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Segment Information
 9 Months Ended
Sep. 30, 2021
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; compactors; cold planers; compact track and multi-terrain loaders; mini, small, medium and large track excavators; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; small and medium track-type tractors; track-type loaders; utility vehicles; wheel excavators; compact, small and medium wheel loaders; and related parts and work tools. Inter-segment sales are a source of revenue for this segment.
Resource Industries:  A segment primarily responsible for supporting customers using machinery in mining, heavy construction and quarry and aggregates. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes large track-type tractors; large mining trucks; hard rock vehicles; longwall miners; electric rope shovels; draglines; hydraulic shovels; rotary drills; large wheel loaders; off-highway trucks; articulated trucks; wheel tractor scrapers; wheel dozers; landfill compactors; soil compactors; select work tools; machinery components; electronics and control systems and related parts. In addition to equipment, Resource Industries also develops and sells technology products and services to provide customers fleet management, equipment management analytics, autonomous machine capabilities, safety services and mining performance solutions. Resource Industries also manages areas that provide services to other parts of the company, including integrated manufacturing, research and development for drivetrains, hydraulic systems, 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 and development, 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 used in the electric power generation industry; reciprocating engines and integrated systems and solutions for the marine and oil and gas industries; reciprocating engines supplied to the industrial industry as well as Cat machinery; 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, as well as financing for vehicles, power generation facilities and marine vessels that, in most cases, incorporate Caterpillar products. Financing plans include operating and finance leases, installment sale contracts, repair/rebuild financing, working capital loans and wholesale financing plans. The segment also provides insurance and risk management products and services that help customers and dealers manage their business risk. Insurance and risk management products offered include physical damage insurance, inventory protection plans, extended service coverage and maintenance plans for machines and engines, and dealer property and casualty insurance. The various forms of financing, insurance and risk management products offered to customers and dealers help support the purchase and lease of Caterpillar equipment. The segment also earns revenues from ME&T, but the related costs are not allocated to operating segments. Financial Products’ segment profit is determined on a pretax basis and includes other income/expense items.
 
All Other operating segment:  Primarily includes activities such as: business strategy; product management and development; manufacturing and sourcing of filters and fluids, undercarriage, ground-engaging tools, fluid transfer products, precision seals, rubber sealing and connecting components primarily for Cat® products; parts distribution; integrated logistics solutions; distribution services responsible for dealer development and administration, including a wholly owned dealer in Japan; dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts; brand management and marketing strategy; and digital investments for new customer and dealer solutions that integrate data analytics with state-of-the-art digital technologies while transforming the buying experience. Results for the All Other operating segment are included as a reconciling item between reportable segments and consolidated external reporting.
 
C.    Segment measurement and reconciliations
 
There are several methodology differences between our segment reporting and our external reporting.  The following is a list of the more significant methodology differences:
 
•ME&T segment net assets generally include inventories, receivables, property, plant and equipment, goodwill, intangibles, accounts payable and customer advances. We generally manage at the corporate level liabilities other than accounts payable and customer advances, and we do not include these in segment operations.  Financial Products Segment assets generally include all categories of assets.
 
•We value segment inventories and cost of sales using a current cost methodology.
•We amortize goodwill allocated to segments using a fixed amount based on a 20-year useful life.  This methodology difference only impacts segment assets. We do not include goodwill amortization expense in segment profit. In addition, we have allocated to segments only a portion of goodwill for certain acquisitions made in 2011 or later.

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

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

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

•We determine ME&T segment profit on a pretax basis and exclude interest expense and most other income/expense items.  We determine Financial Products Segment profit on a pretax basis and include other income/expense items.
Reconciling items are created based on accounting differences between segment reporting and our consolidated external reporting. Please refer to pages 33 to 36 for financial information regarding significant reconciling items.  Most of our reconciling items are self-explanatory given the above explanations.  For the reconciliation of profit, we have grouped the reconciling items as follows:
 
•Corporate costs:  These costs are related to corporate requirements primarily for compliance and legal functions for the benefit of the entire organization.

•Restructuring costs: May include costs for employee separation, long-lived asset impairments and contract terminations. These costs are included in Other operating (income) expenses except for defined-benefit plan curtailment losses and special termination benefits, which are included in Other income (expense). Restructuring costs also include other exit-related costs, which may consist of accelerated depreciation, inventory write-downs, building demolition, equipment relocation and project management costs and LIFO inventory decrement benefits from inventory liquidations at closed facilities, all of which are primarily included in Cost of goods sold. Only certain restructuring costs in 2020 are excluded from segment profit. See Note 20 for more information.

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

•Timing:   Timing differences in the recognition of costs between segment reporting and consolidated external reporting. For example, we report certain costs on the cash basis for segment reporting and the accrual basis for consolidated external reporting.
For the three and nine months ended September 30, 2021 and 2020, sales and revenues by geographic region reconciled to consolidated sales and revenues were as follows:
Sales and Revenues by Geographic Region
(Millions of dollars)
North
 America
Latin
 America
EAME
Asia/
 Pacific
External Sales and RevenuesIntersegment Sales and RevenuesTotal Sales and Revenues
Three Months Ended September 30, 2021    
Construction Industries$2,417 $528 $1,240 $1,076 $5,261 $(6)$5,255 
Resource Industries674 417 456 744 2,291 115 2,406 
Energy & Transportation1,924 329 1,144 744 4,141 936 5,077 
Financial Products Segment478 68 105 111 762 
1
— 762 
Total sales and revenues from reportable segments5,493 1,342 2,945 2,675 12,455 1,045 13,500 
All Other operating segment18 — 3 14 35 84 119 
Corporate Items and Eliminations(56)(13)(9)(15)(93)(1,129)(1,222)
Total Sales and Revenues$5,455 $1,329 $2,939 $2,674 $12,397 $— $12,397 
Three Months Ended September 30, 2020    
Construction Industries$1,781 $230 $796 $1,241 $4,048 $8 $4,056 
Resource Industries487 269 384 564 1,704 112 1,816 
Energy & Transportation1,584 221 1,113 557 3,475 686 4,161 
Financial Products Segment448 63 100 113 724 
1
— 724 
Total sales and revenues from reportable segments4,300 783 2,393 2,475 9,951 806 10,757 
All Other operating segment10 1 1 13 25 81 106 
Corporate Items and Eliminations(59)(12)(10)(14)(95)(887)(982)
Total Sales and Revenues$4,251 $772 $2,384 $2,474 $9,881 $— $9,881 
1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of $87 million and $81 million in the three months ended September 30, 2021 and 2020, respectively.

Sales and Revenues by Geographic Region
(Millions of dollars)
North
 America
Latin
 America
EAME
Asia/
 Pacific
External Sales and RevenuesIntersegment Sales and RevenuesTotal Sales and Revenues
Nine Months Ended September 30, 2021    
Construction Industries$7,041 $1,350 $3,612 $4,302 $16,305 $65 $16,370 
Resource Industries2,130 1,309 1,455 1,965 6,859 342 7,201 
Energy & Transportation5,698 835 3,433 1,953 11,919 2,640 14,559 
Financial Products Segment1,442 195 301 359 2,297 
1
— 2,297 
Total sales and revenues from reportable segments16,311 3,689 8,801 8,579 37,380 3,047 40,427 
All Other operating segment42 1 10 54 107 270 377 
Corporate Items and Eliminations(188)(36)(27)(63)(314)(3,317)(3,631)
Total Sales and Revenues$16,165 $3,654 $8,784 $8,570 $37,173 $— $37,173 
Nine Months Ended September 30, 2020    
Construction Industries$5,470 $707 $2,618 $3,597 $12,392 $18 $12,410 
Resource Industries1,690 859 1,158 1,686 5,393 333 5,726 
Energy & Transportation5,138 667 3,095 1,734 10,634 2,025 12,659 
Financial Products Segment1,466 193 298 344 2,301 
1
— 2,301 
Total sales and revenues from reportable segments13,764 2,426 7,169 7,361 30,720 2,376 33,096 
All Other operating segment22 4 17 38 81 249 330 
Corporate Items and Eliminations(169)(36)(32)(51)(288)(2,625)(2,913)
Total Sales and Revenues$13,617 $2,394 $7,154 $7,348 $30,513 $— $30,513 
1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of $263 million and $274 million in the nine months ended September 30, 2021 and 2020, respectively.
For the three and nine months ended September 30, 2021 and 2020, Energy & Transportation segment sales by end user application were as follows:
Energy & Transportation External Sales
Three Months Ended September 30Nine Months Ended September 30
(Millions of dollars)2021202020212020
Oil and gas$1,088 $734 $3,140 $2,622 
Power generation1,010 1,034 3,025 2,783 
Industrial948 730 2,660 2,209 
Transportation1,095 977 3,094 3,020 
Energy & Transportation External Sales$4,141 $3,475 $11,919 $10,634 


Reconciliation of Consolidated profit before taxes:  
(Millions of dollars)Three Months Ended September 30Nine Months Ended September 30
2021202020212020
Profit from reportable segments:
Construction Industries$859 $585 $2,918 $1,743 
Resource Industries297 167 986 623 
Energy & Transportation696 492 2,093 1,718 
Financial Products Segment173 142 660 395 
Total profit from reportable segments2,025 1,386 6,657 4,479 
Profit from All Other operating segment5 27 (2)31 
Cost centers19 9 51 18 
Corporate costs(189)(122)(576)(409)
Timing(40)(39)(230)(90)
Restructuring costs(35)(87)(124)(211)
Methodology differences:
Inventory/cost of sales73 (7)80 (25)
Postretirement benefit expense116 (32)270 253 
Stock-based compensation expense(58)(55)(169)(169)
Financing costs(103)(125)(342)(324)
Currency19 (22)255 (230)
Other income/expense methodology differences(80)(72)(201)(244)
Other methodology differences23 2 (27)(25)
Total consolidated profit before taxes$1,775 $863 $5,642 $3,054 
Reconciliation of Assets:
(Millions of dollars)September 30, 2021December 31, 2020
Assets from reportable segments:
Construction Industries$4,592 $4,259 
Resource Industries5,985 6,035 
Energy & Transportation9,305 8,582 
Financial Products Segment34,182 34,278 
Total assets from reportable segments54,064 53,154 
Assets from All Other operating segment1,622 1,717 
Items not included in segment assets:  
Cash and cash equivalents8,554 8,822 
Deferred income taxes1,639 1,413 
Goodwill and intangible assets4,894 4,847 
Property, plant and equipment – net and other assets3,208 2,833 
Inventory methodology differences(2,648)(2,536)
Liabilities included in segment assets9,810 8,466 
Other(359)(392)
Total assets$80,784 $78,324 


Reconciliation of Depreciation and amortization:
(Millions of dollars)
Three Months Ended September 30Nine Months Ended September 30
2021202020212020
Depreciation and amortization from reportable segments:
   Construction Industries$60 $61 $178 $183 
   Resource Industries101 105 301 312 
   Energy & Transportation144 147 428 442 
   Financial Products Segment195 174 582 577 
Total depreciation and amortization from reportable segments500 487 1,489 1,514 
Items not included in segment depreciation and amortization:
All Other operating segment59 71 181 196 
Cost centers24 31 74 96 
Other10 4 22 9 
Total depreciation and amortization$593 $593 $1,766 $1,815 
Reconciliation of Capital expenditures:    
(Millions of dollars)
Three Months Ended September 30Nine Months Ended September 30
2021202020212020
Capital expenditures from reportable segments:
Construction Industries$56 $37 $120 $85 
Resource Industries44 10 101 63 
Energy & Transportation115 100 339 331 
Financial Products Segment311 280 900 783 
Total capital expenditures from reportable segments526 427 1,460 1,262 
Items not included in segment capital expenditures:
All Other operating segment59 46 106 84 
Cost centers15 8 34 23 
Timing(13)1 96 147 
Other— 11 (9)(25)
Total capital expenditures$587 $493 $1,687 $1,491