Segment Information

A. Basis for Segment Information

We report information internally for operating segments based on management responsibility. Our operating segments provide financing alternatives to customers and dealers around the world for Caterpillar products, as well as financing for vehicles, power generation facilities and marine vessels that, in most cases, incorporate Caterpillar products. Financing plans include operating and finance leases, installment sale contracts, working capital loans and wholesale financing plans within each of the operating 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.


•	EAME - 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 - Provides financing for large mining customers worldwide.

To align with changes in executive management responsibilities and measurement of segment performance, our management reporting was updated effective January 1, 2020. Prior year data has been revised to conform to the 2020 presentation.

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 is excluded from segment reporting.

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



(Millions of dollars) 2020	External Revenues			Profit before income taxes			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Assets at March 31, 2020			Capital expenditures
North America	$	382		$	75		$	94		$	144	$	22		$	15,146		$	220
EAME	70			16			13			16		7			4,624			4
Asia/Pacific	86			36			27			2		7			4,163			3
Latin America	53			6			23			3		7			2,590			3
Caterpillar Power Finance	20			1			8			—		5			1,509			—
Mining	81			8			17			36		13			2,704			16
Total Segments	692			142			182			201		61			30,736			246
Unallocated	9			(70		)	56			—		—			1,933			1
Timing	(6		)	(1		)	—			—		—			13			—
Methodology	—			56			(63		)	—		—			(74		)	—
Inter-segment Eliminations ⁽¹⁾	—			—			—			—		—			(276		)	—
Total	$	695		$	127		$	175		$	201	$	61		$	32,332		$	247

2019	External Revenues			Profit before income taxes			Interest Expense			Depreciation on equipment leased to others		Provision for credit losses			Assets at December 31, 2019			Capital expenditures
North America	$	400		$	116		$	97		$	143	$	7		$	15,496		$	178
EAME	70			23			13			17		(1		)	4,918			23
Asia/Pacific	88			39			29			3		3			4,540			6
Latin America	58			3			22			5		15			2,809			2
Caterpillar Power Finance	29			(16		)	13			—		26			1,673			—
Mining	80			16			18			34		3			2,966			34
Total Segments	725			181			192			202		53			32,402			243
Unallocated	19			(83		)	64			—		—			1,896			3
Timing	(8		)	(5		)	—			—		—			16			—
Methodology	—			49			(55		)	—		—			(216		)	—
Inter-segment Eliminations ⁽¹⁾	—			—			—			—		—			(405		)	—
Total	$	736		$	142		$	201		$	202	$	53		$	33,693		$	246

⁽¹⁾ Elimination is primarily related to intercompany loans.