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 June 30 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 June 30, 2020			Capital expenditures
North America	$	356		$	62		$	87		$	139	$	25		$	14,684		$	221
EAME	63			14			10			15		6			4,786			9
Asia/Pacific	82			39			23			3		7			4,400			2
Latin America	48			2			21			3		12			2,764			1
Caterpillar Power Finance	17			(10		)	6			—		18			1,409			—
Mining	75			(1		)	14			34		18			2,707			18
Total Segments	641			106			161			194		86			30,750			251
Unallocated	6			(64		)	46			—		—			1,799			5
Timing	(6		)	(1		)	—			—		—			11			—
Methodology	—			48			(57		)	—		—			(136		)	—
Inter-segment Eliminations ⁽¹⁾	—			—			—			—		—			(351		)	—
Total	$	641		$	89		$	150		$	194	$	86		$	32,073		$	256

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	$	412		$	131		$	98		$	145	$	2		$	15,496		$	388
EAME	71			22			13			17		(2		)	4,918			18
Asia/Pacific	99			47			27			3		5			4,540			4
Latin America	59			3			24			4		13			2,809			5
Caterpillar Power Finance	26			(33		)	11			1		42			1,673			—
Mining	83			11			18			34		11			2,966			38
Total Segments	750			181			191			204		71			32,402			453
Unallocated	15			(83		)	65			—		—			1,896			6
Timing	(8		)	(4		)	—			—		—			16			—
Methodology	—			47			(56		)	—		—			(216		)	—
Inter-segment Eliminations ⁽¹⁾	—			—			—			—		—			(405		)	—
Total	$	757		$	141		$	200		$	204	$	71		$	33,693		$	459

⁽¹⁾ Elimination is primarily related to intercompany loans.

Supplemental segment data and reconciliations to consolidated external reporting for the six months ended June 30 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 June 30, 2020			Capital expenditures
North America	$	738		$	137		$	181		$	283	$	47		$	14,684		$	441
EAME	133			30			23			31		13			4,786			13
Asia/Pacific	168			75			50			5		14			4,400			5
Latin America	101			8			44			6		19			2,764			4
Caterpillar Power Finance	37			(9		)	14			—		23			1,409			—
Mining	156			7			31			70		31			2,707			34
Total Segments	1,333			248			343			395		147			30,750			497
Unallocated	15			(134		)	102			—		—			1,799			6
Timing	(12		)	(2		)	—			—		—			11			—
Methodology	—			104			(120		)	—		—			(136		)	—
Inter-segment Eliminations ⁽¹⁾	—			—			—			—		—			(351		)	—
Total	$	1,336		$	216		$	325		$	395	$	147		$	32,073		$	503

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	$	812		$	247		$	195		$	288	$	9		$	15,496		$	566
EAME	141			45			26			34		(3		)	4,918			41
Asia/Pacific	187			86			56			6		8			4,540			10
Latin America	117			6			46			9		28			2,809			7
Caterpillar Power Finance	55			(49		)	24			1		68			1,673			—
Mining	163			27			36			68		14			2,966			72
Total Segments	1,475			362			383			406		124			32,402			696
Unallocated	34			(166		)	129			—		—			1,896			9
Timing	(16		)	(9		)	—			—		—			16			—
Methodology	—			96			(111		)	—		—			(216		)	—
Inter-segment Eliminations ⁽¹⁾	—			—			—			—		—			(405		)	—
Total	$	1,493		$	283		$	401		$	406	$	124		$	33,693		$	705

⁽¹⁾ Elimination is primarily related to intercompany loans.