compared with a decrease during the first quarter of 2023.

EAME sales increased 9 percent due to higher sales of equipment to end users and favorable price realization, partially offset by the impact from changes in dealer inventories, unfavorable currency impacts, primarily related to the euro and British pound, and lower services sales volume. Dealer inventory increased more during the first quarter of 2022 than during the first quarter of 2023.

Asia/Pacific sales increased 2 percent driven by favorable price realization and higher services sales volume, partially offset by unfavorable currency impacts, related to the Japanese yen, Australian dollar and Chinese yuan, the impact from changes in dealer inventories and lower sales of equipment to end users. Dealer inventory increased more during the first quarter of 2022 than the first quarter of 2023.

Dealer inventory increased by $1.4 billion during the first quarter of 2023, compared with an increase of $1.3 billion during the first quarter of 2022. Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rentals and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers. We expect dealer inventories to be about flat in 2023 compared to 2022.

44

Sales and Revenues by Segment
(Millions of dollars)	First Quarter 2022		Sales Volume		Price Realization		Currency		Inter-Segment / Other		First Quarter 2023		$ Change		% Change
Construction Industries	$	6,115	$	(173)	$	942	$	(151)	$	13	$	6,746	$	631	10	%
Resource Industries	2,830		157		472		(29)		(3)		3,427		597		21	%
Energy & Transportation	5,038		621		480		(78)		193		6,254		1,216		24	%
All Other Segment	118		(2)		—		(1)		(4)		111		(7)		(6	%)
Corporate Items and Eliminations	(1,215)		(26)		—		1		(199)		(1,439)		(224)
Machinery, Energy & Transportation Sales	12,886		577		1,894		(258)		—		15,099		2,213		17	%
Financial Products Segment	783		—		—		—		119		902		119		15	%
Corporate Items and Eliminations	(80)		—		—		—		(59)		(139)		(59)
Financial Products Revenues	703		—		—		—		60		763		60		9	%
Consolidated Sales and Revenues	$	13,589	$	577	$	1,894	$	(258)	$	60	$	15,862	$	2,273	17	%

Sales and Revenues by Geographic Region

	North America				Latin America				EAME				Asia/Pacific				External Sales and Revenues					Inter-Segment				Total Sales and Revenues
(Millions of dollars)	$		% Chg		$		% Chg		$		% Chg		$		% Chg		$			% Chg		$		% Chg		$		% Chg
First Quarter 2023
Construction Industries	$	3,608	33	%	$	599	(4	%)	$	1,336	5	%	$	1,161	(21	%)	$	6,704		10	%	$	42	45	%	$	6,746	10	%
Resource Industries	1,308		28	%	474		19	%	599		1	%	978		31	%	3,359			22	%	68		(4	%)	3,427		21	%
Energy & Transportation	2,572		33	%	380		23	%	1,384		17	%	719		20	%	5,055			25	%	1,199		19	%	6,254		24	%
All Other Segment	18		—	%	—		—	%	4		(20	%)	13		(19	%)	35			(10	%)	76		(4	%)	111		(6	%)
Corporate Items and Eliminations	(48)				—				(1)				(5)				(54)					(1,385)				(1,439)
Machinery, Energy & Transportation Sales	7,458		32	%	1,453		9	%	3,322		9	%	2,866		2	%	15,099			17	%	—		—	%	15,099		17	%
Financial Products Segment	575		14	%	104		42	%	114		19	%	109		(2	%)	902		1	15	%	—		—	%	902		15	%
Corporate Items and Eliminations	(83)				(18)				(18)				(20)				(139)					—				(139)
Financial Products Revenues	492		5	%	86		54	%	96		10	%	89		(4	%)	763			9	%	—		—	%	763		9	%
Consolidated Sales and Revenues	$	7,950	30	%	$	1,539	10	%	$	3,418	9	%	$	2,955	1	%	$	15,862		17	%	$	—	—	%	$	15,862	17	%
First Quarter 2022
Construction Industries	$	2,720			$	627			$	1,277			$	1,462			$	6,086				$	29			$	6,115
Resource Industries	1,018				399				594				748				2,759					71				2,830
Energy & Transportation	1,938				310				1,184				600				4,032					1,006				5,038
All Other Segment	18				—				5				16				39					79				118
Corporate Items and Eliminations	(24)				1				(2)				(5)				(30)					(1,185)				(1,215)
Machinery, Energy & Transportation Sales	5,670				1,337				3,058				2,821				12,886					—				12,886
Financial Products Segment	503				73				96				111				783		1			—				783
Corporate Items and Eliminations	(36)				(17)				(9)				(18)				(80)					—				(80)
Financial Products Revenues	467				56				87				93				703					—				703
Consolidated Sales and Revenues	$	6,137			$	1,393			$	3,145			$	2,914			$	13,589				$	—			$	13,589

1 Includes revenues from Machinery, Energy & Transportation of $162 million and $100 million in the first quarter of 2023 and 2022, respectively.

45

CONSOLIDATED OPERATING PROFIT

The chart above graphically illustrates reasons for the change in consolidated operating profit between the first quarter of 2022 (at left) and the first quarter of 2023 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s board of directors and employees. The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation's other operating (income) expenses.

Operating profit for the first quarter of 2023 was $2.731 billion, an increase of $876 million, or 47 percent, compared with $1.855 billion in the first quarter of 2022. The increase was primarily due to favorable price realization and higher sales volume, partially offset by the impact of the divestiture of the company's Longwall business and higher manufacturing costs. Unfavorable manufacturing costs largely reflected higher material costs.

In the first quarter of 2023, the divestiture of the company’s Longwall business was finalized, resulting in an unfavorable impact to operating profit of $586 million, primarily a non-cash item driven by the release of accumulated foreign currency translation.

Operating profit margin was 17.2 percent for the first quarter of 2023, compared with 13.7 percent for the first quarter of 2022.

Profit by Segment
(Millions of dollars)	First Quarter 2023		First Quarter 2022		$ Change		%  Change
Construction Industries	$	1,790	$	1,057	$	733	69	%
Resource Industries	764		361		403		112	%
Energy & Transportation	1,057		538		519		96	%
All Other Segment	11		3		8		267	%
Corporate Items and Eliminations	(1,008)		(244)		(764)
Machinery, Energy & Transportation	2,614		1,715		899		52	%
Financial Products Segment	232		238		(6)		(3	%)
Corporate Items and Eliminations	25		(17)		42
Financial Products	257		221		36		16	%
Consolidating Adjustments	(140)		(81)		(59)
Consolidated Operating Profit	$	2,731	$	1,855	$	876	47	%

46

Other Profit/Loss and Tax Items

▪Interest expense excluding Financial Products in the first quarter of 2023 was $129 million, compared with $109 million in the first quarter of 2022. The increase was due to higher average borrowing rates.

▪Other income (expense) in the first quarter of 2023 was income of $32 million, compared with income of $253 million in the first quarter of 2022. The change was primarily driven by unfavorable impacts from foreign currency exchange, commodity hedges and pension and OPEB plan costs, all partially offset by higher investment and interest income.

▪The provision for income taxes for the first quarter of 2023 reflected an estimated annual tax rate of 23 percent, compared with 24 percent for the first quarter of 2022, excluding the discrete items discussed below. The comparative tax rate for full-year 2022 was 23.2 percent.

The estimated annual tax rate excludes the impact of the nondeductible loss of $586 million related to the divestiture of the company’s Longwall business in the first quarter of 2023. In addition, a discrete tax benefit of $32 million was recorded in the first quarter of 2023, compared with a $12 million benefit in the first quarter of 2022, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense.

Construction Industries

Construction Industries’ total sales were $6.746 billion in the first quarter of 2023, an increase of $631 million, or 10 percent, compared with $6.115 billion in the first quarter of 2022. The increase was due to favorable price realization, partially offset by lower sales volume and unfavorable currency impacts primarily related to the Japanese yen, euro and Chinese yuan. The decrease in sales volume was driven by the impact from changes in dealer inventories. Dealer inventory increased more during the first quarter of 2022 than during the first quarter of 2023.

▪In North America, sales increased due to favorable price realization and higher sales volume. Higher sales volume was driven by the impact from changes in dealer inventories. Dealer inventory increased more during the first quarter of 2023 than during the first quarter of 2022.

▪Sales decreased in Latin America primarily due to lower sales volume, partially offset by favorable price realization. Lower sales volume was driven by the impact from changes in dealer inventories. Dealer inventory increased during the first quarter of 2022, compared with a decrease during the first quarter of 2023.

▪In EAME, sales increased primarily due to favorable price realization, partially offset by unfavorable currency impacts, mainly related to the euro.

▪Sales decreased in Asia/Pacific primarily due to lower sales volume and unfavorable currency impacts, primarily related to the Japanese yen and Chinese yuan, partially offset by favorable price realization. Lower sales volume was driven by the impact from changes in dealer inventories and lower sales of equipment to end users. Dealer inventory increased more during the first quarter of 2022 than during the first quarter of 2023.

Construction Industries’ profit was $1.790 billion in the first quarter of 2023, an increase of $733 million, or 69 percent, compared with $1.057 billion in the first quarter of 2022. The increase was mainly due to favorable price realization, partially offset by lower sales volume, including an unfavorable mix of products, and unfavorable manufacturing costs. Unfavorable manufacturing costs largely reflected higher material costs.

Construction Industries’ profit as a percent of total sales was 26.5 percent in the first quarter of 2023, compared with 17.3 percent in the first quarter of 2022.

Resource Industries

Resource Industries’ total sales were $3.427 billion in the first quarter of 2023, an increase of $597 million, or 21 percent, compared with $2.830 billion in the first quarter of 2022. The increase was primarily due to favorable price realization and higher sales volume. The increase in sales volume was due to higher sales of equipment to end users, partially offset by lower aftermarket parts sales volume.

Resource Industries’ profit was $764 million in the first quarter of 2023, an increase of $403 million, or 112 percent, compared with $361 million in the first quarter of 2022. The increase was mainly due to favorable price realization and higher sales volume, partially offset by unfavorable manufacturing costs. Unfavorable manufacturing costs largely reflected higher material costs.

Resource Industries’ profit as a percent of total sales was 22.3 percent in the first quarter of 2023, compared with 12.8 percent in the first quarter of 2022.

47

Energy & Transportation

Sales by Application
(Millions of dollars)	First Quarter 2023		First Quarter 2022		$ Change		%  Change
Oil and Gas	$	1,314	$	948	$	366	39	%
Power Generation	1,284		1,012		272		27	%
Industrial	1,255		1,020		235		23	%
Transportation	1,202		1,052		150		14	%
External Sales	5,055		4,032		1,023		25	%
Inter-segment	1,199		1,006		193		19	%
Total Sales	$	6,254	$	5,038	$	1,216	24	%

Energy & Transportation’s total sales were $6.254 billion in the first quarter of 2023, an increase of $1.216 billion, or 24 percent, compared with $5.038 billion in the first quarter of 2022. Sales increased across all applications and inter-segment sales. The increase in sales was primarily due to higher sales volume and favorable price realization.

▪Oil and Gas – Sales increased for reciprocating engine aftermarket parts and engines used in well servicing and gas compression applications. Turbines and turbine-related services increased as well.

▪Power Generation – Sales increased in large reciprocating engines, primarily data center applications, and small reciprocating engines. Turbines and turbine-related services increased as well.

▪Industrial – Sales were up across all regions.

▪Transportation – Sales increased in rail services and marine. International locomotive deliveries were also higher.

Energy & Transportation’s profit was $1.057 billion in the first quarter of 2023, an increase of $519 million, or 96 percent, compared with $538 million in the first quarter of 2022. The increase was mainly due to favorable price realization and higher sales volume, partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses. Unfavorable manufacturing costs were driven by higher material costs. The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives.

Energy & Transportation’s profit as a percent of total sales was 16.9 percent in the first quarter of 2023, compared with 10.7 percent in the first quarter of 2022.

Financial Products Segment

Financial Products’ segment revenues were $902 million in the first quarter of 2023, an increase of $119 million, or 15 percent, compared with $783 million in the first quarter of 2022. The increase was primarily due to higher average financing rates across all regions.

Financial Products’ segment profit was $232 million in the first quarter of 2023, a decrease of $6 million, or 3 percent, compared with $238 million in the first quarter of 2022. The decrease was mainly due to unfavorable impacts from equity securities, currency exchange losses and mark-to-market adjustments on derivative contracts. These unfavorable impacts were partially offset by higher net yield on average earning assets and lower provision for credit losses at Cat Financial.

At the end of the first quarter of 2023, past dues at Cat Financial were 2.00 percent, compared with 2.05 percent at the end of the first quarter of 2022. Write-offs, net of recoveries, were $10 million for the first quarter of 2023, compared with $8 million for the first quarter of 2022. As of March 31, 2023, Cat Financial's allowance for credit losses totaled $348 million, or 1.27 percent of finance receivables, compared with $346 million, or 1.29 percent of finance receivables at December 31, 2022.

Corporate Items and Eliminations

Expense for corporate items and eliminations was $983 million in the first quarter of 2023, an increase of $722 million from the first quarter of 2022, primarily driven by the divestiture of the company's Longwall business and increased expenses due to timing differences.

In the first quarter of 2023, the divestiture of the company’s Longwall business was finalized, resulting in an unfavorable impact to operating profit of $586 million, primarily a non-cash item driven by the release of accumulated foreign currency translation. This impact was included in total restructuring costs.

48

RESTRUCTURING COSTS

In 2023, we expect to incur about $700 million of restructuring costs, which include a pre-tax loss of approximately $586 million from the divestiture of our Longwall business within Resource Industries on February 1, 2023. In addition, we expect to incur about $100 million of restructuring costs this year primarily related to strategic actions to address a small number of products. We expect that prior restructuring actions will result in an incremental benefit to operating costs, primarily Cost of goods sold and SG&A expenses of about $100 million in 2023 compared with 2022.

Additional information related to restructuring costs is included in Note 20 - "Restructuring Costs" of Part I, Item 1 "Financial Statements".

GLOSSARY OF TERMS

1.Adjusted Operating Profit Margin – Operating profit excluding restructuring costs, which include the divestiture of the company’s Longwall business, as a percent of sales and revenues.

2.Adjusted Profit Per Share – Profit per share excluding restructuring costs, which include the divestiture of the company’s Longwall business.

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

4.Consolidating Adjustments – Elimination of transactions between Machinery, Energy & Transportation and Financial Products.

5.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; cold planers; compactors; compact track loaders; forestry machines; material handlers; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; track-type loaders; track-type tractors (small, medium); track excavators (mini, small, medium, large); wheel excavators; wheel loaders (compact, small, medium); and related parts and work tools.

6.Corporate Items and Eliminations – Includes corporate-level expenses, timing differences (as some expenses are reported in segment profit on a cash basis), methodology differences between segment and consolidated external reporting, certain restructuring costs and inter-segment eliminations.

7.Currency – With respect to sales and revenues, currency represents the translation impact on sales resulting from changes in foreign currency exchange rates versus the U.S. dollar. With respect to operating profit, currency represents the net translation impact on sales and operating costs resulting from changes in foreign currency exchange rates versus the U.S. dollar. Currency only includes the impact on sales and operating profit for the Machinery, Energy & Transportation line of business; currency impacts on Financial Products revenues and operating profit are included in the Financial Products portions of the respective analyses. With respect to other income/expense, currency represents the effects of forward and option contracts entered into by the company to reduce the risk of fluctuations in exchange rates (hedging) and the net effect of changes in foreign currency exchange rates on our foreign currency assets and liabilities for consolidated results (translation).

8.Dealer Inventories – Represents dealer machine and engine inventories, excluding aftermarket parts.

9.EAME – A geographic region including Europe, Africa, the Middle East and the Commonwealth of Independent States (CIS).

10.Earning Assets – Assets consisting primarily of total finance receivables net of unearned income, plus equipment on operating leases net of accumulated depreciation at Cat Financial.

49

11.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.

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

13.Financial Products Segment – Provides financing alternatives to customers and dealers around the world for Caterpillar products and services, as well as financing for power generation facilities that, in most cases, incorporate Caterpillar products. Financing plans include operating and finance leases, revolving charge accounts, 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 Machinery, Energy & Transportation, but the related costs are not allocated to operating segments. Financial Products’ segment profit is determined on a pretax basis and includes other income/expense items.

14.Latin America – A geographic region including Central and South American countries and Mexico.

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

16.Machinery, Energy & Transportation Other Operating (Income) Expenses – Comprised primarily of gains/losses on disposal of long-lived assets, gains/losses on divestitures and legal settlements and accruals.

17.Manufacturing Costs – Manufacturing costs exclude the impacts of currency and represent the volume-adjusted change for variable costs and the absolute dollar change for period manufacturing costs. Variable manufacturing costs are defined as having a direct relationship with the volume of production. This includes material costs, direct labor and other costs that vary directly with production volume, such as freight, power to operate machines and supplies that are consumed in the manufacturing process. Period manufacturing costs support production but are defined as generally not having a direct relationship to short-term changes in volume. Examples include machinery and equipment repair, depreciation on manufacturing assets, facility support, procurement, factory scheduling, manufacturing planning and operations management.

18.Mark-to-market gains/losses – Represents the net gain or loss of actual results differing from the company’s assumptions and the effects of changing assumptions for our defined benefit pension and OPEB plans. These gains and losses are immediately recognized through earnings upon the annual remeasurement in the fourth quarter, or on an interim basis as triggering events warrant remeasurement.

19.Pension and Other Postemployment Benefits (OPEB) – The company’s defined-benefit pension and postretirement benefit plans.

20.Price Realization – The impact of net price changes excluding currency and new product introductions. Price realization includes geographic mix of sales, which is the impact of changes in the relative weighting of sales prices between geographic regions.

50

21.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.

22.Restructuring Costs – May include costs for employee separation, long-lived asset impairments, contract terminations and divestiture impacts. 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.

23.Sales Volume – With respect to sales and revenues, sales volume represents the impact of changes in the quantities sold for Machinery, Energy & Transportation as well as the incremental sales impact of new product introductions, including emissions-related product updates. With respect to operating profit, sales volume represents the impact of changes in the quantities sold for Machinery, Energy & Transportation combined with product mix as well as the net operating profit impact of new product introductions, including emissions-related product updates. Product mix represents the net operating profit impact of changes in the relative weighting of Machinery, Energy & Transportation sales with respect to total sales. The impact of sales volume on segment profit includes inter-segment sales.

24.Services – Enterprise services include, but are not limited to, aftermarket parts, Financial Products revenues and other service-related revenues. Machinery, Energy & Transportation segments exclude most Financial Products revenues.

LIQUIDITY AND CAPITAL RESOURCES

Sources of funds

We generate significant capital resources from operating activities, which are the primary source of funding for our ME&T operations. Funding for these businesses is also available from commercial paper and long-term debt issuances. Financial Products’ operations are funded primarily from commercial paper, term debt issuances and collections from its existing portfolio. On a consolidated basis, we had positive operating cash flow in the first three months of 2023 and ended the first quarter with $6.79 billion of cash, a decrease of $215 million from year-end 2022. In addition, ME&T has invested in available-for-sale debt securities that are considered highly liquid and are available for current operations. These securities are included in Prepaid expenses and other current assets and Other assets in the Consolidated Statement of Financial Position and were $1.76 billion at the end of March 31, 2023. We intend to maintain a strong cash and liquidity position.

Consolidated operating cash flow for the first three months of 2023 was $1.57 billion, up $1.26 billion compared to the same period a year ago. The increase was primarily due to higher profit before taxes adjusted for non-cash items, including the loss on divestiture of the company's Longwall business.

Total debt as of March 31, 2023 was $37.04 billion, an increase of $45 million from year-end 2022. Debt related to ME&T decreased $26 million in the first three months of 2023 while debt related to Financial Products increased $71 million.

As of March 31, 2023, we had three global credit facilities with a syndicate of banks totaling $10.50 billion (Credit Facility) available in the aggregate to both Caterpillar and Cat Financial for general liquidity purposes. Based on management’s allocation decision, which can be revised from time to time, the portion of the Credit Facility available to ME&T as of March 31, 2023 was $2.75 billion. Information on our Credit Facility is as follows:

•The 364-day facility of $3.15 billion (of which $825 million is available to ME&T) expires in August 2023.

•The three-year facility, as amended and restated in September 2022, of $2.73 billion (of which $715 million is available to ME&T) expires in August 2025.

•The five-year facility, as amended and restated in September 2022, of $4.62 billion (of which $1.21 billion is available to ME&T) expires in September 2027.

51

At March 31, 2023, Caterpillar’s consolidated net worth was $18.21 billion, which was above the $9.00 billion required under the Credit Facility. The consolidated net worth is defined in the Credit Facility as the consolidated shareholders’ equity including preferred stock but excluding the pension and other postretirement benefits balance within Accumulated other comprehensive income (loss).

At March 31, 2023, Cat Financial’s covenant interest coverage ratio was 2.15 to 1. This was above the 1.15 to 1 minimum ratio calculated as (1) profit excluding income taxes, interest expense and net gain (loss) from interest rate derivatives to (2) interest expense calculated at the end of each calendar quarter for the rolling four quarter period then most recently ended, required by the Credit Facility.

In addition, at March 31, 2023, Cat Financial’s six-month covenant leverage ratio was 7.16 to 1. This was below the maximum ratio of debt to net worth of 10 to 1, calculated (1) on a monthly basis as the average of the leverage ratios determined on the last day of each of the six preceding calendar months and (2) at each December 31, required by the Credit Facility.

In the event Caterpillar or Cat Financial does not meet one or more of their respective financial covenants under the Credit Facility in the future (and are unable to obtain a consent or waiver), the syndicate of banks may terminate the commitments allocated to the party that does not meet its covenants. Additionally, in such event, certain of Cat Financial’s other lenders under other loan agreements where similar financial covenants or cross default provisions are applicable may, at their election, choose to pursue remedies under those loan agreements, including accelerating the repayment of outstanding borrowings. At March 31, 2023, there were no borrowings under the Credit Facility.

Our total credit commitments and available credit as of March 31, 2023 were:

	March 31, 2023
(Millions of dollars)	Consolidated		Machinery, Energy & Transportation		Financial Products
Credit lines available:
Global credit facilities	$	10,500	$	2,750	$	7,750
Other external	4,158		586		3,572
Total credit lines available	14,658		3,336		11,322
Less: Commercial paper outstanding	(5,289)		—		(5,289)
Less: Utilized credit	(1,050)		—		(1,050)
Available credit	$	8,319	$	3,336	$	4,983

The other external consolidated credit lines with banks as of March 31, 2023 totaled $4.16 billion. These committed and uncommitted credit lines, which may be eligible for renewal at various future dates or have no specified expiration date, are used primarily by our subsidiaries for local funding requirements. Caterpillar or Cat Financial may guarantee subsidiary borrowings under these lines.

We receive debt ratings from the major credit rating agencies. Moody’s, Fitch and S&P maintain a “mid-A” debt rating. A downgrade of our credit ratings by any of the major credit rating agencies could result in increased borrowing costs and could make access to certain credit markets more difficult. In the event economic conditions deteriorate such that access to debt markets becomes unavailable, ME&T’s operations would rely on cash flow from operations, use of existing cash balances, borrowings from Cat Financial and access to our committed credit facilities. Our Financial Products’ operations would rely on cash flow from its existing portfolio, existing cash balances, access to our committed credit facilities and other credit line facilities of Cat Financial, and potential borrowings from Caterpillar. In addition, we maintain a support agreement with Cat Financial, which requires Caterpillar to remain the sole owner of Cat Financial and may, under certain circumstances, require Caterpillar to make payments to Cat Financial should Cat Financial fail to maintain certain financial ratios.

We facilitate voluntary supplier finance programs (the “Programs”) through participating financial institutions. We account for payments made under the Programs, the same as our other accounts payable, as a reduction to our cash flows from operations. We do not believe that changes in the availability of supplier financing will have a significant impact on our liquidity. Additional information related to the Programs is included in Note 2 - "New accounting guidance" of Part I, Item 1 "Financial Statements".

52

Machinery, Energy & Transportation

Net cash provided by operating activities was $1.78 billion in the first three months of 2023, compared with net cash used of $78 million for the same period in 2022. The increase was primarily due to higher profit before taxes adjusted for non-cash items, including the loss on divestiture of the company's Longwall business and lower working capital requirements. Within working capital, changes in receivables, accounts payable, customer advances and accrued expenses favorably impacted cash flow, but were partially offset by changes in inventories.

Net cash used by investing activities in the first three months of 2023 was $670 million, compared with net cash used of $1.09 billion in the first three months of 2022. The change was primarily due to decreases in net investment activity.

Net cash used for financing activities during the first three months of 2023 was $1.14 billion, compared with net cash used of $1.57 billion in the same period of 2022. The change was primarily due to lower share repurchases in the first three months of 2023.

While our short-term priorities for the use of cash may vary from time to time as business needs and conditions dictate, our long-term cash deployment strategy is focused on the following priorities. Our top priority is to maintain a strong financial position in support of a mid-A rating. Next, we intend to fund operational requirements and commitments. Then, we intend to fund priorities that profitably grow the company and return capital to shareholders through dividend growth and share repurchases. Additional information on cash deployment is as follows:

Strong financial position – Our top priority is to maintain a strong financial position in support of a mid-A rating. We track a diverse group of financial metrics that focus on liquidity, leverage, cash flow and margins which align with our cash deployment actions and the various methodologies used by the major credit rating agencies.

Operational excellence and commitments – Capital expenditures were $414 million during the first three months of 2023, compared to $348 million for the same period in 2022. We expect ME&T’s capital expenditures in 2023 to be about $1.5 billion. We made $208 million of contributions to our pension and other postretirement benefit plans during the first three months of 2023. We currently anticipate full-year 2023 contributions of approximately $372 million. In comparison, we made $210 million of contributions to our pension and other postretirement benefit plans during the first three months of 2022.

Fund strategic growth initiatives and return capital to shareholders – We intend to utilize our liquidity and debt capacity to fund targeted investments that drive long-term profitable growth focused in the areas of expanded offerings and services, including acquisitions.

As part of our capital allocation strategy, ME&T free cash flow is a liquidity measure we use to determine the cash generated and available for financing activities including debt repayments, dividends and share repurchases. We define ME&T free cash flow as cash from ME&T operations less capital expenditures, excluding discretionary pension and other postretirement benefit plan contributions and cash payments related to settlements with the U.S. Internal Revenue Service. A goal of our capital allocation strategy is to return substantially all ME&T free cash flow to shareholders over time in the form of dividends and share repurchases, while maintaining our mid-A rating.

Our share repurchase plans are subject to the company’s cash deployment priorities and are evaluated on an ongoing basis considering the financial condition of the company and the economic outlook, corporate cash flow, the company’s liquidity needs, and the health and stability of global credit markets. The timing and amount of future repurchases may vary depending on market conditions and investing priorities.

In July 2018, the Board approved a share repurchase authorization (the 2018 Authorization) of up to $10.0 billion of Caterpillar common stock effective January 1, 2019, with no expiration. In May 2022, the Board approved a share repurchase authorization (the 2022 Authorization) of up to $15.0 billion of Caterpillar common stock effective August 1, 2022, with no expiration. The Company commenced utilization of the 2022 Authorization for all share repurchases on August 1, 2022, leaving approximately $70 million unutilized under the 2018 Authorization as of March 31, 2023. The Company does not intend to repurchase any additional shares under the 2018 Authorization.

In the first three months of 2023, we repurchased $400 million of Caterpillar common stock, with $12.40 billion remaining under the 2022 Authorization as of March 31, 2023. Our basic shares outstanding as of March 31, 2023 were approximately 516 million.

53

Each quarter, our Board of Directors reviews the company’s dividend for the applicable quarter. The Board evaluates the financial condition of the company and considers the economic outlook, corporate cash flow, the company’s liquidity needs, and the health and stability of global credit markets to determine whether to maintain or change the quarterly dividend. In April 2023, the Board of Directors approved maintaining our quarterly dividend representing $1.20 per share, and we continue to expect our strong financial position to support the dividend. Dividends paid totaled $620 million in the first three months of 2023.

Financial Products

Financial Products operating cash flow was $302 million in the first three months of 2023, compared with $393 million for the same period in 2022. Net cash used for investing activities was $444 million for the first three months of 2023, compared with net cash used of $221 million for the same period in 2022. The change was primarily due to portfolio related activity. Net cash used for financing activities was $43 million for the first three months of 2023 compared with net cash used of $142 million for the same period in 2022. The change was primarily due to higher portfolio funding requirements related to net intercompany purchased receivables.

RECENT ACCOUNTING PRONOUNCEMENTS

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

CRITICAL ACCOUNTING ESTIMATES

For a discussion of the company’s critical accounting estimates, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K. There have been no significant changes to our critical accounting estimates since our 2022 Annual Report on Form 10-K.

OTHER MATTERS

Information related to legal proceedings appears in Note 14—Environmental and Legal Matters of Part II, Item 8 “Financial Statements and Supplementary Data.”

Order Backlog

At the end of the first quarter of 2023, the dollar amount of backlog believed to be firm was approximately $30.4 billion, which was about flat to the fourth quarter of 2022. Of the total backlog at March 31, 2023, approximately $5.6 billion was not expected to be filled in the following twelve months.

54

NON-GAAP FINANCIAL MEASURES

We provide the following definitions for the non-GAAP financial measures used in this report. These non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP and therefore are unlikely to be comparable to the calculation of similar measures for other companies. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measures.

We believe it is important to separately quantify the profit impact of two significant items in order for our results to be meaningful to our readers. These items consist of (i) restructuring costs related to the divestiture of the company's Longwall business and (ii) other restructuring costs. We do not consider these items indicative of earnings from ongoing business activities and believe the non-GAAP measure provides investors with useful perspective on underlying business results and trends and aids with assessing our period-over-period results. In addition, we provide a calculation of ME&T free cash flow as we believe it is an important measure for investors to determine the cash generation available for financing activities including debt repayments, dividends and share repurchases.

Reconciliations of adjusted results to the most directly comparable GAAP measures are as follows:

(Dollars in millions except per share data)	Operating Profit		Operating Profit Margin		Profit Before Taxes		Provision (Benefit) for Income Taxes		Effective Tax Rate		Profit		Profit per Share
Three Months Ended March 31, 2023- U.S. GAAP	$	2,731	17.2	%	$	2,634	$	708	26.9	%	$	1,943	$	3.74
Restructuring costs - Longwall divestiture	586		3.7	%	586		—		—	%	586		1.13
Other restructuring costs	25		0.2	%	25		5		20.0	%	20		0.04
Three Months Ended March 31, 2023 - Adjusted	$	3,342	21.1	%	$	3,245	$	713	22.0	%	$	2,549	$	4.91
Three Months Ended March 31, 2022 - U.S. GAAP	$	1,855	13.7	%	$	1,999	$	469	23.4	%	$	1,537	$	2.86
Restructuring costs	13		0.1	%	13		2		13.0	%	11		0.02
Three Months Ended March 31, 2022 - Adjusted	$	1,868	13.7	%	$	2,012	$	471	23.4	%	$	1,548	$	2.88

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

(Millions of dollars)	Three Months Ended March 31
	2023		2022
ME&T net cash provided by operating activities 1	$	1,779	$	(78)
ME&T capital expenditures	(414)		(348)
ME&T free cash flow	$	1,365	$	(426)
1 See reconciliation of ME&T net cash provided by operating activities to consolidated net cash provided by operating activities on pages 61 - 62.

55

Supplemental Consolidating Data

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

Consolidated – Caterpillar Inc. and its subsidiaries.

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

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

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

The nature of the ME&T and Financial Products businesses is different, especially with regard to the financial position and cash flow items. Caterpillar management utilizes this presentation internally to highlight these differences. We believe this presentation will assist readers in understanding our business.

Pages 57 to 62 reconcile ME&T and Financial Products to Caterpillar Inc. consolidated financial information. Certain amounts for prior periods have been reclassified to conform to the current period presentation.

56

Caterpillar Inc.

Supplemental Data for Results of Operations

For the Three Months Ended March 31, 2023

(Unaudited)

(Millions of dollars)

			Supplemental Consolidating Data
	Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments
Sales and revenues:
Sales of Machinery, Energy & Transportation	$	15,099	$	15,099	$	—	$	—
Revenues of Financial Products	763		—		935		(172)		1
Total sales and revenues	15,862		15,099		935		(172)
Operating costs:
Cost of goods sold	10,103		10,104		—		(1)		2
Selling, general and administrative expenses	1,463		1,320		158		(15)		2
Research and development expenses	472		472		—		—
Interest expense of Financial Products	217		—		217		—
Other operating (income) expenses	876		589		303		(16)		2
Total operating costs	13,131		12,485		678		(32)
Operating profit	2,731		2,614		257		(140)
Interest expense excluding Financial Products	129		129		—		—
Other income (expense)	32		(14)		(19)		65		3
Consolidated profit before taxes	2,634		2,471		238		(75)
Provision (benefit) for income taxes	708		648		60		—
Profit of consolidated companies	1,926		1,823		178		(75)
Equity in profit (loss) of unconsolidated affiliated companies	16		19		—		(3)		4
Profit of consolidated and affiliated companies	1,942		1,842		178		(78)
Less: Profit (loss) attributable to noncontrolling interests	(1)		—		2		(3)		5
Profit 6	$	1,943	$	1,842	$	176	$	(75)

1Elimination of Financial Products’ revenues earned from ME&T.

2Elimination of net expenses recorded by ME&T paid to Financial Products.

3Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T.

4Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.

5Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T subsidiaries.

6Profit attributable to common shareholders.

57

Caterpillar Inc.

Supplemental Data for Results of Operations

For the Three Months Ended March 31, 2022

(Unaudited)

(Millions of dollars)

			Supplemental Consolidating Data
	Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments
Sales and revenues:
Sales of Machinery, Energy & Transportation	$	12,886	$	12,886	$	—	$	—
Revenues of Financial Products	703		—		813		(110)		1
Total sales and revenues	13,589		12,886		813		(110)
Operating costs:
Cost of goods sold	9,559		9,560		—		(1)		2
Selling, general and administrative expenses	1,346		1,182		172		(8)		2
Research and development expenses	457		457		—		—
Interest expense of Financial Products	106		—		106		—
Other operating (income) expenses	266		(28)		314		(20)		2
Total operating costs	11,734		11,171		592		(29)
Operating profit	1,855		1,715		221		(81)
Interest expense excluding Financial Products	109		109		—		—
Other income (expense)	253		157		15		81		3
Consolidated profit before taxes	1,999		1,763		236		—
Provision (benefit) for income taxes	469		412		57		—
Profit of consolidated companies	1,530		1,351		179		—
Equity in profit (loss) of unconsolidated affiliated companies	7		8		—		(1)		4
Profit of consolidated and affiliated companies	1,537		1,359		179		(1)
Less: Profit (loss) attributable to noncontrolling interests	—		—		1		(1)		5
Profit 6	$	1,537	$	1,359	$	178	$	—

1Elimination of Financial Products’ revenues earned from ME&T.

2Elimination of net expenses recorded by ME&T paid to Financial Products.

3Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T.

4Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.

5Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T subsidiaries.

6Profit attributable to common shareholders.

58

Caterpillar Inc.

Supplemental Data for Financial Position

At March 31, 2023

(Unaudited)

(Millions of dollars)

			Supplemental Consolidating Data
	Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments
Assets
Current assets:
Cash and cash equivalents	$	6,789	$	6,017	$	772	$	—
Receivables – trade and other	9,230		3,481		477		5,272		1,2
Receivables – finance	9,119		—		14,655		(5,536)		2
Prepaid expenses and other current assets	2,889		2,629		289		(29)		3
Inventories	17,633		17,633		—		—
Total current assets	45,660		29,760		16,193		(293)
Property, plant and equipment – net	11,973		8,090		3,883		—
Long-term receivables – trade and other	1,209		463		276		470		1,2
Long-term receivables – finance	11,845		—		12,346		(501)		2
Noncurrent deferred and refundable income taxes	2,405		2,923		118		(636)		4
Intangible assets	694		694		—		—
Goodwill	5,309		5,309		—		—
Other assets	4,554		3,795		1,940		(1,181)		5
Total assets	$	83,649	$	51,034	$	34,756	$	(2,141)
Liabilities
Current liabilities:
Short-term borrowings	$	5,841	$	—	$	5,841	$	—
Accounts payable	8,951		8,893		342		(284)		6,7
Accrued expenses	4,121		3,646		461		14		7
Accrued wages, salaries and employee benefits	1,368		1,341		27		—
Customer advances	2,202		2,196		—		6		7
Other current liabilities	3,035		2,400		687		(52)		4,8
Long-term debt due within one year	6,324		37		6,287		—
Total current liabilities	31,842		18,513		13,645		(316)
Long-term debt due after one year	24,873		9,589		15,315		(31)		9
Liability for postemployment benefits	4,069		4,069		—		—
Other liabilities	4,695		3,786		1,601		(692)		4
Total liabilities	65,479		35,957		30,561		(1,039)
Commitments and contingencies
Shareholders’ equity
Common stock	6,546		6,546		905		(905)		10
Treasury stock	(32,108)		(32,108)		—		—
Profit employed in the business	45,457		41,277		4,169		11		10
Accumulated other comprehensive income (loss)	(1,746)		(657)		(1,089)		—
Noncontrolling interests	21		19		210		(208)		10
Total shareholders’ equity	18,170		15,077		4,195		(1,102)
Total liabilities and shareholders’ equity	$	83,649	$	51,034	$	34,756	$	(2,141)

1     Elimination of receivables between ME&T and Financial Products.

2     Reclassification of ME&T’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables.

3     Elimination of ME&T’s insurance premiums that are prepaid to Financial Products.

4     Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction.

5     Elimination of other intercompany assets between ME&T and Financial Products.

6     Elimination of payables between ME&T and Financial Products.

7     Reclassification of Financial Products' payables to accrued expenses or customer advances.

8     Elimination of prepaid insurance in Financial Products’ other liabilities.

9     Elimination of debt between ME&T and Financial Products.

10     Eliminations associated with ME&T’s investments in Financial Products’ subsidiaries.

59

Caterpillar Inc.

Supplemental Data for Financial Position

At December 31, 2022

(Unaudited)

(Millions of dollars)

			Supplemental Consolidating Data
	Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments
Assets
Current assets:
Cash and cash equivalents	$	7,004	$	6,042	$	962	$	—
Receivables – trade and other	8,856		3,710		519		4,627		1,2
Receivables – finance	9,013		—		13,902		(4,889)		2
Prepaid expenses and other current assets	2,642		2,488		290		(136)		3
Inventories	16,270		16,270		—		—
Total current assets	43,785		28,510		15,673		(398)
Property, plant and equipment – net	12,028		8,186		3,842		—
Long-term receivables – trade and other	1,265		418		339		508		1,2
Long-term receivables – finance	12,013		—		12,552		(539)		2
Noncurrent deferred and refundable income taxes	2,213		2,755		115		(657)		4
Intangible assets	758		758		—		—
Goodwill	5,288		5,288		—		—
Other assets	4,593		3,882		1,892		(1,181)		5
Total assets	$	81,943	$	49,797	$	34,413	$	(2,267)
Liabilities
Current liabilities:
Short-term borrowings	$	5,957	$	3	$	5,954	$	—
Accounts payable	8,689		8,657		294		(262)		6
Accrued expenses	4,080		3,687		393		—
Accrued wages, salaries and employee benefits	2,313		2,264		49		—
Customer advances	1,860		1,860		—		—
Dividends payable	620		620		—		—
Other current liabilities	2,690		2,215		635		(160)		4,7
Long-term debt due within one year	5,322		120		5,202		—
Total current liabilities	31,531		19,426		12,527		(422)
Long-term debt due after one year	25,714		9,529		16,216		(31)		8
Liability for postemployment benefits	4,203		4,203		—		—
Other liabilities	4,604		3,677		1,638		(711)		4
Total liabilities	66,052		36,835		30,381		(1,164)
Commitments and contingencies
Shareholders’ equity
Common stock	6,560		6,560		905		(905)		9
Treasury stock	(31,748)		(31,748)		—		—
Profit employed in the business	43,514		39,435		4,068		11		9
Accumulated other comprehensive income (loss)	(2,457)		(1,310)		(1,147)		—
Noncontrolling interests	22		25		206		(209)		9
Total shareholders’ equity	15,891		12,962		4,032		(1,103)
Total liabilities and shareholders’ equity	$	81,943	$	49,797	$	34,413	$	(2,267)

1     Elimination of receivables between ME&T and Financial Products.

2     Reclassification of ME&T’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables.

3     Elimination of ME&T’s insurance premiums that are prepaid to Financial Products.

4     Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction.

5     Elimination of other intercompany assets between ME&T and Financial Products.

6     Elimination of payables between ME&T and Financial Products.

7     Elimination of prepaid insurance in Financial Products' other liabilities.

8     Elimination of debt between ME&T and Financial Products.

9     Eliminations associated with ME&T’s investments in Financial Products’ subsidiaries.

60

Caterpillar Inc.

Supplemental Data for Cash Flow

For the Three Months Ended March 31, 2023

(Unaudited)

(Millions of dollars)

			Supplemental Consolidating Data
	Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments
Cash flow from operating activities:
Profit of consolidated and affiliated companies	$	1,942	$	1,842	$	178	$	(78)	1,5
Adjustments for non-cash items:
Depreciation and amortization	532		342		190		—
Provision (benefit) for deferred income taxes	(191)		(169)		(22)		—
Loss on divestiture	572		572		—		—
Other	117		124		(143)		136		2
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other	(329)		205		14		(548)		2,3
Inventories	(1,403)		(1,402)		—		(1)		2
Accounts payable	477		465		34		(22)		2
Accrued expenses	38		6		32		—
Accrued wages, salaries and employee benefits	(950)		(928)		(22)		—
Customer advances	365		365		—		—
Other assets – net	107		223		4		(120)		2
Other liabilities – net	296		134		37		125		2
Net cash provided by (used for) operating activities	1,573		1,779		302		(508)
Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others	(422)		(414)		(9)		1		2
Expenditures for equipment leased to others	(328)		—		(330)		2		2
Proceeds from disposals of leased assets and property, plant and equipment	184		7		179		(2)		2
Additions to finance receivables	(3,020)		—		(3,462)		442		3
Collections of finance receivables	3,169		—		3,437		(268)		3
Net intercompany purchased receivables	—		—		(258)		258		3
Proceeds from sale of finance receivables	24		—		24		—
Net intercompany borrowings	—		—		2		(2)		4
Investments and acquisitions (net of cash acquired)	(5)		(5)		—		—
Proceeds from sale of businesses and investments (net of cash sold)	(14)		(14)		—		—
Proceeds from sale of securities	239		162		77		—
Investments in securities	(536)		(433)		(103)		—
Other – net	26		27		(1)		—
Net cash provided by (used for) investing activities	(683)		(670)		(444)		431
Cash flow from financing activities:
Dividends paid	(620)		(620)		(75)		75		5
Common stock issued, including treasury shares reissued	(25)		(25)		—		—
Common shares repurchased	(400)		(400)		—		—
Net intercompany borrowings	—		(2)		—		2		4
Proceeds from debt issued (original maturities greater than three months)	1,517		—		1,517		—
Payments on debt (original maturities greater than three months)	(1,475)		(90)		(1,385)		—
Short-term borrowings – net (original maturities three months or less)	(103)		(3)		(100)		—
Net cash provided by (used for) financing activities	(1,106)		(1,140)		(43)		77
Effect of exchange rate changes on cash	(1)		4		(5)		—
Increase (decrease) in cash, cash equivalents and restricted cash	(217)		(27)		(190)		—
Cash, cash equivalents and restricted cash at beginning of period	7,013		6,049		964		—
Cash, cash equivalents and restricted cash at end of period	$	6,796	$	6,022	$	774	$	—

1    Elimination of equity profit earned from Financial Products' subsidiaries partially owned by ME&T subsidiaries.

2    Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.

3    Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory.

4    Elimination of net proceeds and payments to/from ME&T and Financial Products.

5    Elimination of dividend activity between Financial Products and ME&T.

61

Caterpillar Inc.

Supplemental Data for Cash Flow

For the Three Months Ended March 31, 2022

(Unaudited)

(Millions of dollars)

			Supplemental Consolidating Data
	Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments
Cash flow from operating activities:
Profit of consolidated and affiliated companies	$	1,537	$	1,359	$	179	$	(1)	1
Adjustments for non-cash items:
Depreciation and amortization	557		358		199		—
Provision (benefit) for deferred income taxes	(99)		(83)		(16)		—
Other	(52)		(46)		(89)		83		2
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other	(372)		(257)		(7)		(108)		2,3
Inventories	(1,032)		(1,030)		—		(2)		2
Accounts payable	452		393		40		19		2
Accrued expenses	(74)		(1)		(73)		—
Accrued wages, salaries and employee benefits	(965)		(940)		(25)		—
Customer advances	311		311		—		—
Other assets – net	99		137		(17)		(21)		2
Other liabilities – net	(49)		(279)		202		28		2
Net cash provided by (used for) operating activities	313		(78)		393		(2)
Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others	(346)		(344)		(3)		1		2
Expenditures for equipment leased to others	(333)		(4)		(335)		6		2
Proceeds from disposals of leased assets and property, plant and equipment	269		33		241		(5)		2
Additions to finance receivables	(2,988)		—		(3,139)		151		3
Collections of finance receivables	2,966		—		3,159		(193)		3
Net intercompany purchased receivables	—		—		(42)		42		3
Proceeds from sale of finance receivables	9		—		9		—
Net intercompany borrowings	—		—		1		(1)		4
Investments and acquisitions (net of cash acquired)	(8)		(8)		—		—
Proceeds from sale of securities	571		478		93		—
Investments in securities	(1,438)		(1,266)		(172)		—
Other – net	(15)		18		(33)		—
Net cash provided by (used for) investing activities	(1,313)		(1,093)		(221)		1
Cash flow from financing activities:
Dividends paid	(595)		(595)		—		—
Common stock issued, including treasury shares reissued	(28)		(28)		—		—
Common shares repurchased	(820)		(820)		—		—
Net intercompany borrowings	—		(1)		—		1		4
Proceeds from debt issued (original maturities greater than three months)	2,131		—		2,131		—
Payments on debt (original maturities greater than three months)	(1,387)		(6)		(1,381)		—
Short-term borrowings – net (original maturities three months or less)	(1,016)		(124)		(892)		—
Net cash provided by (used for) financing activities	(1,715)		(1,574)		(142)		1
Effect of exchange rate changes on cash	(16)		(21)		5		—
Increase (decrease) in cash, cash equivalents and restricted cash	(2,731)		(2,766)		35		—
Cash, cash equivalents and restricted cash at beginning of period	9,263		8,433		830		—
Cash, cash equivalents and restricted cash at end of period	$	6,532	$	5,667	$	865	$	—

1    Elimination of equity profit earned from Financial Products' subsidiaries partially owned by ME&T subsidiaries.

2    Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.

3    Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory.

4    Elimination of net proceeds and payments to/from ME&T and Financial Products.

62

Forward-looking Statements

Certain statements in this Form 10-Q relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “forecast,” “target,” “guide,” “project,” “intend,” “could,” “should” or other similar words or expressions often identify forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future performance and speak only as of the date they are made, and we do not undertake to update our forward-looking statements.

Caterpillar’s actual results may differ materially from those described or implied in our forward-looking statements based on a number of factors, including, but not limited to: (i) global and regional economic conditions and economic conditions in the industries we serve; (ii) commodity price changes, material price increases, fluctuations in demand for our products or significant shortages of material; (iii) government monetary or fiscal policies; (iv) political and economic risks, commercial instability and events beyond our control in the countries in which we operate; (v) international trade policies and their impact on demand for our products and our competitive position, including the imposition of new tariffs or changes in existing tariff rates; (vi) our ability to develop, produce and market quality products that meet our customers’ needs; (vii) the impact of the highly competitive environment in which we operate on our sales and pricing; (viii) information technology security threats and computer crime; (ix) inventory management decisions and sourcing practices of our dealers and our OEM customers; (x) a failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xi) union disputes or other employee relations issues; (xii) adverse effects of unexpected events; (xiii) disruptions or volatility in global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xiv) failure to maintain our credit ratings and potential resulting increases to our cost of borrowing and adverse effects on our cost of funds, liquidity, competitive position and access to capital markets; (xv) our Financial Products segment’s risks associated with the financial services industry; (xvi) changes in interest rates or market liquidity conditions; (xvii) an increase in delinquencies, repossessions or net losses of Cat Financial’s customers; (xviii) currency fluctuations; (xix) our or Cat Financial’s compliance with financial and other restrictive covenants in debt agreements; (xx) increased pension plan funding obligations; (xxi) alleged or actual violations of trade or anti-corruption laws and regulations; (xxii) additional tax expense or exposure, including the impact of U.S. tax reform; (xxiii) significant legal proceedings, claims, lawsuits or government investigations; (xxiv) new regulations or changes in financial services regulations; (xxv) compliance with environmental laws and regulations; (xxvi) catastrophic events, including global pandemics such as the COVID-19 pandemic; and (xxvii) other factors described in more detail under the section entitled "Part I - Item 1A. Risk Factors" of Caterpillar's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as such factors may be updated from time to time in Caterpillar's periodic filings with the Securities and Exchange Commission.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The information required by this Item is incorporated by reference from Note 5 – “Derivative financial instruments and risk management” included in Part I, Item 1 and Management’s Discussion and Analysis included in Part I, Item 2 of this Form 10-Q.

Item 4.  Controls and Procedures

Evaluation of disclosure controls and procedures

An evaluation was performed under the supervision and with the participation of the company’s management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the company’s disclosure controls and procedures, as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this quarterly report.  Based on that evaluation, the CEO and CFO concluded that the company’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in internal control over financial reporting

During the first quarter of 2023, there has been no change in the company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

63

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

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

Item 1A. Risk Factors

There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

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

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased2	Average Price Paid per Share2		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet be Purchased under the Program (in billions)1
January 1-31, 2023	400,159	$	249.89	400,159	$	12.699
February 1-28, 2023	385,071	$	246.68	385,071	$	12.604
March 1-31, 2023	916,530	$	223.67	916,530	$	12.399
Total	1,701,760	$	235.04	1,701,760
1 In May 2022, the Board approved a share repurchase authorization (the 2022 Authorization) of up to $15.0 billion of Caterpillar common stock effective August 1, 2022, with no expiration. As of March 31, 2023, $12.4 billion remained available under the 2022 Authorization.
2 In January, February and March of 2023, we repurchased 0.4 million, 0.4 million and 0.9 million shares respectively, for an aggregate of $400 million in open market transactions at an average price per share of $249.89, $246.68 and $223.67, respectively.

Non-U.S. Employee Stock Purchase Plans

As of March 31, 2023, we had 28 employee stock purchase plans (the “EIP Plans”) that are administered outside the United States for our non-U.S. employees, which had approximately 14,000 active participants in the aggregate. During the first quarter of 2023, approximately 66,000 shares of Caterpillar common stock were purchased by the EIP Plans pursuant to the terms of such plans.

64

Item 6. Exhibits

10.1	Form of Restricted Stock Unit Award pursuant to the 2014 Long-Term Incentive Plan*
10.2	Form of Restricted Stock Unit Award for Directors pursuant to the 2014 Long-Term Incentive Plan*
10.3	Form of Nonqualified Stock Options Award pursuant to the 2014 Long-Term Incentive Plan*
10.4	Form of Performance-Based Restricted Stock Unit Award pursuant to the 2014 Long-Term Incentive Plan*
31.1	Certification of Chief Executive Officer of Caterpillar Inc., as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer of Caterpillar Inc., as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Chief Executive Officer of Caterpillar Inc. and Chief Financial Officer of Caterpillar Inc., as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive File (embedded within the Inline XBRL document and included in Exhibit 101)

*Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 6 of this report.

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

65

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CATERPILLAR INC.
May 3, 2023	/s/ D. James Umpleby III	Chairman of the Board and Chief Executive Officer
	D. James Umpleby III
May 3, 2023	/s/ Andrew R.J. Bonfield	Chief Financial Officer
	Andrew R.J. Bonfield
May 3, 2023	/s/ Suzette M. Long	Chief Legal Officer and General Counsel
	Suzette M. Long
May 3, 2023	/s/ William E. Schaupp	Vice President and Chief Accounting Officer
	William E. Schaupp

66

EX-10.1

EXHIBIT 10.1

Caterpillar Inc.

2014 Long-Term Incentive Plan

Restricted Stock Unit Award Notice

%%FIRST_NAME_MIDDLE_NAME_LAST_NAME%-%

Grant Date:%%OPTION_DATE,'Month DD, YYYY'%-%

Grant Number:%%OPTION_NUMBER%-%    

Units Granted:%%TOTAL_SHARES_GRANTED,'999,999,999'%-%

The Board of Directors of Caterpillar Inc. (the “Company”) has granted you the number of restricted stock units (“RSUs”) specified above on the date specified above (the “Grant Date”) pursuant to, and subject to the restrictions, terms and conditions set forth in, the Caterpillar Inc. 2014 Long-Term Incentive Plan (the “Plan”). This Award Notice and the Plan specify the material terms and provisions applicable to such restricted stock unit award (the “RSU Award”). Capitalized terms not defined herein shall have the meanings specified in the Plan.

Vesting

Except to the extent the RSUs are forfeited upon your termination of employment as provided below, the RSUs will become vested in the amounts and on the vesting date(s) specified below (each such date, a “Vesting Date”).

Vesting DateUnits Vesting

%%VEST_DATE_PERIOD1,'Month DD, YYYY'%-%%%SHARES_PERIOD1%-%

%%VEST_DATE_PERIOD2,'Month DD, YYYY'%-%%%SHARES_PERIOD2%-%

%%VEST_DATE_PERIOD3,'Month DD, YYYY'%-%%%SHARES_PERIOD3%-%

As soon as administratively practicable, but not later than 60 days, after the applicable Vesting Date, the Company shall issue or deliver to you, subject to the conditions of this Award Notice, unrestricted shares of Common Stock equal to the number of RSUs that become vested, rounded up or down to the nearest whole number, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements.

If you terminate employment prior to the date the RSUs have become fully vested for any reason other than Long-Service Separation, death or in connection with a Change in Control (as described more fully below), the unvested RSUs will be forfeited. Your RSU Award is also subject to certain additional forfeiture conditions set forth in Sections 5.16 and 5.17 of the Plan and in the Post-Employment Restrictions section of this Award Notice.

Voting Rights

During the period between the Grant Date and the date any RSUs become vested and the shares subject to such RSUs are issued or delivered to you (the “Restriction Period”), you are not entitled to any voting rights with respect to such RSUs. From and after the date shares are actually issued or delivered, you then will have full voting rights with respect to those shares.

Dividend Equivalents; Dividends

On each date that a cash dividend is paid to holders of Common Stock, an amount equal to the cash dividend that is paid on each share of Common Stock, multiplied by the number of RSUs that remain unvested and outstanding as of the dividend payment date (the “Dividend Equivalent Amount”) shall be credited for your benefit. Unless otherwise determined by the Board or Committee in its discretion, the aggregate Dividend Equivalent Amount, if any, credited to you shall be converted into an additional number of RSUs determined by dividing the Dividend Equivalent Amount by the Fair Market Value of a share of Common Stock on the dividend payment date (the “Dividend Equivalent RSUs”). The Dividend Equivalent RSUs, if any, will vest on the same Vesting Date corresponding to the underlying RSUs with respect to which the Dividend Equivalent RSUs were credited, and will otherwise be subject to the same conditions applicable to the underlying RSUs, including, without limitation, the provisions governing time and form of settlement; provided however, that Dividend Equivalent RSUs will not accrue on Dividend Equivalent RSUs. Unless expressly provided otherwise, as used elsewhere in this Agreement “RSUs” shall include any Dividend Equivalent RSUs that have been credited to you. From and after the date

Caterpillar: Confidential Green

shares of Common Stock are actually issued or delivered upon settlement of the RSUs, you then will have dividend rights with respect to those shares.

Termination of Employment

Your termination of employment with the Company prior to the date the RSUs become fully vested will impact the unvested RSUs as follows:

•Long-Service Separation

If your employment with the Company terminates at least six months after the Grant Date by reason of Long-Service Separation (as defined below), your unvested RSUs will continue to become vested as of each Vesting Date as though your employment with the Company had continued through the last scheduled Vesting Date, and shares of Common Stock, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to you as soon as administratively practicable, but not later than 60 days, following the applicable Vesting Date. For purposes of this RSU Award, “Long-Service Separation” means termination of employment for any reason other than for Cause after attainment of age 55 with 5 or more years of continuous service with the Company, as determined by the Company in its sole discretion.

•Death

If your employment with the Company terminates by reason of death, your unvested RSUs will become fully vested and shares of Common Stock, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to your beneficiary or your estate (as applicable), as soon as administratively practicable, but not later than 2½ months, following the date of your death.

•Change in Control

In the event of a Change in Control prior to the end of the Restriction Period pursuant to which your RSU Award is effectively continued, assumed or replaced by the surviving or acquiring corporation in such Change in Control (with appropriate adjustments to the number and kind of shares, in each case, that preserve the material terms and conditions of the outstanding RSU Award as in effect immediately prior to the Change in Control) and your employment is terminated either by the Company or its successor without Cause or by you for Good Reason, as defined in the Plan, within the 24–month period commencing on the date of the Change in Control, your unvested RSUs will immediately become fully vested and shares of Common Stock, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to you as soon as administratively practicable, but not later than 60 days, following (1) the applicable Vesting Date; or (2) the date which is six months after the date of your termination of employment, if such date is earlier than the applicable Vesting Date; provided that if you are or will become eligible for Long-Service Separation during the Restriction Period and the Change in Control is not a “change in control event,” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (“Code Section 409A”), then the unvested RSUs will immediately become fully vested, as provided above, but the shares of Common Stock, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to you as soon as administratively practicable, but not later than 60 days following the applicable Vesting Date. In the event of a vesting acceleration event upon a Change in Control pursuant to Section 5.9(a)(ii) or (iii) of the Plan, the shares of Common Stock (or cash amount, as applicable), less any shares (or cash amount, as applicable) withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to you as soon as administratively practicable, but not later than 60 days, following the date of the Change in Control, provided that if the RSUs are non-qualified deferred compensation subject to Code Section 409A and the Change in Control is not a “change in control event” within the meaning of U.S. Treas. Reg. §1.409A-3(i)(5), the RSUs will vest in accordance with Section 5.9(a)(ii) of the Plan, but the vested portion of the RSUs shall instead be settled in cash (in an amount calculated consistent with the methodology described in Section 5.9(a)(iii)), less any amount withheld to satisfy any applicable income and payroll tax withholding requirements, as soon as administratively practicable, but not later than 60 days following the applicable Vesting Date.

Caterpillar: Confidential Green

•Other

If your employment with the Company terminates prior to the date the RSUs become fully vested for any reason other than Long-Service Separation, death or in connection with a Change in Control, all unvested RSUs subject to this RSU Award will lapse and shall be immediately forfeited.

For purposes of this RSU Award, references to employment with the Company shall also mean employment with a Subsidiary. The extent to which you shall be considered employed during any periods during which you are on a leave of absence shall be determined in accordance with Company policy.

Disability

Upon a determination by the Company’s head of Total Rewards that you have a Disability (as defined below), your unvested RSUs will become fully vested and shares of Common Stock, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to you as soon as administratively practicable, but not later than 60 days, following the date of such determination. For purposes of this RSU Award, “Disability” means that you are unable to engage in any substantial gainful business activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months, as determined by the Company’s head of Total Rewards, based upon medical evidence.

Transferability of Award

Subject to certain exceptions set forth in the Plan, the RSU Award may not be assigned, transferred, pledged or hypothecated in any way. The RSU Award is not subject to execution, attachment or similar process. Any attempt at such, contrary to the provisions of the Plan, will be null and void and without effect. Note that once RSUs vest and shares of Common Stock are actually issued or delivered, you will have the ability to transfer those shares.

Designation of Beneficiary

You may designate a beneficiary (or beneficiaries) to whom any shares of Common Stock that are issued to your stock plan account with the Company’s stock plan administrator upon the vesting of the RSUs will be paid upon your death. If you do not designate a beneficiary, such shares will be paid to your estate or to such other payee determined in accordance with procedures established by the Company’s stock plan administrator.

Administration of the Plan

The RSU Award shall at all times be subject to the terms and provisions of the Plan and the Plan shall be administered in accordance with the terms of, and as provided in, the Plan. In the event of conflict between the terms and provisions of this Award Notice and the terms and provisions of the Plan, the provisions of the Plan shall control.

Code Section 409A

It is intended that this Award Notice and the administration of the RSU Award comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated, and other official guidance issued thereunder (“Code Section 409A”), to the extent applicable. The Plan and this Award Notice shall be interpreted and construed on a basis consistent with such intent. Notwithstanding anything contained herein to the contrary, no shares may be issued or delivered unless in compliance with Code Section 409A to the extent that Code Section 409A applies. To the extent this Award Notice provides for the RSU Award to be settled by reference to your termination of employment, your employment shall be deemed to have terminated upon your “separation from service,” within the meaning of Code Section 409A. The Committee reserves the right (including the right to delegate such right) to unilaterally amend this Award Notice (and thus the terms of the RSU Award) without your consent solely in order to maintain an exclusion from the application of, or to maintain compliance with, Code Section 409A. Your acceptance of this RSU Award constitutes acknowledgement and consent to such rights of the Committee. This provision does not create an obligation on the part of the Company to modify the terms of this Award Notice or the Plan and does not guarantee that this RSU Award or the delivery of shares of Common Stock upon settlement of the RSU Award will not be subject to taxes, interest and penalties or any other adverse tax consequences under Code Section 409A. Nothing in this Award Notice shall provide a basis for any person to take any action against the Company or any of its Subsidiaries or affiliates based on

Caterpillar: Confidential Green

matters covered by Code Section 409A, including the tax treatment of any amounts paid under this Award Notice, and neither the Company nor any of its Subsidiaries or affiliates will have any liability under any circumstances to you or any other party if the RSU Award, the delivery of shares of Common Stock upon vesting/settlement of the RSU Award or other payment or tax event hereunder that is intended to be exempt from, or compliant with, Code Section 409A, is not so exempt or compliant or for any action taken by the Committee with respect thereto.

Tax Impact

Please refer to the Plan prospectus and support materials for a general description of the tax consequences of an RSU Award. You may also wish to consult with your personal tax advisor regarding how the RSU Award impacts your individual tax situation. Nothing contained in this Award Notice or in the Plan prospectus shall be construed as a guarantee of any particular tax effect for any benefits or amounts deferred or paid pursuant to this Award Notice.

Withholding

The distribution of shares of Common Stock in connection with the vesting of the RSU Award is a taxable event in many taxing jurisdictions. In some countries, including the United States, the Company is required to withhold taxes upon the taxable event. To satisfy this withholding obligation, you hereby authorize the Company to withhold that number of shares that would satisfy the withholding obligation from the shares otherwise to be issued or delivered to you under the RSU Award. The following conditions apply to such withholding: (a) the value of the shares of Common Stock withheld must equal the minimum withholding obligation; and (b) the value of the shares of Common Stock withheld shall be the Fair Market Value determined as of the date the RSUs become vested. For this purpose and for all purposes of this RSU Award, Fair Market Value shall mean the mean between the high and low prices at which a share of Common Stock of the Company is traded on the New York Stock Exchange. Alternatively, by your acceptance of this RSU Award, you hereby authorize the Company (or your employer), or their respective agents, to select any of the following methods to satisfy withholding obligations upon a taxable event applicable to your RSU Award (i) a cash payment by you to the Company, (ii) your delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously issued whole shares of Common Stock having an aggregate Fair Market Value equal to the amount necessary to satisfy any such obligation, (iii) withholding from proceeds from the sale of shares of Common Stock acquired upon vesting of the RSU Award through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or (iv) any other method of withholding determined by the Company and permitted by applicable laws and the Plan; provided, however, that if you are subject to Section 16 of the Exchange Act, you shall be permitted to select among the methods set forth in (i) through (iv) above in lieu of the net share withholding method set forth in the immediately preceding sentence. Notwithstanding the foregoing, the net share withholding method described above will not be used for social security, FICA or other employment tax-related withholding obligations that become payable in a year prior to the year that shares are issued or delivered to you and, instead, you authorize the Company (or your employer) to use a method determined appropriate by the Company and permitted by applicable laws and the Plan.

Compliance with Securities Laws

The RSU Award is subject to the condition that if the listing, registration or qualification of the shares of Common Stock subject to the RSU Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the issuance or delivery of shares hereunder, the shares of Common Stock subject to the RSU Award shall not be issued or delivered, in whole or in part, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

Adjustment of Shares

Provisions are made within the Plan covering the effect of stock dividends, stock splits, changes in par value, changes in kind of stock, sale, merger, recapitalization, reorganization, etc.

Caterpillar: Confidential Green

Awards Subject to Forfeiture, Clawback and Setoff

The RSU Award is subject to certain forfeiture conditions set forth in the Plan, which in the event such conditions are determined to have occurred, may result in immediate forfeiture and cancellation of your outstanding RSU Award or an obligation to repay the Company the total amount of award gain realized upon settlement of your RSU Award. Also, the Company generally may deduct from and set off against any amounts the Company owes to you, including amounts payable in connection with this RSU Award, such amounts you may owe to the Company.

Effect on Other Benefits

The RSU Award is not intended to and shall not impact the coverage of or the amount of any other employee benefit plans in which you participate that are sponsored by the Company or any of its Subsidiaries or affiliates.

Award Confers No Rights to Continued Employment

In no event shall the granting of the RSU Award or its acceptance by you, or any provision of the Award Notice or the Plan, give or be deemed to give you any right to continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate your employment at any time.

Decisions of Board or Committee

The Board or the Committee shall have the right to resolve all questions which may arise in connection with the RSU Award. Any interpretation, determination or other action made or taken by the Board or the Committee regarding the Plan or this RSU Award shall be final, binding and conclusive.

Successors

This Award Notice shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall acquire any rights hereunder in accordance with this Award Notice or the Plan.

Severability

The invalidity or unenforceability of any particular provision of this Award Notice shall not affect the other provisions hereof and this Award Notice shall be construed in all respects as if such invalid or unenforceable provision was omitted.

Governing Law & Venue

This Award Notice, the RSU Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws. You expressly consent to the exclusive jurisdiction of the federal and state courts serving Irving, Texas for all lawsuits and actions arising out of or relating to the RSU Award and this Award Notice, and you expressly waive any defense that such courts lack personal jurisdiction over you. All such lawsuits and actions shall be tried in the federal or state courts serving Irving, Texas to the exclusion of all other courts.

Entire Agreement

This Award Notice and the Plan constitute the entire agreement between you and the Company with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements between you and the Company with respect to the subject matter hereof, and except as provided herein, may not be modified adversely to your interest except by means of a writing signed by you and the Company.

Acceptance of Award

You are required to electronically accept this Award Notice within your stock plan account with the Company’s stock plan administrator according to the procedures then in effect in order to receive the RSU Award. Your acceptance of this Award Notice constitutes acknowledgement of receipt of the Plan and this RSU Award and consent to the terms of the Plan and this Award Notice as described in the Plan and this Award Notice. You have at least 14 calendar days to consider this Award Notice before accepting it, but you may voluntarily waive this period and accept sooner. Please be advised that you may consult with an attorney of your own choosing to seek

Caterpillar: Confidential Green

independent advice before accepting this RSU Award. By accepting this Award Notice, you acknowledge that you have accepted it knowingly and voluntarily and with the full knowledge and understanding of its provisions after being given the opportunity to consult with counsel.

Notices

All notices, requests or other communications provided for in this Award Notice shall be made, if to the Company, to Caterpillar Inc., Equity Compensation Administration, 100 N.E. Adams Street, Peoria, IL 61629-4440 (or, if applicable, to any updated address provided by the Company for such purposes), and if to you, to your last known mailing address on file with the Company’s stock plan administrator. All notices, requests or other communications provided for in this Award Notice shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mail or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

Post-Employment Restrictions

By accepting this RSU Award, you agree that until 12 months following your termination of employment you will not directly or indirectly, without the prior written consent of Caterpillar Inc., do any of the following:

i.solicit any business competitive with any Company business from any person or entity who: (a) was a provider or customer to the Company within the 18 months before your termination of employment date and (b) with whom you had contact to further the Company’s business or for whom you performed services, or supervised the provision of services for, during your employment;

ii.hire, employ, recruit or solicit any employee of or consultant to the Company who possesses confidential information of the Company;

iii.induce or influence any employee, consultant, customer or provider to the Company to terminate his, her or its employment or other relationship with the Company;

iv.engage or participate in, or in any way render services or assistance to, any business that competes, directly or indirectly, with any Company product or service that you participated in, engaged in, or had confidential information regarding, in any geographic territory over which you had responsibilities, during the 18 months before your termination of employment date; or

v.assist anyone in any of the activities listed above.

If you engage in any of the activities listed above without the prior written consent of Caterpillar Inc. within the first 12 months following your termination of employment, all unvested RSUs subject to this RSU Award will lapse and shall be immediately forfeited. For avoidance of doubt, any RSUs that would have continued to vest following your termination of employment due to Long Service Separation shall be forfeited and no further shares of Common Stock associated with this RSU Award will be issued or delivered to you.

The post-employment restrictions above shall not apply to you and will not be enforced by the Company to the extent any laws, rules, codes of professional responsibility or conduct, professional standards or regulations applicable to you and your employment with the Company prohibit such restrictions.

If you reside or work in the State of California, only subsection (ii) above is applicable to you. If you reside or work in the State of Colorado, you further acknowledge that the Company provided you with a separate notice advising you of the above post-employment restrictions in accordance with CRS § 8-2-113.

If you reside or work in the District of Columbia, the District's Ban on Non-Compete Agreements Amendment Act of 2020 limits the use of non-compete agreements. It allows employers to request non-compete agreements from highly compensated employees, as that term is defined in the Ban on Non-Compete Agreements Amendment Act of 2020, under certain conditions. The Company has determined that you are a highly compensated employee. For more information about the Ban on Non-Compete Agreements Amendment Act of 2020, contact the District of Columbia Department of Employment Services (DOES).

Caterpillar: Confidential Green

For purposes of this Post-Employment Restrictions section, “Company” also includes each and all of the Company’s parents, Subsidiaries, and affiliates.

Further Information

For more detailed information about the Plan, please refer to the Plan prospectus or the Plan itself. Copies of these documents can be obtained on the Documents & Forms tab in the Executive Compensation portal on cat@work. If you have any questions regarding the administration of Caterpillar’s equity compensation program, please contact executivecompensation@cat.com

Caterpillar: Confidential Green

EX-10.2

EXHIBIT 10.2

Caterpillar Inc.

2014 Long-Term Incentive Plan

Restricted Stock Unit Award Notice

%%FIRST_NAME_MIDDLE_NAME_LAST_NAME%-%

    Grant Date:    %%OPTION_DATE,'Month DD, YYYY'%-%    

    Grant Number:    %%OPTION_NUMBER%-%

    Units Granted:    %%TOTAL_SHARES_GRANTED,'999,999,999'%-%

Vesting Date:%%VEST_DATE_PERIOD1,'Month DD, YYYY'%-% 

The Board of Directors of Caterpillar Inc. (the “Company”) has granted you the number of restricted stock units (“RSUs”) specified above on the date specified above (the “Grant Date”) pursuant to, and subject to the restrictions, terms and conditions set forth in, the Caterpillar Inc. 2014 Long-Term Incentive Plan (the “Plan”). This Award Notice and the Plan specify the material terms and provisions applicable to such restricted stock unit award (the “RSU Award”). Capitalized terms not defined herein shall have the meanings specified in the Plan.

Vesting

The RSU Award will become fully vested on the vesting date specified above (the “Vesting Date”). As soon as administratively practicable, but not later than 60 days, after the Vesting Date, the Company shall issue or deliver to you, subject to the conditions of this Award Notice, unrestricted shares of Common Stock equal to the number of RSUs that become vested, rounded up or down to the nearest whole number, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements.

With limited exception as described more fully below, if your service on the Caterpillar Inc. Board of Directors (the “Board”) terminates prior to the Vesting Date, the RSU Award will be forfeited. Your RSU Award is also subject to certain additional forfeiture conditions set forth in Sections 5.16 and 5.17 of the Plan.

Voting Rights

During the period between the Grant Date and the date the shares subject to such RSUs are issued or delivered to you (the “Restriction Period”), you are not entitled to any voting rights with respect to such RSUs. From and after the date shares are actually issued or delivered, you then will have full voting rights with respect to those shares.

Dividend Equivalents; Dividends

On each date that a cash dividend is paid to holders of Common Stock, an amount equal to the cash dividend that is paid on each share of Common Stock, multiplied by the number of RSUs that remain unvested and outstanding as of the dividend payment date (the “Dividend Equivalent Amount”) shall be credited for your benefit. Unless otherwise determined by the Board or Committee in its discretion, the aggregate Dividend Equivalent Amount, if any, credited to you shall be converted into an additional number of RSUs determined by dividing the Dividend Equivalent Amount by the Fair Market Value of a share of Common Stock on the dividend payment date (the “Dividend Equivalent RSUs”). The Dividend Equivalent RSUs, if any, will vest on the same Vesting Date corresponding to the underlying RSUs with respect to which the Dividend Equivalent RSUs were credited, and will otherwise be subject to the same conditions applicable to the underlying RSUs, including, without limitation, the provisions governing time and form of settlement; provided however, that Dividend Equivalent RSUs will not accrue on Dividend Equivalent RSUs. Unless expressly provided otherwise, as used elsewhere in this Agreement “RSUs” shall include any Dividend Equivalent RSUs that have been credited to you. From and after the date shares of Common Stock are actually issued or delivered upon settlement of the RSUs, you then will have dividend rights with respect to those shares.

Termination of Service as Director

Your termination of service on the Board prior to the Vesting Date will impact the unvested RSUs as follows:

•Six-Month Continuous Service Period

If your service on the Board terminates at least six months after the Grant Date, the RSU Award will continue to become vested as of the Vesting Date as though your service on the Board had continued

Caterpillar: Confidential Green

through the Vesting Date, and shares of Common Stock, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to you as soon as administratively practicable, but not later than 60 days, following the Vesting Date.

•Death

If your service on the Board terminates by reason of death, the RSU Award will become fully vested and shares of Common Stock, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to your beneficiary or your estate (as applicable), as soon as administratively practicable, but not later than 2½ months, following the date of your death.

•Change in Control

In the event of a Change in Control prior to the end of the Restriction Period pursuant to which your RSU Award is effectively continued, assumed or replaced by the surviving or acquiring corporation in such Change in Control (with appropriate adjustments to the number and kind of shares, in each case, that preserve the material terms and conditions of the outstanding RSU Award as in effect immediately prior to the Change in Control) and your service on the Board ceases in connection with such Change in Control, the RSU Award will immediately become fully vested and shares of Common Stock, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to you as soon as administratively practicable, but not later than 60 days, following the Vesting Date. In the event of a vesting acceleration event upon a Change in Control pursuant to Section 5.9(a)(ii) or (iii) of the Plan, the shares of Common Stock (or cash amount, as applicable), less any shares (or cash amount, as applicable) withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to you as soon as administratively practicable, but not later than 60 days, following the date of the Change in Control, provided that if the RSUs are non-qualified deferred compensation subject to Code Section 409A and the Change in Control is not a “change in control event” within the meaning of U.S. Treas. Reg. §1.409A-3(i)(5), the RSUs will vest in accordance with Section 5.9(a)(ii) of the Plan, but the vested portion of the RSUs shall instead be settled in cash (in an amount calculated consistent with the methodology described in Section 5.9(a)(iii)), less any amount withheld to satisfy any applicable income and payroll tax withholding requirements, as soon as administratively practicable, but not later than 60 days following the applicable Vesting Date.

•Other

If your service on the Board terminates prior to the Vesting Date for any reason other than as described above, all unvested RSUs subject to this RSU Award will lapse and shall be immediately forfeited.

Disability

Upon a determination by the Company’s head of Total Rewards that you have a Disability (as defined below), the RSU Award will become fully vested and shares of Common Stock, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to you as soon as administratively practicable, but not later than 60 days, following the date of such determination. For purposes of this RSU Award, “Disability” means that you are unable to engage in any substantial gainful business activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months, as determined by the Company’s head of Total Rewards, based upon medical evidence.

Transferability of Award

Subject to certain exceptions set forth in the Plan, the RSU Award may not be assigned, transferred, pledged or hypothecated in any way. The RSU Award is not subject to execution, attachment or similar process. Any attempt at such, contrary to the provisions of the Plan, will be null and void and without effect. Note that once RSUs vest and shares of Common Stock are actually issued or delivered, you will have the ability to transfer those shares.

Designation of Beneficiary

You may designate a beneficiary (or beneficiaries) to whom any shares of Common Stock that are issued to your stock plan account with the Company’s stock plan administrator upon the vesting of the RSUs will be paid upon your death. If you do not designate a beneficiary, such shares will be paid to your estate or to such other payee determined in accordance with procedures established by the Company’s stock plan administrator.

Caterpillar: Confidential Green

Administration of the Plan

The RSU Award shall at all times be subject to the terms and provisions of the Plan and the Plan shall be administered in accordance with the terms of, and as provided in, the Plan. In the event of conflict between the terms and provisions of this Award Notice and the terms and provisions of the Plan, the provisions of the Plan shall control.

Code Section 409A

It is intended that this Award Notice and the administration of the RSU Award comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated, and other official guidance issued thereunder (“Code Section 409A”), to the extent applicable. The Plan and this Award Notice shall be interpreted and construed on a basis consistent with such intent. Notwithstanding anything contained herein to the contrary, no shares may be issued or delivered unless in compliance with Code Section 409A to the extent that Code Section 409A applies. To the extent this Award Notice provides for the RSU Award to be settled by reference to your termination of service, your service shall be deemed to have terminated upon your “separation from service,” within the meaning of Code Section 409A. The Committee reserves the right (including the right to delegate such right) to unilaterally amend this Award Notice (and thus the terms of the RSU Award) without your consent solely in order to maintain an exclusion from the application of, or to maintain compliance with, Code Section 409A. Your acceptance of this RSU Award constitutes acknowledgement and consent to such rights of the Committee. This provision does not create an obligation on the part of the Company to modify the terms of this Award Notice or the Plan and does not guarantee that this RSU Award or the delivery of shares of Common Stock upon settlement of the RSU Award will not be subject to taxes, interest and penalties or any other adverse tax consequences under Code Section 409A. Nothing in this Award Notice shall provide a basis for any person to take any action against the Company or any of its Subsidiaries or affiliates based on matters covered by Code Section 409A, including the tax treatment of any amounts paid under this Award Notice, and neither the Company nor any of its Subsidiaries or affiliates will have any liability under any circumstances to you or any other party if the RSU Award, the delivery of shares of Common Stock upon vesting/settlement of the RSU Award or other payment or tax event hereunder that is intended to be exempt from, or compliant with, Code Section 409A, is not so exempt or compliant or for any action taken by the Committee with respect thereto.

Tax Impact

Please refer to the Plan prospectus and support materials for a general description of the tax consequences of an RSU Award. You may also wish to consult with your personal tax advisor regarding how the RSU Award impacts your individual tax situation. Nothing contained in this Award Notice or in the Plan prospectus shall be construed as a guarantee of any particular tax effect for any benefits or amounts deferred or paid pursuant to this Award Notice.

Withholding

The distribution of shares of Common Stock in connection with the vesting of the RSU Award is a taxable event in many taxing jurisdictions. At your election, the Company may withhold taxes upon the taxable event. To satisfy this withholding obligation, you hereby authorize the Company to withhold that number of shares that would satisfy the withholding obligation from the shares otherwise to be issued or delivered to you under the RSU Award. The following conditions apply to such withholding: (a) the value of the shares of Common Stock withheld must equal the minimum withholding obligation; and (b) the value of the shares of Common Stock withheld shall be the Fair Market Value determined as of the date the RSUs become vested. For this purpose and for all purposes of this RSU Award, Fair Market Value shall mean the mean between the high and low prices at which a share of Common Stock of the Company is traded on the New York Stock Exchange. Alternatively, you may select any of the following methods to satisfy withholding obligations upon a taxable event applicable to your RSU Award in lieu of the net share withholding method described in the immediately preceding sentence: (i) a cash payment by you to the Company, (ii) your delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously issued whole shares of Common Stock having an aggregate Fair Market Value equal to the amount necessary to satisfy any such obligation or (iii) any other method of withholding determined by the Company and permitted by applicable laws and the Plan. Notwithstanding the foregoing, the net share withholding method described above will not be used for any tax-related withholding obligations that become payable in a year prior to the year that shares are issued or delivered

Caterpillar: Confidential Green

to you and, instead, you authorize the Company to use a method determined appropriate by the Company and permitted by applicable laws and the Plan.

Compliance with Securities Laws

The RSU Award is subject to the condition that if the listing, registration or qualification of the shares of Common Stock subject to the RSU Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the issuance or delivery of shares hereunder, the shares of Common Stock subject to the RSU Award shall not be issued or delivered, in whole or in part, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

Adjustment of Shares

Provisions are made within the Plan covering the effect of stock dividends, stock splits, changes in par value, changes in kind of stock, sale, merger, recapitalization, reorganization, etc.

Awards Subject to Forfeiture, Clawback and Setoff

The RSU Award is subject to certain forfeiture conditions set forth in the Plan, which in the event such conditions are determined to have occurred, may result in immediate forfeiture and cancellation of your outstanding RSU Award or an obligation to repay the Company the total amount of award gain realized upon settlement of your RSU Award. Also, the Company generally may deduct from and set off against any amounts the Company owes to you, including amounts payable in connection with this RSU Award, such amounts you may owe to the Company.

Effect on Other Benefits

The RSU Award is not intended to and shall not impact the coverage of or the amount of any other benefit plans in which you participate that are sponsored by the Company or any of its Subsidiaries or affiliates.

Award Confers No Rights to Continued Service on the Board

In no event shall the granting of the RSU Award or its acceptance by you, or any provision of the Award Notice or the Plan, give or be deemed to give you any right to continued service on the Board.

Decisions of Board or Committee

The Board or the Committee shall have the right to resolve all questions which may arise in connection with the RSU Award. Any interpretation, determination or other action made or taken by the Board or the Committee regarding the Plan or this RSU Award shall be final, binding and conclusive.

Successors

This Award Notice shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall acquire any rights hereunder in accordance with this Award Notice or the Plan.

Severability

The invalidity or unenforceability of any particular provision of this Award Notice shall not affect the other provisions hereof and this Award Notice shall be construed in all respects as if such invalid or unenforceable provision was omitted.

Governing Law & Venue

This Award Notice, the RSU Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws. You expressly consent to the exclusive jurisdiction of the federal and state courts serving Irving, Texas for all lawsuits and actions arising out of or relating to the RSU Award and this Award Notice, and you expressly waive any defense

Caterpillar: Confidential Green

that such courts lack personal jurisdiction over you. All such lawsuits and actions shall be tried in the federal or state courts serving Irving, Texas to the exclusion of all other courts.

Entire Agreement

This Award Notice and the Plan constitute the entire agreement between you and the Company with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements between you and the Company with respect to the subject matter hereof, and except as provided herein, may not be modified adversely to your interest except by means of a writing signed by you and the Company.

Acceptance of Award

You are required to accept this Award Notice within your stock plan account with the Company’s stock plan administrator according to the procedures then in effect. Your acceptance of this Award Notice constitutes acknowledgement of receipt of the Plan and this RSU Award and consent to the terms of the Plan and this Award Notice as described in the Plan and this Award Notice.

Notices

All notices, requests or other communications provided for in this Award Notice shall be made, if to the Company, to Caterpillar Inc., Equity Compensation Administration, 100 N.E. Adams Street, Peoria, IL 61629-4440 (or, if applicable, to any updated address provided by the Company for such purposes), and if to you, to your last known mailing address on file with the Company’s stock plan administrator. All notices, requests or other communications provided for in this Award Notice shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mail or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

Further Information

For more detailed information about the Plan, please refer to the Plan prospectus or the Plan itself. If you have any questions regarding the administration of Caterpillar’s equity compensation program, please reach out to your Executive Compensation contact at Caterpillar or e-mailexecutivecompensation@cat.com.

Caterpillar: Confidential Green

EX-10.3

EXHIBIT 10.3

Caterpillar Inc.

2014 Long-Term Incentive Plan

Nonqualified Stock Option Award Notice

%%FIRST_NAME_MIDDLE_NAME_LAST_NAME%-%

    Grant Date:    %%OPTION_DATE,'Month DD, YYYY'%-%    

    Grant Number:    %%OPTION_NUMBER%-%    

    Units Granted:    %%TOTAL_SHARES_GRANTED,'999,999,999'%-%

    Option Price:    %%OPTION_PRICE,'$999,999,999.99'%-%

Expiration Date:    %%EXPIRE_DATE_PERIOD1,'Month DD, YYYY'%-%

The Board of Directors of Caterpillar Inc. (the “Company”) has granted you the number of nonqualified stock options (“NQSOs”) specified above on the date specified above (the “Grant Date”) pursuant to, and subject to the restrictions, terms and conditions set forth in, the Caterpillar Inc. 2014 Long-Term Incentive Plan (the “Plan”) at the price specified above per share, which is the closing transaction price of a share of Company Common Stock as reported on the New York Stock Exchange on the Grant Date. This Award Notice and the Plan specify the material terms and provisions applicable to such nonqualified stock option award (the “Option Award”). Capitalized terms not defined herein shall have the meanings specified in the Plan.

Vesting

Except to the extent the NQSOs are forfeited upon your termination of employment, as provided below, the NQSOs will become vested in the amounts and on the vesting date(s) specified below (each such date, a “Vesting Date”).

Vesting DateNQSOs Vesting

%%VEST_DATE_PERIOD1,'Month DD, YYYY'%-%    %%SHARES_PERIOD1%-%

%%VEST_DATE_PERIOD2,'Month DD, YYYY'%-%%%SHARES_PERIOD2%-%

%%VEST_DATE_PERIOD3,'Month DD, YYYY'%-%%%SHARES_PERIOD3%-%

If you terminate employment prior to the date the NQSOs have become fully vested for any reason other than Long-Service Separation, Disability, death or in connection with a Change in Control (as described more fully below), the unvested NQSOs will be forfeited. Your Option Award is also subject to certain additional forfeiture conditions set forth in Sections 5.16 and 5.17 of the Plan and in the Post-Employment Restrictions section of this Award Notice.

Exercise of Award

The Option Award may only be exercised through the Plan’s designated administrator, currently E*TRADE, or through such other means as the Company may designate. You may exercise the Option Award by providing notice of exercise, in a manner specified by the Company, setting forth the number of shares to be exercised, accompanied by full payment for the shares. The exercise price shall be payable at your election by: (1) tendering cash, (2) tendering previously acquired shares of Company Common Stock, (3) except as may be prohibited by applicable law, a broker-dealer, acceptable to the Company and to whom you submitted an irrevocable notice of exercise, tendering cash, (4) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered, or (5) any combination of (1), (2), (3) and (4). Notwithstanding the foregoing, the Company, in its sole discretion, may require you (or in the event of your death, your legal representative, as the case may be) exercise the Option Award by a means of a market sale transaction (either a “same-day sale” transaction or a “sell-to-cover” transaction).

The Option Award will expire unless exercised by the expiration date specified above (the “Expiration Date”), the tenth anniversary of the Grant Date. If the Expiration Date occurs during any period in which you are prohibited from trading Company Common Stock pursuant to the Company’s insider trading policy or during a period when the exercise of the Option Award would violate applicable securities law (a “Blackout Period”), then the Option

Caterpillar: Confidential Green

Award will not expire on the Expiration Date. Instead, the Option Award will not expire until the date that is 30 days after the expiration of the Blackout Period.

Voting Rights

During the period between the Grant Date and the date you exercise your vested NQSOs and the shares subject to such NQSOs are issued or delivered to you (the “Restriction Period”), you are not entitled to any voting rights with respect to such NQSOs. From and after the date shares are actually issued or delivered, you then will have full voting rights with respect to those shares.

Dividends and Other Distributions

During the Restriction Period, you will not receive or be credited with dividends or any other distributions (e.g., dividend equivalents) with respect to the NQSOs. From and after the date shares are actually issued or delivered, you then will have dividend rights with respect to those shares.

Termination of Employment

Your termination of employment with the Company prior to the date the NQSOs become fully vested will impact the unvested NQSOs as follows:

•Long-Service Separation

If your employment with the Company terminates at least six months after the Grant Date by reason of Long-Service Separation (as defined below), your unvested NQSOs will continue to become vested and exercisable as of each Vesting Date as though your employment with the Company had continued through the last scheduled Vesting Date. In such event, your Option Award will remain exercisable until the Expiration Date. For purposes of this Option Award, “Long-Service Separation” means termination of employment after attainment of age 55 with 5 or more years of continuous service with the Company, as determined by the Company in its sole discretion.

•Disability

If your employment with the Company terminates by reason of Disability (as defined below), your unvested NQSOs will become fully vested. In such event, your Option Award will remain exercisable until the Expiration Date. For purposes of this Option Award, “Disability” means, unless otherwise provided for in an employment, change in control or similar agreement in effect between you and the Company or a Subsidiary, qualifying for long-term disability benefits under any long-term disability program sponsored by the Company or a Subsidiary in which you participate or, if you do not participate in any such program, your inability to engage in any substantial gainful business activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months, as determined by the Company’s head of Total Rewards, based upon medical evidence.

•Death

If your employment with the Company terminates by reason of death, your unvested NQSOs will become fully vested and your estate or your beneficiary (as applicable) will have until the Expiration Date to exercise the Option Award. If you die after your termination of employment when the Option Award is otherwise exercisable, the Option Award will remain exercisable by your estate or your beneficiary (as applicable) until: (a) the Expiration Date if your termination of employment was due to Long-Service Separation, Disability or in connection with a Change in Control; or (b) the earlier of: (1) the Expiration Date or (2) 38 months following your termination of employment if your termination of employment was for any reason other than Long-Service Separation, Disability or in connection with a Change in Control.

•Change in Control

In the event of a Change in Control prior to the date the NQSOs become fully vested pursuant to which your Option Award is effectively continued, assumed or replaced by the surviving or acquiring corporation in such Change in Control (with appropriate adjustments to the number and kind of shares, in each case, that preserve the material terms and conditions of the outstanding Option Award as in effect immediately prior to the Change in Control) and your employment is terminated either by the Company without Cause or by you for Good Reason, as defined in the Plan, within the 24–month period

Caterpillar: Confidential Green

commencing on the date of the Change in Control, your unvested NQSOs will immediately become fully vested. In such event, your Option Award will remain exercisable until the Expiration Date.

•Cause

If your employment with the Company is terminated for Cause (as defined in the Plan), all of your unexercised NQSOs associated with the Option Award (whether vested or non-vested) shall expire immediately and all rights thereunder cease upon such termination.

•Other

If your employment with the Company terminates prior to the date the NQSOs become fully vested for any reason other than Long-Service Separation, Disability, death, Cause or in connection with a Change in Control, all unvested NQSOs associated with this Option Award shall be immediately forfeited to the Company. In such event, with respect to vested NQSOs, you will have until the earlier of (1) the Expiration Date or (2) the date which is 60 days following the date of your termination of employment to exercise the Option Award.

For purposes of this Option Award, references to employment with the Company shall also mean employment with a Subsidiary. The extent to which you shall be considered employed during any periods during which you are on a leave of absence shall be determined in accordance with Company policy.

Transferability of Award

Subject to certain exceptions set forth in the Plan, the Option Award is only exercisable by you (or your beneficiary, estate or representative, as applicable) and may not be assigned, transferred, pledged or hypothecated in any way. The Option Award is not subject to execution, attachment or similar process. Any attempt at such, contrary to the provisions of the Plan, will be null and void and without effect. Note that once your Option Award is exercised and shares of Common Stock are actually issued or delivered, you will have the ability to transfer those shares.

Designation of Beneficiary

Any vested and unexercised NQSOs will transfer to your estate upon your death. If you wish to designate a beneficiary for the NQSOs, contact executivecompensation@cat.com for additional information. You may designate a beneficiary (or beneficiaries) to whom any shares of Common Stock issued to your stock plan account with the Company’s stock plan administrator upon the exercise of the NQSOs will be paid upon your death. If you do not designate a beneficiary, such shares will be paid to your estate or to such other payee determined in accordance with procedures established by the Company’s stock plan administrator.

Administration of the Plan

The Option Award shall, at all times, be subject to the terms and provisions of the Plan and the Plan shall be administered in accordance with the terms of, and as provided in, the Plan. In the event of conflict between the terms and provisions of this Award Notice and the terms and provisions of the Plan, the provisions of the Plan shall control.

Code Section 409A

It is intended that this Award Notice and the administration of the Option Award will be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated and other official guidance issued thereunder (“Code Section 409A”). The Plan and this Award Notice shall be interpreted and construed on a basis consistent with such intent. Notwithstanding anything contained herein to the contrary, the Committee reserves the right (including the right to delegate such right) to unilaterally amend this Award Notice (and thus the terms of the Option Award) without your consent solely in order to maintain an exclusion from the application of, or to maintain compliance with, Code Section 409A. Your acceptance of this Option Award constitutes acknowledgement and consent to such rights of the Committee. This provision does not create an obligation on the part of the Company to modify the terms of this Award Notice or the Plan and does not guarantee that this Option Award or the delivery of shares of Common Stock upon exercise of the Option Award will not be subject to taxes, interest and penalties or any other adverse tax consequences under Code Section 409A. Nothing in this Award Notice shall provide a basis for any person to take any action against the Company or any of its Subsidiaries or affiliates based on matters covered by Code Section 409A, including the tax treatment of any amounts paid under this Award Notice, and neither the Company nor any of its Subsidiaries or affiliates

Caterpillar: Confidential Green

will have any liability under any circumstances to you or any other party if the Option Award, the delivery of shares of Common Stock upon exercise of the Option Award or other payment or tax event hereunder that is intended to be exempt from, or compliant with, Code Section 409A, is not so exempt or compliant or for any action taken by the Committee with respect thereto.

Tax Impact

Please refer to the Plan prospectus and support materials for a general description of the tax consequences of an Option Award. You may also wish to consult with your personal tax advisor regarding how the Option Award impacts your individual tax situation. Nothing contained in this Award Notice or in the Plan prospectus shall be construed as a guarantee of any particular tax effect for any benefits or amounts deferred or paid pursuant to this Award Notice.

Withholding

The exercise of an NQSO is a taxable event in many taxing jurisdictions. In some countries, including the United States, the Company is required to withhold taxes upon the taxable event. To satisfy this withholding obligation, you hereby authorize the Company to withhold that number of shares that would satisfy the withholding obligation from the shares otherwise to be issued or delivered to you under the Option Award. The following conditions apply to such withholding: (a) the value of the shares of Common Stock withheld must equal the minimum withholding obligation; and (b) the value of the shares of Common Stock withheld shall be the Fair Market Value determined as of the exercise date. For this purpose and for all other purposes of this Option Award except the Option price as described above, Fair Market Value shall mean the mean between the high and low prices at which a share of Common Stock of the Company is traded on the New York Stock Exchange. Alternatively, by your acceptance of this Option Award, you hereby authorize the Company (or your employer), or their respective agents, to select any of the following methods to satisfy withholding obligations upon a taxable event applicable to your Option Award (i) a cash payment by you to the Company, (ii) your delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously issued whole shares of Common Stock having an aggregate Fair Market Value equal to the amount necessary to satisfy any such obligation, (iii) withholding from proceeds from the sale of shares of Common Stock acquired upon exercise of the Options through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or (iv) any other method of withholding determined by the Company and permitted by applicable laws and the Plan; provided, however, that if you are subject to Section 16 of the Exchange Act, you shall be permitted to select among the methods set forth in subsection (i) through (iv) in lieu of the net share withholding method set forth in the immediately preceding sentence.

Compliance with Securities Laws

The Company will take steps required to achieve compliance with all applicable United States federal and state securities laws (and other laws, including registration requirements) and with the rules and practices of the stock exchanges upon which the stock of the Company is listed and the Option Award is subject to the requirements of such laws and rules. The Option Award is subject to the condition that if the listing, registration or qualification of the shares of Common Stock subject to the Option Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the issuance or delivery of shares hereunder, the shares of Common Stock subject to the Option Award shall not be issued or delivered, in whole or in part, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

Adjustment of Shares

Provisions are made within the Plan covering the effect of stock dividends, stock splits, changes in par value, changes in kind of stock, sale, merger, recapitalization, reorganization, etc.

Awards Subject to Forfeiture, Clawback and Setoff

The Option Award (and its exercise) is subject to certain forfeiture conditions set forth in the Plan which, in the event such conditions are determined to have occurred, may result in immediate forfeiture and cancellation of your outstanding Option Award or an obligation to repay the Company the total amount of award gain realized upon exercise of your Option Award. Also, the Company generally may deduct from and set off against any

Caterpillar: Confidential Green

amounts the Company owes to you, including amounts payable in connection with this Option Award, such amounts you may owe to the Company.

Effect on Other Benefits

The Option Award is not intended to and shall not impact the coverage of or the amount of any other employee benefit plans in which you participate that are sponsored by the Company or any of its Subsidiaries or affiliates.

Award Confers No Rights to Continued Employment

In no event shall the granting of the Option Award or its acceptance by you, or any provision of the Award Notice or the Plan, give or be deemed to give you any right to continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate your employment at any time.

Decisions of Board or Committee

The Board or the Committee shall have the right to resolve all questions which may arise in connection with the Option Award. Any interpretation, determination or other action made or taken by the Board or the Committee regarding the Plan or this Option Award shall be final, binding and conclusive.

Successors

This Award Notice shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall acquire any rights hereunder in accordance with this Award Notice or the Plan.

Severability

The invalidity or unenforceability of any particular provision of this Award Notice shall not affect the other provisions hereof and this Award Notice shall be construed in all respects as if such invalid or unenforceable provision was omitted.

Governing Law & Venue

This Award Notice, the Option Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws. You expressly consent to the exclusive jurisdiction of the federal and state courts serving Irving, Texas for all lawsuits and actions arising out of or relating to the Option Award and this Award Notice, and you expressly waive any defense that such courts lack personal jurisdiction over you. All such lawsuits and actions shall be tried in the federal or state courts serving Irving, Texas to the exclusion of all other courts.

Entire Agreement

This Award Notice and the Plan constitute the entire agreement between you and the Company with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements between you and the Company with respect to the subject matter hereof, and except as provided herein, may not be modified adversely to your interest except by means of a writing signed by you and the Company.

Acceptance of Award

You are required to electronically accept this Award Notice within your stock plan account with the Company’s stock plan administrator according to the procedures then in effect in order to receive the Option Award. Your acceptance of this Award Notice constitutes acknowledgement of receipt of the Plan and this Option Award and consent to the terms of the Plan and this Award Notice as described in the Plan and this Award Notice. You have at least 14 calendar days to consider this Award Notice before accepting it, but you may voluntarily waive this period and accept sooner. Please be advised that you may consult with an attorney of your own choosing to seek independent advice before accepting this Option Award. By accepting this Award Notice, you acknowledge that you have accepted it knowingly and voluntarily and with the full knowledge and understanding of its provisions after being given the opportunity to consult with counsel.

Caterpillar: Confidential Green

Notices

All notices, requests or other communications provided for in this Award Notice shall be made, if to the Company, to Caterpillar Inc., Equity Compensation Administration, 100 N.E. Adams Street, Peoria, IL 61629-4440 (or, if applicable, to any updated address provided by the Company for such purposes), and if to you, to your last known mailing address on file with the Company’s stock plan administrator. All notices, requests or other communications provided for in this Award Notice shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mail or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

Post-Employment Restrictions

By accepting this Option Award, you agree that until 12 months following your termination of employment, you will not directly or indirectly, without the prior written consent of Caterpillar Inc., do any of the following:

i.solicit any business competitive with any Company business from any person or entity who: (a) was a provider or customer to the Company within the 18 months before your termination of employment date and (b) with whom you had contact to further the Company’s business or for whom you performed services, or supervised the provision of services for, during your employment;

ii.hire, employ, recruit or solicit any employee of or consultant to the Company who possesses confidential information of the Company;

iii.induce or influence any employee, consultant, customer or provider to the Company to terminate his, her or its employment or other relationship with the Company;

iv.engage or participate in, or in any way render services or assistance to, any business that competes, directly or indirectly, with any Company product or service that you participated in, engaged in, or had confidential information regarding, in any geographic territory over which you had responsibilities, during the 18 months before your termination of employment date; or

v.assist anyone in any of the activities listed above.

If you engage in any of the activities listed above without the prior written consent of Caterpillar Inc. within the first 12 months following your termination of employment, all of your unexercised NQSOs associated with the Option Award (whether vested or non-vested) shall expire immediately and all rights thereunder cease upon such termination.

The post-employment restrictions above shall not apply to you and will not be enforced by the Company to the extent any laws, rules, codes of professional responsibility or conduct, professional standards or regulations applicable to you and your employment with the Company prohibit such restrictions.

If you reside or work in the State of California, only subsection (ii) above is applicable to you. If you reside or work in the State of Colorado, you further acknowledge that the Company provided you with a separate notice advising you of the above post-employment restrictions in accordance with CRS § 8-2-113.

If you reside or work in the District of Columbia, the District's Ban on Non-Compete Agreements Amendment Act of 2020 limits the use of non-compete agreements. It allows employers to request non-compete agreements from highly compensated employees, as that term is defined in the Ban on Non-Compete Agreements Amendment Act of 2020, under certain conditions. The Company has determined that you are a highly compensated employee. For more information about the Ban on Non-Compete Agreements Amendment Act of 2020, contact the District of Columbia Department of Employment Services (DOES).

For purposes of this Post-Employment Restrictions section, “Company” also includes each and all of the Company’s parents, Subsidiaries, and affiliates.

Caterpillar: Confidential Green

Further Information

For more detailed information about the Plan, please refer to the Plan prospectus or the Plan itself. Copies of these documents can be obtained on the Documents & Forms tab in the Executive Compensation portal on cat@work. If you have any questions regarding the administration of Caterpillar’s equity compensation program, please contact executivecompensation@cat.com.

Caterpillar: Confidential Green

EX-10.4

EXHIBIT 10.4

Caterpillar Inc.

2014 Long-Term Incentive Plan

Performance-Based Restricted Stock Unit Award Notice

%%FIRST_NAME_MIDDLE_NAME_LAST_NAME%-%

    Grant Date:    %%OPTION_DATE,'Month DD, YYYY'%-%

Grant Number:    %%OPTION_NUMBER%-%

Units Granted:    %%TOTAL_SHARES_GRANTED,'999,999,999'%-%

Vesting Date:    %%VEST_DATE_PERIOD1,'Month DD, YYYY'%-%

The Board of Directors of Caterpillar Inc. (the “Company”) has granted you the number of restricted stock units (“RSUs”) specified above on the date specified above (the “Grant Date”) pursuant to, and subject to the restrictions, terms and conditions set forth in, the Caterpillar Inc. 2014 Long-Term Incentive Plan (the “Plan”). This Award Notice and the Plan specify the material terms and provisions applicable to such restricted stock unit award (the “RSU Award”). Capitalized terms not defined herein shall have the meanings specified in the Plan.

Vesting

Except to the extent the RSUs are forfeited upon your termination of employment as provided below, the RSU Award will vest as of the vesting date specified above (the “Vesting Date”) if the Company achieves the performance goal(s) established by the Committee (the “Performance Goals”) for the performance period below (the “Performance Period”), as set forth in Appendix A hereto.

Performance Period Start Date:    %%GRANT_USER_DEFINED_FIELD_11%-%

Performance Period End Date:    %%GRANT_USER_DEFINED_FIELD_12%-%

As soon as administratively practicable, but not later than two and one-half months, after the Performance Period End Date specified above, the Company shall issue or deliver to you, subject to the achievement of the Performance Goals and the other conditions of this Award Notice, unrestricted shares of Common Stock equal to the number of RSUs that become vested, rounded up or down to the nearest whole number, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements.

If you terminate employment prior to the date the RSUs have become fully vested for any reason other than Long-Service Separation, Disability, death or in connection with a Change in Control (as described more fully below), all of the unvested RSUs will be forfeited. Your RSU Award is also subject to certain additional forfeiture conditions set forth in Sections 5.16 and 5.17 of the Plan and in the Post-Employment Restrictions section of this Award Notice.

Voting Rights

During the period between the Grant Date and the date the RSUs become vested and the shares subject to such RSUs are issued or delivered to you (the “Restriction Period”), you are not entitled to any voting rights with respect to such RSUs. From and after the date shares are actually issued or delivered, you then will have full voting rights with respect to those shares.

Dividend Equivalents; Dividends

On each date that a cash dividend is paid to holders of Common Stock, an amount equal to the cash dividend that is paid on each share of Common Stock, multiplied by the number of RSUs that remain unvested and outstanding as of the dividend payment date (the “Dividend Equivalent Amount”) shall be credited for your benefit. Unless otherwise determined by the Board or Committee in its discretion, the aggregate Dividend Equivalent Amount, if any, credited to you shall be converted into an additional number of RSUs determined by dividing the Dividend Equivalent Amount by the Fair Market Value of a share of Common Stock on the dividend payment date (the “Dividend Equivalent RSUs”). The Dividend Equivalent RSUs, if any, will vest on the same Vesting Date corresponding to the underlying RSUs with respect to which the Dividend Equivalent RSUs were credited, and will otherwise be subject to the same conditions applicable to the underlying RSUs, including, without limitation,

Caterpillar: Confidential Green

the provisions governing time and form of settlement; provided however, that Dividend Equivalent RSUs will not accrue on Dividend Equivalent RSUs. Unless expressly provided otherwise, as used elsewhere in this Agreement “RSUs” shall include any Dividend Equivalent RSUs that have been credited to you. From and after the date shares of Common Stock are actually issued or delivered upon settlement of the RSUs, you then will have dividend rights with respect to those shares.

Termination of Employment

If your employment with the Company terminates prior to the Vesting Date, all unvested RSUs subject to this RSU Award will lapse and shall be immediately forfeited, except as follows:

•Long-Service Separation

If your employment with the Company terminates at least six months after the Grant Date by reason of Long-Service Separation (as defined below), the RSU Award will remain outstanding and the RSUs will become vested if and to the extent the Performance Goals for the full Performance Period are achieved. For purposes of this RSU Award, “Long-Service Separation” means termination of employment for any reason other than for Cause after attainment of age 55 with 5 or more years of continuous service with the Company, as determined by the Company in its sole discretion.

•Disability

If your employment with the Company terminates by reason of Disability, the RSU Award will remain outstanding and the RSUs will become vested if and to the extent the Performance Goals are achieved. For purposes of this RSU Award, “Disability” means, unless otherwise provided for in an employment, change in control or similar agreement in effect between you and the Company or a Subsidiary, qualifying for long-term disability benefits under any long-term disability program sponsored by the Company or a Subsidiary in which you participate or, if you do not participate in any such program, your inability to engage in any substantial gainful business activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months, as determined by the Company’s head of Total Rewards, based upon medical evidence.

•Death

If your employment with the Company terminates by reason of death, your unvested RSUs will become fully vested and shares of Common Stock, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to your beneficiary or your estate (as applicable), as soon as administratively practicable, but not later than 2½ months, following the date of your death.

•Change in Control

In the event of a Change in Control prior to the end of the Restriction Period pursuant to which your RSU Award is effectively continued, assumed or replaced by the surviving or acquiring corporation in such Change in Control (with appropriate adjustments to the number and kind of shares, in each case, that preserve the material terms and conditions of the outstanding RSU Award as in effect immediately prior to the Change in Control) and your employment is terminated either by the Company or its successor without Cause or by you for Good Reason, as defined in the Plan, within the 24–month period commencing on the date of the Change in Control, all of the RSUs will immediately become fully vested and shares of Common Stock, less any shares withheld to satisfy any applicable income and payroll tax withholding requirements, will be issued or delivered to you as soon as administratively practicable, but not later than two and one-half months, after your termination of employment.

For purposes of this RSU Award, references to employment with the Company shall also mean employment with a Subsidiary. The extent to which you shall be considered employed during any periods during which you are on a leave of absence shall be determined in accordance with Company policy.

Transferability of Award

Subject to certain exceptions set forth in the Plan, the RSU Award may not be assigned, transferred, pledged or hypothecated in any way. The RSU Award is not subject to execution, attachment or similar process. Any attempt

Caterpillar: Confidential Green

at such, contrary to the provisions of the Plan, will be null and void and without effect. Note that once RSUs vest and shares of Common Stock are actually issued or delivered, you will have the ability to transfer those shares.

Designation of Beneficiary

You may designate a beneficiary (or beneficiaries) to whom any shares of Common Stock that are issued to your stock plan account with the Company’s stock plan administrator upon the vesting of the RSUs will be paid upon your death. If you do not designate a beneficiary, such shares will be paid to your estate or to such other payee determined in accordance with procedures established by the Company’s stock plan administrator.

Administration of the Plan

The RSU Award shall, at all times, be subject to the terms and provisions of the Plan and the Plan shall be administered in accordance with the terms of, and as provided in, the Plan. In the event of conflict between the terms and provisions of this Award Notice and the terms and provisions of the Plan, the provisions of the Plan shall control.

Code Section 409A

It is intended that this Award Notice and the administration of the RSU Award comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated, and other official guidance issued thereunder (“Code Section 409A”), to the extent applicable. The Plan and this Award Notice shall be interpreted and construed on a basis consistent with such intent. Notwithstanding anything contained herein to the contrary, no shares may be issued or delivered unless in compliance with Code Section 409A to the extent that Code Section 409A applies. To the extent this Award Notice provides for the RSU Award to be settled by reference to your termination of employment, your employment shall be deemed to have terminated upon your “separation from service,” within the meaning of Code Section 409A. The Committee reserves the right (including the right to delegate such right) to unilaterally amend this Award Notice (and thus the terms of the RSU Award) without your consent solely in order to maintain an exclusion from the application of, or to maintain compliance with, Code Section 409A. Your acceptance of this RSU Award constitutes acknowledgement and consent to such rights of the Committee. This provision does not create an obligation on the part of the Company to modify the terms of this Award Notice or the Plan and does not guarantee that this RSU Award or the delivery of shares of Common Stock upon settlement of the RSU Award will not be subject to taxes, interest and penalties or any other adverse tax consequences under Code Section 409A. Nothing in this Award Notice shall provide a basis for any person to take any action against the Company or any of its Subsidiaries or affiliates based on matters covered by Code Section 409A, including the tax treatment of any amounts paid under this Award Notice, and neither the Company nor any of its Subsidiaries or affiliates will have any liability under any circumstances to you or any other party if the RSU Award, the delivery of shares of Common Stock upon vesting/settlement of the RSU Award or other payment or tax event hereunder that is intended to be exempt from, or compliant with, Code Section 409A, is not so exempt or compliant or for any action taken by the Committee with respect thereto.

Tax Impact

Please refer to the Plan prospectus and support materials for a general description of the tax consequences of an RSU Award. You may also wish to consult with your personal tax advisor regarding how the RSU Award impacts your individual tax situation. Nothing contained in this Award Notice or in the Plan prospectus shall be construed as a guarantee of any particular tax effect for any benefits or amounts deferred or paid pursuant to this Award Notice.

Withholding

The distribution of shares of Common Stock in connection with the vesting of the RSU Award is a taxable event in many taxing jurisdictions. In some countries, including the United States, the Company is required to withhold taxes upon the taxable event. To satisfy this withholding obligation, you hereby authorize the Company to withhold that number of shares that would satisfy the withholding obligation from the shares otherwise to be issued or delivered to you under the RSU Award. The following conditions apply to such withholding: (a) the value of the shares of Common Stock withheld must equal the minimum withholding obligation; and (b) the value of the shares of Common Stock withheld shall be the Fair Market Value determined as of the date the RSUs become vested. For this purpose and for all purposes of this RSU Award, Fair Market Value shall mean the mean between the high and low prices at which a share of Common Stock of the Company is traded on the New York

Caterpillar: Confidential Green

Stock Exchange. Alternatively, by your acceptance of this RSU Award, you hereby authorize the Company (or your employer), or their respective agents, to select any of the following methods to satisfy withholding obligations upon a taxable event applicable to your RSU Award (i) a cash payment by you to the Company, (ii) your delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously issued whole shares of Common Stock having an aggregate Fair Market Value equal to the amount necessary to satisfy any such obligation, (iii) withholding from proceeds from the sale of shares of Common Stock acquired upon vesting of the RSU Award through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or (iv) any other method of withholding determined by the Company and permitted by applicable laws and the Plan; provided, however, that if you are subject to Section 16 of the Exchange Act, you shall be permitted to select among the methods set forth in (i) through (iv) above in lieu of the net share withholding method set forth in the immediately preceding sentence. Notwithstanding the foregoing, the net share withholding method described above will not be used for social security, FICA or other employment tax-related withholding obligations that become payable in a year prior to the year that shares are issued or delivered to you and, instead, you authorize the Company (or your employer) to use a method determined appropriate by the Company and permitted by applicable laws and the Plan.

Compliance with Securities Laws

The RSU Award is subject to the condition that if the listing, registration or qualification of the shares of Common Stock subject to the RSU Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the issuance or delivery of shares hereunder, the shares of Common Stock subject to the RSU Award shall not be issued or delivered, in whole or in part, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

Adjustment of Shares

Provisions are made within the Plan covering the effect of stock dividends, stock splits, changes in par value, changes in kind of stock, sale, merger, recapitalization, reorganization, etc.

Awards Subject to Forfeiture, Clawback and Setoff

The RSU Award is subject to certain forfeiture conditions set forth in the Plan, which in the event such conditions are determined to have occurred, may result in immediate forfeiture and cancellation of your outstanding RSU Award or an obligation to repay the Company the total amount of award gain realized upon settlement of your RSU Award. Also, the Company generally may deduct from and set off against any amounts the Company owes to you, including amounts payable in connection with this RSU Award, such amounts you may owe to the Company.

Effect on Other Benefits

The RSU Award is not intended to and shall not impact the coverage of or the amount of any other employee benefit plans in which you participate that are sponsored by the Company or any of its Subsidiaries or affiliates.

Award Confers No Rights to Continued Employment

In no event shall the granting of the RSU Award or its acceptance by you, or any provision of the Award Notice or the Plan, give or be deemed to give you any right to continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate your employment at any time.

Decisions of Board or Committee

The Board or the Committee shall have the right to resolve all questions which may arise in connection with the RSU Award. Any interpretation, determination or other action made or taken by the Board or the Committee regarding the Plan or this RSU Award shall be final, binding and conclusive.

Caterpillar: Confidential Green

Successors

This Award Notice shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall acquire any rights hereunder in accordance with this Award Notice or the Plan.

Severability

The invalidity or unenforceability of any particular provision of this Award Notice shall not affect the other provisions hereof and this Award Notice shall be construed in all respects as if such invalid or unenforceable provision was omitted.

Governing Law & Venue

This Award Notice, the RSU Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws. You expressly consent to the exclusive jurisdiction of the federal and state courts serving Irving, Texas for all lawsuits and actions arising out of or relating to the RSU Award and this Award Notice, and you expressly waive any defense that such courts lack personal jurisdiction over you. All such lawsuits and actions shall be tried in the federal or state courts serving Irving, Texas to the exclusion of all other courts.

Entire Agreement

This Award Notice and the Plan constitute the entire agreement between you and the Company with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements between you and the Company with respect to the subject matter hereof, and except as provided herein, may not be modified adversely to your interest except by means of a writing signed by you and the Company.

Acceptance of Award

You are required to electronically accept this Award Notice within your stock plan account with the Company’s stock plan administrator according to the procedures then in effect in order to receive the RSU Award. Your acceptance of this Award Notice constitutes acknowledgement of receipt of the Plan and this RSU Award and consent to the terms of the Plan and this Award Notice as described in the Plan and this Award Notice. You have at least 14 calendar days to consider this Award Notice before accepting it, but you may voluntarily waive this period and accept sooner. Please be advised that you may consult with an attorney of your own choosing to seek independent advice before accepting this RSU Award. By accepting this Award Notice, you acknowledge that you have accepted it knowingly and voluntarily and with the full knowledge and understanding of its provisions after being given the opportunity to consult with counsel.

Notices

All notices, requests or other communications provided for in this Award Notice shall be made, if to the Company, to Caterpillar Inc., Equity Compensation Administration, 100 N.E. Adams Street, Peoria, IL 61629-4440 (or, if applicable, to any updated address provided by the Company for such purposes), and if to you, to your last known mailing address on file with the Company’s stock plan administrator. All notices, requests or other communications provided for in this Award Notice shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mail or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

Post-Employment Restrictions

By accepting this RSU Award, you agree that until 12 months following your termination of employment, you will not directly or indirectly, without the prior written consent of Caterpillar Inc., do any of the following:

i.solicit any business competitive with any Company business from any person or entity who: (a) was a provider or customer to the Company within the 18 months before your termination of employment

Caterpillar: Confidential Green

date and (b) with whom you had contact to further the Company’s business or for whom you performed services, or supervised the provision of services for, during your employment;

ii.hire, employ, recruit or solicit any employee of or consultant to the Company who possesses confidential information of the Company;

iii.induce or influence any employee, consultant, customer or provider to the Company to terminate his, her or its employment or other relationship with the Company;

iv.engage or participate in, or in any way render services or assistance to, any business that competes, directly or indirectly, with any Company product or service that you participated in, engaged in, or had confidential information regarding, in any geographic territory over which you had responsibilities, during the 18 months before your termination of employment date; or

v.assist anyone in any of the activities listed above.

If you engage in any of the activities listed above without the prior written consent of Caterpillar Inc. within the first 12 months following your termination of employment, all unvested RSUs subject to this RSU Award will lapse and shall be immediately forfeited. For avoidance of doubt, any RSUs that would have otherwise vested upon achievement of the Performance Goals following your termination of employment due to Long Service Separation shall be forfeited.

The post-employment restrictions above shall not apply to you and will not be enforced by the Company to the extent any laws, rules, codes of professional responsibility or conduct, professional standards or regulations applicable to you and your employment with the Company prohibit such restrictions.

If you reside or work in the State of California, only subsection (ii) above is applicable to you. If you reside or work in the State of Colorado, you further acknowledge that the Company provided you with a separate notice advising you of the above post-employment restrictions in accordance with CRS § 8-2-113.

If you reside or work in the District of Columbia, the District's Ban on Non-Compete Agreements Amendment Act of 2020 limits the use of non-compete agreements. It allows employers to request non-compete agreements from highly compensated employees, as that term is defined in the Ban on Non-Compete Agreements Amendment Act of 2020, under certain conditions. The Company has determined that you are a highly compensated employee. For more information about the Ban on Non-Compete Agreements Amendment Act of 2020, contact the District of Columbia Department of Employment Services (DOES).

For purposes of this Post-Employment Restrictions section, “Company” also includes each and all of the Company’s parents, Subsidiaries, and affiliates.

Further Information

For more detailed information about the Plan, please refer to the Plan prospectus or the Plan itself. Copies of these documents can be obtained on the Documents & Forms tab in the Executive Compensation portal on cat@work. If you have any questions regarding the administration of Caterpillar’s equity compensation program, please contact executivecompensation@cat.com.

Caterpillar: Confidential Green

Appendix A

Performance-Based Restricted Stock Unit Award

Performance Period

Appendix A

Performance-Based Restricted Stock Unit Award

Performance Period Start Date:    %%GRANT_USER_DEFINED_FIELD_11%-%

Performance Period End Date:    %%GRANT_USER_DEFINED_FIELD_12%-%

Performance Goal:        %%GRANT_USER_DEFINED_FIELD_13%-%

The Performance Goal shall be [INSERT DESCRIPTION OF PERFORMANCE GOAL].

Capitalized terms not defined in this Appendix A shall have the meanings specified in the Plan and in the Award Notice.

Caterpillar: Confidential Green

EX-31.1

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, D. James Umpleby III, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Caterpillar Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 3, 2023	/s/ D. James Umpleby III	Chief Executive Officer
	D. James Umpleby III

EX-31.2

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, Andrew R.J. Bonfield, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Caterpillar Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 3, 2023	/s/ Andrew R.J. Bonfield	Chief Financial Officer
	Andrew R.J. Bonfield

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Caterpillar Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 3, 2023	/s/ D. James Umpleby III	Chief Executive Officer
	D. James Umpleby III
May 3, 2023	/s/ Andrew R.J. Bonfield	Chief Financial Officer
	Andrew R.J. Bonfield

A signed original of this written statement required by Section 906 has been provided to Caterpillar Inc. and will be retained by Caterpillar Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover Page	3 Months Ended
	Mar. 31, 2023 shares
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	1-768
Entity Registrant Name	CATERPILLAR INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	37-0602744
Entity Address, Address Line One	5205 N. O'Connor Boulevard,
Entity Address, Address Line Two	Suite 100,
Entity Address, City or Town	Irving,
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75039
City Area Code	972
Local Phone Number	891-7700
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	515,920,061
Entity Central Index Key	0000018230
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Common Stock ($1.00 par value)
Trading Symbol	CAT
Security Exchange Name	NYSE
5.3% Debentures due September 15, 2035
Entity Information [Line Items]
Title of 12(b) Security	5.3% Debentures due September 15, 2035
Trading Symbol	CAT35
Security Exchange Name	NYSE

XML

Consolidated Statement of Results of Operations - USD ($) shares in Millions, $ in Millions		3 Months Ended
		Mar. 31, 2023	Mar. 31, 2022
Sales and revenues:
Sales and revenues		$ 15,862	$ 13,589
Operating costs:
Cost of goods sold		10,103	9,559
Selling, general and administrative expenses		1,463	1,346
Research and development expenses		472	457
Other operating (income) expenses		876	266
Total operating costs		13,131	11,734
Operating profit		2,731	1,855
Other income (expense)		32	253
Consolidated profit before taxes		2,634	1,999
Provision (benefit) for income taxes		708	469
Profit of consolidated companies		1,926	1,530
Equity in profit (loss) of unconsolidated affiliated companies		16	7
Profit of consolidated and affiliated companies		1,942	1,537
Less: Profit (loss) attributable to the noncontrolling interests		(1)	0
Profit	[1]	$ 1,943	$ 1,537
Profit per common share (in dollars per share)		$ 3.76	$ 2.88
Profit per common share - diluted (in dollars per share)	[2]	$ 3.74	$ 2.86
Weighted-average common shares outstanding (millions)
Basic (in shares)		516.2	534.5
Diluted (in shares)	[2]	519.4	538.3
Machinery, Energy & Transportation
Sales and revenues:
Sales and revenues		$ 15,099	$ 12,886
Financial Products
Sales and revenues:
Sales and revenues		763	703
Operating costs:
Interest expense of Financial Products		217	106
All other excluding Financial Products
Operating costs:
Interest expense excluding Financial Products		$ 129	$ 109

[1] Profit attributable to common shareholders.

[2] Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

XML

Consolidated Statement of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Comprehensive Income [Abstract]
Profit of consolidated and affiliated companies	$ 1,942	$ 1,537
Foreign currency translation	607	(115)
Pension and other post retirement benefits	(2)	(1)
Derivative financial instruments	84	23
Available for sale securities	22	(64)
Total other comprehensive income (loss), net of tax	711	(157)
Comprehensive income	2,653	1,380
Less: comprehensive income attributable to the noncontrolling interests	(1)	0
Comprehensive income attributable to shareholders	$ 2,654	$ 1,380

XML

Consolidated Statement of Financial Position - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 6,789	$ 7,004
Receivables - trade and other	9,230	8,856
Receivables - finance	9,119	9,013
Prepaid expenses and other current assets	2,889	2,642
Inventories	17,633	16,270
Total current assets	45,660	43,785
Property, plant and equipment - net	11,973	12,028
Long-term receivables - trade and other	1,209	1,265
Long-term receivables - finance	11,845	12,013
Noncurrent deferred and refundable income taxes	2,405	2,213
Intangible assets	694	758
Goodwill	5,309	5,288
Other assets	4,554	4,593
Total assets	83,649	81,943
Short-term borrowings:
Accounts payable	8,951	8,689
Accrued expenses	4,121	4,080
Accrued wages, salaries and employee benefits	1,368	2,313
Customer advances	2,202	1,860
Dividends payable	0	620
Other current liabilities	3,035	2,690
Long-term debt due within one year:
Total current liabilities	31,842	31,531
Long-term debt due after one year:
Liability for postemployment benefits	4,069	4,203
Other liabilities	4,695	4,604
SPC liabilities in consolidated statement	65,479	66,052
Commitments and contingencies (Notes 11 and 14)
Shareholders' equity
Authorized shares: 2,000,000,000 Issued shares: (3/31/23 and 12/31/22 – 814,894,624) at paid-in amount	6,546	6,560
Treasury stock: (3/31/23 – 298,974,563 shares; 12/31/22 – 298,549,134 shares) at cost	(32,108)	(31,748)
Profit employed in the business	45,457	43,514
Accumulated other comprehensive income (loss)	(1,746)	(2,457)
Noncontrolling interests	21	22
Total shareholders' equity	18,170	15,891
Total liabilities and shareholders' equity	$ 83,649	$ 81,943
Common stock, par value (in dollars per share)	$ 1.00	$ 1.00
Common stock, Authorized shares	2,000,000,000	2,000,000,000
Common stock, Issued shares	814,894,624	814,894,624
Treasury stock, shares	298,974,563	298,549,134
Machinery, Energy & Transportation
Short-term borrowings:
Short-term borrowings	$ 0	$ 3
Long-term debt due within one year:
Long-term debt due within one year	37	120
Long-term debt due after one year:
Long-term Debt due after one year	9,558	9,498
Financial Products
Short-term borrowings:
Short-term borrowings	5,841	5,954
Long-term debt due within one year:
Long-term debt due within one year	6,287	5,202
Long-term debt due after one year:
Long-term Debt due after one year	$ 15,315	$ 16,216

XML

Consolidated Statement of Changes in Shareholders' Equity - USD ($) $ in Millions		Total	Common stock	Treasury stock	Profit employed in the business	Accumulated other comprehensive income (loss)	Noncontrolling interests
Balance at Dec. 31, 2021		$ 16,516	$ 6,398	$ (27,643)	$ 39,282	$ (1,553)	$ 32
Increase (Decrease) in Shareholders' Equity
Profit of consolidated and affiliated companies		1,537	0	0	1,537	0	0
Foreign currency translation		(115)	0	0	0	(115)	0
Pension and other post retirement benefits		(1)	0	0	0	(1)	0
Derivative financial instruments, net of tax		23	0	0	0	23	0
Available for sale securities		(64)	0	0	0	(64)	0
Dividends declared		1	0	0	1	0	0
Common shares issued from treasury stock for stock-based compensation		(28)	(65)	37	0	0	0
Stock-based compensation expense, before tax (in dollars)		40	40	0	0	0	0
Common shares repurchased	[1]	(720)	0	(720)	0	0	0
Other		(92)	(92)	0	0	0	0
Balance at Mar. 31, 2022		$ 17,097	6,281	(28,326)	40,820	(1,710)	32
Increase (Decrease) in Shareholders' Equity
Common shares issued, Shares, from treasury stock for stock-based compensation (in shares)		1,037,468
Common shares repurchased (in shares)		3,571,684
Balance at Dec. 31, 2022		$ 15,891	6,560	(31,748)	43,514	(2,457)	22
Increase (Decrease) in Shareholders' Equity
Profit of consolidated and affiliated companies		1,942	0	0	1,943	0	(1)
Foreign currency translation		607	0	0	0	607	0
Pension and other post retirement benefits		(2)	0	0	0	(2)	0
Derivative financial instruments, net of tax		84	0	0	0	84	0
Available for sale securities		22	0	0	0	22	0
Common shares issued from treasury stock for stock-based compensation		(25)	(66)	41	0	0	0
Stock-based compensation expense, before tax (in dollars)		44	44	0	0	0	0
Common shares repurchased	[1]	(400)	0	(400)	0	0	0
Other		7	8	(1)	0	0	0
Balance at Mar. 31, 2023		$ 18,170	$ 6,546	$ (32,108)	$ 45,457	$ (1,746)	$ 21
Increase (Decrease) in Shareholders' Equity
Common shares issued, Shares, from treasury stock for stock-based compensation (in shares)		1,276,331
Common shares repurchased (in shares)		1,701,760

[1] See Note 12 for additional information.

XML

Consolidated Statement of Cash Flow - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flow from operating activities:
Profit of consolidated and affiliated companies	$ 1,942	$ 1,537
Adjustments for non-cash items:
Depreciation and amortization	532	557
Provision (benefit) for deferred income taxes	(191)	(99)
Loss on divestiture	572	0
Other	117	(52)
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables - trade and other	(329)	(372)
Inventories	(1,403)	(1,032)
Accounts payable	477	452
Accrued expenses	38	(74)
Accrued wages, salaries and employee benefits	(950)	(965)
Customer advances	365	311
Other assets - net	107	99
Other liabilities - net	296	(49)
Net cash provided by (used for) operating activities	1,573	313
Cash flow from investing activities:
Payments to Acquire Property, Plant, and Equipment	(422)	(346)
Expenditures for equipment leased to others	(328)	(333)
Proceeds from disposals of leased assets and property, plant and equipment	184	269
Additions to finance receivables	(3,020)	(2,988)
Collections of finance receivables	3,169	2,966
Proceeds from sale of finance receivables	24	9
Investments and acquisitions (net of cash acquired)	(5)	(8)
Proceeds from sale of businesses and investments (net of cash sold)	(14)	0
Proceeds from sale of securities	239	571
Investments in securities	(536)	(1,438)
Other - net	26	(15)
Net Cash Provided by (Used in) Investing Activities	(683)	(1,313)
Cash flow from financing activities:
Dividends paid	(620)	(595)
Common stock issued, including treasury shares reissued	(25)	(28)
Common shares repurchased	(400)	(820)
Short-term borrowings - net (original maturities three months or less)	(103)	(1,016)
Net cash provided by (used for) financing activities	(1,106)	(1,715)
Effect of exchange rate changes on cash	(1)	(16)
Increase (decrease) in cash, cash equivalents and restricted cash	(217)	(2,731)
Cash and short-term investments and restricted cash at beginning of period	7,013	9,263
Cash and short-term investments and restricted cash at end of period	6,796	6,532
Machinery, Energy & Transportation
Cash flow from financing activities:
Proceeds from debt issued (original maturities greater than three months)	0	0
Payments on debt (original maturities greater than three months)	(90)	(6)
Financial Products
Cash flow from financing activities:
Proceeds from debt issued (original maturities greater than three months)	1,517	2,131
Payments on debt (original maturities greater than three months)	$ (1,385)	$ (1,381)

XML

Nature of Operations, Basis of Presentation and Change in Accounting Principle

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations and Basis of Presentation

A.  Nature of operations

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

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

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

B.  Basis of presentation

In the opinion of management, the accompanying unaudited financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of (a) the consolidated results of operations for the three months ended March 31, 2023 and 2022, (b) the consolidated comprehensive income for the three months ended March 31, 2023 and 2022, (c) the consolidated financial position at March 31, 2023 and December 31, 2022, (d) the consolidated changes in shareholders’ equity for the three months ended March 31, 2023 and 2022 and (e) the consolidated cash flow for the three months ended March 31, 2023 and 2022.  The financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).

Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in our company’s annual report on Form 10-K for the year ended December 31, 2022 (2022 Form 10-K).

The December 31, 2022 financial position data included herein is derived from the audited consolidated financial statements included in the 2022 Form 10-K but does not include all disclosures required by U.S. GAAP. Certain amounts for prior periods have been reclassified to conform to the current period financial statement presentation.

Cat Financial has end-user customers and dealers that are variable interest entities (VIEs) of which we are not the primary beneficiary. Our maximum exposure to loss from our involvement with these VIEs is limited to the credit risk inherently present in the financial support that we have provided. Credit risk was evaluated and reflected in our financial statements as part of our overall portfolio of finance receivables and related allowance for credit losses. See Note 11 for further discussions on a consolidated VIE.

XML

New Accounting Guidance

3 Months Ended

Mar. 31, 2023

Accounting Changes and Error Corrections [Abstract]

New Accounting Guidance

New accounting guidance

A. Adoption of new accounting standards

Supplier finance programs (ASU 2022-04) - In September 2022, the Financial Accounting Standards Board (FASB) issued guidance to enhance the transparency of supplier finance programs. The new standard requires annual disclosure of the key terms of the program, a description of where in the financial statements amounts outstanding under the program are presented, a rollforward of such amounts, and interim disclosure of amounts outstanding as of the end of each period. The guidance does not affect recognition, measurement, or financial statement presentation of supplier finance programs. The ASU was effective on January 1, 2023, except for the rollforward, which is effective on January 1, 2024. Our adoption of this guidance results in the following disclosures relating to our supplier finance programs and related obligations.

We facilitate voluntary supplier finance programs (the “Programs”) through participating financial institutions. The Programs are available to a wide range of suppliers and allow them the option to manage their cash flow. We are not a party to the agreements between the participating financial institutions and the suppliers in connection with the Programs. The range of payment terms, typically 60-90 days, we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the Programs. The amount of obligations outstanding that are confirmed as valid to the participating financial institutions for suppliers who voluntarily participate in the Programs, included in Accounts payable in the Consolidated Statement of Financial Position, were $970 million and $862 million at March 31, 2023 and December 31, 2022, respectively.

We consider the applicability and impact of all ASUs. We adopted the following ASUs effective January 1, 2023, none of which had a material impact on our financial statements:

ASU	Description
2021-08	Business combinations
2022-02	Financial instruments - Credit losses
2022-06	Reference rate reform

B. Accounting standards issued but not yet adopted

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

XML

Sales and revenue contract information

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue from contracts with customers

Sales and revenue contract information

Trade receivables represent amounts due from dealers and end users for the sale of our products, and include amounts due from wholesale inventory financing provided by Cat Financial for a dealer’s purchase of inventory. We recognize trade receivables from dealers and end users in Receivables – trade and other and Long-term receivables – trade and other in the Consolidated Statement of Financial Position. Trade receivables from dealers and end users were $7,854 million, $7,551 million and $7,267 million as of March 31, 2023, December 31, 2022 and December 31, 2021, respectively. Long-term trade receivables from dealers and end users were $472 million, $506 million and $624 million as of March 31, 2023, December 31, 2022 and December 31, 2021, respectively.

For certain contracts, we invoice for payment when contractual milestones are achieved. We recognize a contract asset when a sale is recognized prior to invoicing. We reduce the contract asset when we invoice for payment and recognize a corresponding trade receivable. Contract assets are included in Prepaid expenses and other current assets in the Consolidated Statement of Financial Position. Contract assets were $195 million, $247 million and $187 million as of March 31, 2023, December 31, 2022 and December 31, 2021, respectively.

We invoice in advance of recognizing the sale of certain products. We recognize advanced customer payments as a contract liability in Customer advances and Other liabilities in the Consolidated Statement of Financial Position. Contract liabilities were $2,664 million, $2,314 million and $1,557 million as of March 31, 2023, December 31, 2022 and December 31, 2021, respectively. We reduce the contract liability when revenue is recognized. During the three months ended March 31, 2023 and 2022, we recognized $737 million and $437 million, respectively, of revenue that was recorded as a contract liability at the beginning of 2023 and 2022.

As of March 31, 2023, we have entered into contracts with dealers and end users for which sales have not been recognized as we have not satisfied our performance obligations and transferred control of the products. The dollar amount of unsatisfied performance obligations for contracts with an original duration greater than one year is $12.6 billion, with about one-half of the amount expected to be completed and revenue recognized in the twelve months following March 31, 2023. We have elected the practical expedient not to disclose unsatisfied performance obligations with an original contract duration of one year or less. Contracts with an original duration of one year or less are primarily sales to dealers for machinery, engines and replacement parts.

See Note 16 for further disaggregated sales and revenues information.

XML

Stock-Based Compensation

3 Months Ended

Mar. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-based compensation

Accounting for stock-based compensation requires that the cost resulting from all stock-based payments be recognized in the financial statements based on the grant date fair value of the award.  Our stock-based compensation consists of stock options, restricted stock units (RSUs) and performance-based restricted stock units (PRSUs).

We recognized pretax stock-based compensation expense of $44 million and $40 million for the three months ended March 31, 2023 and 2022, respectively.

The following table illustrates the type and fair value of the stock-based compensation awards granted during the three months ended March 31, 2023 and 2022, respectively:

	Three Months Ended March 31, 2023					Three Months Ended March 31, 2022
	Shares Granted	Weighted-Average Fair Value Per Share		Weighted-Average Grant Date Stock Price		Shares Granted	Weighted-Average Fair Value Per Share		Weighted-Average Grant Date Stock Price
Stock options	777,275	$	75.79	$	253.98	1,029,202	$	51.69	$	196.70
RSUs	379,426	$	253.98	$	253.98	484,025	$	196.70	$	196.70
PRSUs	221,869	$	253.98	$	253.98	258,900	$	196.70	$	196.70

The following table provides the assumptions used in determining the fair value of the stock-based awards for the three months ended March 31, 2023 and 2022, respectively:

	Grant Year
	2023	2022
Weighted-average dividend yield	2.60%	2.60%
Weighted-average volatility	31.0%	31.7%
Range of volatilities	28.5% - 35.5%	25.3% - 36.8%
Range of risk-free interest rates	3.92% - 5.03%	1.03% - 2.00%
Weighted-average expected lives	7 years	8 years

As of March 31, 2023, the total remaining unrecognized compensation expense related to nonvested stock-based compensation awards was $305 million, which will be amortized over the weighted-average remaining requisite service periods of approximately 1.8 years.

XML

Derivative Financial Instruments and Risk Management

3 Months Ended

Mar. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments and Risk Management

Derivative financial instruments and risk management

Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates, interest rates and commodity prices.  Our Risk Management Policy (policy) allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate, interest rate and commodity price exposures.  Our policy specifies that derivatives are not to be used for speculative purposes.  Derivatives that we use are primarily foreign currency forward, option and cross currency contracts, interest rate contracts and commodity forward and option contracts.  Our derivative activities are subject to the management, direction and control of our senior financial officers.  We present at least annually to the Audit Committee of the Board of Directors on our risk management practices, including our use of financial derivative instruments.

We recognize all derivatives at their fair value on the Consolidated Statement of Financial Position. On the date the derivative contract is entered into, we designate the derivative as (1) a hedge of the fair value of a recognized asset or liability (fair value hedge), (2) a hedge of a forecasted transaction or the variability of cash flow (cash flow hedge) or (3) an undesignated instrument. We record in current earnings changes in the fair value of a derivative that is qualified, designated and highly effective as a fair value hedge, along with the gain or loss on the hedged recognized asset or liability that is attributable to the hedged risk. We record in AOCI changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge, to the extent effective, on the Consolidated Statement of Financial Position until we reclassify them to earnings in the same period or periods during which the hedged transaction affects earnings.  We report changes in the fair value of undesignated derivative instruments in current earnings. We classify cash flows from designated derivative financial instruments within the same category as the item being hedged on the Consolidated Statement of Cash Flow.  We include cash flows from undesignated derivative financial instruments in the investing category on the Consolidated Statement of Cash Flow.

We formally document all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions.  This process includes linking all derivatives that are designated as fair value hedges to specific assets and liabilities on the Consolidated Statement of Financial Position and linking cash flow hedges to specific forecasted transactions or variability of cash flow.

We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the designated derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flow of hedged items.  When a derivative is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, we discontinue hedge accounting prospectively, in accordance with the derecognition criteria for hedge accounting.

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of sales made and costs incurred in foreign currencies. Movements in foreign currency rates also affect our competitive position as these changes may affect business practices and/or pricing strategies of non-U.S.-based competitors. Additionally, we have balance sheet positions denominated in foreign currencies, thereby creating exposure to movements in exchange rates.

Our ME&T operations purchase, manufacture and sell products in many locations around the world. As we have a diversified revenue and cost base, we manage our future foreign currency cash flow exposure on a net basis. We use foreign currency forward and option contracts to manage unmatched foreign currency cash inflow and outflow. Our objective is to minimize the risk of exchange rate movements that would reduce the U.S. dollar value of our foreign currency cash flow. Our policy allows for managing anticipated foreign currency cash flow for up to approximately five years. As of March 31, 2023, the maximum term of these outstanding contracts at inception was approximately 60 months.

We generally designate as cash flow hedges at inception of the contract any foreign currency forward or option contracts that meet the requirements for hedge accounting and the maturity extends beyond the current quarter-end. We perform designation on a specific exposure basis to support hedge accounting. The remainder of ME&T foreign currency contracts are undesignated.  

In managing foreign currency risk for our Financial Products operations, our objective is to minimize earnings volatility resulting from conversion and the remeasurement of net foreign currency balance sheet positions and future transactions denominated in foreign currencies. Our policy allows the use of foreign currency forward, option and cross currency contracts to offset the risk of currency mismatch between our assets and liabilities and exchange rate risk associated with future transactions denominated in foreign currencies. Our foreign currency forward and option contracts are primarily undesignated. We designate fixed-to-fixed cross currency contracts as cash flow hedges to protect against movements in exchange rates on foreign currency fixed-rate assets and liabilities.

Interest Rate Risk

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

Our ME&T operations generally use fixed-rate debt as a source of funding.  Our objective is to minimize the cost of borrowed funds.  Our policy allows us to enter into fixed-to-floating interest rate contracts and forward rate agreements to meet that objective. We designate fixed-to-floating interest rate contracts as fair value hedges at inception of the contract, and we designate certain forward rate agreements as cash flow hedges at inception of the contract.

Financial Products operations has a match-funding policy that addresses interest rate risk by aligning the interest rate profile (fixed or floating rate and duration) of Cat Financial’s debt portfolio with the interest rate profile of our receivables portfolio within predetermined ranges on an ongoing basis. In connection with that policy, we use interest rate derivative instruments to modify the debt structure to match assets within the receivables portfolio. This matched funding reduces the volatility of margins between interest-bearing assets and interest-bearing liabilities, regardless of which direction interest rates move.

Our policy allows us to use fixed-to-floating, floating-to-fixed and floating-to-floating interest rate contracts to meet the match-funding objective.  We designate fixed-to-floating interest rate contracts as fair value hedges to protect debt against changes in fair value due to changes in the benchmark interest rate.  We designate most floating-to-fixed interest rate contracts as cash flow hedges to protect against the variability of cash flows due to changes in the benchmark interest rate.

We have, at certain times, liquidated fixed-to-floating and floating-to-fixed interest rate contracts at both ME&T and Financial Products. We amortize the gains or losses associated with these contracts at the time of liquidation into earnings over the original term of the previously designated hedged item.

Commodity Price Risk

Commodity price movements create a degree of risk by affecting the price we must pay for certain raw materials. Our policy is to use commodity forward and option contracts to manage the commodity risk and reduce the cost of purchased materials.

Our ME&T operations purchase base and precious metals embedded in the components we purchase from suppliers.  Our suppliers pass on to us price changes in the commodity portion of the component cost. In addition, we are subject to price changes on energy products such as natural gas and diesel fuel purchased for operational use.

Our objective is to minimize volatility in the price of these commodities. Our policy allows us to enter into commodity forward and option contracts to lock in the purchase price of a portion of these commodities within a five-year horizon. All such commodity forward and option contracts are undesignated.

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

(Millions of dollars)	Fair Value
	March 31, 2023				December 31, 2022
	Assets 1		Liabilities 2		Assets 1		Liabilities 2
Designated derivatives
Foreign exchange contracts	$	452	$	(106)	$	462	$	(152)
Interest rate contracts	86		(221)		93		(288)
Total	$	538	$	(327)	$	555	$	(440)
Undesignated derivatives
Foreign exchange contracts	$	30	$	(67)	$	65	$	(47)
Commodity contracts	27		(10)		24		(9)
Total	$	57	$	(77)	$	89	$	(56)
1 Assets are classified on the Consolidated Statement of Financial Position as Receivables - trade and other or Long-term receivables - trade and other.
2 Liabilities are classified on the Consolidated Statement of Financial Position as Accrued expenses or Other liabilities.

The total notional amounts of the derivative instruments as of March 31, 2023 and December 31, 2022 were $22.8 billion and $24.3 billion, respectively. The notional amounts of the derivative financial instruments do not represent amounts exchanged by the parties. We calculate the amounts exchanged by the parties by referencing the notional amounts and by other terms of the derivatives, such as foreign currency exchange rates, interest rates or commodity prices.

Gains (Losses) on derivative instruments are categorized as follows:

(Millions of dollars)	Three Months Ended March 31
	Fair Value / Undesignated Hedges				Cash Flow Hedges
	Gains (Losses) Recognized on the Consolidated Statement of Results of Operations 1				Gains (Losses) Recognized in AOCI				Gains (Losses) Reclassified from AOCI 2
	2023		2022		2023		2022		2023		2022
Foreign exchange contracts	$	(28)	$	(63)	$	58	$	(9)	$	(65)	$	26
Interest rate contracts	(27)		7		(2)		56		13		(7)
Commodity contract	8		93		—		—		—		—
Total	$	(47)	$	37	$	56	$	47	$	(52)	$	19
1 Foreign exchange contract and Commodity contract gains (losses) are included in Other income (expense). Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products.
2 Foreign exchange contract gains (losses) are primarily included in Other income (expense). Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products.

The following amounts were recorded on the Consolidated Statement of Financial Position related to cumulative basis adjustments for fair value hedges:

(Millions of dollars)	Carrying Value of the Hedged Liabilities				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Liabilities
	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Long-term debt due within one year	$	194	$	—	$	(6)	$	—
Long-term debt due after one year	4,115		4,173		(189)		(280)
Total	$	4,309	$	4,173	$	(195)	$	(280)

We enter into International Swaps and Derivatives Association (ISDA) master netting agreements within ME&T and Financial Products that permit the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement generally permits the company or the counterparty to determine the net amount payable for contracts due on the same date and in the same currency for similar types of derivative transactions. The master netting agreements may also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event.

Collateral is typically not required of the counterparties or of our company under the master netting agreements. As of March 31, 2023 and December 31, 2022, no cash collateral was received or pledged under the master netting agreements.

The effect of the net settlement provisions of the master netting agreements on our derivative balances upon an event of default or termination event was as follows:

(Millions of dollars)	March 31, 2023				December 31, 2022
	Assets		Liabilities		Assets		Liabilities
Gross Amounts Recognized	$	595	$	(404)	$	644	$	(496)
Financial Instruments Not Offset	(164)		164		(233)		233
Net Amount	$	431	$	(240)	$	411	$	(263)

XML

Inventories

3 Months Ended

Mar. 31, 2023

Inventory Disclosure [Abstract]

Inventories

Inventories

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

(Millions of dollars)	March 31, 2023		December 31, 2022
Raw materials	$	6,776	$	6,370
Work-in-process	1,656		1,452
Finished goods	8,868		8,138
Supplies	333		310
Total inventories	$	17,633	$	16,270

XML

Intangible Assets and Goodwill

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

Intangible assets and goodwill

A.  Intangible assets

Intangible assets were comprised of the following:

		March 31, 2023
(Millions of dollars)	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	16	$	2,241	$	(1,717)	$	524
Intellectual property	13	1,470		(1,345)		125
Other	17	121		(76)		45
Total finite-lived intangible assets	15	$	3,832	$	(3,138)	$	694

		December 31, 2022
	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	16	$	2,233	$	(1,675)	$	558
Intellectual property	12	1,473		(1,320)		153
Other	16	132		(85)		47
Total finite-lived intangible assets	14	$	3,838	$	(3,080)	$	758

Amortization expense for the three months ended March 31, 2023 and 2022 was $66 million and $72 million, respectively. Amortization expense related to intangible assets is expected to be:

(Millions of dollars)
Remaining Nine Months of 2023	2024	2025	2026	2027	Thereafter
$151	$171	$161	$91	$27	$93

B.  Goodwill

No goodwill was impaired during the three months ended March 31, 2023 or 2022.

The changes in carrying amount of goodwill by reportable segment for the three months ended March 31, 2023 were as follows: 

(Millions of dollars)	December 31, 2022		Other Adjustments 1		March 31, 2023
Construction Industries
Goodwill	$	287	$	(3)	$	284
Impairments	(22)		—		(22)
Net goodwill	265		(3)		262
Resource Industries
Goodwill	4,130		18		4,148
Impairments	(1,175)		—		(1,175)
Net goodwill	2,955		18		2,973
Energy & Transportation
Goodwill	2,947		6		2,953
Impairments	(925)		—		(925)
Net goodwill	2,022		6		2,028
All Other 2
Goodwill	46		—		46
Impairments	—		—		—
Net goodwill	46		—		46
Consolidated total
Goodwill	7,410		21		7,431
Impairments	(2,122)		—		(2,122)
Net goodwill	$	5,288	$	21	$	5,309

1 Other adjustments are comprised primarily of foreign currency translation.

2 Includes All Other operating segment (See Note 16).

XML

Investments in Debt and Equity Securities

3 Months Ended

Mar. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Equity Securities

Investments in debt and equity securities

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

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

The cost basis and fair value of available-for-sale debt securities with unrealized gains and losses included in equity (AOCI in the Consolidated Statement of Financial Position) were as follows:

Available-for-sale debt securities	March 31, 2023						December 31, 2022
(Millions of dollars)	Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value		Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value
Government debt securities
U.S. treasury bonds	$	10	$	(1)	$	9	$	9	$	—	$	9
Other U.S. and non-U.S. government bonds	61		(4)		57		60		(5)		55
Corporate debt securities
Corporate bonds and other debt securities	2,594		(75)		2,519		2,561		(95)		2,466
Asset-backed securities	189		(5)		184		187		(5)		182
Mortgage-backed debt securities
U.S. governmental agency	366		(25)		341		364		(31)		333
Residential	3		(1)		2		3		(1)		2
Commercial	135		(10)		125		127		(10)		117
Total available-for-sale debt securities	$	3,358	$	(121)	$	3,237	$	3,311	$	(147)	$	3,164

Available-for-sale debt securities in an unrealized loss position:
	March 31, 2023
	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
Government debt securities
Other U.S. and non-U.S. government bonds	$	13	$	1	$	26	$	4	$	39	$	5
Corporate debt securities
Corporate bonds	990		19		931		61		1,921		80
Asset-backed securities	67		2		86		4		153		6
Mortgage-backed debt securities
U.S. governmental agency	107		3		226		22		333		25
Commercial	42		2		83		8		125		10
	$	1,219	$	27	$	1,352	$	99	$	2,571	$	126

	December 31, 2022
	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
Government debt securities
Other U.S. and non-U.S. government bonds	$	19	$	1	$	20	$	4	$	39	$	5
Corporate debt securities
Corporate bonds	1,815		46		357		50		2,172		96
Asset-backed securities	75		2		55		3		130		5
Mortgage-backed debt securities
U.S. governmental agency	229		16		98		15		327		31
Residential	2		—		1		1		3		1
Commercial	63		5		54		5		117		10
Total	$	2,203	$	70	$	585	$	78	$	2,788	$	148
1 Indicates the length of time that individual securities have been in a continuous unrealized loss position.

The unrealized losses on our investments in government debt securities, corporate debt securities, and mortgage-backed debt 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 respective amortized cost basis. In addition, we did not expect credit-related losses on these investments as of March 31, 2023.

The cost basis and fair value of available-for-sale debt securities at March 31, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay and creditors may have the right to call obligations.        

	March 31, 2023
(Millions of dollars)	Cost Basis		Fair Value
Due in one year or less	$	961	$	950
Due after one year through five years	1,571		1,511
Due after five years through ten years	257		245
Due after ten years	65		63
U.S. governmental agency mortgage-backed securities	366		341
Residential mortgage-backed securities	3		2
Commercial mortgage-backed securities	135		125
Total debt securities – available-for-sale	$	3,358	$	3,237

Sales of available-for-sale debt securities:
	Three Months Ended March 31
(Millions of dollars)	2023		2022
Proceeds from the sale of available-for-sale securities	$	223	$	96
Gross gains from the sale of available-for-sale securities	—		—
Gross losses from the sale of available-for-sale securities	—		—

In addition, we had $250 million of investments in time deposits classified as held-to-maturity debt securities as of March 31, 2023. We did not have any investments classified as held-to-maturity debt securities as of December 31, 2022. All these investments mature within one year and we include them in Prepaid expenses and other current assets in the Consolidated Statement of Financial Position. We record held-to-maturity debt securities at amortized cost, which approximates fair value.

For the three months ended March 31, 2023 and 2022, the net unrealized gains (losses) for equity securities held at March 31, 2023 and 2022 were $(8) million and $(12) million, respectively.

XML

Postretirement Benefits

3 Months Ended

Mar. 31, 2023

Retirement Benefits [Abstract]

Postretirement Benefits

Postretirement benefits

A.  Pension and postretirement benefit costs    

	U.S. Pension Benefits				Non-U.S. Pension Benefits				Other Postretirement Benefits
	March 31				March 31				March 31
(Millions of dollars)	2023		2022		2023		2022		2023		2022
For the three months ended:
Components of net periodic benefit cost:
Service cost	$	—	$	—	$	10	$	13	$	17	$	25
Interest cost	164		100		31		18		36		20
Expected return on plan assets	(172)		(167)		(40)		(34)		(3)		(4)
Amortization of prior service cost (credit)	—		—		—		—		(3)		(1)
Net periodic benefit cost (benefit) 1	$	(8)	$	(67)	$	1	$	(3)	$	47	$	40

1 The service cost component is included in Operating costs in the Consolidated Statement of Results of Operations. All other components are included in Other income (expense) in the Consolidated Statement of Results of Operations.

We made $208 million of contributions to our pension and other postretirement plans during the three months ended March 31, 2023. We currently anticipate full-year 2023 contributions of approximately $372 million.

B.  Defined contribution benefit costs

Total company costs related to our defined contribution plans, which are included in Operating Costs in the Consolidated Statement of Results of Operations, were as follows:

	Three Months Ended March 31
(Millions of dollars)	2023		2022
U.S. Plans	$	149	$	114
Non-U.S. Plans	29		29
	$	178	$	143

The increase in the U.S. defined contribution benefit costs for the three months ended March 31, 2023 was primarily due to the fair value adjustments related to our non-qualified deferred compensation plans.

XML

Leases

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Revenue from finance and operating leases

Leases

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

	Three Months Ended March 31
(Millions of dollars)	2023		2022
Finance lease revenue	$	104	$	112
Operating lease revenue	275		278
Total	$	379	$	390

We present revenues net of sales and other related taxes.

XML

Guarantees and Product Warranty

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Guarantees and Product Warranty

Guarantees and product warranty

Caterpillar dealer performance guarantees

Dealer performance guarantees mainly consists of an indemnity to a third-party insurance company for potential losses related to performance bonds issued on behalf of Caterpillar dealers.  The bonds have varying terms and are issued to insure governmental agencies against nonperformance by certain dealers.  

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

No significant loss has been experienced or is anticipated under any of these guarantees.  At March 31, 2023 and December 31, 2022, the related recorded liability was $4 million and $2 million, respectively. The maximum potential amount of future payments that we can estimate (undiscounted and without reduction for any amounts that may possibly be recovered under recourse or collateralized provisions) and we could be required to make under the guarantees was as follows:

(Millions of dollars)	March 31, 2023		December 31, 2022
Caterpillar dealer performance guarantees	$	191	$	188
Other guarantees	381		323
Total guarantees	$	572	$	511

Cat Financial provides guarantees to purchase certain loans of Caterpillar dealers from a special-purpose corporation (SPC) that qualifies as a variable interest entity.  The purpose of the SPC is to provide short-term working capital loans to Caterpillar dealers.  This SPC issues commercial paper and uses the proceeds to fund its loan program. Cat Financial receives a fee for providing this guarantee.  Cat Financial is the primary beneficiary of the SPC as its guarantees result in Cat Financial having both the power to direct the activities that most significantly impact the SPC’s economic performance and the obligation to absorb losses, and therefore Cat Financial has consolidated the financial statements of the SPC.  As of March 31, 2023 and December 31, 2022, the SPC’s assets of $1.13 billion and $971 million, respectively, were primarily comprised of loans to dealers, and the SPC’s liabilities of $1.13 billion and $970 million, respectively, were primarily comprised of commercial paper.  The assets of the SPC are not available to pay Cat Financial’s creditors. Cat Financial may be obligated to perform under the guarantee if the SPC experiences losses. No loss has been experienced or is anticipated under this loan purchase agreement.

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

The reconciliation of the change in our product warranty liability balances for the quarters ended March 31 was as follows:

	First Three Months
(Millions of dollars)	2023		2022
Warranty liability, beginning of period	$	1,761	$	1,689
Reduction in liability (payments)	(213)		(194)
Increase in liability (new warranties)	246		168
Warranty liability, end of period	$	1,794	$	1,663

XML

Profit Per Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share Reconciliation [Abstract]

Profit Per Share

Profit per share

Computations of profit per share:	Three Months Ended March 31
(Dollars in millions except per share data)	2023		2022
Profit for the period (A) 1	$	1,943	$	1,537
Determination of shares (in millions):
Weighted-average number of common shares outstanding (B)	516.2		534.5
Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price	3.2		3.8
Average common shares outstanding for fully diluted computation (C) 2	519.4		538.3
Profit per share of common stock:
Assuming no dilution (A/B)	$	3.76	$	2.88
Assuming full dilution (A/C) 2	$	3.74	$	2.86
Shares outstanding as of March 31 (in millions)	515.9		533.4
1 Profit attributable to common shareholders.
2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

For the three months ended March 31, 2023 and 2022, we excluded 0.8 million and 2.1 million of outstanding stock options, respectively, from the computation of diluted earnings per share because the effect would have been antidilutive.

For the three months ended March 31, 2023 and 2022, we repurchased 1.7 million and 3.6 million shares of Caterpillar common stock, respectively, at an aggregate cost of $400 million and $720 million, respectively. We made these purchases through open market transactions in 2023 and the combination of an accelerated stock repurchase agreement with a third-party financial institution and open market transactions in 2022.

XML

Accumulated other comprehensive income (loss)

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss)We present comprehensive income and its components in the Consolidated Statement of Comprehensive Income. Changes in the balances for each component of AOCI were as follows:

	Three Months Ended March 31
(Millions of dollars)	2023		2022
Foreign currency translation:
Beginning balance	$	(2,328)	$	(1,508)
Gains (losses) on foreign currency translation	103		(104)
Less: Tax provision /(benefit)	(10)		11
Net gains (losses) on foreign currency translation	113		(115)
(Gains) losses reclassified to earnings	494		—
Less: Tax provision /(benefit)	—		—
Net (gains) losses reclassified to earnings	494		—
Other comprehensive income (loss), net of tax	607		(115)
Ending balance	$	(1,721)	$	(1,623)
Pension and other postretirement benefits
Beginning balance	$	(39)	$	(62)
Current year prior service credit (cost)	—		—
Less: Tax provision /(benefit)	—		—
Net current year prior service credit (cost)	—		—
Amortization of prior service (credit) cost	(3)		(1)
Less: Tax provision /(benefit)	(1)		—
Net amortization of prior service (credit) cost	(2)		(1)
Other comprehensive income (loss), net of tax	(2)		(1)
Ending balance	$	(41)	$	(63)
Derivative financial instruments
Beginning balance	$	28	$	(3)
Gains (losses) deferred	56		47
Less: Tax provision /(benefit)	12		10
Net gains (losses) deferred	44		37
(Gains) losses reclassified to earnings	52		(19)
Less: Tax provision /(benefit)	12		(5)
Net (gains) losses reclassified to earnings	40		(14)
Other comprehensive income (loss), net of tax	84		23
Ending balance	$	112	$	20
Available-for-sale securities
Beginning balance	$	(118)	$	20
Gains (losses) deferred	26		(79)
Less: Tax provision /(benefit)	4		(15)
Net gains (losses) deferred	22		(64)
(Gains) losses reclassified to earnings	—		—
Less: Tax provision /(benefit)	—		—
Net (gains) losses reclassified to earnings	—		—
Other comprehensive income (loss), net of tax	22		(64)
Ending balance	$	(96)	$	(44)
Total AOCI Ending Balance at March 31	$	(1,746)	$	(1,710)

XML

Environmental and legal matters

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Environmental and legal matters

Environmental and legal matters

The Company is regulated by federal, state and international environmental laws governing its use, transport and disposal of substances and control of emissions. In addition to governing our manufacturing and other operations, these laws often impact the development of our products, including, but not limited to, required compliance with air emissions standards applicable to internal combustion engines. We have made, and will continue to make, significant research and development and capital expenditures to comply with these emissions standards.

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

On January 7, 2015, the U.S. Attorney’s Office for the Central District of Illinois issued a grand jury subpoena to the Company and thereafter issued additional subpoenas; these subpoenas sought information regarding, among other things, movements of cash among U.S. and non-U.S. Caterpillar subsidiaries, the purchase and resale of replacement parts by Caterpillar Inc. and non-U.S. Caterpillar subsidiaries, and Caterpillar SARL (CSARL) and related structures. On March 2-3, 2017, federal agents executed search and seizure warrants, which concerned both tax and export activities, at three facilities of the Company in the Peoria, Illinois area, including its former corporate headquarters. The Tax Division of the U.S. Department of Justice conducted a review of the grand jury investigation and informed the Company on November 28, 2022 that it does not have a pending criminal tax matter involving the Company. In January 2023, the government began returning to the Company the documents and information seized under the search warrants, which, as noted, related to both tax and export issues, as well as the documents and information the Company produced under the grand jury subpoenas.

In addition, we are involved in other unresolved legal actions that arise in the normal course of business. The most prevalent of these unresolved actions involve disputes related to product design, manufacture and performance liability (including claimed asbestos exposure), contracts, employment issues, environmental matters, intellectual property rights, taxes (other than income taxes) and securities laws. The aggregate range of reasonably possible losses in excess of accrued liabilities, if any, associated with these unresolved legal actions is not material. In some cases, we cannot reasonably estimate a range of loss because there is insufficient information regarding the matter. However, we believe there is no more than a remote chance that any liability arising from these matters would be material. Although it is not possible to predict with certainty the outcome of these unresolved legal actions, we believe that these actions will not individually or in the aggregate have a material adverse effect on our consolidated results of operations, financial position or liquidity.

XML

Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income taxes

The effective tax rate for the three months ended March 31, 2023 was 26.9 percent compared to 23.4 percent for the three months ended March 31, 2022.

The provision for income taxes for the three months ended March 31, 2023, reflected an estimated annual tax rate of 23 percent, compared with 24 percent for the three months ended March 31, 2022, excluding the discrete items discussed below. The comparative tax rate for full-year 2022 was approximately 23.2 percent.

The estimated annual tax rate excludes the impact of the nondeductible loss of $586 million related to the divestiture of the company's Longwall business in the three months ended March 31, 2023. In addition, the company recorded a discrete tax benefit of $32 million for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense, compared with a $12 million benefit for the three months ended March 31, 2022.

XML

Segment Information

3 Months Ended

Mar. 31, 2023

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.

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; cold planers; compactors; compact track loaders; forestry machines; material handlers; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; track-type loaders; track-type tractors (small, medium); track excavators (mini, small, medium, large); wheel excavators; wheel loaders (compact, small, medium); 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 power generation facilities that, in most cases, incorporate Caterpillar products. Financing plans include operating and finance leases, revolving charge accounts, 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 27 to 29 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, contract terminations and divestiture impacts. 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 months ended March 31, 2023 and 2022, 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 Revenues			Intersegment Sales and Revenues		Total Sales and Revenues
Three Months Ended March 31, 2023
Construction Industries	$	3,608	$	599	$	1,336	$	1,161	$	6,704		$	42	$	6,746
Resource Industries	1,308		474		599		978		3,359			68		3,427
Energy & Transportation	2,572		380		1,384		719		5,055			1,199		6,254
Financial Products Segment	575		104		114		109		902		1	—		902
Total sales and revenues from reportable segments	8,063		1,557		3,433		2,967		16,020			1,309		17,329
All Other operating segment	18		—		4		13		35			76		111
Corporate Items and Eliminations	(131)		(18)		(19)		(25)		(193)			(1,385)		(1,578)
Total Sales and Revenues	$	7,950	$	1,539	$	3,418	$	2,955	$	15,862		$	—	$	15,862
Three Months Ended March 31, 2022
Construction Industries	$	2,720	$	627	$	1,277	$	1,462	$	6,086		$	29	$	6,115
Resource Industries	1,018		399		594		748		2,759			71		2,830
Energy & Transportation	1,938		310		1,184		600		4,032			1,006		5,038
Financial Products Segment	503		73		96		111		783		1	—		783
Total sales and revenues from reportable segments	6,179		1,409		3,151		2,921		13,660			1,106		14,766
All Other operating segment	18		—		5		16		39			79		118
Corporate Items and Eliminations	(60)		(16)		(11)		(23)		(110)			(1,185)		(1,295)
Total Sales and Revenues	$	6,137	$	1,393	$	3,145	$	2,914	$	13,589		$	—	$	13,589

1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of $162 million and $100 million in the three months ended March 31, 2023 and 2022, respectively.

For the three months ended March 31, 2023 and 2022, Energy & Transportation segment sales by end user application were as follows:

Energy & Transportation External Sales
	Three Months Ended March 31
(Millions of dollars)	2023		2022
Oil and gas	$	1,314	$	948
Power generation	1,284		1,012
Industrial	1,255		1,020
Transportation	1,202		1,052
Energy & Transportation External Sales	$	5,055	$	4,032

Reconciliation of Consolidated profit before taxes:
(Millions of dollars)	Three Months Ended March 31
	2023		2022
Profit from reportable segments:
Construction Industries	$	1,790	$	1,057
Resource Industries	764		361
Energy & Transportation	1,057		538
Financial Products Segment	232		238
Total profit from reportable segments	3,843		2,194
Profit from All Other operating segment	11		3
Cost centers	30		10
Corporate costs	(238)		(198)
Timing	(206)		(98)
Restructuring costs	(611)		(13)
Methodology differences:
Inventory/cost of sales	126		168
Postretirement benefit expense	(31)		81
Stock-based compensation expense	(44)		(40)
Financing costs	(50)		(100)
Currency	(26)		106
Other income/expense methodology differences	(146)		(81)
Other methodology differences	(24)		(33)
Total consolidated profit before taxes	$	2,634	$	1,999

Reconciliation of Assets:
(Millions of dollars)	March 31, 2023		December 31, 2022
Assets from reportable segments:
Construction Industries	$	5,584	$	5,168
Resource Industries	5,719		5,775
Energy & Transportation	9,513		9,455
Financial Products Segment	34,591		34,269
Total assets from reportable segments	55,407		54,667
Assets from All Other operating segment	1,795		1,828
Items not included in segment assets:
Cash and cash equivalents	6,017		6,042
Deferred income taxes	2,287		2,098
Goodwill and intangible assets	4,437		4,248
Property, plant and equipment – net and other assets	4,523		4,234
Inventory methodology differences	(3,441)		(3,063)
Liabilities included in segment assets	13,118		12,519
Other	(494)		(630)
Total assets	$	83,649	$	81,943

Reconciliation of Depreciation and amortization:
(Millions of dollars)
	Three Months Ended March 31
	2023		2022
Depreciation and amortization from reportable segments:
Construction Industries	$	54	$	58
Resource Industries	87		92
Energy & Transportation	129		134
Financial Products Segment	178		188
Total depreciation and amortization from reportable segments	448		472
Items not included in segment depreciation and amortization:
All Other operating segment	57		58
Cost centers	20		21
Other	7		6
Total depreciation and amortization	$	532	$	557

Reconciliation of Capital expenditures:
(Millions of dollars)
	Three Months Ended March 31
	2023		2022
Capital expenditures from reportable segments:
Construction Industries	$	32	$	32
Resource Industries	26		22
Energy & Transportation	169		177
Financial Products Segment	279		241
Total capital expenditures from reportable segments	506		472
Items not included in segment capital expenditures:
All Other operating segment	26		16
Cost centers	22		9
Timing	212		192
Other	(16)		(10)
Total capital expenditures	$	750	$	679

XML

Cat Financial Financing Activities

3 Months Ended

Mar. 31, 2023

Receivables [Abstract]

Cat Financial Financing Activities

Cat Financial financing activities

Allowance for credit losses

Portfolio segments

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

Customer

Cat Financial provides loans and finance leases to end-user customers primarily for the purpose of financing new and used Caterpillar machinery, engines and equipment for commercial use. Cat Financial also provides financing for power generation facilities that, in most cases, incorporate Caterpillar products. The average original term of Cat Financial's customer finance receivable portfolio was approximately 51 months with an average remaining term of approximately 28 months as of March 31, 2023.

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

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

During the three months ended March 31, 2023, Cat Financial's forecasts for the markets in which it operates reflected a continuation of the trend of relatively low unemployment rates and delinquencies. However, delinquencies show an increasing trend as persistently high inflation rates and consequent central bank actions are weakening global economic growth. The company believes the economic forecasts employed represent reasonable and supportable forecasts, followed by a reversion to long-term trends.

Dealer

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

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

In general, Cat Financial's Dealer portfolio segment has not historically experienced large increases or decreases in credit losses based on changes in economic conditions due to its close working relationships with the dealers and their financial strength. Therefore, Cat Financial made no adjustments to historical loss rates during the three months ended March 31, 2023.

Classes of finance receivables

Cat Financial further evaluates portfolio segments by the class of finance receivables, which is defined as a level of information (below a portfolio segment) in which the finance receivables have the same initial measurement attribute and a similar method for assessing and monitoring credit risk. Cat Financial's classes, which align with management reporting for credit losses, are as follows:

•North America - Finance receivables originated in the United States and Canada.

•EAME - Finance receivables originated in Europe, Africa, the Middle East and the Commonwealth of Independent States.

•Asia/Pacific - Finance receivables originated in Australia, New Zealand, China, Japan, Southeast Asia and India.

•Mining - Finance receivables related to large mining customers worldwide.

•Latin America - Finance receivables originated in Mexico and Central and South American countries.

•Power Finance - Finance receivables originated worldwide related to Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems.

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

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

(Millions of dollars)	Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
Allowance for Credit Losses:	Customer		Dealer		Total		Customer		Dealer		Total
Beginning balance	$	277	$	65	$	342	$	251	$	82	$	333
Write-offs	(20)		—		(20)		(20)		—		(20)
Recoveries	10		—		10		12		—		12
Provision for credit losses 1	10		—		10		26		(1)		25
Other	1		—		1		2		—		2
Ending balance	$	278	$	65	$	343	$	271	$	81	$	352
Finance Receivables	$	19,573	$	1,721	$	21,294	$	20,289	$	1,722	$	22,011
1 Excludes provision for credit losses on unfunded commitments and other miscellaneous receivables.

Gross write-offs by origination year for the Customer portfolio segment were as follows:

(Millions of dollars)	March 31, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Finance Receivables		Total
North America	$	—	$	3	$	3	$	—	$	—	$	—	$	4	10
EAME	—		1		—		1		—		—		—		2
Asia/Pacific	—		—		2		1		1		—		—		4
Latin America	—		—		1		2		1		—		—		4
Total	$	—	$	4	$	6	$	4	$	2	$	—	$	4	$	20

Credit quality of finance receivables

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

Customer

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

(Millions of dollars)	March 31, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Finance Receivables		Total Finance Receivables
North America
Current	$	886	$	3,585	$	2,931	$	1,308	$	525	$	168	$	255	$	9,658
31-60 days past due	3		29		30		18		8		2		3		93
61-90 days past due	—		11		8		5		2		1		2		29
91+ days past due	—		12		19		12		5		5		3		56
EAME
Current	310		1,198		864		423		234		189		—		3,218
31-60 days past due	2		15		12		4		2		1		—		36
61-90 days past due	—		7		5		3		2		—		—		17
91+ days past due	—		8		23		14		3		2		—		50
Asia/Pacific
Current	248		896		568		230		48		14		—		2,004
31-60 days past due	—		9		12		9		2		—		—		32
61-90 days past due	—		4		4		3		1		—		—		12
91+ days past due	—		4		6		5		3		1		—		19
Mining
Current	318		837		520		186		137		98		56		2,152
31-60 days past due	—		5		—		4		1		—		—		10
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		—		1		—		—		—		—		1
Latin America
Current	182		716		339		124		51		28		—		1,440
31-60 days past due	—		17		32		4		9		9		—		71
61-90 days past due	—		4		4		1		—		3		—		12
91+ days past due	—		5		14		8		2		1		—		30
Power Finance
Current	12		76		78		140		32		159		133		630
31-60 days past due	—		—		—		—		—		2		—		2
61-90 days past due	—		—		—		—		—		1		—		1
91+ days past due	—		—		—		—		—		—		—		—
Totals by Aging Category
Current	$	1,956	$	7,308	$	5,300	$	2,411	$	1,027	$	656	$	444	$	19,102
31-60 days past due	5		75		86		39		22		14		3		244
61-90 days past due	—		26		21		12		5		5		2		71
91+ days past due	—		29		63		39		13		9		3		156
Total Customer	$	1,961	$	7,438	$	5,470	$	2,501	$	1,067	$	684	$	452	$	19,573

(Millions of dollars)	December 31, 2022
	2022		2021		2020		2019		2018		Prior		Revolving Finance Receivables		Total Finance Receivables
North America
Current	$	3,915	$	3,276	$	1,525	$	653	$	206	$	34	$	240	$	9,849
31-60 days past due	25		26		18		12		4		1		4		90
61-90 days past due	9		15		7		3		1		—		3		38
91+ days past due	11		16		12		6		4		3		4		56
EAME
Current	1,270		953		477		280		155		68		—		3,203
31-60 days past due	10		12		7		1		1		—		—		31
61-90 days past due	8		4		3		1		—		—		—		16
91+ days past due	6		25		16		4		1		1		—		53
Asia/Pacific
Current	1,033		684		313		69		18		2		—		2,119
31-60 days past due	10		12		8		1		1		—		—		32
61-90 days past due	2		5		4		2		—		—		—		13
91+ days past due	2		6		6		4		—		—		—		18
Mining
Current	863		575		220		171		93		108		80		2,110
31-60 days past due	—		1		—		—		—		—		—		1
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		—		—		—		—		1		—		1
Latin America
Current	770		400		150		69		26		20		—		1,435
31-60 days past due	7		8		4		2		—		1		—		22
61-90 days past due	2		5		1		1		—		—		—		9
91+ days past due	2		13		11		2		1		—		—		29
Power Finance
Current	78		85		142		33		18		161		125		642
31-60 days past due	—		—		—		—		—		—		—		—
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		—		—		—		—		5		—		5
Totals by Aging Category
Current	$	7,929	$	5,973	$	2,827	$	1,275	$	516	$	393	$	445	$	19,358
31-60 days past due	52		59		37		16		6		2		4		176
61-90 days past due	21		29		15		7		1		—		3		76
91+ days past due	21		60		45		16		6		10		4		162
Total Customer	$	8,023	$	6,121	$	2,924	$	1,314	$	529	$	405	$	456	$	19,772

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

Dealer

As of March 31, 2023 and December 31, 2022, Cat Financial's total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $58 million that were 91+ days past due in Latin America, all of which were originated in 2017.

Non-accrual finance receivables

Recognition of income is suspended and the finance receivable is placed on non-accrual status when management determines that collection of future income is not probable. Contracts on non-accrual status are generally more than 120 days past due. Recognition is resumed and previously suspended income is recognized when collection is considered probable. Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms. Interest earned but uncollected prior to the receivable being placed on non-accrual status is written off through Provision for credit losses when, in the judgment of management, it is considered uncollectible.

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

	March 31, 2023						December 31, 2022
	Amortized Cost						Amortized Cost
(Millions of dollars)	Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing		Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing
North America	$	48	$	—	$	12	$	52	$	4	$	11
EAME	44		—		6		43		—		10
Asia/Pacific	12		—		7		11		—		7
Mining	2		—		—		—		1		—
Latin America	77		—		—		45		—		—
Power Finance	8		—		—		5		11		—
Total	$	191	$	—	$	25	$	156	$	16	$	28

Interest income recognized for customer finance receivables on non-accrual status was not material during the three months ended March 31, 2023 and 2022.

There were $58 million in finance receivables in Cat Financial's Dealer portfolio segment on non-accrual status as of March 31, 2023 and December 31, 2022, all of which was in Latin America.

Modifications

Cat Financial periodically modifies loan terms in response to borrowers’ financial difficulty. Typically, the types of modifications granted are payment deferrals, interest only payment periods and/or term extensions. During the three months ended March 31, 2023, loan modifications granted to borrowers experiencing financial difficulty were not material.

The effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses based on the methodologies used to estimate the allowance; therefore, a change to the allowance for credit losses is generally not recorded upon modification. On rare occasions when principal forgiveness is provided, the amount forgiven is written off against the allowance for credit losses.

XML

Fair Value Disclosures

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Fair value disclosures

    A. Fair value measurements

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

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

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

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

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

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

Fair value measurement includes the consideration of nonperformance risk.  Nonperformance risk refers to the risk that an obligation (either by a counterparty or Caterpillar) will not be fulfilled.  For financial assets traded in an active market (Level 1 and certain Level 2), the nonperformance risk is included in the market price.  For certain other financial assets and liabilities (certain Level 2 and Level 3), our fair value calculations have been adjusted accordingly.

Investments in debt and equity securities

We have investments in certain debt and equity securities that are recorded at fair value.  Fair values for our U.S. treasury bonds and large capitalization value and smaller company growth equity securities are based upon valuations for identical instruments in active markets.  Fair values for other government debt securities, corporate debt securities and mortgage-backed debt securities are based upon models that take into consideration such market-based factors as recent sales, risk-free yield curves and prices of similarly rated bonds.

We also have investments in time deposits classified as held-to-maturity debt securities. The fair value of these investments is based upon valuations observed in less active markets than Level 1. These investments have a maturity of less than one year and are recorded at amortized costs, which approximate fair value.

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

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

Derivative financial instruments

The fair value of interest rate contracts is primarily based on a standard industry accepted valuation model that utilizes the appropriate market-based forward swap curves and zero-coupon interest rates to determine discounted cash flows.  The fair value of foreign currency and commodity forward, option and cross currency contracts is based on standard industry accepted valuation models that discount cash flows resulting from the differential between the contract price and the market-based forward rate.

See Note 5 for additional information.

Assets and liabilities measured on a recurring basis at fair value included in our Consolidated Statement of Financial Position as of March 31, 2023 and December 31, 2022 were as follows:

	March 31, 2023
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets / Liabilities, at Fair Value
Assets
Debt securities
Government debt securities
U.S. treasury bonds	$	9	$	—	$	—	$	—	$	9
Other U.S. and non-U.S. government bonds	—		57		—		—		57
Corporate debt securities
Corporate bonds and other debt securities	—		2,469		50		—		2,519
Asset-backed securities	—		184		—		—		184
Mortgage-backed debt securities
U.S. governmental agency	—		341		—		—		341
Residential	—		2		—		—		2
Commercial	—		125		—		—		125
Total debt securities	9		3,178		50		—		3,237
Equity securities
Large capitalization value	200		—		—		—		200
Smaller company growth	32		—		—		—		32
REIT	—		—		—		200		200
Total equity securities	232		—		—		200		432
Derivative financial instruments - assets
Foreign currency contracts - net	—		309		—		—		309
Commodity contracts - net	—		17		—		—		17
Total assets	$	241	$	3,504	$	50	$	200	$	3,995
Liabilities
Derivative financial instruments - liabilities
Interest rate contracts - net	$	—	$	135	$	—	$	—	$	135
Total liabilities	$	—	$	135	$	—	$	—	$	135

	December 31, 2022
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets / Liabilities, at Fair Value
Assets
Debt securities
Government debt securities
U.S. treasury bonds	$	9	$	—	$	—	$	—	$	9
Other U.S. and non-U.S. government bonds	—		55		—		—		55
Corporate debt securities
Corporate bonds and other debt securities	—		2,416		50		—		2,466
Asset-backed securities	—		182		—		—		182
Mortgage-backed debt securities
U.S. governmental agency	—		333		—		—		333
Residential	—		2		—		—		2
Commercial	—		117		—		—		117
Total debt securities	9		3,105		50		—		3,164
Equity securities
Large capitalization value	203		—		—		—		203
Smaller company growth	31		—		—		—		31
REIT	—		—		—		207		207
Total equity securities	234		—		—		207		441
Derivative financial instruments - assets
Foreign currency contracts - net	—		328		—		—		328
Commodity contracts - net	—		15		—		—		15
Total Assets	$	243	$	3,448	$	50	$	207	$	3,948
Liabilities
Derivative financial instruments - liabilities
Interest rate contracts - net	$	—	$	195	$	—	$	—	$	195
Total liabilities	$	—	$	195	$	—	$	—	$	195

In addition to the amounts above, certain Cat Financial loans are subject to measurement at fair value on a nonrecurring basis and are classified as Level 3 measurements. A loan is measured at fair value when management determines that collection of contractual amounts due is not probable and the loan is individually evaluated.  In these cases, an allowance for credit losses may be established based either on the present value of expected future cash flows discounted at the receivables’ effective interest rate, the fair value of the collateral for collateral-dependent receivables, or the observable market price of the receivable.  In determining collateral value, Cat Financial estimates the current fair market value of the collateral less selling costs. Cat Financial had loans carried at fair value of $61 million and $68 million as of March 31, 2023 and December 31, 2022, respectively.  

    B. Fair values of financial instruments

In addition to the methods and assumptions we use to record the fair value of financial instruments as discussed in the Fair value measurements section above, we use the following methods and assumptions to estimate the fair value of our financial instruments:

Cash and cash equivalents

Carrying amount approximates fair value. We classify cash and cash equivalents as Level 1. See Consolidated Statement of Financial Position.

Restricted cash and short-term investments

Carrying amount approximates fair value.  We include restricted cash and short-term investments in Prepaid expenses and other current assets in the Consolidated Statement of Financial Position. We classify these instruments as Level 1 except for time deposits which are Level 2, and certain corporate debt securities which are Level 3. See Note 8 for additional information.

Finance receivables

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

Wholesale inventory receivables

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

Short-term borrowings

Carrying amount approximates fair value. We classify short-term borrowings as Level 1. See Consolidated Statement of Financial Position.

Long-term debt

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

Guarantees

The fair value of guarantees is based upon our estimate of the premium a market participant would require to issue the same guarantee in a stand-alone arms-length transaction with an unrelated party. If quoted or observable market prices are not available, fair value is based upon internally developed models that utilize current market-based assumptions. We classify guarantees as Level 3. See Note 11 for additional information.

Our financial instruments not carried at fair value were as follows:

	March 31, 2023				December 31, 2022
(Millions of dollars)	Carrying  Amount		Fair  Value		Carrying  Amount		Fair  Value		Fair Value Levels	Reference
Assets
Finance receivables – net (excluding finance leases 1 )	$	14,010	$	13,488	$	13,965	$	13,377	3	Note 17
Wholesale inventory receivables – net (excluding finance leases 1)	1,024		967		827		778		3
Liabilities
Long-term debt (including amounts due within one year)
Machinery, Energy & Transportation	9,595		9,542		9,618		9,240		2
Financial Products	21,602		21,066		21,418		20,686		2

1    Represents finance leases and failed sale leasebacks of $7,198 million and $7,325 million at March 31, 2023 and December 31, 2022, respectively.

XML

Other Income (expense)

3 Months Ended

Mar. 31, 2023

Other Income and Expenses [Abstract]

Other income (expense)

Other income (expense)

	Three Months Ended March 31
(Millions of dollars)	2023		2022
Investment and interest income	$	93	$	21
Foreign exchange gains (losses) 1	(72)		47
License fee income	31		32
Net periodic pension and OPEB income (cost), excluding service cost	(13)		68
Gains (losses) on securities	(11)		(12)
Miscellaneous income (loss)	4		97
Total	$	32	$	253

1 Includes gains (losses) from foreign exchange derivative contracts. See Note 5 for further details.

XML

Restructuring Costs

3 Months Ended

Mar. 31, 2023

Restructuring Charges [Abstract]

Restructuring Costs

Restructuring costs

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

Restructuring costs for the three months ended March 31, 2023 and 2022 were as follows:

(Millions of dollars)	Three Months Ended March 31
	2023		2022
Employee separations 1	$	12	$	5
Longwall divestiture 1	586		—
Other 2	13		8
Total restructuring costs	$	611	$	13
1 Recognized in Other operating (income) expenses.
2 Represents costs related to our restructuring programs, primarily for accelerated depreciation, project management, equipment relocation and inventory write-downs, all of which are primarily included in Cost of goods sold.

The restructuring costs for the three months ended March 31, 2023 were primarily related to the divestiture of the company's Longwall business within Resource Industries. The divestiture closed on February 1, 2023 and resulted in a pre-tax loss of approximately $586 million, primarily a non-cash item driven by the release of $494 million of accumulated foreign currency translation. The transaction is subject to certain post-closing adjustments. For the three months ended March 31, 2022, the restructuring costs were primarily related to actions across the company including strategic actions to address a small number of products.

In 2023 and 2022, all restructuring costs are excluded from segment profit.

The following table summarizes the 2023 and 2022 employee separation activity:

(Millions of dollars)	Three Months Ended March 31
	2023		2022
Liability balance, beginning of period	$	39	$	61
Increase in liability (separation charges)	12		5
Reduction in liability (payments)	(28)		(19)
Liability balance, end of period	$	23	$	47

Most of the liability balance at March 31, 2023 is expected to be paid in 2023.

XML

Derivative Financial Instruments and Risk Management (Policies)

3 Months Ended

Mar. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives, Policy

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of sales made and costs incurred in foreign currencies. Movements in foreign currency rates also affect our competitive position as these changes may affect business practices and/or pricing strategies of non-U.S.-based competitors. Additionally, we have balance sheet positions denominated in foreign currencies, thereby creating exposure to movements in exchange rates.

Our ME&T operations purchase, manufacture and sell products in many locations around the world. As we have a diversified revenue and cost base, we manage our future foreign currency cash flow exposure on a net basis. We use foreign currency forward and option contracts to manage unmatched foreign currency cash inflow and outflow. Our objective is to minimize the risk of exchange rate movements that would reduce the U.S. dollar value of our foreign currency cash flow. Our policy allows for managing anticipated foreign currency cash flow for up to approximately five years. As of March 31, 2023, the maximum term of these outstanding contracts at inception was approximately 60 months.

We generally designate as cash flow hedges at inception of the contract any foreign currency forward or option contracts that meet the requirements for hedge accounting and the maturity extends beyond the current quarter-end. We perform designation on a specific exposure basis to support hedge accounting. The remainder of ME&T foreign currency contracts are undesignated.  

In managing foreign currency risk for our Financial Products operations, our objective is to minimize earnings volatility resulting from conversion and the remeasurement of net foreign currency balance sheet positions and future transactions denominated in foreign currencies. Our policy allows the use of foreign currency forward, option and cross currency contracts to offset the risk of currency mismatch between our assets and liabilities and exchange rate risk associated with future transactions denominated in foreign currencies. Our foreign currency forward and option contracts are primarily undesignated. We designate fixed-to-fixed cross currency contracts as cash flow hedges to protect against movements in exchange rates on foreign currency fixed-rate assets and liabilities.

Interest Rate Risk

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

Our ME&T operations generally use fixed-rate debt as a source of funding.  Our objective is to minimize the cost of borrowed funds.  Our policy allows us to enter into fixed-to-floating interest rate contracts and forward rate agreements to meet that objective. We designate fixed-to-floating interest rate contracts as fair value hedges at inception of the contract, and we designate certain forward rate agreements as cash flow hedges at inception of the contract.

Financial Products operations has a match-funding policy that addresses interest rate risk by aligning the interest rate profile (fixed or floating rate and duration) of Cat Financial’s debt portfolio with the interest rate profile of our receivables portfolio within predetermined ranges on an ongoing basis. In connection with that policy, we use interest rate derivative instruments to modify the debt structure to match assets within the receivables portfolio. This matched funding reduces the volatility of margins between interest-bearing assets and interest-bearing liabilities, regardless of which direction interest rates move.

Our policy allows us to use fixed-to-floating, floating-to-fixed and floating-to-floating interest rate contracts to meet the match-funding objective.  We designate fixed-to-floating interest rate contracts as fair value hedges to protect debt against changes in fair value due to changes in the benchmark interest rate.  We designate most floating-to-fixed interest rate contracts as cash flow hedges to protect against the variability of cash flows due to changes in the benchmark interest rate.

We have, at certain times, liquidated fixed-to-floating and floating-to-fixed interest rate contracts at both ME&T and Financial Products. We amortize the gains or losses associated with these contracts at the time of liquidation into earnings over the original term of the previously designated hedged item.

Commodity Price Risk

Commodity price movements create a degree of risk by affecting the price we must pay for certain raw materials. Our policy is to use commodity forward and option contracts to manage the commodity risk and reduce the cost of purchased materials.

Our ME&T operations purchase base and precious metals embedded in the components we purchase from suppliers.  Our suppliers pass on to us price changes in the commodity portion of the component cost. In addition, we are subject to price changes on energy products such as natural gas and diesel fuel purchased for operational use.

Our objective is to minimize volatility in the price of these commodities. Our policy allows us to enter into commodity forward and option contracts to lock in the purchase price of a portion of these commodities within a five-year horizon. All such commodity forward and option contracts are undesignated.

XML

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of type and fair value of the stock-based compensation awards granted during the period

The following table illustrates the type and fair value of the stock-based compensation awards granted during the three months ended March 31, 2023 and 2022, respectively:

	Three Months Ended March 31, 2023					Three Months Ended March 31, 2022
	Shares Granted	Weighted-Average Fair Value Per Share		Weighted-Average Grant Date Stock Price		Shares Granted	Weighted-Average Fair Value Per Share		Weighted-Average Grant Date Stock Price
Stock options	777,275	$	75.79	$	253.98	1,029,202	$	51.69	$	196.70
RSUs	379,426	$	253.98	$	253.98	484,025	$	196.70	$	196.70
PRSUs	221,869	$	253.98	$	253.98	258,900	$	196.70	$	196.70

Schedule providing assumptions used in determining the fair value of stock-based awards

The following table provides the assumptions used in determining the fair value of the stock-based awards for the three months ended March 31, 2023 and 2022, respectively:

	Grant Year
	2023	2022
Weighted-average dividend yield	2.60%	2.60%
Weighted-average volatility	31.0%	31.7%
Range of volatilities	28.5% - 35.5%	25.3% - 36.8%
Range of risk-free interest rates	3.92% - 5.03%	1.03% - 2.00%
Weighted-average expected lives	7 years	8 years

XML

Derivative Financial Instruments and Risk Management (Tables)

3 Months Ended

Mar. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Location and fair value of derivative instruments reported in the Consolidated Statement of Financial Position

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

(Millions of dollars)	Fair Value
	March 31, 2023				December 31, 2022
	Assets 1		Liabilities 2		Assets 1		Liabilities 2
Designated derivatives
Foreign exchange contracts	$	452	$	(106)	$	462	$	(152)
Interest rate contracts	86		(221)		93		(288)
Total	$	538	$	(327)	$	555	$	(440)
Undesignated derivatives
Foreign exchange contracts	$	30	$	(67)	$	65	$	(47)
Commodity contracts	27		(10)		24		(9)
Total	$	57	$	(77)	$	89	$	(56)
1 Assets are classified on the Consolidated Statement of Financial Position as Receivables - trade and other or Long-term receivables - trade and other.
2 Liabilities are classified on the Consolidated Statement of Financial Position as Accrued expenses or Other liabilities.

Derivative Instruments, Gain (Loss)

Gains (Losses) on derivative instruments are categorized as follows:

(Millions of dollars)	Three Months Ended March 31
	Fair Value / Undesignated Hedges				Cash Flow Hedges
	Gains (Losses) Recognized on the Consolidated Statement of Results of Operations 1				Gains (Losses) Recognized in AOCI				Gains (Losses) Reclassified from AOCI 2
	2023		2022		2023		2022		2023		2022
Foreign exchange contracts	$	(28)	$	(63)	$	58	$	(9)	$	(65)	$	26
Interest rate contracts	(27)		7		(2)		56		13		(7)
Commodity contract	8		93		—		—		—		—
Total	$	(47)	$	37	$	56	$	47	$	(52)	$	19
1 Foreign exchange contract and Commodity contract gains (losses) are included in Other income (expense). Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products.
2 Foreign exchange contract gains (losses) are primarily included in Other income (expense). Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products.

Cumulative basis adjustments for fair value hedges

The following amounts were recorded on the Consolidated Statement of Financial Position related to cumulative basis adjustments for fair value hedges:

(Millions of dollars)	Carrying Value of the Hedged Liabilities				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Liabilities
	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Long-term debt due within one year	$	194	$	—	$	(6)	$	—
Long-term debt due after one year	4,115		4,173		(189)		(280)
Total	$	4,309	$	4,173	$	(195)	$	(280)

Offsetting Assets and Liabilities

The effect of the net settlement provisions of the master netting agreements on our derivative balances upon an event of default or termination event was as follows:

(Millions of dollars)	March 31, 2023				December 31, 2022
	Assets		Liabilities		Assets		Liabilities
Gross Amounts Recognized	$	595	$	(404)	$	644	$	(496)
Financial Instruments Not Offset	(164)		164		(233)		233
Net Amount	$	431	$	(240)	$	411	$	(263)

XML

Inventories (Tables)

3 Months Ended

Mar. 31, 2023

Inventory Disclosure [Abstract]

Inventories

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

(Millions of dollars)	March 31, 2023		December 31, 2022
Raw materials	$	6,776	$	6,370
Work-in-process	1,656		1,452
Finished goods	8,868		8,138
Supplies	333		310
Total inventories	$	17,633	$	16,270

XML

Intangible Assets and Goodwill (Tables)

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

Intangible assets were comprised of the following:

		March 31, 2023
(Millions of dollars)	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	16	$	2,241	$	(1,717)	$	524
Intellectual property	13	1,470		(1,345)		125
Other	17	121		(76)		45
Total finite-lived intangible assets	15	$	3,832	$	(3,138)	$	694

		December 31, 2022
	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	16	$	2,233	$	(1,675)	$	558
Intellectual property	12	1,473		(1,320)		153
Other	16	132		(85)		47
Total finite-lived intangible assets	14	$	3,838	$	(3,080)	$	758

Expected amortization expense related to intangible assets

Amortization expense related to intangible assets is expected to be:

(Millions of dollars)
Remaining Nine Months of 2023	2024	2025	2026	2027	Thereafter
$151	$171	$161	$91	$27	$93

Goodwill acquired

The changes in carrying amount of goodwill by reportable segment for the three months ended March 31, 2023 were as follows: 

(Millions of dollars)	December 31, 2022		Other Adjustments 1		March 31, 2023
Construction Industries
Goodwill	$	287	$	(3)	$	284
Impairments	(22)		—		(22)
Net goodwill	265		(3)		262
Resource Industries
Goodwill	4,130		18		4,148
Impairments	(1,175)		—		(1,175)
Net goodwill	2,955		18		2,973
Energy & Transportation
Goodwill	2,947		6		2,953
Impairments	(925)		—		(925)
Net goodwill	2,022		6		2,028
All Other 2
Goodwill	46		—		46
Impairments	—		—		—
Net goodwill	46		—		46
Consolidated total
Goodwill	7,410		21		7,431
Impairments	(2,122)		—		(2,122)
Net goodwill	$	5,288	$	21	$	5,309

1 Other adjustments are comprised primarily of foreign currency translation.

2 Includes All Other operating segment (See Note 16).

XML

Investments in Debt and Equity Securities (Tables)

3 Months Ended

Mar. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Cost basis and fair value of available-for-sale securities

The cost basis and fair value of available-for-sale debt securities with unrealized gains and losses included in equity (AOCI in the Consolidated Statement of Financial Position) were as follows:

Available-for-sale debt securities	March 31, 2023						December 31, 2022
(Millions of dollars)	Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value		Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value
Government debt securities
U.S. treasury bonds	$	10	$	(1)	$	9	$	9	$	—	$	9
Other U.S. and non-U.S. government bonds	61		(4)		57		60		(5)		55
Corporate debt securities
Corporate bonds and other debt securities	2,594		(75)		2,519		2,561		(95)		2,466
Asset-backed securities	189		(5)		184		187		(5)		182
Mortgage-backed debt securities
U.S. governmental agency	366		(25)		341		364		(31)		333
Residential	3		(1)		2		3		(1)		2
Commercial	135		(10)		125		127		(10)		117
Total available-for-sale debt securities	$	3,358	$	(121)	$	3,237	$	3,311	$	(147)	$	3,164

Investments in an unrealized loss position that are not other-than-temporarily impaired:

Available-for-sale debt securities in an unrealized loss position:
	March 31, 2023
	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
Government debt securities
Other U.S. and non-U.S. government bonds	$	13	$	1	$	26	$	4	$	39	$	5
Corporate debt securities
Corporate bonds	990		19		931		61		1,921		80
Asset-backed securities	67		2		86		4		153		6
Mortgage-backed debt securities
U.S. governmental agency	107		3		226		22		333		25
Commercial	42		2		83		8		125		10
	$	1,219	$	27	$	1,352	$	99	$	2,571	$	126

	December 31, 2022
	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
Government debt securities
Other U.S. and non-U.S. government bonds	$	19	$	1	$	20	$	4	$	39	$	5
Corporate debt securities
Corporate bonds	1,815		46		357		50		2,172		96
Asset-backed securities	75		2		55		3		130		5
Mortgage-backed debt securities
U.S. governmental agency	229		16		98		15		327		31
Residential	2		—		1		1		3		1
Commercial	63		5		54		5		117		10
Total	$	2,203	$	70	$	585	$	78	$	2,788	$	148
1 Indicates the length of time that individual securities have been in a continuous unrealized loss position.

Cost basis and fair value of the available-for-sale debt securities by contractual maturity

The cost basis and fair value of available-for-sale debt securities at March 31, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay and creditors may have the right to call obligations.        

	March 31, 2023
(Millions of dollars)	Cost Basis		Fair Value
Due in one year or less	$	961	$	950
Due after one year through five years	1,571		1,511
Due after five years through ten years	257		245
Due after ten years	65		63
U.S. governmental agency mortgage-backed securities	366		341
Residential mortgage-backed securities	3		2
Commercial mortgage-backed securities	135		125
Total debt securities – available-for-sale	$	3,358	$	3,237

Schedule of proceeds and gross gain and losses from the sale of available-for-sale securities

Sales of available-for-sale debt securities:
	Three Months Ended March 31
(Millions of dollars)	2023		2022
Proceeds from the sale of available-for-sale securities	$	223	$	96
Gross gains from the sale of available-for-sale securities	—		—
Gross losses from the sale of available-for-sale securities	—		—

XML

Postretirement Benefits (Tables)

3 Months Ended

Mar. 31, 2023

Retirement Benefits [Abstract]

Schedule of net benefit costs

	U.S. Pension Benefits				Non-U.S. Pension Benefits				Other Postretirement Benefits
	March 31				March 31				March 31
(Millions of dollars)	2023		2022		2023		2022		2023		2022
For the three months ended:
Components of net periodic benefit cost:
Service cost	$	—	$	—	$	10	$	13	$	17	$	25
Interest cost	164		100		31		18		36		20
Expected return on plan assets	(172)		(167)		(40)		(34)		(3)		(4)
Amortization of prior service cost (credit)	—		—		—		—		(3)		(1)
Net periodic benefit cost (benefit) 1	$	(8)	$	(67)	$	1	$	(3)	$	47	$	40

1 The service cost component is included in Operating costs in the Consolidated Statement of Results of Operations. All other components are included in Other income (expense) in the Consolidated Statement of Results of Operations.

Company costs related to U.S. and non-U.S. defined contribution plans

Total company costs related to our defined contribution plans, which are included in Operating Costs in the Consolidated Statement of Results of Operations, were as follows:

	Three Months Ended March 31
(Millions of dollars)	2023		2022
U.S. Plans	$	149	$	114
Non-U.S. Plans	29		29
	$	178	$	143

XML

Leases (Tables)

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Revenue from finance and operating leases

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

	Three Months Ended March 31
(Millions of dollars)	2023		2022
Finance lease revenue	$	104	$	112
Operating lease revenue	275		278
Total	$	379	$	390

XML

Guarantees and Product Warranty (Tables)

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Guarantees

The maximum potential amount of future payments that we can estimate (undiscounted and without reduction for any amounts that may possibly be recovered under recourse or collateralized provisions) and we could be required to make under the guarantees was as follows:

(Millions of dollars)	March 31, 2023		December 31, 2022
Caterpillar dealer performance guarantees	$	191	$	188
Other guarantees	381		323
Total guarantees	$	572	$	511

Product warranty

The reconciliation of the change in our product warranty liability balances for the quarters ended March 31 was as follows:

	First Three Months
(Millions of dollars)	2023		2022
Warranty liability, beginning of period	$	1,761	$	1,689
Reduction in liability (payments)	(213)		(194)
Increase in liability (new warranties)	246		168
Warranty liability, end of period	$	1,794	$	1,663

XML

Profit Per Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share Reconciliation [Abstract]

Computations of profit per share

Computations of profit per share:	Three Months Ended March 31
(Dollars in millions except per share data)	2023		2022
Profit for the period (A) 1	$	1,943	$	1,537
Determination of shares (in millions):
Weighted-average number of common shares outstanding (B)	516.2		534.5
Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price	3.2		3.8
Average common shares outstanding for fully diluted computation (C) 2	519.4		538.3
Profit per share of common stock:
Assuming no dilution (A/B)	$	3.76	$	2.88
Assuming full dilution (A/C) 2	$	3.74	$	2.86
Shares outstanding as of March 31 (in millions)	515.9		533.4
1 Profit attributable to common shareholders.
2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

XML

Accumulated other comprehensive income (loss) (Tables)

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Changes in Accumulated other comprehensive income (loss), net of tax

We present comprehensive income and its components in the Consolidated Statement of Comprehensive Income. Changes in the balances for each component of AOCI were as follows:

	Three Months Ended March 31
(Millions of dollars)	2023		2022
Foreign currency translation:
Beginning balance	$	(2,328)	$	(1,508)
Gains (losses) on foreign currency translation	103		(104)
Less: Tax provision /(benefit)	(10)		11
Net gains (losses) on foreign currency translation	113		(115)
(Gains) losses reclassified to earnings	494		—
Less: Tax provision /(benefit)	—		—
Net (gains) losses reclassified to earnings	494		—
Other comprehensive income (loss), net of tax	607		(115)
Ending balance	$	(1,721)	$	(1,623)
Pension and other postretirement benefits
Beginning balance	$	(39)	$	(62)
Current year prior service credit (cost)	—		—
Less: Tax provision /(benefit)	—		—
Net current year prior service credit (cost)	—		—
Amortization of prior service (credit) cost	(3)		(1)
Less: Tax provision /(benefit)	(1)		—
Net amortization of prior service (credit) cost	(2)		(1)
Other comprehensive income (loss), net of tax	(2)		(1)
Ending balance	$	(41)	$	(63)
Derivative financial instruments
Beginning balance	$	28	$	(3)
Gains (losses) deferred	56		47
Less: Tax provision /(benefit)	12		10
Net gains (losses) deferred	44		37
(Gains) losses reclassified to earnings	52		(19)
Less: Tax provision /(benefit)	12		(5)
Net (gains) losses reclassified to earnings	40		(14)
Other comprehensive income (loss), net of tax	84		23
Ending balance	$	112	$	20
Available-for-sale securities
Beginning balance	$	(118)	$	20
Gains (losses) deferred	26		(79)
Less: Tax provision /(benefit)	4		(15)
Net gains (losses) deferred	22		(64)
(Gains) losses reclassified to earnings	—		—
Less: Tax provision /(benefit)	—		—
Net (gains) losses reclassified to earnings	—		—
Other comprehensive income (loss), net of tax	22		(64)
Ending balance	$	(96)	$	(44)
Total AOCI Ending Balance at March 31	$	(1,746)	$	(1,710)

XML

Segment Information (Tables)

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Disaggregation of Revenue

For the three months ended March 31, 2023 and 2022, 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 Revenues			Intersegment Sales and Revenues		Total Sales and Revenues
Three Months Ended March 31, 2023
Construction Industries	$	3,608	$	599	$	1,336	$	1,161	$	6,704		$	42	$	6,746
Resource Industries	1,308		474		599		978		3,359			68		3,427
Energy & Transportation	2,572		380		1,384		719		5,055			1,199		6,254
Financial Products Segment	575		104		114		109		902		1	—		902
Total sales and revenues from reportable segments	8,063		1,557		3,433		2,967		16,020			1,309		17,329
All Other operating segment	18		—		4		13		35			76		111
Corporate Items and Eliminations	(131)		(18)		(19)		(25)		(193)			(1,385)		(1,578)
Total Sales and Revenues	$	7,950	$	1,539	$	3,418	$	2,955	$	15,862		$	—	$	15,862
Three Months Ended March 31, 2022
Construction Industries	$	2,720	$	627	$	1,277	$	1,462	$	6,086		$	29	$	6,115
Resource Industries	1,018		399		594		748		2,759			71		2,830
Energy & Transportation	1,938		310		1,184		600		4,032			1,006		5,038
Financial Products Segment	503		73		96		111		783		1	—		783
Total sales and revenues from reportable segments	6,179		1,409		3,151		2,921		13,660			1,106		14,766
All Other operating segment	18		—		5		16		39			79		118
Corporate Items and Eliminations	(60)		(16)		(11)		(23)		(110)			(1,185)		(1,295)
Total Sales and Revenues	$	6,137	$	1,393	$	3,145	$	2,914	$	13,589		$	—	$	13,589

1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of $162 million and $100 million in the three months ended March 31, 2023 and 2022, respectively.

For the three months ended March 31, 2023 and 2022, Energy & Transportation segment sales by end user application were as follows:

Energy & Transportation External Sales
	Three Months Ended March 31
(Millions of dollars)	2023		2022
Oil and gas	$	1,314	$	948
Power generation	1,284		1,012
Industrial	1,255		1,020
Transportation	1,202		1,052
Energy & Transportation External Sales	$	5,055	$	4,032

Reconciliation of Consolidated profit before taxes

Reconciliation of Consolidated profit before taxes:
(Millions of dollars)	Three Months Ended March 31
	2023		2022
Profit from reportable segments:
Construction Industries	$	1,790	$	1,057
Resource Industries	764		361
Energy & Transportation	1,057		538
Financial Products Segment	232		238
Total profit from reportable segments	3,843		2,194
Profit from All Other operating segment	11		3
Cost centers	30		10
Corporate costs	(238)		(198)
Timing	(206)		(98)
Restructuring costs	(611)		(13)
Methodology differences:
Inventory/cost of sales	126		168
Postretirement benefit expense	(31)		81
Stock-based compensation expense	(44)		(40)
Financing costs	(50)		(100)
Currency	(26)		106
Other income/expense methodology differences	(146)		(81)
Other methodology differences	(24)		(33)
Total consolidated profit before taxes	$	2,634	$	1,999

Reconciliation of Assets:

Reconciliation of Assets:
(Millions of dollars)	March 31, 2023		December 31, 2022
Assets from reportable segments:
Construction Industries	$	5,584	$	5,168
Resource Industries	5,719		5,775
Energy & Transportation	9,513		9,455
Financial Products Segment	34,591		34,269
Total assets from reportable segments	55,407		54,667
Assets from All Other operating segment	1,795		1,828
Items not included in segment assets:
Cash and cash equivalents	6,017		6,042
Deferred income taxes	2,287		2,098
Goodwill and intangible assets	4,437		4,248
Property, plant and equipment – net and other assets	4,523		4,234
Inventory methodology differences	(3,441)		(3,063)
Liabilities included in segment assets	13,118		12,519
Other	(494)		(630)
Total assets	$	83,649	$	81,943

Reconciliation of Depreciation and amortization:

Reconciliation of Depreciation and amortization:
(Millions of dollars)
	Three Months Ended March 31
	2023		2022
Depreciation and amortization from reportable segments:
Construction Industries	$	54	$	58
Resource Industries	87		92
Energy & Transportation	129		134
Financial Products Segment	178		188
Total depreciation and amortization from reportable segments	448		472
Items not included in segment depreciation and amortization:
All Other operating segment	57		58
Cost centers	20		21
Other	7		6
Total depreciation and amortization	$	532	$	557

Reconciliation of Capital expenditures:

Reconciliation of Capital expenditures:
(Millions of dollars)
	Three Months Ended March 31
	2023		2022
Capital expenditures from reportable segments:
Construction Industries	$	32	$	32
Resource Industries	26		22
Energy & Transportation	169		177
Financial Products Segment	279		241
Total capital expenditures from reportable segments	506		472
Items not included in segment capital expenditures:
All Other operating segment	26		16
Cost centers	22		9
Timing	212		192
Other	(16)		(10)
Total capital expenditures	$	750	$	679

XML

Cat Financial Financing Activities (Tables)

3 Months Ended

Mar. 31, 2023

Receivables [Abstract]

Allowance for credit losses and total finance receivables

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

(Millions of dollars)	Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
Allowance for Credit Losses:	Customer		Dealer		Total		Customer		Dealer		Total
Beginning balance	$	277	$	65	$	342	$	251	$	82	$	333
Write-offs	(20)		—		(20)		(20)		—		(20)
Recoveries	10		—		10		12		—		12
Provision for credit losses 1	10		—		10		26		(1)		25
Other	1		—		1		2		—		2
Ending balance	$	278	$	65	$	343	$	271	$	81	$	352
Finance Receivables	$	19,573	$	1,721	$	21,294	$	20,289	$	1,722	$	22,011
1 Excludes provision for credit losses on unfunded commitments and other miscellaneous receivables.

Financing Receivable Credit Quality Indicators

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

(Millions of dollars)	March 31, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Finance Receivables		Total Finance Receivables
North America
Current	$	886	$	3,585	$	2,931	$	1,308	$	525	$	168	$	255	$	9,658
31-60 days past due	3		29		30		18		8		2		3		93
61-90 days past due	—		11		8		5		2		1		2		29
91+ days past due	—		12		19		12		5		5		3		56
EAME
Current	310		1,198		864		423		234		189		—		3,218
31-60 days past due	2		15		12		4		2		1		—		36
61-90 days past due	—		7		5		3		2		—		—		17
91+ days past due	—		8		23		14		3		2		—		50
Asia/Pacific
Current	248		896		568		230		48		14		—		2,004
31-60 days past due	—		9		12		9		2		—		—		32
61-90 days past due	—		4		4		3		1		—		—		12
91+ days past due	—		4		6		5		3		1		—		19
Mining
Current	318		837		520		186		137		98		56		2,152
31-60 days past due	—		5		—		4		1		—		—		10
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		—		1		—		—		—		—		1
Latin America
Current	182		716		339		124		51		28		—		1,440
31-60 days past due	—		17		32		4		9		9		—		71
61-90 days past due	—		4		4		1		—		3		—		12
91+ days past due	—		5		14		8		2		1		—		30
Power Finance
Current	12		76		78		140		32		159		133		630
31-60 days past due	—		—		—		—		—		2		—		2
61-90 days past due	—		—		—		—		—		1		—		1
91+ days past due	—		—		—		—		—		—		—		—
Totals by Aging Category
Current	$	1,956	$	7,308	$	5,300	$	2,411	$	1,027	$	656	$	444	$	19,102
31-60 days past due	5		75		86		39		22		14		3		244
61-90 days past due	—		26		21		12		5		5		2		71
91+ days past due	—		29		63		39		13		9		3		156
Total Customer	$	1,961	$	7,438	$	5,470	$	2,501	$	1,067	$	684	$	452	$	19,573

(Millions of dollars)	December 31, 2022
	2022		2021		2020		2019		2018		Prior		Revolving Finance Receivables		Total Finance Receivables
North America
Current	$	3,915	$	3,276	$	1,525	$	653	$	206	$	34	$	240	$	9,849
31-60 days past due	25		26		18		12		4		1		4		90
61-90 days past due	9		15		7		3		1		—		3		38
91+ days past due	11		16		12		6		4		3		4		56
EAME
Current	1,270		953		477		280		155		68		—		3,203
31-60 days past due	10		12		7		1		1		—		—		31
61-90 days past due	8		4		3		1		—		—		—		16
91+ days past due	6		25		16		4		1		1		—		53
Asia/Pacific
Current	1,033		684		313		69		18		2		—		2,119
31-60 days past due	10		12		8		1		1		—		—		32
61-90 days past due	2		5		4		2		—		—		—		13
91+ days past due	2		6		6		4		—		—		—		18
Mining
Current	863		575		220		171		93		108		80		2,110
31-60 days past due	—		1		—		—		—		—		—		1
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		—		—		—		—		1		—		1
Latin America
Current	770		400		150		69		26		20		—		1,435
31-60 days past due	7		8		4		2		—		1		—		22
61-90 days past due	2		5		1		1		—		—		—		9
91+ days past due	2		13		11		2		1		—		—		29
Power Finance
Current	78		85		142		33		18		161		125		642
31-60 days past due	—		—		—		—		—		—		—		—
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		—		—		—		—		5		—		5
Totals by Aging Category
Current	$	7,929	$	5,973	$	2,827	$	1,275	$	516	$	393	$	445	$	19,358
31-60 days past due	52		59		37		16		6		2		4		176
61-90 days past due	21		29		15		7		1		—		3		76
91+ days past due	21		60		45		16		6		10		4		162
Total Customer	$	8,023	$	6,121	$	2,924	$	1,314	$	529	$	405	$	456	$	19,772

Investment in finance receivables on non-accrual status

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

	March 31, 2023						December 31, 2022
	Amortized Cost						Amortized Cost
(Millions of dollars)	Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing		Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing
North America	$	48	$	—	$	12	$	52	$	4	$	11
EAME	44		—		6		43		—		10
Asia/Pacific	12		—		7		11		—		7
Mining	2		—		—		—		1		—
Latin America	77		—		—		45		—		—
Power Finance	8		—		—		5		11		—
Total	$	191	$	—	$	25	$	156	$	16	$	28

Write-offs by origination year

Gross write-offs by origination year for the Customer portfolio segment were as follows:

(Millions of dollars)	March 31, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Finance Receivables		Total
North America	$	—	$	3	$	3	$	—	$	—	$	—	$	4	10
EAME	—		1		—		1		—		—		—		2
Asia/Pacific	—		—		2		1		1		—		—		4
Latin America	—		—		1		2		1		—		—		4
Total	$	—	$	4	$	6	$	4	$	2	$	—	$	4	$	20

XML

Fair Value Disclosures (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Assets and liabilities measured on a recurring basis at fair value

Assets and liabilities measured on a recurring basis at fair value included in our Consolidated Statement of Financial Position as of March 31, 2023 and December 31, 2022 were as follows:

	March 31, 2023
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets / Liabilities, at Fair Value
Assets
Debt securities
Government debt securities
U.S. treasury bonds	$	9	$	—	$	—	$	—	$	9
Other U.S. and non-U.S. government bonds	—		57		—		—		57
Corporate debt securities
Corporate bonds and other debt securities	—		2,469		50		—		2,519
Asset-backed securities	—		184		—		—		184
Mortgage-backed debt securities
U.S. governmental agency	—		341		—		—		341
Residential	—		2		—		—		2
Commercial	—		125		—		—		125
Total debt securities	9		3,178		50		—		3,237
Equity securities
Large capitalization value	200		—		—		—		200
Smaller company growth	32		—		—		—		32
REIT	—		—		—		200		200
Total equity securities	232		—		—		200		432
Derivative financial instruments - assets
Foreign currency contracts - net	—		309		—		—		309
Commodity contracts - net	—		17		—		—		17
Total assets	$	241	$	3,504	$	50	$	200	$	3,995
Liabilities
Derivative financial instruments - liabilities
Interest rate contracts - net	$	—	$	135	$	—	$	—	$	135
Total liabilities	$	—	$	135	$	—	$	—	$	135

	December 31, 2022
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets / Liabilities, at Fair Value
Assets
Debt securities
Government debt securities
U.S. treasury bonds	$	9	$	—	$	—	$	—	$	9
Other U.S. and non-U.S. government bonds	—		55		—		—		55
Corporate debt securities
Corporate bonds and other debt securities	—		2,416		50		—		2,466
Asset-backed securities	—		182		—		—		182
Mortgage-backed debt securities
U.S. governmental agency	—		333		—		—		333
Residential	—		2		—		—		2
Commercial	—		117		—		—		117
Total debt securities	9		3,105		50		—		3,164
Equity securities
Large capitalization value	203		—		—		—		203
Smaller company growth	31		—		—		—		31
REIT	—		—		—		207		207
Total equity securities	234		—		—		207		441
Derivative financial instruments - assets
Foreign currency contracts - net	—		328		—		—		328
Commodity contracts - net	—		15		—		—		15
Total Assets	$	243	$	3,448	$	50	$	207	$	3,948
Liabilities
Derivative financial instruments - liabilities
Interest rate contracts - net	$	—	$	195	$	—	$	—	$	195
Total liabilities	$	—	$	195	$	—	$	—	$	195

Fair values of financial instruments

Our financial instruments not carried at fair value were as follows:

	March 31, 2023				December 31, 2022
(Millions of dollars)	Carrying  Amount		Fair  Value		Carrying  Amount		Fair  Value		Fair Value Levels	Reference
Assets
Finance receivables – net (excluding finance leases 1 )	$	14,010	$	13,488	$	13,965	$	13,377	3	Note 17
Wholesale inventory receivables – net (excluding finance leases 1)	1,024		967		827		778		3
Liabilities
Long-term debt (including amounts due within one year)
Machinery, Energy & Transportation	9,595		9,542		9,618		9,240		2
Financial Products	21,602		21,066		21,418		20,686		2

1    Represents finance leases and failed sale leasebacks of $7,198 million and $7,325 million at March 31, 2023 and December 31, 2022, respectively.

XML

Other income (expense) (Tables)

3 Months Ended

Mar. 31, 2023

Other Income and Expenses [Abstract]

Other income (expense)

	Three Months Ended March 31
(Millions of dollars)	2023		2022
Investment and interest income	$	93	$	21
Foreign exchange gains (losses) 1	(72)		47
License fee income	31		32
Net periodic pension and OPEB income (cost), excluding service cost	(13)		68
Gains (losses) on securities	(11)		(12)
Miscellaneous income (loss)	4		97
Total	$	32	$	253

1 Includes gains (losses) from foreign exchange derivative contracts. See Note 5 for further details.

XML

Restructuring Costs (Tables)

3 Months Ended

Mar. 31, 2023

Restructuring Charges [Abstract]

Restructuring and related costs

Restructuring costs for the three months ended March 31, 2023 and 2022 were as follows:

(Millions of dollars)	Three Months Ended March 31
	2023		2022
Employee separations 1	$	12	$	5
Longwall divestiture 1	586		—
Other 2	13		8
Total restructuring costs	$	611	$	13
1 Recognized in Other operating (income) expenses.
2 Represents costs related to our restructuring programs, primarily for accelerated depreciation, project management, equipment relocation and inventory write-downs, all of which are primarily included in Cost of goods sold.

Summary of separation activity

The following table summarizes the 2023 and 2022 employee separation activity:

(Millions of dollars)	Three Months Ended March 31
	2023		2022
Liability balance, beginning of period	$	39	$	61
Increase in liability (separation charges)	12		5
Reduction in liability (payments)	(28)		(19)
Liability balance, end of period	$	23	$	47

XML

New Accounting Guidance (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
New Accounting Pronouncements
Supplier Finance Program, Obligation, Current	$ 970	$ 862

XML

Sales and revenue contract information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Dec. 31, 2021
Revenue from Contract with Customer [Abstract]
Trade receivables from dealers and end users	$ 7,854		$ 7,551	$ 7,267
Long term trade receivables from dealers and end users	472		506	624
Contract Assets	195		247	187
Contract liabilities	2,664		$ 2,314	$ 1,557
Revenue recognized from contract liability balance at beginning of period	737	$ 437
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
Unsatisfied performance obligations with an original contract duration greater than one year	$ 12,600
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
Expected period of performance satisfaction	12 months
Revenue, Remaining Performance Obligation, Percentage	50.00%

XML

Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Stock-based compensation awards
Stock-based compensation expense, before tax (in dollars)	$ 44	$ 40
Risk-free interest rates, low end of range (as a percent)	3.92%	1.03%
Risk-free interest rates, high end of range (as a percent)	5.03%	2.00%
Rate of volatilities, Minimum	28.50%	25.30%
Rate of volatilities, Maximum	35.50%	36.80%
Assumptions used in determining the fair value of the stock-based awards
Weighted-average dividend yield (as a percent)	2.60%	2.60%
Weighted-average volatility (as a percent)	31.00%	31.70%
Rate of volatilities, Minimum	28.50%	25.30%
Rate of volatilities, Maximum	35.50%	36.80%
Risk-free interest rates, low end of range (as a percent)	3.92%	1.03%
Risk-free interest rates, high end of range (as a percent)	5.03%	2.00%
Weighted-average expected lives (in years)	7 years	8 years
Unrecognized compensation cost related to nonvested stock-based compensation awards (in dollars)	$ 305
Term of amortization of unrecognized compensation cost over weighted-average remaining requisite service periods (in years)	1 year 9 months 18 days
Stock Options
Stock-based compensation awards
Shares Granted (in shares)	777,275	1,029,202
Weighted-Average Fair Value Per Share (in dollars per share)	$ 75.79	$ 51.69
Weighted-Average Grant Date Stock Price (in dollars per share)	253.98	196.70
RSUs
Stock-based compensation awards
Weighted-Average Grant Date Stock Price (in dollars per share)	$ 253.98	$ 196.70
Shares Granted (in shares)	379,426	484,025
Weighted-Average Fair Value Per Share (in dollars per share)	$ 253.98	$ 196.70
PRSUs
Stock-based compensation awards
Weighted-Average Grant Date Stock Price (in dollars per share)	$ 253.98	$ 196.70
Shares Granted (in shares)	221,869	258,900
Weighted-Average Fair Value Per Share (in dollars per share)	$ 253.98	$ 196.70

XML

Derivative Financial Instruments and Risk Management (Details)	3 Months Ended
	Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Foreign currency cash flow hedges, maximum allowable period (in years)	5 years
Foreign currency cash flow hedges, maximum period (in months)	60 months
Commodity forward and option contracts, maximum period (in years)	5 years

XML

Derivative Financial instruments and Risk Management- Location and fair value (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Derivatives Fair Value
Assets	$ 595	$ 644
Liabilities	(404)	(496)
Designated Derivatives
Derivatives Fair Value
Assets	538	555
Liabilities	(327)	(440)
Designated Derivatives | Foreign exchange contracts
Derivatives Fair Value
Assets	452	462
Liabilities	(106)	(152)
Designated Derivatives | Interest rate contracts
Derivatives Fair Value
Assets	86	93
Liabilities	(221)	(288)
Undesignated Derivatives
Derivatives Fair Value
Assets	57	89
Liabilities	(77)	(56)
Undesignated Derivatives | Foreign exchange contracts
Derivatives Fair Value
Assets	30	65
Liabilities	(67)	(47)
Undesignated Derivatives | Commodity contracts
Derivatives Fair Value
Assets	27	24
Liabilities	$ (10)	$ (9)

XML

Derivative Financial instruments and Risk Management- Notional amounts (Details) - USD ($) $ in Billions	Mar. 31, 2023	Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative, Notional Amount	$ 22.8	$ 24.3

XML

Derivative Financial instruments and Risk Management- Gain and Loss on Hedging instruments (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Derivative Instruments, Gain (Loss)
Amount of gains (losses) recognized in AOCI	$ 56	$ 47
Amount of gain (losses) reclassified from AOCI	52	(19)
Fair Value / Undesignated Hedges
Derivative Instruments, Gain (Loss)
Gains (Losses) recognized on the consolidated statement of results of operations	(47)	37
Fair Value / Undesignated Hedges | Foreign exchange contracts
Derivative Instruments, Gain (Loss)
Gains (Losses) recognized on the consolidated statement of results of operations	(28)	(63)
Fair Value / Undesignated Hedges | Interest rate contracts
Derivative Instruments, Gain (Loss)
Gains (Losses) recognized on the consolidated statement of results of operations	(27)	7
Fair Value / Undesignated Hedges | Commodity contracts
Derivative Instruments, Gain (Loss)
Gains (Losses) recognized on the consolidated statement of results of operations	8	93
Designated Derivatives | Cash Flow Hedges
Derivative Instruments, Gain (Loss)
Amount of gains (losses) recognized in AOCI	56	47
Amount of gain (losses) reclassified from AOCI	(52)	19
Designated Derivatives | Cash Flow Hedges | Foreign exchange contracts
Derivative Instruments, Gain (Loss)
Amount of gains (losses) recognized in AOCI	58	(9)
Amount of gain (losses) reclassified from AOCI	(65)	26
Designated Derivatives | Cash Flow Hedges | Interest rate contracts
Derivative Instruments, Gain (Loss)
Amount of gains (losses) recognized in AOCI	(2)	56
Amount of gain (losses) reclassified from AOCI	13	(7)
Designated Derivatives | Cash Flow Hedges | Commodity contracts
Derivative Instruments, Gain (Loss)
Amount of gains (losses) recognized in AOCI	0	0
Amount of gain (losses) reclassified from AOCI	$ 0	$ 0

XML

Derivative Financial Instruments and Risk Management- Fair value hedges (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Derivatives Fair Value
Carrying Value of the Hedged Liabilities	$ 4,309	$ 4,173
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Liabilities	(195)	(280)
Long-term debt due after one year
Derivatives Fair Value
Carrying Value of the Hedged Liabilities	4,115	4,173
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Liabilities	(189)	(280)
Long-term debt due within one year
Derivatives Fair Value
Carrying Value of the Hedged Liabilities	194	0
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Liabilities	$ (6)	$ 0

XML

Derivative Financial instruments and Risk Management-Effect of net settlement provisions upon default or termination (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Assets
Gross Amount of Recognized Assets	$ 595	$ 644
Financial Instruments Not Offset- Assets	(164)	(233)
Net Amount of Assets	431	411
Liabilities
Gross Amount of Recognized Liabilities	(404)	(496)
Financial Instruments Not Offset-Liabilities	164	233
Net Amount of Liabilities	$ (240)	$ (263)

XML

Inventories (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw materials	$ 6,776	$ 6,370
Work-in-process	1,656	1,452
Finished goods	8,868	8,138
Supplies	333	310
Total inventories	$ 17,633	$ 16,270

XML

Intangible Assets and Goodwill (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Intangible assets
Weighted Amortizable Life (in years)	15 years		14 years
Finite-Lived Intangible Assets, Gross	$ 3,832		$ 3,838
Finite-Lived Intangible Assets, Accumulated Amortization	(3,138)		(3,080)
Net	694		$ 758
Amortization expense	66	$ 72
Remaining Nine Months of 2023	151
2024	171
2025	161
2026	91
2027	27
Thereafter	$ 93
Customer Relationships
Intangible assets
Weighted Amortizable Life (in years)	16 years		16 years
Finite-Lived Intangible Assets, Gross	$ 2,241		$ 2,233
Finite-Lived Intangible Assets, Accumulated Amortization	(1,717)		(1,675)
Net	$ 524		$ 558
Intellectual Property
Intangible assets
Weighted Amortizable Life (in years)	13 years		12 years
Finite-Lived Intangible Assets, Gross	$ 1,470		$ 1,473
Finite-Lived Intangible Assets, Accumulated Amortization	(1,345)		(1,320)
Net	$ 125		$ 153
Other
Intangible assets
Weighted Amortizable Life (in years)	17 years		16 years
Finite-Lived Intangible Assets, Gross	$ 121		$ 132
Finite-Lived Intangible Assets, Accumulated Amortization	(76)		(85)
Net	$ 45		$ 47

XML

Intangible Assets and Goodwill (Details 2) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Changes in carrying amount of goodwill by reportable segment:
Goodwill, beginning of period	$ 7,410
Impairments, beginning of period	(2,122)
Net goodwill, beginning of period	5,288
Goodwill impairment charge	0	$ 0
Other adjustments	21
Goodwill, end of period	7,431
Impairments, end of period	(2,122)
Net goodwill, end of period	5,309
Construction Industries
Changes in carrying amount of goodwill by reportable segment:
Goodwill, beginning of period	287
Impairments, beginning of period	(22)
Net goodwill, beginning of period	265
Other adjustments	(3)
Goodwill, end of period	284
Impairments, end of period	(22)
Net goodwill, end of period	262
Resource Industries
Changes in carrying amount of goodwill by reportable segment:
Goodwill, beginning of period	4,130
Impairments, beginning of period	(1,175)
Net goodwill, beginning of period	2,955
Other adjustments	18
Goodwill, end of period	4,148
Impairments, end of period	(1,175)
Net goodwill, end of period	2,973
Energy & Transportation
Changes in carrying amount of goodwill by reportable segment:
Goodwill, beginning of period	2,947
Impairments, beginning of period	(925)
Net goodwill, beginning of period	2,022
Other adjustments	6
Goodwill, end of period	2,953
Impairments, end of period	(925)
Net goodwill, end of period	2,028
All Other Operating Segments
Changes in carrying amount of goodwill by reportable segment:
Goodwill, beginning of period	46
Impairments, beginning of period	0
Net goodwill, beginning of period	46
Other adjustments	0
Goodwill, end of period	46
Impairments, end of period	0
Net goodwill, end of period	$ 46

XML

Investments in Debt and Equity Securities (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Schedule of Investments in Debt and Equity Securities
Cost basis	$ 3,358	$ 3,311
Unrealized pretax net gains (losses)	(121)	(147)
Fair Value	3,237	3,164
U.S. treasury bonds
Schedule of Investments in Debt and Equity Securities
Cost basis	10	9
Unrealized pretax net gains (losses)	(1)	0
Fair Value	9	9
Other U.S. and non-U.S. government bonds
Schedule of Investments in Debt and Equity Securities
Cost basis	61	60
Unrealized pretax net gains (losses)	(4)	(5)
Fair Value	57	55
Corporate bonds
Schedule of Investments in Debt and Equity Securities
Cost basis	2,594	2,561
Unrealized pretax net gains (losses)	(75)	(95)
Fair Value	2,519	2,466
Asset-backed securities
Schedule of Investments in Debt and Equity Securities
Cost basis	189	187
Unrealized pretax net gains (losses)	(5)	(5)
Fair Value	184	182
U.S. governmental agency mortgage-backed securities
Schedule of Investments in Debt and Equity Securities
Cost basis	366	364
Unrealized pretax net gains (losses)	(25)	(31)
Fair Value	341	333
Residential
Schedule of Investments in Debt and Equity Securities
Cost basis	3	3
Unrealized pretax net gains (losses)	(1)	(1)
Fair Value	2	2
Commercial
Schedule of Investments in Debt and Equity Securities
Cost basis	135	127
Unrealized pretax net gains (losses)	(10)	(10)
Fair Value	$ 125	$ 117

XML

Investments in Debt and Equity Securities (Details 2) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Available-for-sale Securities, Continuous Unrealized Loss Position
Less than 12 months - Fair Value	$ 1,219	$ 2,203
Less than 12 months - Unrealized losses	27	70
12 months or more - Fair Value	1,352	585
12 months or more - Unrealized losses	99	78
Total - Fair Value	2,571	2,788
Total - Unrealized losses	126	148
Other U.S. and non-U.S. government bonds
Available-for-sale Securities, Continuous Unrealized Loss Position
Less than 12 months - Fair Value	13	19
Less than 12 months - Unrealized losses	1	1
12 months or more - Fair Value	26	20
12 months or more - Unrealized losses	4	4
Total - Fair Value	39	39
Total - Unrealized losses	5	5
Corporate bonds
Available-for-sale Securities, Continuous Unrealized Loss Position
Less than 12 months - Fair Value	990	1,815
Less than 12 months - Unrealized losses	19	46
12 months or more - Fair Value	931	357
12 months or more - Unrealized losses	61	50
Total - Fair Value	1,921	2,172
Total - Unrealized losses	80	96
Asset-backed securities
Available-for-sale Securities, Continuous Unrealized Loss Position
Less than 12 months - Fair Value	67	75
Less than 12 months - Unrealized losses	2	2
12 months or more - Fair Value	86	55
12 months or more - Unrealized losses	4	3
Total - Fair Value	153	130
Total - Unrealized losses	6	5
U.S. governmental agency mortgage-backed securities
Available-for-sale Securities, Continuous Unrealized Loss Position
Less than 12 months - Fair Value	107	229
Less than 12 months - Unrealized losses	3	16
12 months or more - Fair Value	226	98
12 months or more - Unrealized losses	22	15
Total - Fair Value	333	327
Total - Unrealized losses	25	31
Residential
Available-for-sale Securities, Continuous Unrealized Loss Position
Less than 12 months - Fair Value		2
Less than 12 months - Unrealized losses		0
12 months or more - Fair Value		1
12 months or more - Unrealized losses		1
Total - Fair Value		3
Total - Unrealized losses		1
Commercial
Available-for-sale Securities, Continuous Unrealized Loss Position
Less than 12 months - Fair Value	42	63
Less than 12 months - Unrealized losses	2	5
12 months or more - Fair Value	83	54
12 months or more - Unrealized losses	8	5
Total - Fair Value	125	117
Total - Unrealized losses	$ 10	$ 10

XML

Investments in Debt and Equity Securities (Details 3) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Schedule of Investments in Debt and Equity Securities
Due in one year or less, Cost Basis	$ 961
Due in one year or less, Fair Value	950
Due after one year through five years, Cost Basis	1,571
Due after one year through five years, Fair Value	1,511
Due after five through ten years, Cost Basis	257
Due after five years through ten years, Fair Value	245
Due after ten years, Cost Basis	65
Due after ten years, Fair Value	63
Debt Securities, Available-for-sale, Amortized Cost	3,358		$ 3,311
Debt securities, Available-for-sale, Fair value	3,237		3,164
Available-for-sale Securities, Proceeds, Gains and Losses
Proceeds from the sale of available-for-sale securities	223	$ 96
Gross gains from the sale of available-for-sale securities	0	0
Gross losses from the sale of available-for-sale securities	0	0
Schedule of Held-to-maturity Securities
Unrealized gain (loss) on equity securities	(8)	$ (12)
Bank Time Deposits
Schedule of Held-to-maturity Securities
Time deposit	250		0
U.S. governmental agency mortgage-backed securities
Schedule of Investments in Debt and Equity Securities
Debt Securities, Available-for-sale, Amortized Cost	366		364
Debt securities, Available-for-sale, Fair value	341		333
Residential
Schedule of Investments in Debt and Equity Securities
Debt Securities, Available-for-sale, Amortized Cost	3		3
Debt securities, Available-for-sale, Fair value	2		2
Commercial
Schedule of Investments in Debt and Equity Securities
Debt Securities, Available-for-sale, Amortized Cost	135		127
Debt securities, Available-for-sale, Fair value	$ 125		$ 117

XML

Postretirement Benefits (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Pension and other postretirement benefit contributions
Expected full year contributions to pension and other postretirement benefit plans during the year	$ 372
Pension and Other Postretirement Benefits
Pension and other postretirement benefit contributions
Contributions to pension and other postretirement benefit plans	208
Other Postretirement Benefits Plan
Components of net periodic benefit cost:
Service cost	17	$ 25
Interest cost	36	20
Expected return on plan assets	(3)	(4)
Amortization of prior service cost / (credit)	(3)	(1)
Net periodic benefit cost (benefit)	47	40
UNITED STATES
Components of net periodic benefit cost:
Service cost	0	0
Interest cost	164	100
Expected return on plan assets	(172)	(167)
Amortization of prior service cost / (credit)	0	0
Net periodic benefit cost (benefit)	(8)	(67)
Foreign Plan
Components of net periodic benefit cost:
Service cost	10	13
Interest cost	31	18
Expected return on plan assets	(40)	(34)
Amortization of prior service cost / (credit)	0	0
Net periodic benefit cost (benefit)	$ 1	$ (3)

XML

Postretirement Benefits (Details 2) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Defined Contribution Plan
Costs related to defined contribution plans	$ 178	$ 143
U.S. Plans
Defined Contribution Plan
Costs related to defined contribution plans	149	114
Non-U.S. Plans
Defined Contribution Plan
Costs related to defined contribution plans	$ 29	$ 29

XML

Leases Lease revenue (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Leases [Abstract]
Finance lease revenue	$ 104	$ 112
Operating lease revenue	275	278
Total	$ 379	$ 390
Financial Products
Leases [Abstract]
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration]	Sales and revenues	Sales and revenues
Lessor, Lease, Description
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration]	Sales and revenues	Sales and revenues

XML

Guarantees and Product Warranty (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Related liability	$ 4	$ 2
Guarantor Obligations
Guarantees, maximum potential amount of future payments	572	511
SPC assets in consolidated statement	83,649	81,943
SPC liabilities in consolidated statement	65,479	66,052
Caterpillar dealer performance guarantees
Guarantor Obligations
Guarantees, maximum potential amount of future payments	191	188
Other guarantees
Guarantor Obligations
Guarantees, maximum potential amount of future payments	381	323
Variable Interest Entity, Primary Beneficiary
Guarantor Obligations
SPC assets in consolidated statement	1,130	971
SPC liabilities in consolidated statement	$ 1,130	$ 970

XML

Guarantees and Product Warranty (Details 2) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Change in product warranty liability balances
Warranty liability, beginning balance	$ 1,761	$ 1,689
Reduction in liability (payments)	(213)	(194)
Increase in liability (new warranties)	246	168
Warranty liability, ending balance	$ 1,794	$ 1,663

XML

Profit Per Share (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended
		Mar. 31, 2023	Mar. 31, 2022
Earnings Per Share Reconciliation [Abstract]
Profit for the period (A) (in dollars)	[1]	$ 1,943	$ 1,537
Determination of shares (in millions)
Weighted-average number of common shares outstanding (B) (in shares)		516,200,000	534,500,000
Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price (in shares)		3,200,000	3,800,000
Average common shares outstanding for fully diluted computation (C) (in shares)	[2]	519,400,000	538,300,000
Assuming no dilution (A/B) (in dollars per share)		$ 3.76	$ 2.88
Assuming full dilution (A/C) (in dollars per share)	[2]	$ 3.74	$ 2.86
Common Stock, Shares, Outstanding		515,900,000	533,400,000
Common shares under SARs and stock options not included in the computation of diluted earnings per share (in shares)		800,000	2,100,000
Stock repurchase
Common shares repurchased (in shares)		1,701,760	3,571,684
Cost of repurchase	[3]	$ 400	$ 720

[1] Profit attributable to common shareholders.

[2] Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

[3] See Note 12 for additional information.

XML

Accumulated other comprehensive income (loss) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Foreign currency translation
Beginning balance	$ (2,328)	$ (1,508)
Gains (losses) on foreign currency translation	103	(104)
Less: Tax provision /(benefit)	(10)	11
Net gains (losses) on foreign currency translation	113	(115)
(Gains) losses reclassified to earnings	494	0
Less: Tax provision /(benefit)	0	0
Net (gains) losses reclassified to earnings	494	0
Other comprehensive income (loss), net of tax	607	(115)
Ending balance	(1,721)	(1,623)
Pension and other postretirement benefits:
Beginning balance	(39)	(62)
Current year prior service credit (cost)	0	0
Pension and other postretirement benefits, Current year prior service credit (cost), tax (provision)/benefit	0	0
Net current year prior service credit (cost)	0	0
Amortization of prior service credit (cost)	(3)	(1)
Less: Tax provision /(benefit)	(1)	0
Net amortization of prior service (credit) cost	(2)	(1)
Pension and other post retirement benefits	(2)	(1)
Ending balance	(41)	(63)
Derivative financial instruments:
Beginning balance	28	(3)
Amount of gains (losses) recognized in AOCI	56	47
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, Tax	12	10
Gains (losses) deferred, net of tax	44	37
Amount of gain (losses) reclassified from AOCI	52	(19)
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax	12	(5)
Net (gains) losses reclassified to earnings	40	(14)
Other comprehensive income (loss), net of tax	84	23
Ending balance	112	20
Available-for-sale securities:
Beginning balance	(118)	20
Gains (losses) deferred	26	(79)
Less: Tax provision /(benefit)	4	(15)
Net gains (losses) deferred	22	(64)
(Gains) losses reclassified to earnings	0	0
Available-for-sale securities, (Gains) losses reclassified to earnings, tax (provision)/benefit	0	0
Net (gains) losses reclassified to earnings	0	0
Other comprehensive income (loss), net of tax	22	(64)
Ending balance	(96)	(44)
Accumulated other comprehensive income (loss)	$ (1,746)	$ (1,710)	$ (2,457)

XML

Environmental and legal matters Environmental and legal matters (Details)	Mar. 03, 2017
IRS investigation
Loss Contingencies
Number of facilities served search and seizure warrants	3

XML

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Effective Income Tax Rate (as a percentage)	26.90%	23.40%
Estimated Annual Income Tax Rate (as a percentage)	23.00%	24.00%	23.20%
Gain (Loss) on Divestiture	$ (586)
Tax benefit for settlement of stock-based compensation awards	$ 32	$ 12

XML

Segment Information (Details)	3 Months Ended
	Mar. 31, 2023 segments group_presidents
Segment Reporting Information
Number of group presidents | group_presidents	4
Number of operating segments	5
Useful life to amortize goodwill for segment assets	20 years
Reportable Segments
Segment Reporting Information
Number of operating segments led by Group Presidents	3
Number of operating segments led by Group President responsible for corporate services	1
Number of reportable segments	4
All Other operating segments
Segment Reporting Information
Number of group presidents | group_presidents	1
Number of smaller operating segments led by Group President | group_presidents	1

XML

Sales and revenues by geographic region (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Sales and revenues by geographic region
Sales and revenues	$ 15,862	$ 13,589
Reportable Segments
Sales and revenues by geographic region
Sales and revenues	17,329	14,766
Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	16,020	13,660
Reportable Segments | Segment Reconciling Items
Sales and revenues by geographic region
Sales and revenues	1,309	1,106
Corporate Items and Eliminations
Sales and revenues by geographic region
Sales and revenues	(1,578)	(1,295)
Corporate Items and Eliminations | Corporate, Non-Segment
Sales and revenues by geographic region
Sales and revenues	(193)	(110)
Corporate Items and Eliminations | Intersegment Eliminations
Sales and revenues by geographic region
Sales and revenues	(1,385)	(1,185)
North America
Sales and revenues by geographic region
Sales and revenues	7,950	6,137
North America | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	8,063	6,179
North America | Corporate Items and Eliminations | Corporate, Non-Segment
Sales and revenues by geographic region
Sales and revenues	(131)	(60)
Latin America
Sales and revenues by geographic region
Sales and revenues	1,539	1,393
Latin America | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	1,557	1,409
Latin America | Corporate Items and Eliminations | Corporate, Non-Segment
Sales and revenues by geographic region
Sales and revenues	(18)	(16)
EAME
Sales and revenues by geographic region
Sales and revenues	3,418	3,145
EAME | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	3,433	3,151
EAME | Corporate Items and Eliminations | Corporate, Non-Segment
Sales and revenues by geographic region
Sales and revenues	(19)	(11)
Asia/Pacific
Sales and revenues by geographic region
Sales and revenues	2,955	2,914
Asia/Pacific | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	2,967	2,921
Asia/Pacific | Corporate Items and Eliminations | Corporate, Non-Segment
Sales and revenues by geographic region
Sales and revenues	(25)	(23)
Construction Industries | Reportable Segments
Sales and revenues by geographic region
Sales and revenues	6,746	6,115
Construction Industries | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	6,704	6,086
Construction Industries | Reportable Segments | Segment Reconciling Items
Sales and revenues by geographic region
Sales and revenues	42	29
Construction Industries | North America | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	3,608	2,720
Construction Industries | Latin America | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	599	627
Construction Industries | EAME | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	1,336	1,277
Construction Industries | Asia/Pacific | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	1,161	1,462
Resource Industries | Reportable Segments
Sales and revenues by geographic region
Sales and revenues	3,427	2,830
Resource Industries | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	3,359	2,759
Resource Industries | Reportable Segments | Segment Reconciling Items
Sales and revenues by geographic region
Sales and revenues	68	71
Resource Industries | North America | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	1,308	1,018
Resource Industries | Latin America | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	474	399
Resource Industries | EAME | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	599	594
Resource Industries | Asia/Pacific | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	978	748
Energy & Transportation
Sales and revenues by geographic region
Sales and revenues	5,055	4,032
Energy & Transportation | Reportable Segments
Sales and revenues by geographic region
Sales and revenues	6,254	5,038
Energy & Transportation | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	5,055	4,032
Energy & Transportation | Reportable Segments | Segment Reconciling Items
Sales and revenues by geographic region
Sales and revenues	1,199	1,006
Energy & Transportation | North America | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	2,572	1,938
Energy & Transportation | Latin America | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	380	310
Energy & Transportation | EAME | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	1,384	1,184
Energy & Transportation | Asia/Pacific | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	719	600
Financial Products Segment
Sales and revenues by geographic region
Revenue from Related Parties	162	100
Financial Products Segment | Reportable Segments
Sales and revenues by geographic region
Sales and revenues	902	783
Financial Products Segment | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	902	783
Financial Products Segment | Reportable Segments | Segment Reconciling Items
Sales and revenues by geographic region
Sales and revenues	0	0
Financial Products Segment | North America | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	575	503
Financial Products Segment | Latin America | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	104	73
Financial Products Segment | EAME | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	114	96
Financial Products Segment | Asia/Pacific | Reportable Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	109	111
All Other Operating Segments
Sales and revenues by geographic region
Sales and revenues	111	118
All Other Operating Segments | Operating Segments
Sales and revenues by geographic region
Sales and revenues	35	39
All Other Operating Segments | Segment Reconciling Items
Sales and revenues by geographic region
Sales and revenues	76	79
All Other Operating Segments | North America | Operating Segments
Sales and revenues by geographic region
Sales and revenues	18	18
All Other Operating Segments | Latin America | Operating Segments
Sales and revenues by geographic region
Sales and revenues	0	0
All Other Operating Segments | EAME | Operating Segments
Sales and revenues by geographic region
Sales and revenues	4	5
All Other Operating Segments | Asia/Pacific | Operating Segments
Sales and revenues by geographic region
Sales and revenues	$ 13	$ 16

XML

Energy & Transportation sales (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Energy and transportation sales
Sales and revenues	$ 15,862	$ 13,589
Energy & Transportation
Energy and transportation sales
Sales and revenues	5,055	4,032
Energy & Transportation | Oil And Gas Customer
Energy and transportation sales
Sales and revenues	1,314	948
Energy & Transportation | Power generation
Energy and transportation sales
Sales and revenues	1,284	1,012
Energy & Transportation | Industrial
Energy and transportation sales
Sales and revenues	1,255	1,020
Energy & Transportation | Transportation
Energy and transportation sales
Sales and revenues	$ 1,202	$ 1,052

XML

Reconciliations of consolidated profit before taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	$ 2,634	$ 1,999
Operating Segments | Reportable Segments
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	3,843	2,194
Operating Segments | Reportable Segments | Construction Industries
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	1,790	1,057
Operating Segments | Reportable Segments | Resource Industries
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	764	361
Operating Segments | Reportable Segments | Energy & Transportation
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	1,057	538
Operating Segments | Reportable Segments | Financial Products Segment
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	232	238
Operating Segments | All Other operating segments
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	11	3
Intersegment Eliminations | Cost Centers
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	30	10
Intersegment Eliminations | Corporate Costs
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	(238)	(198)
Intersegment Eliminations | Timing
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	(206)	(98)
Intersegment Eliminations | Restructuring Costs
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	(611)	(13)
Intersegment Eliminations | Inventory/cost of sales
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	126	168
Intersegment Eliminations | Postretirement Benefits Expense
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	(31)	81
Intersegment Eliminations | Stock-Based Compensation Expense
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	(44)	(40)
Intersegment Eliminations | Financing Costs
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	(50)	(100)
Intersegment Eliminations | Currency
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	(26)	106
Intersegment Eliminations | Other Income Expense Methodology Differences
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	(146)	(81)
Intersegment Eliminations | Other
Reconciliation of Consolidated profit (loss) before taxes
Reclassifications before tax	$ (24)	$ (33)

XML

Reconciliation of assets (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Reconciliation of Assets
Assets	$ 83,649	$ 81,943
Intersegment Eliminations
Reconciliation of Assets
Inventory Methodology Difference	(3,441)	(3,063)
Intersegment Eliminations | Cash and Short Term Investments
Reconciliation of Assets
Assets	6,017	6,042
Intersegment Eliminations | Deferred Income Taxes
Reconciliation of Assets
Assets	2,287	2,098
Intersegment Eliminations | Goodwill and Intangible Assets
Reconciliation of Assets
Assets	4,437	4,248
Intersegment Eliminations | Property Plant and Equipment-Net and Other Assets
Reconciliation of Assets
Assets	4,523	4,234
Intersegment Eliminations | Liabilities Included in Segment Assets
Reconciliation of Assets
Assets	13,118	12,519
Intersegment Eliminations | Other
Reconciliation of Assets
Assets	(494)	(630)
Operating Segments | Reportable Segments
Reconciliation of Assets
Assets	55,407	54,667
Operating Segments | Reportable Segments | Construction Industries
Reconciliation of Assets
Assets	5,584	5,168
Operating Segments | Reportable Segments | Resource Industries
Reconciliation of Assets
Assets	5,719	5,775
Operating Segments | Reportable Segments | Energy & Transportation
Reconciliation of Assets
Assets	9,513	9,455
Operating Segments | Reportable Segments | Financial Products Segment
Reconciliation of Assets
Assets	34,591	34,269
Operating Segments | All Other operating segments
Reconciliation of Assets
Assets	$ 1,795	$ 1,828

XML

Reconciliations of depreciation and amortization (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Reconciliation of Depreciation and amortization
Depreciation and amortization	$ 532	$ 557
Operating Segments | Reportable Segments
Reconciliation of Depreciation and amortization
Depreciation and amortization	448	472
Operating Segments | Reportable Segments | Construction Industries
Reconciliation of Depreciation and amortization
Depreciation and amortization	54	58
Operating Segments | Reportable Segments | Resource Industries
Reconciliation of Depreciation and amortization
Depreciation and amortization	87	92
Operating Segments | Reportable Segments | Energy & Transportation
Reconciliation of Depreciation and amortization
Depreciation and amortization	129	134
Operating Segments | Reportable Segments | Financial Products Segment
Reconciliation of Depreciation and amortization
Depreciation and amortization	178	188
Intersegment Eliminations | All Other operating segments
Reconciliation of Depreciation and amortization
Depreciation and amortization	57	58
Intersegment Eliminations | Cost Centers
Reconciliation of Depreciation and amortization
Depreciation and amortization	20	21
Intersegment Eliminations | Other
Reconciliation of Depreciation and amortization
Depreciation and amortization	$ 7	$ 6

XML

Reconciliations of capital expenditures (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Reconciliation of Capital expenditures
Segment Reporting Information, Expenditure for Additions Long-Lived Assets	$ 750	$ 679
Operating Segments | Reportable Segments
Reconciliation of Capital expenditures
Segment Reporting Information, Expenditure for Additions Long-Lived Assets	506	472
Operating Segments | Reportable Segments | Construction Industries
Reconciliation of Capital expenditures
Segment Reporting Information, Expenditure for Additions Long-Lived Assets	32	32
Operating Segments | Reportable Segments | Resource Industries
Reconciliation of Capital expenditures
Segment Reporting Information, Expenditure for Additions Long-Lived Assets	26	22
Operating Segments | Reportable Segments | Energy & Transportation
Reconciliation of Capital expenditures
Segment Reporting Information, Expenditure for Additions Long-Lived Assets	169	177
Operating Segments | Reportable Segments | Financial Products Segment
Reconciliation of Capital expenditures
Segment Reporting Information, Expenditure for Additions Long-Lived Assets	279	241
Intersegment Eliminations | All Other operating segments
Reconciliation of Capital expenditures
Segment Reporting Information, Expenditure for Additions Long-Lived Assets	26	16
Intersegment Eliminations | Cost Centers
Reconciliation of Capital expenditures
Segment Reporting Information, Expenditure for Additions Long-Lived Assets	22	9
Intersegment Eliminations | Timing
Reconciliation of Capital expenditures
Segment Reporting Information, Expenditure for Additions Long-Lived Assets	212	192
Intersegment Eliminations | Other
Reconciliation of Capital expenditures
Segment Reporting Information, Expenditure for Additions Long-Lived Assets	$ (16)	$ (10)

XML

Cat Financial Financing Activities (Details-Allowance for credit losses) - Finance Receivables - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Allowance for Credit Loss Activity
Beginning balance	$ 342	$ 333
Write-offs	(20)	(20)
Recoveries	10	12
Provision for credit losses	10	25
Other	1	2
Ending balance	343	352
Total Finance Receivables	21,294	22,011
Customer
Allowance for Credit Loss Activity
Beginning balance	277	251
Write-offs	(20)	(20)
Recoveries	10	12
Provision for credit losses	10	26
Other	1	2
Ending balance	278	271
Total Finance Receivables	19,573	20,289
Dealer
Allowance for Credit Loss Activity
Beginning balance	65	82
Write-offs	0	0
Recoveries	0	0
Provision for credit losses	0	(1)
Other	0	0
Ending balance	65	81
Total Finance Receivables	$ 1,721	$ 1,722

XML

Cat Financial Financing Activities (Details-Write offs) - Finance Receivables - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Write-offs by origination year
Total	$ 20	$ 20
Customer
Write-offs by origination year
2023	0
2022	4
2021	6
2020	4
2019	2
Prior	0
Revolving Finance Receivables	4
Total	20	$ 20
Customer | North America
Write-offs by origination year
2023	0
2022	3
2021	3
2020	0
2019	0
Prior	0
Revolving Finance Receivables	4
Total	10
Customer | EMEA
Write-offs by origination year
2023	0
2022	1
2021	0
2020	1
2019	0
Prior	0
Revolving Finance Receivables	0
Total	2
Customer | Asia/Pacific
Write-offs by origination year
2023	0
2022	0
2021	2
2020	1
2019	1
Prior	0
Revolving Finance Receivables	0
Total	4
Customer | Latin America
Write-offs by origination year
2023	0
2022	0
2021	1
2020	2
2019	1
Prior	0
Revolving Finance Receivables	0
Total	$ 4

XML

Cat Financial Financing Activities Cat Financing Activities (Details Credit quality- Customer Receivables Aging by origination year -Vintage disclosure) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Receivables [Abstract]
Period after which Unpaid Installments are Considered as Past Due	30 days
Dealer | Latin America | Financing Receivables, Equal to or Greater than 30 Days Past Due
Financing Receivable, Credit Quality Indicator
Prior	$ 58	$ 58
Finance Receivables | Customer
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	1,961	8,023
2022 and 2021, respectively	7,438	6,121
2021 and 2020, respectively	5,470	2,924
2020 and 2019, respectively	2,501	1,314
2019 and 2018, respectively	1,067	529
Prior	684	405
Revolving Finance Receivables	452	456
Total Finance Receivables	19,573	19,772
Finance Receivables | Customer | Current
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	1,956	7,929
2022 and 2021, respectively	7,308	5,973
2021 and 2020, respectively	5,300	2,827
2020 and 2019, respectively	2,411	1,275
2019 and 2018, respectively	1,027	516
Prior	656	393
Revolving Finance Receivables	444	445
Total Finance Receivables	19,102	19,358
Finance Receivables | Customer | 31-60 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	5	52
2022 and 2021, respectively	75	59
2021 and 2020, respectively	86	37
2020 and 2019, respectively	39	16
2019 and 2018, respectively	22	6
Prior	14	2
Revolving Finance Receivables	3	4
Total Finance Receivables	244	176
Finance Receivables | Customer | 61-90 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	21
2022 and 2021, respectively	26	29
2021 and 2020, respectively	21	15
2020 and 2019, respectively	12	7
2019 and 2018, respectively	5	1
Prior	5	0
Revolving Finance Receivables	2	3
Total Finance Receivables	71	76
Finance Receivables | Customer | 91+ days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	21
2022 and 2021, respectively	29	60
2021 and 2020, respectively	63	45
2020 and 2019, respectively	39	16
2019 and 2018, respectively	13	6
Prior	9	10
Revolving Finance Receivables	3	4
Total Finance Receivables	156	162
Finance Receivables | Customer | North America | Current
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	886	3,915
2022 and 2021, respectively	3,585	3,276
2021 and 2020, respectively	2,931	1,525
2020 and 2019, respectively	1,308	653
2019 and 2018, respectively	525	206
Prior	168	34
Revolving Finance Receivables	255	240
Total Finance Receivables	9,658	9,849
Finance Receivables | Customer | North America | 31-60 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	3	25
2022 and 2021, respectively	29	26
2021 and 2020, respectively	30	18
2020 and 2019, respectively	18	12
2019 and 2018, respectively	8	4
Prior	2	1
Revolving Finance Receivables	3	4
Total Finance Receivables	93	90
Finance Receivables | Customer | North America | 61-90 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	9
2022 and 2021, respectively	11	15
2021 and 2020, respectively	8	7
2020 and 2019, respectively	5	3
2019 and 2018, respectively	2	1
Prior	1	0
Revolving Finance Receivables	2	3
Total Finance Receivables	29	38
Finance Receivables | Customer | North America | 91+ days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	11
2022 and 2021, respectively	12	16
2021 and 2020, respectively	19	12
2020 and 2019, respectively	12	6
2019 and 2018, respectively	5	4
Prior	5	3
Revolving Finance Receivables	3	4
Total Finance Receivables	56	56
Finance Receivables | Customer | EAME | Current
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	310	1,270
2022 and 2021, respectively	1,198	953
2021 and 2020, respectively	864	477
2020 and 2019, respectively	423	280
2019 and 2018, respectively	234	155
Prior	189	68
Revolving Finance Receivables	0	0
Total Finance Receivables	3,218	3,203
Finance Receivables | Customer | EAME | 31-60 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	2	10
2022 and 2021, respectively	15	12
2021 and 2020, respectively	12	7
2020 and 2019, respectively	4	1
2019 and 2018, respectively	2	1
Prior	1	0
Revolving Finance Receivables	0	0
Total Finance Receivables	36	31
Finance Receivables | Customer | EAME | 61-90 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	8
2022 and 2021, respectively	7	4
2021 and 2020, respectively	5	3
2020 and 2019, respectively	3	1
2019 and 2018, respectively	2	0
Prior	0	0
Revolving Finance Receivables	0	0
Total Finance Receivables	17	16
Finance Receivables | Customer | EAME | 91+ days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	6
2022 and 2021, respectively	8	25
2021 and 2020, respectively	23	16
2020 and 2019, respectively	14	4
2019 and 2018, respectively	3	1
Prior	2	1
Revolving Finance Receivables	0	0
Total Finance Receivables	50	53
Finance Receivables | Customer | Asia/Pacific | Current
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	248	1,033
2022 and 2021, respectively	896	684
2021 and 2020, respectively	568	313
2020 and 2019, respectively	230	69
2019 and 2018, respectively	48	18
Prior	14	2
Revolving Finance Receivables	0	0
Total Finance Receivables	2,004	2,119
Finance Receivables | Customer | Asia/Pacific | 31-60 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	10
2022 and 2021, respectively	9	12
2021 and 2020, respectively	12	8
2020 and 2019, respectively	9	1
2019 and 2018, respectively	2	1
Prior	0	0
Revolving Finance Receivables	0	0
Total Finance Receivables	32	32
Finance Receivables | Customer | Asia/Pacific | 61-90 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	2
2022 and 2021, respectively	4	5
2021 and 2020, respectively	4	4
2020 and 2019, respectively	3	2
2019 and 2018, respectively	1	0
Prior	0	0
Revolving Finance Receivables	0	0
Total Finance Receivables	12	13
Finance Receivables | Customer | Asia/Pacific | 91+ days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	2
2022 and 2021, respectively	4	6
2021 and 2020, respectively	6	6
2020 and 2019, respectively	5	4
2019 and 2018, respectively	3	0
Prior	1	0
Revolving Finance Receivables	0	0
Total Finance Receivables	19	18
Finance Receivables | Customer | Mining | Current
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	318	863
2022 and 2021, respectively	837	575
2021 and 2020, respectively	520	220
2020 and 2019, respectively	186	171
2019 and 2018, respectively	137	93
Prior	98	108
Revolving Finance Receivables	56	80
Total Finance Receivables	2,152	2,110
Finance Receivables | Customer | Mining | 31-60 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	0
2022 and 2021, respectively	5	1
2021 and 2020, respectively	0	0
2020 and 2019, respectively	4	0
2019 and 2018, respectively	1	0
Prior	0	0
Revolving Finance Receivables	0	0
Total Finance Receivables	10	1
Finance Receivables | Customer | Mining | 61-90 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	0
2022 and 2021, respectively	0	0
2021 and 2020, respectively	0	0
2020 and 2019, respectively	0	0
2019 and 2018, respectively	0	0
Prior	0	0
Revolving Finance Receivables	0	0
Total Finance Receivables	0	0
Finance Receivables | Customer | Mining | 91+ days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	0
2022 and 2021, respectively	0	0
2021 and 2020, respectively	1	0
2020 and 2019, respectively	0	0
2019 and 2018, respectively	0	0
Prior	0	1
Revolving Finance Receivables	0	0
Total Finance Receivables	1	1
Finance Receivables | Customer | Latin America | Current
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	182	770
2022 and 2021, respectively	716	400
2021 and 2020, respectively	339	150
2020 and 2019, respectively	124	69
2019 and 2018, respectively	51	26
Prior	28	20
Revolving Finance Receivables	0	0
Total Finance Receivables	1,440	1,435
Finance Receivables | Customer | Latin America | 31-60 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	7
2022 and 2021, respectively	17	8
2021 and 2020, respectively	32	4
2020 and 2019, respectively	4	2
2019 and 2018, respectively	9	0
Prior	9	1
Revolving Finance Receivables	0	0
Total Finance Receivables	71	22
Finance Receivables | Customer | Latin America | 61-90 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	2
2022 and 2021, respectively	4	5
2021 and 2020, respectively	4	1
2020 and 2019, respectively	1	1
2019 and 2018, respectively	0	0
Prior	3	0
Revolving Finance Receivables	0	0
Total Finance Receivables	12	9
Finance Receivables | Customer | Latin America | 91+ days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	2
2022 and 2021, respectively	5	13
2021 and 2020, respectively	14	11
2020 and 2019, respectively	8	2
2019 and 2018, respectively	2	1
Prior	1	0
Revolving Finance Receivables	0	0
Total Finance Receivables	30	29
Finance Receivables | Customer | Power Finance | Current
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	12	78
2022 and 2021, respectively	76	85
2021 and 2020, respectively	78	142
2020 and 2019, respectively	140	33
2019 and 2018, respectively	32	18
Prior	159	161
Revolving Finance Receivables	133	125
Total Finance Receivables	630	642
Finance Receivables | Customer | Power Finance | 31-60 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	0
2022 and 2021, respectively	0	0
2021 and 2020, respectively	0	0
2020 and 2019, respectively	0	0
2019 and 2018, respectively	0	0
Prior	2	0
Revolving Finance Receivables	0	0
Total Finance Receivables	2	0
Finance Receivables | Customer | Power Finance | 61-90 days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	0
2022 and 2021, respectively	0	0
2021 and 2020, respectively	0	0
2020 and 2019, respectively	0	0
2019 and 2018, respectively	0	0
Prior	1	0
Revolving Finance Receivables	0	0
Total Finance Receivables	1	0
Finance Receivables | Customer | Power Finance | 91+ days past due
Financing Receivable, Credit Quality Indicator
2023 and 2022, respectively	0	0
2022 and 2021, respectively	0	0
2021 and 2020, respectively	0	0
2020 and 2019, respectively	0	0
2019 and 2018, respectively	0	0
Prior	0	5
Revolving Finance Receivables	0	0
Total Finance Receivables	$ 0	$ 5

XML

Cat Financial Financing Activities (Details Non-accrual) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Receivables [Abstract]
Period after which Collection of Future Income is Considered as Not Probable	120 days
Finance Receivables | Customer
Financing Receivable, Nonaccrual
Amortized Cost, Non-accrual With an Allowance	$ 191	$ 156
Amortized Cost, Non-accrual Without an Allowance	0	16
Financing Receivable, 91 days past due and still accruing	25	28
Finance Receivables | North America | Customer
Financing Receivable, Nonaccrual
Amortized Cost, Non-accrual With an Allowance	48	52
Amortized Cost, Non-accrual Without an Allowance	0	4
Financing Receivable, 91 days past due and still accruing	12	11
Finance Receivables | EAME | Customer
Financing Receivable, Nonaccrual
Amortized Cost, Non-accrual With an Allowance	44	43
Amortized Cost, Non-accrual Without an Allowance	0	0
Financing Receivable, 91 days past due and still accruing	6	10
Finance Receivables | Asia/Pacific | Customer
Financing Receivable, Nonaccrual
Amortized Cost, Non-accrual With an Allowance	12	11
Amortized Cost, Non-accrual Without an Allowance	0	0
Financing Receivable, 91 days past due and still accruing	7	7
Finance Receivables | Mining | Customer
Financing Receivable, Nonaccrual
Amortized Cost, Non-accrual With an Allowance	2	0
Amortized Cost, Non-accrual Without an Allowance	0	1
Financing Receivable, 91 days past due and still accruing	0	0
Finance Receivables | Latin America | Dealer
Financing Receivable, Nonaccrual
Amortized Cost, Non-accrual With an Allowance	58	58
Finance Receivables | Latin America | Customer
Financing Receivable, Nonaccrual
Amortized Cost, Non-accrual With an Allowance	77	45
Amortized Cost, Non-accrual Without an Allowance	0	0
Financing Receivable, 91 days past due and still accruing	0	0
Finance Receivables | Power Finance | Customer
Financing Receivable, Nonaccrual
Amortized Cost, Non-accrual With an Allowance	8	5
Amortized Cost, Non-accrual Without an Allowance	0	11
Financing Receivable, 91 days past due and still accruing	$ 0	$ 0

XML

Fair Value Disclosures (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	$ 3,237	$ 3,164
Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	3,237	3,164
Equity Securities	432	441
Total Assets	3,995	3,948
Total Liabilities	135	195
Recurring basis | Interest rate contracts
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Derivative Assets (Liabilities), at Fair Value, Net	(135)	(195)
Recurring basis | Foreign exchange contracts
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Derivative Assets (Liabilities), at Fair Value, Net	309	328
Recurring basis | Commodity contracts
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Derivative Assets (Liabilities), at Fair Value, Net	17	15
U.S. treasury bonds
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	9	9
U.S. treasury bonds | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	9	9
Other U.S. and non-U.S. government bonds
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	57	55
Other U.S. and non-U.S. government bonds | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	57	55
Corporate bonds
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	2,519	2,466
Corporate bonds | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	2,519	2,466
Asset-backed securities
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	184	182
Asset-backed securities | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	184	182
U.S. governmental agency | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	341	333
Residential
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	2	2
Residential | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	2	2
Commercial
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	125	117
Commercial | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	125	117
Large capitalization value | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Equity Securities	200	203
Smaller company growth | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Equity Securities	32	31
REIT | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Equity Securities	200	207
Level 1 | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	9	9
Equity Securities	232	234
Total Assets	241	243
Level 1 | U.S. treasury bonds | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	9	9
Level 1 | Large capitalization value | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Equity Securities	200	203
Level 1 | Smaller company growth | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Equity Securities	32	31
Level 2 | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	3,178	3,105
Total Assets	3,504	3,448
Total Liabilities	135	195
Level 2 | Recurring basis | Interest rate contracts
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Derivative Assets (Liabilities), at Fair Value, Net	(135)	(195)
Level 2 | Recurring basis | Foreign exchange contracts
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Derivative Assets (Liabilities), at Fair Value, Net	309	328
Level 2 | Recurring basis | Commodity contracts
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Derivative Assets (Liabilities), at Fair Value, Net	17	15
Level 2 | Other U.S. and non-U.S. government bonds | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	57	55
Level 2 | Corporate bonds | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	2,469	2,416
Level 2 | Asset-backed securities | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	184	182
Level 2 | U.S. governmental agency | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	341	333
Level 2 | Residential | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	2	2
Level 2 | Commercial | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	125	117
Fair Value Measured on Net Asset Value (NAV) | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Equity Securities	200	207
Total Assets	200	207
Fair Value Measured on Net Asset Value (NAV) | REIT | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Equity Securities	200	207
Level 3 | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	50	50
Total Assets	50	50
Level 3 | Corporate Debt Securities | Recurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Debt securities, Available-for-sale, Fair value	50	50
Financial Products | Level 3 | Nonrecurring basis
Assets and liabilities measured on a recurring and non-recurring basis at fair value
Loans carried at fair value	$ 61	$ 68

XML

Fair Value Disclosures (Details 2) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Carrying Amount
Assets
Finance receivables-net (excluding finance leases)	$ 14,010	$ 13,965
Wholesale inventory receivables-net (excluding finance leases)	1,024	827
Carrying Amount | Machinery, Energy & Transportation
Liabilities
Long-term debt (including amounts due within one year)	9,595	9,618
Carrying Amount | Financial Products
Liabilities
Long-term debt (including amounts due within one year)	21,602	21,418
Carrying amount of assets excluded from measurement at fair value
Assets
Excluded items: Finance leases and failed sale leasebacks, Carrying Value	7,198	7,325
Level 2 | Fair Value | Machinery, Energy & Transportation
Liabilities
Long-term debt (including amounts due within one year)	9,542	9,240
Level 2 | Fair Value | Financial Products
Liabilities
Long-term debt (including amounts due within one year)	21,066	20,686
Level 3 | Fair Value
Assets
Finance receivables-net (excluding finance leases)	13,488	13,377
Wholesale inventory receivables-net (excluding finance leases)	$ 967	$ 778

XML

Other income (expense) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Other Income and Expenses [Abstract]
Investment and interest income	$ 93	$ 21
Foreign exchange gains (losses)	(72)	47
License fee income	31	32
Net periodic pension and OPEB income (cost), excluding service cost	(13)	68
Gains (losses) on securities	(11)	(12)
Miscellaneous income (loss)	4	97
Total	$ 32	$ 253

XML

Restructuring Costs (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Restructuring Charges [Abstract]
Gain (Loss) on Divestiture	$ (586)
(Gains) losses reclassified to earnings	494	$ 0
Restructuring and Related Cost
Restructuring costs	611	13
Employee Separation Charges [Roll Forward]
Restructuring Reserve, Beginning Balance	39	61
Increase in liability (separation charges)	12	5
Payments for Restructuring	(28)	(19)
Restructuring Reserve, Ending Balance	23	47
Employee separations | Other Operating Income (Expense)
Restructuring and Related Cost
Restructuring costs	12	5
Longwall Divestiture | Other Operating Income (Expense)
Restructuring and Related Cost
Restructuring costs	586	0
Other | Cost of Sales
Restructuring and Related Cost
Restructuring costs	$ 13	$ 8