XML 29 R14.htm IDEA: XBRL DOCUMENT v3.7.0.1
Segment Information
 3 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
Segment Information
Segment 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 and Southeast Asia.  
•
Latin America and 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 7 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 three months ended March 31 was as follows:
(Millions of dollars)


 
2017
External
Revenues
 
Profit
before
income
taxes
 
Interest
Expense
 
Depreciation
on equipment
leased to
others
 
Provision
for
credit
losses
 
Assets at
March 31,
2017
 
Capital
expenditures
North America
$
320

 
$
82

 
$
73

 
$
129

 
$
7

 
$
14,803

 
$
182

Europe
65

 
20

 
9

 
20

 
1

 
3,807

 
18

Asia/Pacific
63

 
26

 
20

 
7

 
(4
)
 
3,802

 
2

Latin America and CPF
121

 
35

 
42

 
12

 
9

 
6,829

 
33

Mining
70

 
15

 
12

 
37

 
—

 
2,639

 
35

Total Segments
639

 
178

 
156

 
205

 
13

 
31,880

 
270

Unallocated
31

 
(37
)
 
42

 
—

 
—

 
3,267

 
1

Timing
(8
)
 
(6
)
 
—

 
—

 
3

 
23

 
—

Methodology
—

 
32

 
(36
)
 
—

 
—

 
(199
)
 
—

Inter-segment Eliminations (1)
—

 
—

 
—

 
—

 
—

 
(239
)
 
—

Total
$
662

 
$
167

 
$
162

 
$
205

 
$
16

 
$
34,732

 
$
271

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
$
300

 
$
82

 
$
73

 
$
109

 
$
9

 
$
14,925

 
$
172

Europe
66

 
20

 
8

 
20

 
2

 
3,834

 
38

Asia/Pacific
61

 
21

 
20

 
6

 
(1
)
 
3,620

 
10

Latin America and CPF
125

 
27

 
42

 
17

 
17

 
7,270

 
17

Mining
81

 
10

 
13

 
51

 
4

 
2,734

 
58

Total Segments
633

 
160

 
156

 
203

 
31

 
32,383

 
295

Unallocated
18

 
(32
)
 
24

 
—

 
—

 
1,688

 
1

Timing
(8
)
 
(4
)
 
—

 
—

 
(2
)
 
27

 
1

Methodology
—

 
21

 
(25
)
 
—

 
—

 
(220
)
 
—

Inter-segment Eliminations (1)
—

 
—

 
—

 
—

 
—

 
(263
)
 
—

Total
$
643

 
$
145

 
$
155

 
$
203

 
$
29

 
$
33,615

 
$
297

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (1) Elimination is primarily related to intercompany loans.