Segment Information

9 Months Ended

Sep. 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 - This segment includes our operations that serve dealers and customers in Europe, Africa, Middle East and the Commonwealth of Independent States.  

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

• Latin Americaand Caterpillar Power Finance - This segment includes our operations in Brazil, Mexico and Chile that serve local dealers and customers in Central and South America. 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. 

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

To align with changes in executive management responsibilities, our segment reporting was updated effective July 1, 2015. Prior year data has been revised to conform to the current period segment presentation.

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) 2015	Revenues			Segment Profit			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Segment Assets at September 30, 2015			Capital expenditures
North America	$	291		$	99		$	66		$	102	$	(4	)	$	14,078		$	292
Europe	70			29			8			18		—			3,987			31
Asia/Pacific	66			17			22			5		2			3,921			2
Latin America and CPF	126			20			36			25		18			7,156			31
Mining	90			3			13			57		8			2,879			—
Total Segments	643			168			145			207		24			32,021			356
Unallocated	18			(26		)	17			—		(1		)	1,891			—
Timing	(8		)	(3		)	—			—		(1		)	27			1
Methodology	—			14			(18		)	—		—			(201		)	—
Inter-segment Eliminations	—			—			—			—		—			(221		)	—
Total	$	653		$	153		$	144		$	207	$	22		$	33,517		$	357
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	$	274		$	97		$	61		$	94	$	(4	)	$	13,661		$	308
Europe	89			34			12			24		(4		)	4,276			41
Asia/Pacific	94			32			30			6		9			4,767			6
Latin America and CPF	162			33			43			34		30			8,001			22
Mining	116			18			16			68		6			3,161			50
Total Segments	735			214			162			226		37			33,866			427
Unallocated	15			(22		)	12			—		(1		)	1,648			—
Timing	(7		)	(5		)	—			—		2			120			—
Methodology	—			10			(16		)	—		—			(215		)	—
Inter-segment Eliminations	—			—			—			—		—			(243		)	—
Total	$	743		$	197		$	158		$	226	$	38		$	35,176		$	427

Supplemental segment data and reconciliations to consolidated external reporting for the nine months ended September 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 September 30, 2015			Capital expenditures
North America	$	865		$	289		$	193		$	303	$	(2	)	$	14,078		$	746
Europe	216			85			24			57		—			3,987			83
Asia/Pacific	223			52			80			15		22			3,921			19
Latin America and CPF	400			69			113			81		58			7,156			74
Mining	290			43			41			173		10			2,879			69
Total Segments	1,994			538			451			629		88			32,021			991
Unallocated	54			(72		)	49			—		(1		)	1,891			—
Timing	(23		)	(17		)	—			—		2			27			2
Methodology	—			41			(55		)	—		—			(201		)	—
Inter-segment Eliminations	—			—			—			—		—			(221		)	—
Total	$	2,025		$	490		$	445		$	629	$	89		$	33,517		$	993
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	$	786		$	264		$	176		$	261	$	5		$	13,661		$	786
Europe	271			90			40			72		5			4,276			105
Asia/Pacific	281			104			88			18		23			4,767			23
Latin America and CPF	450			115			126			90		44			8,001			82
Mining	362			51			50			211		27			3,161			208
Total Segments	2,150			624			480			652		104			33,866			1,204
Unallocated	53			(56		)	35			1		2			1,648			1
Timing	(21		)	(7		)	—			—		—			120			1
Methodology	—			26			(40		)	—		—			(215		)	—
Inter-segment Eliminations	—			—			—			—		—			(243		)	—
Total	$	2,182		$	587		$	475		$	653	$	106		$	35,176		$	1,206