Segment Information

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information

A.     Description of Segments

Our segment data is based on disclosure requirements of accounting guidance on segment reporting, which requires that financial information be reported on the basis that is used internally for measuring segment performance. Internally, we report information for operating segments based on management responsibility. Our operating segments offer primarily the same types of services within each of the respective segments. The operating segments are as follows:

• North America - Includes our operations in the United States and Canada that serve local dealers and customers.

• Europe and Caterpillar Power Finance - This segment includes our operations that serve dealers and customers in Europe, Africa, Middle East and the Commonwealth of Independent States.  This segment also includes Caterpillar Power Finance (CPF), which finances marine vessels with Caterpillar engines worldwide and also provides debt financing for Caterpillar electrical power generation, gas compression and co-generation systems, as well as non-Caterpillar equipment that is powered by these systems worldwide. 

• Asia/Pacific - This segment includes our operations in Australia, China, Japan, South Korea and Southeast Asia that serve local dealers and customers.  

• Latin America - Includes our operations in Brazil, Mexico and Chile that serve local dealers and customers in Central and South America.

• Mining - This segment includes large mining customers worldwide. This segment also provides project financing in various countries. 

B.     Measurement and Reconciliations

Cash, debt and other expenses are allocated to operating segments based on their respective portfolios. The related Interest expense is calculated based on the amount of allocated debt and the rates associated with that debt. The performance of each segment is assessed based on a consistent leverage ratio. The Provision for credit losses included in each operating segment's profit is based on each operating segment's share of the Company's Allowance for credit losses.

Reconciling items are created based on accounting differences between operating segment reporting and our consolidated external reporting. For the reconciliation of profit before income taxes, we have grouped the reconciling items as follows:

• Unallocated - This item is related to corporate requirements and strategies that are considered to be for the benefit of the entire organization. Also included are the consolidated results of the special purpose corporation (see Note 7 for additional information) and other miscellaneous items.

• Timing - Timing differences in the recognition of costs between operating segment reporting and consolidated external reporting.

• Methodology - Methodology differences between our operating segment reporting and our consolidated external reporting are as follows:

◦ Segment assets include off-balance sheet managed assets for which we typically maintain servicing responsibilities.

◦ The impact of the difference between the actual leverage and the segment leverage ratios is included as a methodology difference.

◦ Interest expense includes realized forward points on foreign currency forward contracts, with the mark-to-market elements of the forward exchange contracts included as a methodology difference.

◦ The net gain or loss from interest rate derivatives is included as a methodology difference.

◦ The profit attributable to noncontrolling interests is considered a component of segment profit.

As noted above, the operating segment information is presented on a management-reporting basis. Unlike financial reporting, there is no authoritative guidance for management reporting equivalent to U.S. GAAP.

Supplemental segment data and reconciliations to consolidated external reporting for the three months ended September 30 was as follows:

(Millions of dollars) 2014	Revenues			Segment Profit			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Segment Assets at September 30, 2014			Capital expenditures
North America	$	274		$	97		$	61		$	94	$	(4	)	$	13,302		$	308
Europe and CPF	126			30			21			25		18			7,797			41
Asia/Pacific	94			32			30			6		9			4,973			6
Latin America	125			37			34			33		8			4,845			22
Mining	116			18			16			68		6			3,242			50
Total Segments	735			214			162			226		37			34,159			427
Unallocated	15			(22		)	12			—		(1		)	1,623			—
Timing	(7		)	(5		)	—			—		2			28			—
Methodology	—			10			(16		)	—		—			(218		)	—
Inter-segment Eliminations	—			—			—			—		—			(212		)	—
Total	$	743		$	197		$	158		$	226	$	38		$	35,380		$	427
2013	Revenues			Segment Profit			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Segment Assets at December 31, 2013			Capital expenditures
North America	$	242		$	77		$	64		$	73	$	(1	)	$	12,160		$	212
Europe and CPF	128			25			26			22		25			8,068			80
Asia/Pacific	97			36			35			6		4			5,251			8
Latin America	100			19			29			24		13			4,947			60
Mining	122			23			20			74		(2		)	3,441			113
Total Segments	689			180			174			199		39			33,867			473
Unallocated	16			(20		)	14			—		3			1,595			—
Timing	(6		)	1			—			—		(2		)	68			—
Methodology	—			3			(9		)	—		—			(189		)	—
Inter-segment Eliminations	—			—			—			—		—			(227		)	—
Total	$	699		$	164		$	179		$	199	$	40		$	35,114		$	473

Supplemental segment data and reconciliations to consolidated external reporting for the nine months ended September 30 was as follows:

(Millions of dollars) 2014	Revenues			Segment Profit			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Segment Assets at September 30, 2014			Capital expenditures
North America	$	786		$	264		$	176		$	261	$	5		$	13,302		$	786
Europe and CPF	379			105			68			76		37			7,797			105
Asia/Pacific	281			104			88			18		23			4,973			23
Latin America	342			100			98			86		12			4,845			82
Mining	362			51			50			211		27			3,242			208
Total Segments	2,150			624			480			652		104			34,159			1,204
Unallocated	53			(56		)	35			1		2			1,623			1
Timing	(21		)	(7		)	—			—		—			28			1
Methodology	—			26			(40		)	—		—			(218		)	—
Inter-segment Eliminations	—			—			—			—		—			(212		)	—
Total	$	2,182		$	587		$	475		$	653	$	106		$	35,380		$	1,206
2013	Revenues			Segment Profit			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Segment Assets at December 31, 2013			Capital expenditures
North America	$	703		$	212		$	195		$	214	$	(4	)	$	12,160		$	527
Europe and CPF	370			92			80			61		51			8,068			180
Asia/Pacific	306			116			103			19		10			5,251			32
Latin America	311			78			102			66		24			4,947			184
Mining	350			61			61			197		12			3,441			335
Total Segments	2,040			559			541			557		93			33,867			1,258
Unallocated	53			(56		)	44			1		1			1,595			1
Timing	(19		)	(29		)	—			—		(3		)	68			1
Methodology	—			16			(28		)	—		—			(189		)	—
Inter-segment Eliminations	—			—			—			—		—			(227		)	—
Total	$	2,074		$	490		$	557		$	558	$	91		$	35,114		$	1,260