Energy & Transportation: A segment primarily responsible for supporting customers using reciprocating engines, turbines, diesel-electric locomotives and related services across industries serving Oil and Gas, Power Generation, Industrial and Transportation applications, including marine- and rail-related businesses. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product and services portfolio includes turbines, centrifugal gas compressors, and turbine-related services; reciprocating engine-powered generator sets; integrated systems used in the electric power generation industry; reciprocating engines and integrated systems and solutions for the marine and oil and gas industries; reciprocating engines supplied to the industrial industry as well as Cat machinery; and diesel-electric locomotives and components and other rail-related products and services, including remanufacturing and leasing. Responsibilities also include the remanufacturing of Caterpillar reciprocating engines and components and remanufacturing services for other companies; and product support of on-highway vocational trucks for North America. Inter-segment sales are a source of revenue for this segment.
Financial Products Segment: Provides 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, repair/rebuild financing, working capital loans and wholesale financing plans. The segment also provides insurance and risk management products and services that help customers and dealers manage their business risk. Insurance and risk management products offered include physical damage insurance, inventory protection plans, extended service coverage and maintenance plans for machines and engines, and dealer property and casualty insurance. The various forms of financing, insurance and risk management products offered to customers and dealers help support the purchase and lease of Caterpillar equipment. The segment also earns revenues from ME&T, but the related costs are not allocated to operating segments. Financial Products' segment profit is determined on a pretax basis and includes other income/expense items.
All Other operating segment: Primarily includes activities such as: business strategy; product management and development; manufacturing and sourcing of filters and fluids, undercarriage, ground-engaging tools, fluid transfer products, precision seals, rubber sealing and connecting components primarily for Cat(R) products; parts distribution; integrated logistics solutions; distribution services responsible for dealer development and administration, including a wholly owned dealer in Japan; dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts; brand management and marketing strategy; and digital investments for new customer and dealer solutions that integrate data analytics with state-of-the-art digital technologies while transforming the buying experience. Results for the All Other operating segment are included as a reconciling item between reportable segments and consolidated external reporting.
C. Segment measurement and reconciliations
There are several methodology differences between our segment reporting and our external reporting. The following is a list of the more significant methodology differences: ? ME&T segment net assets generally include inventories, receivables, property, plant and equipment, goodwill,
intangibles, accounts payable and customer advances. We generally manage at the corporate level liabilities other
than accounts payable and customer advances, and we do not include these in segment operations. Financial Products
Segment assets generally include all categories of assets. ? We value segment inventories and cost of sales using a current cost methodology. 26
Table of Contents ? We amortize goodwill allocated to segments using a fixed amount based on a 20-year useful life. This methodology
difference only impacts segment assets. We do not include goodwill amortization expense in segment profit. In
addition, we have allocated to segments only a portion of goodwill for certain acquisitions made in 2011 or later. ? We generally manage currency exposures for ME&T at the corporate level and do not include in segment profit the
effects of changes in exchange rates on results of operations within the year. We report the net difference created
in the translation of revenues and costs between exchange rates used for U.S. GAAP reporting and exchange rates
used for segment reporting as a methodology difference. ? We do not include stock-based compensation expense in segment profit. ? Postretirement benefit expenses are split; segments are generally responsible for service costs, with the remaining
elements of net periodic benefit cost included as a methodology difference. ? We determine ME&T segment profit on a pretax basis and exclude interest expense and most other income/ expense
items. We determine Financial Products Segment profit on a pretax basis and include other income/ expense items.
Reconciling items are created based on accounting differences between segment reporting and our consolidated external reporting. Please refer to pages 28 to 30 for financial information regarding significant reconciling items. Most of our reconciling items are self-explanatory given the above explanations. For the reconciliation of profit, we have grouped the reconciling items as follows: ? Corporate costs: These costs are related to corporate requirements primarily for compliance and legal functions for
the benefit of the entire organization. ? Restructuring costs: May include costs for employee separation, long-lived asset impairments and contract
terminations. These costs are included in Other operating (income) expenses except for defined-benefit plan
curtailment losses and special termination benefits, which are included in Other income (expense). Restructuring
costs also include other exit-related costs, which may consist of accelerated depreciation, inventory write-downs,
building demolition, equipment relocation and project management costs and LIFO inventory decrement benefits from
inventory liquidations at closed facilities, all of which are primarily included in Cost of goods sold. Only
certain restructuring costs in 2020 are excluded from segment profit. See Note 20 for more information. ? Methodology differences: See previous discussion of significant accounting differences between segment reporting
and consolidated external reporting. ? Timing: Timing differences in the recognition of costs between segment reporting and consolidated external
reporting. For example, we report certain costs on the cash basis for segment reporting and the accrual basis for
consolidated external reporting.
27
Table of Contents
For the three months ended March 31, 2021 and 2020, sales and revenues by geographic region reconciled to consolidated sales and revenues were as follows:
Intersegment Total Sales Sales and Revenues by Geographic Region Asia/ External North America Latin America EAME Pacific Sales and Sales and and (Millions of dollars) Revenues Revenues Revenues Three Months Ended March 31, 2021 Construction Industries............. USD 2,126 USD 392 USD 1,081 USD 1,842 USD 5,441 USD 18 USD 5,459 Resource Industries............... 657 405 474 561 2,097 119 2,216 Energy & Transportation........... 1,782 256 1,093 527 3,658 849 4,507 Financial Products Segment......... 476 62 100 123 761 1 - 761 Total sales and revenues from reportable 5,041 1,115 2,748 3,053 11,957 986 12,943 segments....................... All Other operating segment......... 13 - 3 22 38 92 130 Corporate Items and Eliminations..... (63) (11) (8) (26) (108) (1,078) (1,186) Total Sales and Revenues............ USD 4,991 USD 1,104 USD 2,743 USD 3,049 USD 11,887 USD - USD 11,887 Three Months Ended March 31, 2020 Construction Industries............. USD 2,085 USD 265 USD 889 USD 1,073 USD 4,312 USD (6) USD 4,306 Resource Industries............... 696 320 395 568 1,979 105 2,084 Energy & Transportation........... 1,738 249 1,053 578 3,618 731 4,349 Financial Products Segment......... 525 70 102 117 814 1 - 814 Total sales and revenues from reportable 5,044 904 2,439 2,336 10,723 830 11,553 segments....................... All Other operating segment......... 5 2 11 10 28 81 109 Corporate Items and Eliminations..... (69) (14) (13) (20) (116) (911) (1,027) Total Sales and Revenues............ USD 4,980 USD 892 USD 2,437 USD 2,326 USD 10,635 USD - USD 10,635
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