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 six 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, the Middle East and the Commonwealth of Independent States.


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


•	Latin America - Includes our operations in Mexico and Central and South American countries.


•	Caterpillar Power Finance - Provides financing worldwide for marine vessels with Caterpillar engines and for Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems.


•	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 8 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.

Supplemental segment data and reconciliations to consolidated external reporting for the three months ended March 31 was as follows:



(Millions of dollars) 2019	External Revenues			Profit before income taxes			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Assets at March 31, 2019			Capital expenditures
North America	$	401		$	116		$	97		$	144	$	7		$	15,677		$	179
Europe	72			24			14			17		(1		)	4,800			23
Asia/Pacific	94			42			30			3		3			4,756			6
Latin America	60			3			23			6		16			2,923			2
Caterpillar Power Finance	29			(16		)	13			—		26			1,964			—
Mining	69			12			14			32		2			2,230			33
Total Segments	725			181			191			202		53			32,350			243
Unallocated	19			(83		)	64			—		—			1,952			3
Timing	(8		)	(5		)	—			—		—			25			—
Methodology	—			49			(54		)	—		—			(176		)	—
Inter-segment Eliminations ⁽¹⁾	—			—			—			—		—			(327		)	—
Total	$	736		$	142		$	201		$	202	$	53		$	33,824		$	246

2018	External Revenues			Profit before income taxes			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Assets at December 31, 2018			Capital expenditures
North America	$	361		$	95		$	82		$	135	$	17		$	15,632		$	210
Europe	68			7			10			20		11			4,862			14
Asia/Pacific	82			40			25			6		(4		)	4,639			4
Latin America	69			4			29			7		12			2,972			8
Caterpillar Power Finance	34			(3		)	12			1		18			2,259			—
Mining	62			5			15			30		6			2,234			33
Total Segments	676			148			173			199		60			32,598			269
Unallocated	22			(67		)	58			—		—			1,957			92
Timing	(8		)	(3		)	—			—		7			55			—
Methodology	—			46			(57		)	—		—			(159		)	—
Inter-segment Eliminations ⁽¹⁾	—			—			—			—		—			(270		)	—
Total	$	690		$	124		$	174		$	199	$	67		$	34,181		$	361

⁽¹⁾ Elimination is primarily related to intercompany loans.