Segment and Geographic Information

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment and Geographic Information

SEGMENT AND GEOGRAPHIC INFORMATION

A.     Basis for Segment Information

We report information internally for operating segments based on management responsibility. Our operating segments offer financing to customers and dealers for the purchase and lease of Caterpillar and other equipment, as well as financing for Caterpillar sales to dealers. Financing plans include operating and finance leases, installment sale contracts, working capital loans and wholesale financing plans within each of the respective segments.

B.     Description of Segments

We have five operating segments that offer financing services. Following is a brief description of our segments:

• North America - Includes our operations in the United States and Canada.

• Europe - Includes our operations in Europe, Africa, Middle East and the Commonwealth of Independent States.  

• Asia/Pacific - Includes our operations in Australia, New Zealand, China, Japan, South Korea and Southeast Asia.  

• Latin Americaand Caterpillar Power Finance - Includes our operations in Central and South American countries. This segment also includes Caterpillar Power Finance (CPF), which finances marine vessels with Caterpillar engines worldwide and also provides financing for Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems worldwide. 

• Mining - Serves large mining customers worldwide and provides project financing in various countries. 

C.     Segment Measurement and Reconciliations

Cash, debt and other expenses are allocated to our 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 is based on each segment's respective finance receivable portfolio. Capital expenditures include expenditures for equipment on operating leases and other miscellaneous capital expenditures.

Reconciling items are created based on accounting differences between segment reporting and 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 11 for additional information) and other miscellaneous items.

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

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

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

◦ The impact of differences between the actual leverage and the segment leverage ratios.

◦ Interest expense includes realized forward points on foreign currency forward contracts.

◦ The net gain or loss from interest rate derivatives.

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

Supplemental segment data and reconciliations to consolidated external reporting for the years ended December 31 was as follows:

(Millions of dollars) 2016	External Revenues			Profit before income taxes			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Assets at December 31, 2016			Capital expenditures
North America	$	1,230		$	326		$	287		$	477	$	28		$	14,925		$	1,180
Europe	268			86			33			83		—			3,834			147
Asia/Pacific	254			82			81			29		3			3,620			74
Latin America and CPF	487			77			156			61		100			7,270			26
Mining	308			49			47			188		7			2,734			206
Total Segments	2,547			620			604			838		138			32,383			1,633
Unallocated	80			(138		)	116			—		—			1,688			—
Timing	(32		)	(12		)	—			3		(3		)	27			3
Methodology	—			91			(109		)	—		—			(220		)	—
Inter-segment Eliminations (1)	—			—			—			—		—			(263		)	—
Total	$	2,595		$	561		$	611		$	841	$	135		$	33,615		$	1,636
2015	External Revenues			Profit before income taxes			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Assets at December 31, 2015			Capital expenditures
North America	$	1,156		$	370		$	261		$	409	$	7		$	14,419		$	1,118
Europe	284			96			31			76		3			3,758			136
Asia/Pacific	285			65			100			21		29			3,923			37
Latin America and CPF	533			108			152			104		64			7,376			89
Mining	380			52			56			226		14			2,947			69
Total Segments	2,638			691			600			836		117			32,423			1,449
Unallocated	65			(101		)	67			—		—			1,743			9
Timing	(30		)	(32		)	—			—		2			164			3
Methodology	—			61			(74		)	—		—			(216		)	—
Inter-segment Eliminations (1)	—			—			—			—		—			(247		)	—
Total	$	2,673		$	619		$	593		$	836	$	119		$	33,867		$	1,461
2014	External Revenues			Profit before income taxes			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Assets at December 31, 2014			Capital expenditures
North America	$	1,067		$	355		$	240		$	361	$	3		$	13,633		$	1,068
Europe	353			114			52			94		10			4,276			133
Asia/Pacific	368			129			116			24		35			4,766			34
Latin America and CPF	594			144			166			118		62			7,994			111
Mining	471			68			67			273		31			3,252			269
Total Segments	2,853			810			641			870		141			33,921			1,615
Unallocated	60			(86		)	46			—		—			1,551			10
Timing	(28		)	(8		)	—			—		(2		)	120			2
Methodology	—			37			(56		)	—		—			(215		)	—
Inter-segment Eliminations (1)	—			—			—			—		—			(243		)	—
Total	$	2,885		$	753		$	631		$	870	$	139		$	35,134		$	1,627

⁽¹⁾ Elimination is primarily related to intercompany loans.

Geographic information: 

(Millions of dollars)
	2016		2015		2014
Revenues
Inside U.S.	$	1,397	$	1,330	$	1,219
Inside Canada	171		198		259
Inside Australia	176		200		261
All other	851		945		1,146
Total	$	2,595	$	2,673	$	2,885
Equipment on Operating Leases and Non-Leased   Equipment (included in Other Assets), Net	2016		2015
Inside U.S.	$	2,401	$	2,058
Inside Canada	535		572
Inside Australia	250		282
All other	584		716
Total	$	3,770	$	3,628