Segment Information

6 Months Ended

Jun. 30, 2015

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 June 30 was as follows:

(Millions of dollars) 2015	Revenues			Segment Profit			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Segment Assets at June 30, 2015			Capital expenditures
North America	$	290		$	93		$	64		$	100	$	6		$	14,352		$	278
Europe and CPF	104			31			17			20		6			7,354			32
Asia/Pacific	77			15			27			5		11			4,290			13
Latin America	101			15			30			27		15			4,151			19
Mining	100			11			14			58		12			2,992			—
Total Segments	672			165			152			210		50			33,139			342
Unallocated	18			(27		)	16			—		—			1,762			—
Timing	(7		)	(3		)	—			—		(1		)	26			—
Methodology	—			15			(18		)	—		—			(215		)	—
Inter-segment Eliminations	—			—			—			—		—			(220		)	—
Total	$	683		$	150		$	150		$	210	$	49		$	34,492		$	342
2014	Revenues			Segment Profit			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Segment Assets at December 31, 2014			Capital expenditures
North America	$	265		$	90		$	55		$	87	$	6		$	13,661		$	348
Europe and CPF	123			34			23			25		10			7,601			33
Asia/Pacific	95			34			30			6		7			4,767			7
Latin America	112			37			32			26		—			4,676			25
Mining	123			23			16			68		8			3,161			95
Total Segments	718			218			156			212		31			33,866			508
Unallocated	17			(21		)	11			1		3			1,648			1
Timing	(7		)	—			—			—		(3		)	120			1
Methodology	—			11			(12		)	—		—			(215		)	—
Inter-segment Eliminations	—			—			—			—		—			(243		)	—
Total	$	728		$	208		$	155		$	213	$	31		$	35,176		$	510

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

(Millions of dollars) 2015	Revenues			Segment Profit			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Segment Assets at June 30, 2015			Capital expenditures
North America	$	574		$	190		$	127		$	201	$	2		$	14,352		$	454
Europe and CPF	217			66			34			41		19			7,354			52
Asia/Pacific	157			35			58			10		20			4,290			17
Latin America	203			39			59			54		21			4,151			43
Mining	200			40			28			116		2			2,992			69
Total Segments	1,351			370			306			422		64			33,139			635
Unallocated	36			(46		)	32			—		—			1,762			—
Timing	(15		)	(14		)	—			—		3			26			1
Methodology	—			27			(37		)	—		—			(215		)	—
Inter-segment Eliminations	—			—			—			—		—			(220		)	—
Total	$	1,372		$	337		$	301		$	422	$	67		$	34,492		$	636
2014	Revenues			Segment Profit			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Segment Assets at December 31, 2014			Capital expenditures
North America	$	512		$	167		$	115		$	167	$	9		$	13,661		$	478
Europe and CPF	253			75			47			51		19			7,601			64
Asia/Pacific	187			72			58			12		14			4,767			17
Latin America	217			63			64			53		4			4,676			60
Mining	246			33			34			143		21			3,161			158
Total Segments	1,415			410			318			426		67			33,866			777
Unallocated	38			(34		)	23			1		3			1,648			1
Timing	(14		)	(2		)	—			—		(2		)	120			1
Methodology	—			16			(24		)	—		—			(215		)	—
Inter-segment Eliminations	—			—			—			—		—			(243		)	—
Total	$	1,439		$	390		$	317		$	427	$	68		$	35,176		$	779