UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-768

CATERPILLAR INC.

(Exact name of registrant as specified in its charter)

Delaware

37-0602744

(State or other jurisdiction of incorporation)

(IRS Employer I.D. No.)

510 Lake Cook Road,

Suite 100,

Deerfield,

Illinois

60015

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (224) 551-4000

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common Stock ($1.00 par value)	CAT	New York Stock Exchange	¹
8% Debentures due February 15, 2023	CAT23	New York Stock Exchange
5.3% Debentures due September 15, 2035	CAT35	New York Stock Exchange

¹ In addition to the New York Stock Exchange, Caterpillar common stock is also listed on stock exchanges in France and Switzerland.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At ~~September 30, 2021, 540,941,600~~March 31, 2022, 533,353,205 shares of common stock of the registrant were outstanding.

Table of Contents


Part I. Financial Information
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4940
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7961
Item 4.	Controls and Procedures	7961

Part II. Other Information
Item 1.	Legal Proceedings	8062
Item 1A.	Risk Factors	8062
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8062
Item 3.	Defaults Upon Senior Securities	*
Item 4.	Mine Safety Disclosures	*
Item 5.	Other Information	*62
Item 6.	Exhibits	8163

* Item omitted because no answer is called for or item is not applicable.

Table of Contents

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Caterpillar Inc.

Consolidated Statement of Results of Operations

(Unaudited)

(Dollars in millions except per share data)


		Three Months Ended September 30					Three Months Ended March 31
		2021		2020			2022		2021
Sales and revenues:	Sales and revenues:					Sales and revenues:
Sales of Machinery, Energy & Transportation	Sales of Machinery, Energy & Transportation	$	11,707	$	9,228	Sales of Machinery, Energy & Transportation	$	12,886	$	11,191
Revenues of Financial Products	Revenues of Financial Products	690		653		Revenues of Financial Products	703		696
Total sales and revenues	Total sales and revenues	12,397		9,881		Total sales and revenues	13,589		11,887

Operating costs:	Operating costs:					Operating costs:
Cost of goods sold	Cost of goods sold	8,617		6,919		Cost of goods sold	9,559		8,012
Selling, general and administrative expenses	Selling, general and administrative expenses	1,340		1,126		Selling, general and administrative expenses	1,346		1,239
Research and development expenses	Research and development expenses	427		344		Research and development expenses	457		374
Interest expense of Financial Products	Interest expense of Financial Products	111		137		Interest expense of Financial Products	106		125
Other operating (income) expenses	Other operating (income) expenses	238		370		Other operating (income) expenses	266		323
Total operating costs	Total operating costs	10,733		8,896		Total operating costs	11,734		10,073

Operating profit	Operating profit	1,664		985		Operating profit	1,855		1,814

Interest expense excluding Financial Products	Interest expense excluding Financial Products	114		136		Interest expense excluding Financial Products	109		142
Other income (expense)	Other income (expense)	225		14		Other income (expense)	253		325

Consolidated profit before taxes	Consolidated profit before taxes	1,775		863		Consolidated profit before taxes	1,999		1,997

Provision (benefit) for income taxes	Provision (benefit) for income taxes	368		187		Provision (benefit) for income taxes	469		475
Profit of consolidated companies	Profit of consolidated companies	1,407		676		Profit of consolidated companies	1,530		1,522

Equity in profit (loss) of unconsolidated affiliated companies	Equity in profit (loss) of unconsolidated affiliated companies	21		(5)		Equity in profit (loss) of unconsolidated affiliated companies	7		9

Profit of consolidated and affiliated companies	Profit of consolidated and affiliated companies	1,428		671		Profit of consolidated and affiliated companies	1,537		1,531

Less: Profit (loss) attributable to noncontrolling interests	Less: Profit (loss) attributable to noncontrolling interests	2		3		Less: Profit (loss) attributable to noncontrolling interests	—		1

Profit 1	Profit 1	$	1,426	$	668	Profit 1	$	1,537	$	1,530

Profit per common share	Profit per common share	$	2.62	$	1.23	Profit per common share	$	2.88	$	2.80

Profit per common share – diluted 2	Profit per common share – diluted 2	$	2.60	$	1.22	Profit per common share – diluted 2	$	2.86	$	2.77

Weighted-average common shares outstanding (millions)	Weighted-average common shares outstanding (millions)					Weighted-average common shares outstanding (millions)
– Basic	– Basic	544.0		542.3		– Basic	534.5		546.4
– Diluted 2	– Diluted 2	547.6		546.4		– Diluted 2	538.3		551.4

1 Profit attributable to common shareholders.

2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Caterpillar Inc.

Consolidated Statement of Comprehensive Income

(Unaudited)

(Dollars in millions)

Three Months Ended September 30
2021 2020
Profit of consolidated and affiliated companies $ 1,428 $ 671
Other comprehensive income (loss), net of tax (Note 13):
Foreign currency translation: (242) 291
Pension and other postretirement benefits: (8) (8)
Derivative financial instruments: (31) 76
Available-for-sale securities: (5) 8
Total other comprehensive income (loss), net of tax (286) 367
Comprehensive income 1,142 1,038
Less: comprehensive income attributable to the noncontrolling interests 2 3
Comprehensive income attributable to shareholders $ 1,140 $ 1,035

~~See accompanying notes to Consolidated Financial Statements.~~

~~Table of Contents~~

~~Caterpillar Inc.~~

~~Consolidated Statement of Results of Operations~~

~~(Unaudited)~~

~~(Dollars in millions except per share data)~~

Nine Months Ended September 30
2021 2020
Sales and revenues:
Sales of Machinery, Energy & Transportation $ 35,091 $ 28,452
Revenues of Financial Products 2,082 2,061
Total sales and revenues 37,173 30,513
Operating costs:
Cost of goods sold 25,510 21,298
Selling, general and administrative expenses 3,943 3,426
Research and development expenses 1,247 1,041
Interest expense of Financial Products 352 461
Other operating (income) expenses 854 1,114
Total operating costs 31,906 27,340
Operating profit 5,267 3,173
Interest expense excluding Financial Products 376 384
Other income (expense) 751 265
Consolidated profit before taxes 5,642 3,054
Provision (benefit) for income taxes 1,313 839
Profit of consolidated companies 4,329 2,215
Equity in profit (loss) of unconsolidated affiliated companies 44 8
Profit of consolidated and affiliated companies 4,373 2,223
Less: Profit (loss) attributable to noncontrolling interests 4 5
Profit 1
$ 4,369 $ 2,218
Profit per common share $ 8.00 $ 4.08
Profit per common share – diluted 2
$ 7.94 $ 4.05
Weighted-average common shares outstanding (millions)
– Basic 545.8 543.9
– Diluted 2
550.2 547.8

1 ~~Profit attributable to common shareholders.~~

2 ~~Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.~~

~~See accompanying notes to Consolidated Financial Statements.~~

~~Table of Contents~~

~~Caterpillar Inc~~.

~~Consolidated Statement of Comprehensive Income~~

~~(Unaudited)~~

~~(Dollars in millions)~~


		Nine Months Ended September 30					Three Months Ended March 31
		2021		2020			2022		2021

Profit of consolidated and affiliated companies	Profit of consolidated and affiliated companies	$	4,373	$	2,223	Profit of consolidated and affiliated companies	$	1,537	$	1,531
Other comprehensive income (loss), net of tax (Note 13):	Other comprehensive income (loss), net of tax (Note 13):					Other comprehensive income (loss), net of tax (Note 13):
Foreign currency translation:	Foreign currency translation:	(490)		106		Foreign currency translation:	(115)		(347)
Pension and other postretirement benefits:	Pension and other postretirement benefits:	(23)		(20)		Pension and other postretirement benefits:	(1)		(8)
Derivative financial instruments:	Derivative financial instruments:	(19)		4		Derivative financial instruments:	23		(31)
Available-for-sale securities:	Available-for-sale securities:	(20)		29		Available-for-sale securities:	(64)		(16)

Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax	(552)		119		Total other comprehensive income (loss), net of tax	(157)		(402)
Comprehensive income	Comprehensive income	3,821		2,342		Comprehensive income	1,380		1,129
Less: comprehensive income attributable to the noncontrolling interests	Less: comprehensive income attributable to the noncontrolling interests	4		5		Less: comprehensive income attributable to the noncontrolling interests	—		1
Comprehensive income attributable to shareholders	Comprehensive income attributable to shareholders	$	3,817	$	2,337	Comprehensive income attributable to shareholders	$	1,380	$	1,128

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Caterpillar Inc.

Consolidated Statement of Financial Position

(Unaudited)

(Dollars in millions)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	9,446	$	9,352	Cash and cash equivalents	$	6,526	$	9,254
Receivables – trade and other	Receivables – trade and other	7,647		7,317		Receivables – trade and other	9,135		8,477
Receivables – finance	Receivables – finance	8,919		9,463		Receivables – finance	9,003		8,898

Prepaid expenses and other current assets	Prepaid expenses and other current assets	2,215		1,930		Prepaid expenses and other current assets	2,868		2,788
Inventories	Inventories	13,666		11,402		Inventories	15,038		14,038
Total current assets	Total current assets	41,893		39,464		Total current assets	42,570		43,455

Property, plant and equipment – net	Property, plant and equipment – net	11,904		12,401		Property, plant and equipment – net	11,932		12,090
Long-term receivables – trade and other	Long-term receivables – trade and other	1,273		1,185		Long-term receivables – trade and other	1,204		1,204
Long-term receivables – finance	Long-term receivables – finance	12,605		12,222		Long-term receivables – finance	12,665		12,707

Noncurrent deferred and refundable income taxes	Noncurrent deferred and refundable income taxes	1,744		1,523		Noncurrent deferred and refundable income taxes	1,973		1,840
Intangible assets	Intangible assets	1,121		1,308		Intangible assets	967		1,042
Goodwill	Goodwill	6,353		6,394		Goodwill	6,293		6,324
Other assets	Other assets	3,891		3,827		Other assets	4,672		4,131
Total assets	Total assets	$	80,784	$	78,324	Total assets	$	82,276	$	82,793

Liabilities	Liabilities					Liabilities
Current liabilities:	Current liabilities:					Current liabilities:
Short-term borrowings:	Short-term borrowings:					Short-term borrowings:
Machinery, Energy & Transportation	Machinery, Energy & Transportation	$	—	$	10	Machinery, Energy & Transportation	$	—	$	9
Financial Products	Financial Products	3,247		2,005		Financial Products	4,501		5,395
Accounts payable	Accounts payable	7,218		6,128		Accounts payable	8,361		8,154
Accrued expenses	Accrued expenses	3,579		3,642		Accrued expenses	3,846		3,757
Accrued wages, salaries and employee benefits	Accrued wages, salaries and employee benefits	2,075		1,096		Accrued wages, salaries and employee benefits	1,275		2,242
Customer advances	Customer advances	1,155		1,108		Customer advances	1,388		1,087
Dividends payable	Dividends payable	—		562		Dividends payable	—		595
Other current liabilities	Other current liabilities	2,319		2,017		Other current liabilities	2,355		2,256
Long-term debt due within one year:	Long-term debt due within one year:					Long-term debt due within one year:
Machinery, Energy & Transportation	Machinery, Energy & Transportation	48		1,420		Machinery, Energy & Transportation	127		45
Financial Products	Financial Products	6,335		7,729		Financial Products	7,679		6,307
Total current liabilities	Total current liabilities	25,976		25,717		Total current liabilities	29,532		29,847

Long-term debt due after one year:	Long-term debt due after one year:					Long-term debt due after one year:
Machinery, Energy & Transportation	Machinery, Energy & Transportation	9,759		9,749		Machinery, Energy & Transportation	9,636		9,746
Financial Products	Financial Products	17,395		16,250		Financial Products	15,641		16,287
Liability for postemployment benefits	Liability for postemployment benefits	6,395		6,872		Liability for postemployment benefits	5,363		5,592
Other liabilities	Other liabilities	4,564		4,358		Other liabilities	5,007		4,805
Total liabilities	Total liabilities	64,089		62,946		Total liabilities	65,179		66,277
Commitments and contingencies (Notes 11 and 14)	Commitments and contingencies (Notes 11 and 14)	0		0		Commitments and contingencies (Notes 11 and 14)	0		0

Shareholders’ equity	Shareholders’ equity					Shareholders’ equity
Common stock of $1.00 par value:	Common stock of $1.00 par value:					Common stock of $1.00 par value:
Authorized shares: 2,000,000,000 Issued shares: (9/30/21 and 12/31/20 – 814,894,624) at paid-in amount		6,352		6,230
Treasury stock (9/30/21 – 273,953,024 shares; 12/31/20 – 269,590,777 shares) at cost		(26,608)		(25,178)
Authorized shares: 2,000,000,000 Issued shares: (3/31/22 and 12/31/21 – 814,894,624) at paid-in amount						Authorized shares: 2,000,000,000 Issued shares: (3/31/22 and 12/31/21 – 814,894,624) at paid-in amount	6,281		6,398
Treasury stock (3/31/22 – 281,541,419 shares; 12/31/21 – 279,006,573 shares) at cost						Treasury stock (3/31/22 – 281,541,419 shares; 12/31/21 – 279,006,573 shares) at cost	(28,326)		(27,643)
Profit employed in the business	Profit employed in the business	38,361		35,167		Profit employed in the business	40,820		39,282
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(1,440)		(888)		Accumulated other comprehensive income (loss)	(1,710)		(1,553)
Noncontrolling interests	Noncontrolling interests	30		47		Noncontrolling interests	32		32
Total shareholders’ equity	Total shareholders’ equity	16,695		15,378		Total shareholders’ equity	17,097		16,516
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	80,784	$	78,324	Total liabilities and shareholders’ equity	$	82,276	$	82,793

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Caterpillar Inc.

Consolidated Statement of Changes in Shareholders’ Equity

(Unaudited)

(Dollars in millions)


		Common stock		Treasury stock		Profit employed in the business		Accumulated other comprehensive income (loss)		Noncontrolling interests		Total			Common stock		Treasury stock		Profit employed in the business		Accumulated other comprehensive income (loss)		Noncontrolling interests		Total
Three Months Ended September 30, 2020
Balance at June 30, 2020		$	6,120	$	(25,412)	$	34,841	$	(1,815)	$	43	$	13,777
Three Months Ended March 31, 2021														Three Months Ended March 31, 2021
Balance at December 31, 2020														Balance at December 31, 2020	$	6,230	$	(25,178)	$	35,167	$	(888)	$	47	$	15,378

Profit of consolidated and affiliated companies	Profit of consolidated and affiliated companies	—		—		668		—		3		671		Profit of consolidated and affiliated companies	—		—		1,530		—		1		1,531
Foreign currency translation, net of tax	Foreign currency translation, net of tax	—		—		—		291		—		291		Foreign currency translation, net of tax	—		—		—		(347)		—		(347)
Pension and other postretirement benefits, net of tax	Pension and other postretirement benefits, net of tax	—		—		—		(8)		—		(8)		Pension and other postretirement benefits, net of tax	—		—		—		(8)		—		(8)
Derivative financial instruments, net of tax	Derivative financial instruments, net of tax	—		—		—		76		—		76		Derivative financial instruments, net of tax	—		—		—		(31)		—		(31)
Available-for-sale securities, net of tax	Available-for-sale securities, net of tax	—		—		—		8		—		8		Available-for-sale securities, net of tax	—		—		—		(16)		—		(16)

Common shares issued from treasury stock for stock-based compensation: 1,751,708		23		97		—		—		—		120
Distribution to noncontrolling interests														Distribution to noncontrolling interests	—		—		—		—		(2)		(2)
Common shares issued from treasury stock for stock-based compensation: 2,459,683														Common shares issued from treasury stock for stock-based compensation: 2,459,683	(63)		128		—		—		—		65
Stock-based compensation expense	Stock-based compensation expense	55		—		—		—		—		55		Stock-based compensation expense	42		—		—		—		—		42

Other	Other	6		—		(1)		—		(1)		4		Other	6		1		—		—		(2)		5
Balance at September 30, 2020		$	6,204	$	(25,315)	$	35,508	$	(1,448)	$	45	$	14,994
Balance at March 31, 2021														Balance at March 31, 2021	$	6,215	$	(25,049)	$	36,697	$	(1,290)	$	44	$	16,617

Three Months Ended September 30, 2021
Balance at June 30, 2021		$	6,293	$	(25,240)	$	36,934	$	(1,154)	$	47	$	16,880
Three Months Ended March 31, 2022														Three Months Ended March 31, 2022
Balance at December 31, 2021														Balance at December 31, 2021	$	6,398	$	(27,643)	$	39,282	$	(1,553)	$	32	$	16,516

Profit of consolidated and affiliated companies	Profit of consolidated and affiliated companies	—		—		1,426		—		2		1,428		Profit of consolidated and affiliated companies	—		—		1,537		—		—		1,537
Foreign currency translation, net of tax	Foreign currency translation, net of tax	—		—		—		(242)		—		(242)		Foreign currency translation, net of tax	—		—		—		(115)		—		(115)
Pension and other postretirement benefits, net of tax	Pension and other postretirement benefits, net of tax	—		—		—		(8)		—		(8)		Pension and other postretirement benefits, net of tax	—		—		—		(1)		—		(1)
Derivative financial instruments, net of tax	Derivative financial instruments, net of tax	—		—		—		(31)		—		(31)		Derivative financial instruments, net of tax	—		—		—		23		—		23
Available-for-sale securities, net of tax	Available-for-sale securities, net of tax	—		—		—		(5)		—		(5)		Available-for-sale securities, net of tax	—		—		—		(64)		—		(64)
Change in ownership from noncontrolling interests		—		—		—		—		(16)		(16)

Dividends declared	Dividends declared	—		—		1		—		—		1		Dividends declared	—		—		1		—		—		1
Distribution to noncontrolling interests		—		—		—		—		(2)		(2)
Common shares issued from treasury stock for stock-based compensation: 80,571		(5)		4		—		—		—		(1)

Common shares issued from treasury stock for stock-based compensation: 1,037,468														Common shares issued from treasury stock for stock-based compensation: 1,037,468	(65)		37		—		—		—		(28)
Stock-based compensation expense	Stock-based compensation expense	58		—		—		—		—		58		Stock-based compensation expense	40		—		—		—		—		40
Common shares repurchased: 6,610,4381		—		(1,371)		—		—		—		(1,371)

Common shares repurchased: 3,571,684 1														Common shares repurchased: 3,571,684 1	—		(720)		—		—		—		(720)
Other	Other	6		(1)		—		—		(1)		4		Other	(92)		—		—		—		—		(92)
Balance at September 30, 2021		$	6,352	$	(26,608)	$	38,361	$	(1,440)	$	30	$	16,695
Balance at March 31, 2022														Balance at March 31, 2022	$	6,281	$	(28,326)	$	40,820	$	(1,710)	$	32	$	17,097

1 ~~See Note 12 for additional information.~~

~~See accompanying notes to Consolidated Financial Statements.~~

~~Table of Contents~~

~~Caterpillar Inc.~~

~~Consolidated Statement of Changes in Shareholders’ Equity~~

~~(Unaudited)~~

~~(Dollars in millions)~~

Common
stock Treasury
stock Profit
employed
in the
business Accumulated
other
comprehensive
income (loss) Noncontrolling
interests Total
Nine Months Ended September 30, 2020
Balance at December 31, 2019 $ 5,935 $ (24,217) $ 34,437 $ (1,567) $ 41 $ 14,629
Adjustments to adopt new accounting guidance
Credit losses — — (25) — — (25)
Balance at January 1, 2020 5,935 (24,217) 34,412 (1,567) 41 14,604
Profit of consolidated and affiliated companies — — 2,218 — 5 2,223
Foreign currency translation, net of tax — — — 106 — 106
Pension and other postretirement benefits, net of tax — — — (20) — (20)
Derivative financial instruments, net of tax — — — 4 — 4
Available-for-sale securities, net of tax — — — 29 — 29
Dividends declared 1
— — (1,121) — — (1,121)
Common shares issued from treasury stock for stock-based compensation: 3,271,679 (43) 153 — — — 110
Stock-based compensation expense 169 — — — — 169
Common shares repurchased: 10,096,006 2
— (1,250) — — — (1,250)
Other 143 (1) (1) — (1) 140
Balance at September 30, 2020 $ 6,204 $ (25,315) $ 35,508 $ (1,448) $ 45 $ 14,994
Nine Months Ended September 30, 2021
Balance at December 31, 2020 $ 6,230 $ (25,178) $ 35,167 $ (888) $ 47 $ 15,378
Profit of consolidated and affiliated companies — — 4,369 — 4 4,373
Foreign currency translation, net of tax — — — (490) — (490)
Pension and other postretirement benefits, net of tax — — — (23) — (23)
Derivative financial instruments, net of tax — — — (19) — (19)
Available-for-sale securities, net of tax — — — (20) — (20)
Change in ownership from noncontrolling interests — — — — (16) (16)
Dividends declared 1
— — (1,175) — — (1,175)
Distribution to noncontrolling interests — — — — (4) (4)
Common shares issued from treasury stock for stock-based compensation: 3,410,146 (70) 192 — — — 122
Stock-based compensation expense 169 — — — — 169
Common shares repurchased: 7,772,393 2
— (1,622) — — — (1,622)
Other 23 — — — (1) 22
Balance at September 30, 2021 $ 6,352 $ (26,608) $ 38,361 $ (1,440) $ 30 $ 16,695

1 ~~Dividends per share of common stock of $2.14 and $2.06 were declared in the nine months ended September 30, 2021 and 2020, respectively.~~

2 See Note 12 for additional information.

See accompanying notes to Consolidated Financial Statements.

Table of Contents

Caterpillar Inc.

Consolidated Statement of Cash Flow

(Unaudited)

(Millions of dollars)


		Nine Months Ended September 30					Three Months Ended March 31
		2021		2020			2022		2021
Cash flow from operating activities:	Cash flow from operating activities:					Cash flow from operating activities:
Profit of consolidated and affiliated companies	Profit of consolidated and affiliated companies	$	4,373	$	2,223	Profit of consolidated and affiliated companies	$	1,537	$	1,531
Adjustments for non-cash items:	Adjustments for non-cash items:					Adjustments for non-cash items:
Depreciation and amortization	Depreciation and amortization	1,766		1,815		Depreciation and amortization	557		586
Net gain on remeasurement of pension obligations		—		(55)

Provision (benefit) for deferred income taxes	Provision (benefit) for deferred income taxes	(321)		(38)		Provision (benefit) for deferred income taxes	(99)		109
Other	Other	102		919		Other	(52)		(104)
Changes in assets and liabilities, net of acquisitions and divestitures:	Changes in assets and liabilities, net of acquisitions and divestitures:					Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other	Receivables – trade and other	(326)		1,473		Receivables – trade and other	(372)		(543)
Inventories	Inventories	(2,195)		(139)		Inventories	(1,032)		(657)
Accounts payable	Accounts payable	1,232		(596)		Accounts payable	452		733
Accrued expenses	Accrued expenses	46		(286)		Accrued expenses	(74)		84
Accrued wages, salaries and employee benefits	Accrued wages, salaries and employee benefits	934		(547)		Accrued wages, salaries and employee benefits	(965)		191
Customer advances	Customer advances	39		13		Customer advances	311		58
Other assets – net	Other assets – net	138		(15)		Other assets – net	99		56
Other liabilities – net	Other liabilities – net	(2)		(512)		Other liabilities – net	(49)		(116)
Net cash provided by (used for) operating activities	Net cash provided by (used for) operating activities	5,786		4,255		Net cash provided by (used for) operating activities	313		1,928

Cash flow from investing activities:	Cash flow from investing activities:					Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others	Capital expenditures – excluding equipment leased to others	(673)		(686)		Capital expenditures – excluding equipment leased to others	(346)		(252)
Expenditures for equipment leased to others	Expenditures for equipment leased to others	(1,014)		(805)		Expenditures for equipment leased to others	(333)		(252)
Proceeds from disposals of leased assets and property, plant and equipment	Proceeds from disposals of leased assets and property, plant and equipment	877		550		Proceeds from disposals of leased assets and property, plant and equipment	269		309
Additions to finance receivables	Additions to finance receivables	(9,603)		(9,278)		Additions to finance receivables	(2,988)		(2,629)
Collections of finance receivables	Collections of finance receivables	9,221		9,656		Collections of finance receivables	2,966		2,770
Proceeds from sale of finance receivables	Proceeds from sale of finance receivables	44		37		Proceeds from sale of finance receivables	9		5
Investments and acquisitions (net of cash acquired)	Investments and acquisitions (net of cash acquired)	(449)		(93)		Investments and acquisitions (net of cash acquired)	(8)		(386)
Proceeds from sale of businesses and investments (net of cash sold)	Proceeds from sale of businesses and investments (net of cash sold)	23		13		Proceeds from sale of businesses and investments (net of cash sold)	—		28
Proceeds from sale of securities	Proceeds from sale of securities	424		239		Proceeds from sale of securities	571		126
Investments in securities	Investments in securities	(934)		(512)		Investments in securities	(1,438)		(148)
Other – net	Other – net	(8)		(80)		Other – net	(15)		(48)
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	(2,092)		(959)		Net cash provided by (used for) investing activities	(1,313)		(477)

Cash flow from financing activities:	Cash flow from financing activities:					Cash flow from financing activities:
Dividends paid	Dividends paid	(1,733)		(1,683)		Dividends paid	(595)		(562)
Common stock issued, including treasury shares reissued	Common stock issued, including treasury shares reissued	122		110		Common stock issued, including treasury shares reissued	(28)		65
Common shares repurchased	Common shares repurchased	(1,622)		(1,130)		Common shares repurchased	(820)		—

Proceeds from debt issued (original maturities greater than three months):	Proceeds from debt issued (original maturities greater than three months):					Proceeds from debt issued (original maturities greater than three months):
Machinery, Energy & Transportation	Machinery, Energy & Transportation	494		1,991		Machinery, Energy & Transportation	—		494
Financial Products	Financial Products	6,437		7,427		Financial Products	2,131		1,779
Payments on debt (original maturities greater than three months):	Payments on debt (original maturities greater than three months):					Payments on debt (original maturities greater than three months):
Machinery, Energy & Transportation	Machinery, Energy & Transportation	(1,910)		(18)		Machinery, Energy & Transportation	(6)		(644)
Financial Products	Financial Products	(6,710)		(6,771)		Financial Products	(1,381)		(2,243)
Short-term borrowings – net (original maturities three months or less)	Short-term borrowings – net (original maturities three months or less)	1,324		(2,138)		Short-term borrowings – net (original maturities three months or less)	(1,016)		1,659
Other – net	Other – net	(4)		(1)		Other – net	—		(2)
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	(3,602)		(2,213)		Net cash provided by (used for) financing activities	(1,715)		546
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(9)		(56)		Effect of exchange rate changes on cash	(16)		(12)
Increase (decrease) in cash, cash equivalents and restricted cash	Increase (decrease) in cash, cash equivalents and restricted cash	83		1,027		Increase (decrease) in cash, cash equivalents and restricted cash	(2,731)		1,985
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	9,366		8,292		Cash, cash equivalents and restricted cash at beginning of period	9,263		9,366
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	9,449	$	9,319	Cash, cash equivalents and restricted cash at end of period	$	6,532	$	11,351

Cash equivalents primarily represent short-term, highly liquid investments with original maturities of generally three months or less.

See accompanying notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. A. Nature of operations

Information in our financial statements and related commentary are presented in the following categories:

Machinery, Energy & Transportation (ME&T) – We define ME&T as Caterpillar Inc. and its subsidiaries, excluding Financial Products. ME&T’s information relates to the design, manufacturing and marketing of our products.

Financial Products – We define Financial Products as our finance and insurance subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance Services). Financial Products’ information relates to the financing to customers and dealers for the purchase and lease of Caterpillar and other equipment.

B. Basis of presentation

In the opinion of management, the accompanying unaudited financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of (a) the consolidated results of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (b) the consolidated comprehensive income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (c) the consolidated financial position at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, (d) the consolidated changes in shareholders’ equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ and (e) the consolidated cash flow for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021. The financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).

Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in our company’s annual report on Form 10-K for the year ended December 31, ~~2020 (2020~~2021 (2021 Form 10-K).

The December 31, ~~2020~~2021 financial position data included herein is derived from the audited consolidated financial statements included in the ~~2020~~2021 Form 10-K but does not include all disclosures required by U.S. GAAP. Certain amounts for prior periods have been reclassified to conform to the current period financial statement presentation.

Cat Financial has end-user customers that are variable interest entities (VIEs) of which we are not the primary beneficiary. Although we have provided financial support to these entities and therefore have a variable interest, we do not have the power to direct the activities that most significantly impact their economic performance. Our maximum exposure to loss from our involvement with these VIEs is limited to the credit risk inherently present in the financial support that we have provided. These risks were evaluated and reflected in our financial statements as part of our overall portfolio of finance receivables and related allowance for credit losses. See Note 11 for further discussions on a consolidated VIE.

2. New accounting guidance

A. Adoption of new accounting standards

~~Reference rate reform~~ ~~(Accounting Standards Update (ASU) 2020-04) – In March 2020,~~We consider the ~~Financial Accounting Standards Board (FASB) issued accounting guidance to ease the potential burden in accounting for reference rate reform related activities that~~applicability and impact debt, leases, derivatives and other contracts. The guidance is optional and may be elected over time as reference rate reform activities occur between March 12, 2020 through December 31, 2022. In January 2021, we elected to adopt optional expedients impacting our derivative instruments. In addition, in October 2021, we elected to adopt optional expedients for contract modifications. The adoption of ~~the optional expedients will not have a material impact on our financial statements.~~

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all ASUs. We adopted the following ASUs effective January 1, ~~2021,~~2022, none of which had a material impact on our financial statements:


ASU			Description
~~2020-01~~2020-06			~~Investments - Equity securities, equity method~~Debt with conversion and ~~joint ventures~~other options and ~~derivatives~~Derivatives and hedging
~~2020-08~~2021-05			~~Codification improvements – Receivables~~Lessor - ~~Nonrefundable fees and other costs~~Variable lease payments
~~2021-01~~2021-10			~~Reference rate reform - Scope~~Government assistance

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B. Accounting standards issued but not yet adopted

We consider the applicability and impact of all ASUs. We assessed the ASUs and determined that they either were not applicable or were not expected to have a material impact on our financial statements.

3. Sales and revenue contract information

Trade receivables represent amounts due from dealers and end users for the sale of our products. In addition, Cat Financial provides wholesale inventory financing for a dealer’s purchase of inventory. We include wholesale inventory receivables in Receivables – trade and other and Long-term receivables – trade and other in the Consolidated Statement of Financial Position. ~~Short-term trade receivables from dealers and end users were $6,476 million, $6,310 million and $7,648 million as of September 30, 2021, December 31, 2020 and December 31, 2019, respectively.~~ We recognize ~~short-term~~ trade receivables from dealers and end users in Receivables – trade and other ~~in the Consolidated Statement of Financial Position. Long-term trade receivables from dealers~~ and end users were $667 million, $657 million and $693 million as of September 30, 2021, December 31, 2020 and December 31, 2019, respectively. We recognize long-term trade receivables from dealers and end users in Long-term receivables – trade and other in the Consolidated Statement of Financial Position. Trade receivables from dealers and end users were $7,818 million, $7,267 million and $6,310 million as of March 31, 2022, December 31, 2021 and December 31, 2020, respectively. Long-term trade receivables from dealers and end users were $553 million, $624 million and $657 million as of March 31, 2022, December 31, 2021 and December 31, 2020, respectively.

We invoice in advance of recognizing the sale of certain products. We recognize advanced customer payments as a contract liability in Customer advances and Other liabilities in the Consolidated Statement of Financial Position. Contract liabilities were ~~$1,577~~$1,869 million, ~~$1,526~~$1,557 million and ~~$1,654~~$1,526 million as of ~~September 30, 2021,~~March 31, 2022, December 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. We reduce the contract liability when revenue is recognized. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, we recognized ~~$121~~$437 million and ~~$795~~$433 million, respectively, of revenue that was recorded as a contract liability at the beginning of ~~2021. During the three~~2022 and ~~nine months ended September 30, 2020, we recognized $144 million and $843 million, respectively, of revenue that was recorded as a contract liability at the beginning of 2020.~~2021, respectively.

As of ~~September 30, 2021,~~March 31, 2022, we have entered into contracts with dealers and end users for which sales have not been recognized as we have not satisfied our performance obligations and transferred control of the products. The dollar amount of unsatisfied performance obligations for contracts with an original duration greater than one year is ~~$5.8~~$7.7 billion, with about ~~one-third~~one-half of the amount expected to be completed and revenue recognized in the twelve months following ~~September 30, 2021.~~March 31, 2022. We have elected the practical expedient not to disclose unsatisfied performance obligations with an original contract duration of one year or less. Contracts with an original duration of one year or less are primarily sales to dealers for machinery, engines and replacement parts.

See Note 16 for further disaggregated sales and revenues information.

4. Stock-based compensation

Accounting for stock-based compensation requires that the cost resulting from all stock-based payments be recognized in the financial statements based on the grant date fair value of the award. Our stock-based compensation primarily consists of stock options, restricted stock units (RSUs) and performance-based restricted stock units (PRSUs).

We recognized pretax stock-based compensation expense of ~~$58~~$40 million and ~~$169~~$42 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and $55 million and $169 million for the three and nine months ended September 30, 2020,~~ respectively.

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The following table illustrates the type and fair value of the stock-based compensation awards granted during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively:


		Nine Months Ended September 30, 2021					Nine Months Ended September 30, 2020						Three Months Ended March 31, 2022					Three Months Ended March 31, 2021
		Shares Granted	Weighted-Average Fair Value Per Share		Weighted-Average Grant Date Stock Price		Shares Granted	Weighted-Average Fair Value Per Share		Weighted-Average Grant Date Stock Price			Shares Granted	Weighted-Average Fair Value Per Share		Weighted-Average Grant Date Stock Price		Shares Granted	Weighted-Average Fair Value Per Share		Weighted-Average Grant Date Stock Price
Stock options	Stock options	1,084,821	$	56.30	$	219.76	1,913,888	$	25.98	$	127.60	Stock options	1,029,202	$	51.69	$	196.70	1,084,821	$	56.30	$	219.76
RSUs	RSUs	448,311	$	219.76	$	219.76	705,287	$	127.60	$	127.60	RSUs	484,025	$	196.70	$	196.70	448,311	$	219.76	$	219.76
PRSUs	PRSUs	266,894	$	219.76	$	219.76	371,641	$	127.60	$	127.60	PRSUs	258,900	$	196.70	$	196.70	266,894	$	219.76	$	219.76

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The following table provides the assumptions used in determining the fair value of the stock-based awards for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively:


		Grant Year			Grant Year
		2021	2020		2022	2021
Weighted-average dividend yield	Weighted-average dividend yield	2.60%	2.47%	Weighted-average dividend yield	2.60%	2.60%
Weighted-average volatility	Weighted-average volatility	32.9%	25.7%	Weighted-average volatility	31.7%	32.9%
Range of volatilities	Range of volatilities	29.2% - 45.8%	24.5% - 29.7%	Range of volatilities	25.3% - 36.8%	29.2% - 45.8%
Range of risk-free interest rates	Range of risk-free interest rates	0.06% - 1.41%	1.21% - 1.39%	Range of risk-free interest rates	1.03% - 2.00%	0.06% - 1.41%
Weighted-average expected lives	Weighted-average expected lives	8 years	8 years	Weighted-average expected lives	8 years	8 years

As of ~~September 30, 2021,~~March 31, 2022, the total remaining unrecognized compensation expense related to nonvested stock-based compensation awards was ~~$175~~$299 million, which will be amortized over the weighted-average remaining requisite service periods of approximately ~~1.9~~1.8 years.

5. Derivative financial instruments and risk management

Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates, interest rates and commodity prices. Our Risk Management Policy (policy) allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate, interest rate and commodity price exposures. Our policy specifies that derivatives are not to be used for speculative purposes. Derivatives that we use are primarily foreign currency forward, option and cross currency contracts, interest rate contracts and commodity forward and option contracts. Our derivative activities are subject to the management, direction and control of our senior financial officers. We present at least annually to the Audit Committee of the Board of Directors on our risk management practices, including our use of financial derivative instruments.

We recognize all derivatives at their fair value on the Consolidated Statement of Financial Position. On the date the derivative contract is entered into, we designate the derivative as (1) a hedge of the fair value of a recognized asset or liability (fair value hedge), (2) a hedge of a forecasted transaction or the variability of cash flow (cash flow hedge) or (3) an undesignated instrument. We record in current earnings changes in the fair value of a derivative that is qualified, designated and highly effective as a fair value hedge, along with the gain or loss on the hedged recognized asset or liability that is attributable to the hedged risk. We record in Accumulated other comprehensive income (loss) (AOCI) changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge, to the extent effective, on the Consolidated Statement of Financial Position until we reclassify them to earnings in the same period or periods during which the hedged transaction affects earnings. We report changes in the fair value of undesignated derivative instruments in current earnings. We classify cash flows from designated derivative financial instruments within the same category as the item being hedged on the Consolidated Statement of Cash Flow. We include cash flows from undesignated derivative financial instruments in the investing category on the Consolidated Statement of Cash Flow.

We formally document all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as fair value hedges to specific assets and liabilities on the Consolidated Statement of Financial Position and linking cash flow hedges to specific forecasted transactions or variability of cash flow.

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We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the designated derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flow of hedged items. When a derivative is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, we discontinue hedge accounting prospectively, in accordance with the derecognition criteria for hedge accounting.

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of sales made and costs incurred in foreign currencies. Movements in foreign currency rates also affect our competitive position as these changes may affect business practices and/or pricing strategies of non-U.S.-based competitors. Additionally, we have balance sheet positions denominated in foreign currencies, thereby creating exposure to movements in exchange rates.

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Our ME&T operations purchase, manufacture and sell products in many locations around the world. As we have a diversified revenue and cost base, we manage our future foreign currency cash flow exposure on a net basis. We use foreign currency forward and option contracts to manage unmatched foreign currency cash inflow and outflow. Our objective is to minimize the risk of exchange rate movements that would reduce the U.S. dollar value of our foreign currency cash flow. Our policy allows for managing anticipated foreign currency cash flow for up to approximately five years. As of ~~September 30, 2021,~~March 31, 2022, the maximum term of these outstanding contracts at inception was approximately 60 months.

We generally designate as cash flow hedges at inception of the contract any ~~Australian dollar, Brazilian real, British pound, Canadian dollar, Chinese yuan, Indian rupee, Japanese yen, Mexican peso, Norwegian Krona, Singapore dollar or Thailand baht~~ forward or option contracts that meet the requirements for hedge accounting and the maturity extends beyond the current quarter-end. We perform designation on a specific exposure basis to support hedge accounting. The remainder of ME&T foreign currency contracts are undesignated.

In managing foreign currency risk for our Financial Products operations, our objective is to minimize earnings volatility resulting from conversion and the remeasurement of net foreign currency balance sheet positions and future transactions denominated in foreign currencies. Our policy allows the use of foreign currency forward, option and cross currency contracts to offset the risk of currency mismatch between our assets and liabilities and exchange rate risk associated with future transactions denominated in foreign currencies. Our foreign currency forward and option contracts are primarily undesignated. We designate fixed-to-fixed cross currency contracts as cash flow hedges to protect against movements in exchange rates on foreign currency fixed-rate assets and liabilities.

Interest Rate Risk

Interest rate movements create a degree of risk by affecting the amount of our interest payments and the value of our fixed-rate debt. Our practice is to use interest rate contracts to manage our exposure to interest rate changes.

Our ME&T operations generally use fixed-rate debt as a source of funding. Our objective is to minimize the cost of borrowed funds. Our policy allows us to enter into fixed-to-floating interest rate contracts and forward rate agreements to meet that objective. We designate fixed-to-floating interest rate contracts as fair value hedges at inception of the contract, and we designate certain forward rate agreements as cash flow hedges at inception of the contract.

Financial Products operations has a match-funding policy that addresses interest rate risk by aligning the interest rate profile (fixed or floating rate and duration) of Cat Financial’s debt portfolio with the interest rate profile of our receivables portfolio within predetermined ranges on an ongoing basis. In connection with that policy, we use interest rate derivative instruments to modify the debt structure to match assets within the receivables portfolio. This matched funding reduces the volatility of margins between interest-bearing assets and interest-bearing liabilities, regardless of which direction interest rates move.

Our policy allows us to use fixed-to-floating, floating-to-fixed and floating-to-floating interest rate contracts to meet the match-funding objective. We designate fixed-to-floating interest rate contracts as fair value hedges to protect debt against changes in fair value due to changes in the benchmark interest rate. We designate most floating-to-fixed interest rate contracts as cash flow hedges to protect against the variability of cash flows due to changes in the benchmark interest rate.

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We have, at certain times, liquidated fixed-to-floating and floating-to-fixed interest rate contracts at both ME&T and Financial Products. We amortize the gains or losses associated with these contracts at the time of liquidation into earnings over the original term of the previously designated hedged item.

Commodity Price Risk

Commodity price movements create a degree of risk by affecting the price we must pay for certain raw materials. Our policy is to use commodity forward and option contracts to manage the commodity risk and reduce the cost of purchased materials.

Our ME&T operations purchase base and precious metals embedded in the components we purchase from suppliers. Our suppliers pass on to us price changes in the commodity portion of the component cost. In addition, we are subject to price changes on energy products such as natural gas and diesel fuel purchased for operational use.

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Our objective is to minimize volatility in the price of these commodities. Our policy allows us to enter into commodity forward and option contracts to lock in the purchase price of a portion of these commodities within a five-year horizon. All such commodity forward and option contracts are undesignated.

The location and fair value of derivative instruments reported in the Consolidated Statement of Financial Position were as follows:

(Millions of dollars)
Consolidated Statement of Financial Asset (Liability) Fair Value
Position Location September 30, 2021 December 31, 2020
Designated derivatives
Foreign exchange contracts
Machinery, Energy & Transportation Receivables – trade and other $ 44 $ 74
Machinery, Energy & Transportation Long-term receivables – trade and other 33 71
Machinery, Energy & Transportation Accrued expenses (23) (36)
Machinery, Energy & Transportation Other liabilities (7) (1)
Financial Products Receivables – trade and other — 1
Financial Products Long-term receivables – trade and other 115 1
Financial Products Accrued expenses (21) (148)
Interest rate contracts
Machinery, Energy & Transportation Long-term receivables – trade and other — 4
Financial Products Receivables – trade and other 8 2
Financial Products Long-term receivables – trade and other 27 57
Financial Products Accrued expenses (8) (5)
$ 168 $ 20
Undesignated derivatives
Foreign exchange contracts
Machinery, Energy & Transportation Receivables – trade and other $ 13 $ 10
Machinery, Energy & Transportation Long-term receivables – trade and other 1 —
Machinery, Energy & Transportation Accrued expenses (10) (1)
Financial Products Receivables – trade and other 54 17
Financial Products Long-term receivables – trade and other 6 7
Financial Products Accrued expenses (12) (107)
Commodity contracts
Machinery, Energy & Transportation Receivables – trade and other 29 35
Machinery, Energy & Transportation Long-term receivables – trade and other 2 2
Machinery, Energy & Transportation Accrued expenses (23) —
Machinery, Energy & Transportation Other liabilities (1) —
$ 59 $ (37)


(Millions of dollars)	Fair Value
	March 31, 2022				December 31, 2021
	Assets1		Liabilities2		Assets1		Liabilities2
Designated derivatives
Foreign exchange contracts	$	242	$	(127)	$	228	$	(64)
Interest rate contracts	75		(87)		38		(15)
Total	$	317	$	(214)	$	266	$	(79)

Undesignated derivatives
Foreign exchange contracts	$	58	$	(88)	$	46	$	(42)
Commodity contracts	87		—		30		(9)
Total	$	145	$	(88)	$	76	$	(51)

1 Assets are classified on the Consolidated Statement of Financial Position as Receivables - trade and other or Long-term receivables - trade and other.
2 Liabilities are classified on the Consolidated Statement of Financial Position as Accrued expenses or Other liabilities.

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The total notional amounts of the derivative instruments as of March 31, 2022 and December 31, 2021 were ~~as follows:~~

(Millions of dollars) September 30, 2021 December 31, 2020
Machinery, Energy & Transportation $ 4,742 $ 3,553
Financial Products $ 11,069 $ 11,260

$20.7 billion and $18.9 billion, respectively. The notional amounts of the derivative financial instruments do not represent amounts exchanged by the parties. We calculate the amounts exchanged by the parties by referencing the notional amounts and by other terms of the derivatives, such as foreign currency exchange rates, interest rates or commodity prices.

~~The effect of derivatives designated as hedging~~Gains (Losses) on derivative instruments ~~on the Consolidated Statement of Results of Operations was~~are categorized as follows:

Cash Flow Hedges
Three Months Ended September 30, 2021
Recognized in Earnings
(Millions of dollars)
Amount of Gains
(Losses) Recognized
in AOCI
Classification of
Gains (Losses) Amount of Gains
(Losses) Reclassified
from AOCI Amount of the line items in the Consolidated Statement of Results of Operations
Foreign exchange contracts
Machinery, Energy & Transportation $ (47) Sales of Machinery, Energy & Transportation $ 2 $ 11,707
Cost of goods sold 4 8,617
Financial Products 89 Interest expense of Financial Products (3) 111
Other income (expense) 87 225
Interest rate contracts
Financial Products 3 Interest expense of Financial Products (5) 111
$ 45 $ 85

Three Months Ended September 30, 2020
Recognized in Earnings
Amount of Gains
(Losses) Recognized
in AOCI Classification of
Gains (Losses) Amount of Gains
(Losses) Reclassified
from AOCI Amount of the line items in the Consolidated Statement of Results of Operations
Foreign exchange contracts
Machinery, Energy & Transportation $ 66 Sales of Machinery, Energy & Transportation $ (6) $ 9,228
Cost of goods sold (15) 6,919
Financial Products (64) Interest expense of Financial Products 8 137
Other income (expense) (63) 14
Interest rate contracts
Machinery, Energy & Transportation 2 Interest expense excluding Financial Products (1) 136
Financial Products 1 Interest expense of Financial Products (16) 137
$ 5 $ (93)


(Millions of dollars)	Three Months Ended March 31
	Fair Value / Undesignated Hedges				Cash Flow Hedges
	Gains (Losses) Recognized on the Consolidated Statement of Results of Operations1				Gains (Losses) Recognized in AOCI				Gains (Losses) Reclassified from AOCI2
	2022		2021		2022		2021		2022		2021
Foreign exchange contracts	$	(63)	$	78	$	(9)	$	72	$	26	$	129
Interest rate contracts	7		7		56		7		(7)		(11)
Commodity contracts	93		20		—		—		—		—
Total	$	37	$	105	$	47	$	79	$	19	$	118

1 Foreign exchange contract and Commodity contract gains (losses) are included in Other income (expense). Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products.
2 Foreign exchange contract gains (losses) are primarily included in Sales of Machinery, Energy & Transportation and Other income (expense) in the Consolidated Statement of Results of Operations. Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products in the Consolidated Statement of Results of Operations.

~~Table of Contents~~

Cash Flow Hedges
Nine Months Ended September 30, 2021
Recognized in Earnings
(Millions of dollars)
Amount of Gains
(Losses) Recognized
in AOCI
Classification of
Gains (Losses) Amount of Gains
(Losses) Reclassified
from AOCI Amount of the line items in the Consolidated Statement of Results of Operations
Foreign exchange contracts
Machinery, Energy & Transportation $ (40) Sales of Machinery, Energy & Transportation $ (21) $ 35,091
Cost of goods sold 42 25,510
Financial Products 170 Interest expense of Financial Products (1) 352
Other income (expense) 167 751
Interest rate contracts
Machinery, Energy & Transportation 7 Interest expense excluding Financial Products (2) 376
Financial Products 4 Interest expense of Financial Products (21) 352
$ 141 $ 164

Nine Months Ended September 30, 2020
Recognized in Earnings
Amount of Gains
(Losses) Recognized
in AOCI Classification of
Gains (Losses) Amount of Gains
(Losses) Reclassified
from AOCI Amount of the line items in the Consolidated Statement of Results of Operations
Foreign exchange contracts
Machinery, Energy & Transportation $ (58) Sales of Machinery, Energy & Transportation $ 10 $ 28,452
Cost of goods sold (58) 21,298
Financial Products 2 Interest expense of Financial Products 28 461
Other income (expense) (35) 265
Interest rate contracts
Machinery, Energy & Transportation (14) Interest expense excluding Financial Products (3) 384
Financial Products (23) Interest expense of Financial Products (40) 461
$ (93) $ (98)

1712

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The ~~effect of derivatives not designated as hedging instruments~~following amounts were recorded on the Consolidated Statement of ~~Results of Operations was as follows:~~ Financial Position related to cumulative basis adjustments for fair value hedges:

(Millions of dollars)
Classification of Gains (Losses) Three Months Ended September 30, 2021 Three Months Ended September 30, 2020
Foreign exchange contracts
Machinery, Energy & Transportation Other income (expense) $ 2 $ 8
Financial Products Other income (expense) 44 (73)
Commodity contracts
Machinery, Energy & Transportation Other income (expense) (30) 6
$ 16 $ (59)
Classification of Gains (Losses) Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
Foreign exchange contracts
Machinery, Energy & Transportation Other income (expense) $ 5 $ 21
Financial Products Other income (expense) 72 12
Commodity contracts
Machinery, Energy & Transportation Other income (expense) 35 (25)
$ 112 $ 8


(Millions of dollars)	Carrying Value of the Hedged Liabilities				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Liabilities
	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Long-term debt due within one year	$	750	$	755	$	—	$	5
Long-term debt due after one year	2,419		1,304		(87)		(2)
Total	$	3,169	$	2,059	$	(87)	$	3

We enter into International Swaps and Derivatives Association (ISDA) master netting agreements within ME&T and Financial Products that permit the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement generally permits the company or the counterparty to determine the net amount payable for contracts due on the same date and in the same currency for similar types of derivative transactions. The master netting agreements generally also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event.

Collateral is generally not required of the counterparties or of our company under the master netting agreements. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, no cash collateral was received or pledged under the master netting agreements.

~~Table of Contents~~

The effect of the net settlement provisions of the master netting agreements on our derivative balances upon an event of default or termination event was as follows:

September 30, 2021 Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars) Gross Amount of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amount of Assets Presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net Amount of Assets
Derivatives
Machinery, Energy & Transportation $ 122 $ — $ 122 $ (53) $ — $ 69
Financial Products 210 — 210 (39) — 171
Total $ 332 $ — $ 332 $ (92) $ — $ 240

September 30, 2021 Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars) Gross Amount of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amount of Liabilities Presented in the Statement of Financial Position Financial Instruments Cash Collateral Pledged Net Amount of Liabilities
Derivatives
Machinery, Energy & Transportation $ (64) $ — $ (64) $ 53 $ — $ (11)
Financial Products (41) — (41) 39 — (2)
Total $ (105) $ — $ (105) $ 92 $ — $ (13)


(Millions of dollars)	March 31, 2022				December 31, 2021
	Assets		Liabilities		Assets		Liabilities
Gross Amounts Recognized	$	462	$	(302)	$	342	$	(130)
Financial Instruments Not Offset	(152)		152		(114)		114
Cash Collateral Received	—		—		—		—
Net Amount	$	310	$	(150)	$	228	$	(16)

December 31, 2020 Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars) Gross Amount of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amount of Assets Presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net Amount of Assets
Derivatives
Machinery, Energy & Transportation $ 196 $ — $ 196 $ (38) $ — $ 158
Financial Products 85 — 85 (57) — 28
Total $ 281 $ — $ 281 $ (95) $ — $ 186

December 31, 2020 Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars) Gross Amount of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amount of Liabilities Presented in the Statement of Financial Position Financial Instruments Cash Collateral Pledged Net Amount of Liabilities
Derivatives
Machinery, Energy & Transportation $ (38) $ — $ (38) $ 38 $ — $ —
Financial Products (260) — (260) 57 — (203)
Total $ (298) $ — $ (298) $ 95 $ — $ (203)

~~Table of Contents~~

6. Inventories

Inventories (principally using the last-in, first-out (LIFO) method) were comprised of the following:


(Millions of dollars)	(Millions of dollars)	September 30, 2021		December 31, 2020		(Millions of dollars)	March 31, 2022		December 31, 2021
Raw materials	Raw materials	$	5,144	$	4,021	Raw materials	$	5,924	$	5,528
Work-in-process	Work-in-process	1,522		1,052		Work-in-process	1,438		1,318
Finished goods	Finished goods	6,707		6,054		Finished goods	7,390		6,907
Supplies	Supplies	293		275		Supplies	286		285
Total inventories	Total inventories	$	13,666	$	11,402	Total inventories	$	15,038	$	14,038

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7. Intangible assets and goodwill

A. Intangible assets

Intangible assets were comprised of the following:


			September 30, 2021								March 31, 2022
(Millions of dollars)	(Millions of dollars)	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net		(Millions of dollars)	Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	Customer relationships	15	$	2,436	$	(1,682)	$	754	Customer relationships	15	$	2,273	$	(1,601)	$	672
Intellectual property	Intellectual property	12	1,473		(1,160)		313		Intellectual property	12	1,473		(1,225)		248
Other	Other	15	157		(103)		54		Other	16	131		(84)		47
Total finite-lived intangible assets	Total finite-lived intangible assets	14	$	4,066	$	(2,945)	$	1,121	Total finite-lived intangible assets	14	$	3,877	$	(2,910)	$	967


			December 31, 2020								December 31, 2021
		Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net			Weighted Amortizable Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	Customer relationships	15	$	2,493	$	(1,600)	$	893	Customer relationships	15	$	2,421	$	(1,709)	$	712
Intellectual property	Intellectual property	12	1,439		(1,073)		366		Intellectual property	12	1,472		(1,192)		280
Other	Other	14	164		(115)		49		Other	14	156		(106)		50
Total finite-lived intangible assets	Total finite-lived intangible assets	14	$	4,096	$	(2,788)	$	1,308	Total finite-lived intangible assets	14	$	4,049	$	(3,007)	$	1,042

Amortization expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 was ~~$75~~$72 million and ~~$228 million, respectively. Amortization expense for the three and nine months ended September 30, 2020 was $78 million and $236~~$77 million, respectively. Amortization expense related to intangible assets is expected to be:

(Millions of dollars)
Remaining Three Months of 2021 2022 2023 2024 2025 Thereafter
$74 $287 $228 $170 $160 $202


(Millions of dollars)

Remaining Nine Months of 2022	2023	2024	2025	2026	Thereafter
$214	$227	$168	$158	$87	$113

B. Goodwill

No goodwill was impaired during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 or ~~2020.~~2021.

2014

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The changes in carrying amount of goodwill by reportable segment for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 were as follows:


(Millions of dollars)	(Millions of dollars)	December 31, 2020		Acquisitions 1		Other Adjustments 2		September 30, 2021		(Millions of dollars)	December 31, 2021		Other Adjustments 1		March 31, 2022
Construction Industries	Construction Industries									Construction Industries
Goodwill	Goodwill	$	320	$	4	$	(17)	$	307	Goodwill	$	302	$	(9)	$	293
Impairments	Impairments	(22)		—		—		(22)		Impairments	(22)		—		(22)
Net goodwill	Net goodwill	298		4		(17)		285		Net goodwill	280		(9)		271
Resource Industries	Resource Industries									Resource Industries
Goodwill	Goodwill	4,253		22		(62)		4,213		Goodwill	4,182		2		4,184
Impairments	Impairments	(1,175)		—		—		(1,175)		Impairments	(1,175)		—		(1,175)
Net goodwill	Net goodwill	3,078		22		(62)		3,038		Net goodwill	3,007		2		3,009
Energy & Transportation	Energy & Transportation									Energy & Transportation
Goodwill	Goodwill	2,959		51		(35)		2,975		Goodwill	2,985		(22)		2,963
All Other 3
All Other 2										All Other 2
Goodwill	Goodwill	59		—		(4)		55		Goodwill	52		(2)		50
Consolidated total	Consolidated total									Consolidated total
Goodwill	Goodwill	7,591		77		(118)		7,550		Goodwill	7,521		(31)		7,490
Impairments	Impairments	(1,197)		—		—		(1,197)		Impairments	(1,197)		—		(1,197)
Net goodwill	Net goodwill	$	6,394	$	77	$	(118)	$	6,353	Net goodwill	$	6,324	$	(31)	$	6,293

1~~See Note 21 for additional details.~~

2 Other adjustments are comprised primarily of foreign currency translation.

32 Includes All Other operating segment (See Note 16).

8. Investments in debt and equity securities

We have investments in certain debt and equity securities, ~~primarily at Insurance Services,~~ which we record at fair value and primarily include in Other assets in the Consolidated Statement of Financial Position.

We classify debt securities primarily as available-for-sale. We include the unrealized gains and losses arising from the revaluation of available-for-sale debt securities, net of applicable deferred income taxes, in equity (AOCI in the Consolidated Statement of Financial Position). We include the unrealized gains and losses arising from the revaluation of the equity securities in Other income (expense) in the Consolidated Statement of Results of Operations. We generally determine realized gains and losses on sales of investments using the specific identification method for available-for-sale debt and equity securities and include them in Other income (expense) in the Consolidated Statement of Results of Operations.

The cost basis and fair value of available-for-sale debt securities with unrealized gains and losses included in equity (AOCI in the Consolidated Statement of Financial Position) were as follows:

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Available-for-sale debt securities	Available-for-sale debt securities	September 30, 2021						December 31, 2020						Available-for-sale debt securities	March 31, 2022						December 31, 2021
(Millions of dollars)	(Millions of dollars)	Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value		Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value		(Millions of dollars)	Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value		Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value
Government debt	Government debt													Government debt
U.S. treasury bonds	U.S. treasury bonds	$	10	$	—	$	10	$	10	$	—	$	10	U.S. treasury bonds	$	9	$	—	$	9	$	10	$	—	$	10
Other U.S. and non-U.S. government bonds	Other U.S. and non-U.S. government bonds	57		—		57		58		1		59		Other U.S. and non-U.S. government bonds	61		(1)		60		61		—		61

Corporate bonds	Corporate bonds													Corporate bonds
Corporate bonds	Corporate bonds	1,004		31		1,035		962		50		1,012		Corporate bonds	2,026		(38)		1,988		1,027		19		1,046
Asset-backed securities	Asset-backed securities	146		2		148		156		3		159		Asset-backed securities	184		(1)		183		175		1		176

Mortgage-backed debt securities	Mortgage-backed debt securities													Mortgage-backed debt securities
U.S. governmental agency	U.S. governmental agency	340		9		349		362		12		374		U.S. governmental agency	328		(9)		319		319		6		325
Residential	Residential	4		—		4		5		—		5		Residential	3		—		3		4		—		4
Commercial	Commercial	97		3		100		60		4		64		Commercial	103		(3)		100		98		1		99
Total available-for-sale debt securities	Total available-for-sale debt securities	$	1,658	$	45	$	1,703	$	1,613	$	70	$	1,683	Total available-for-sale debt securities	$	2,714	$	(52)	$	2,662	$	1,694	$	27	$	1,721


Available-for-sale debt securities in an unrealized loss position:	Available-for-sale debt securities in an unrealized loss position:													Available-for-sale debt securities in an unrealized loss position:

		September 30, 2021													March 31, 2022
		Less than 12 months 1				12 months or more 1				Total					Less than 12 months 1				12 months or more 1				Total
(Millions of dollars)	(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government debt														Government debt
Other U.S. and non-U.S. government bonds														Other U.S. and non-U.S. government bonds	$	24	$	1	$	—	$	—	$	24	$	1

Corporate bonds	Corporate bonds													Corporate bonds
Corporate bonds	Corporate bonds	$	215	$	2	$	6	$	—	$	221	$	2	Corporate bonds	1,433		37		61		6		1,494		43
Asset-backed securities														Asset-backed securities	109		3		—		—		109		3

Mortgage-backed debt securities														Mortgage-backed debt securities
U.S. governmental agency														U.S. governmental agency	231		8		25		2		256		10

Commercial														Commercial	98		3		1		—		99		3
Total	Total	$	215	$	2	$	6	$	—	$	221	$	2	Total	$	1,895	$	52	$	87	$	8	$	1,982	$	60


		December 31, 2020													December 31, 2021
		Less than 12 months 1				12 months or more 1				Total					Less than 12 months 1				12 months or more 1				Total
(Millions of dollars)	(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate bonds	Corporate bonds													Corporate bonds
Corporate bonds	Corporate bonds	$	13	$	—	$	4	$	—	$	17	$	—	Corporate bonds	$	270	$	4	$	33	$	1	$	303	$	5

Mortgage-backed debt securities														Mortgage-backed debt securities
U.S. governmental agency														U.S. governmental agency	89		1		22		—		111		1

Total	Total	$	13	$	—	$	4	$	—	$	17	$	—	Total	$	359	$	5	$	55	$	1	$	414	$	6

1 Indicates the length of time that individual securities have been in a continuous unrealized loss position.	1 Indicates the length of time that individual securities have been in a continuous unrealized loss position.													1 Indicates the length of time that individual securities have been in a continuous unrealized loss position.

~~Corporate Bonds~~ The unrealized losses on our investments in government debt, corporate bonds and mortgage-backed debt securities relate to changes in interest rates and credit-related yield spreads since time of purchase. We do not intend to sell the investments, and it is not likely that we will be required to sell the investments before recovery of their amortized cost basis. In addition, we did not expect credit-related losses on these investments as of ~~September 30, 2021.~~March 31, 2022.

2216

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The cost basis and fair value of available-for-sale debt securities at ~~September 30, 2021,~~March 31, 2022, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay and creditors may have the right to call obligations.


		September 30, 2021					March 31, 2022
(Millions of dollars)	(Millions of dollars)	Cost Basis		Fair Value		(Millions of dollars)	Cost Basis		Fair Value
Due in one year or less	Due in one year or less	$	154	$	156	Due in one year or less	$	508	$	507
Due after one year through five years	Due after one year through five years	730		753		Due after one year through five years	1,369		1,341
Due after five years through ten years	Due after five years through ten years	271		278		Due after five years through ten years	327		317
Due after ten years	Due after ten years	62		63		Due after ten years	76		75
U.S. governmental agency mortgage-backed securities	U.S. governmental agency mortgage-backed securities	340		349		U.S. governmental agency mortgage-backed securities	328		319
Residential mortgage-backed securities	Residential mortgage-backed securities	4		4		Residential mortgage-backed securities	3		3
Commercial mortgage-backed securities	Commercial mortgage-backed securities	97		100		Commercial mortgage-backed securities	103		100
Total debt securities – available-for-sale	Total debt securities – available-for-sale	$	1,658	$	1,703	Total debt securities – available-for-sale	$	2,714	$	2,662


Sales of available-for-sale debt securities:	Sales of available-for-sale debt securities:									Sales of available-for-sale debt securities:
		Three Months Ended September 30				Nine Months Ended September 30					Three Months Ended March 31
(Millions of dollars)	(Millions of dollars)	2021		2020		2021		2020		(Millions of dollars)		2022		2021
Proceeds from the sale of available-for-sale securities	Proceeds from the sale of available-for-sale securities	$	97	$	74	$	322	$	197	Proceeds from the sale of available-for-sale securities		$	96	$	100
Gross gains from the sale of available-for-sale securities	Gross gains from the sale of available-for-sale securities	1		—		3		1		Gross gains from the sale of available-for-sale securities		—		—
Gross losses from the sale of available-for-sale securities	Gross losses from the sale of available-for-sale securities	—		—		—		1		Gross losses from the sale of available-for-sale securities		—		—

In addition, we had ~~$543~~$813 million and $964 million of investments in time deposits classified as held-to-maturity debt securities as of ~~September 30, 2021.~~March 31, 2022 and December 31, 2021, respectively. All these investments mature within one year and we include them in Prepaid expenses and other current assets in the Consolidated Statement of Financial Position. We ~~did not have any investments classified as held-to-maturity debt securities as of December 31, 2020. We~~ record held-to-maturity debt securities at amortized cost, which approximates fair value. We did not have any unrealized gains or losses on these securities as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the net unrealized gains (losses) for equity securities held at ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$46~~$(12) million and $9 million, respectively. For the nine months ended September 30, 2021 and 2020, the net unrealized gains (losses) for equity securities held at September 30, 2021 and 2020 were $65 million and $(1)$20 million, respectively.

~~Table of Contents~~

9. Postretirement benefits

A. Pension and postretirement benefit costs


		U.S. Pension Benefits				Non-U.S. Pension Benefits				Other Postretirement Benefits					U.S. Pension Benefits				Non-U.S. Pension Benefits				Other Postretirement Benefits
(Millions of dollars)	(Millions of dollars)	September 30				September 30				September 30				(Millions of dollars)	March 31				March 31				March 31
		2021		2020		2021		2020		2021		2020			2022		2021		2022		2021		2022		2021
For the three months ended:	For the three months ended:													For the three months ended:
Components of net periodic benefit cost:	Components of net periodic benefit cost:													Components of net periodic benefit cost:
Service cost	Service cost	$	—	$	—	$	15	$	13	$	25	$	24	Service cost	$	—	$	—	$	13	$	14	$	25	$	25
Interest cost	Interest cost	82		120		16		17		16		26		Interest cost	100		82		18		14		20		16
Expected return on plan assets	Expected return on plan assets	(180)		(197)		(33)		(34)		(1)		(4)		Expected return on plan assets	(167)		(179)		(34)		(32)		(4)		(2)
Amortization of prior service cost (credit)	Amortization of prior service cost (credit)	—		—		—		—		(11)		(9)		Amortization of prior service cost (credit)	—		—		—		—		(1)		(10)
(Gain) loss on remeasurement of pension obligations 1		—		(2)		—		79		—		—
Curtailments, settlements and termination benefits 1		—		—		—		4		—		—
Net periodic benefit cost (benefit) 2		$	(98)	$	(79)	$	(2)	$	79	$	29	$	37

For the nine months ended:
Components of net periodic benefit cost:
Service cost		$	—	$	—	$	44	$	41	$	75	$	71
Interest cost		247		362		43		57		48		79
Expected return on plan assets		(538)		(593)		(98)		(107)		(4)		(10)
Amortization of prior service cost (credit)		—		—		—		—		(31)		(28)
(Gain) loss on remeasurement of pension obligations 1		—		—		—		(55)		—		—
Curtailments, settlements and termination benefits 1		—		—		—		25		—		—
Net periodic benefit cost (benefit) 2		$	(291)	$	(231)	$	(11)	$	(39)	$	88	$	112

Net periodic benefit cost (benefit) 1														Net periodic benefit cost (benefit) 1	$	(67)	$	(97)	$	(3)	$	(4)	$	40	$	29

1 Total lump-sum transfers out of certain pension plans exceeded the service and interest cost for 2020, which required us to follow settlement accounting and remeasure the plans' obligations as of March 31, 2020, June 30, 2020 and September 30, 2020.

2 The service cost component is included in Operating costs in the Consolidated Statement of Results of Operations. All other components are included in Other income (expense) in the Consolidated Statement of Results of Operations.

We made ~~$69 million and $229~~$210 million of contributions to our pension and other postretirement plans during the three ~~and nine~~ months ended ~~September 30, 2021, respectively.~~March 31, 2022. We currently anticipate full-year ~~2021~~2022 contributions of approximately ~~$310~~$357 million.

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B. Defined contribution benefit costs

Total company costs related to our defined contribution plans, which are included in Operating Costs in the Consolidated Statement of Results of Operations, were as follows:


		Three Months Ended September 30				Nine Months Ended September 30					Three Months Ended March 31
(Millions of dollars)	(Millions of dollars)	2021		2020		2021		2020		(Millions of dollars)		2022		2021
U.S. Plans	U.S. Plans	$	81	$	103	$	321	$	248	U.S. Plans		$	114	$	125
Non-U.S. Plans	Non-U.S. Plans	29		22		83		65		Non-U.S. Plans		29		26
		$	110	$	125	$	404	$	313			$	143	$	151

The ~~increase~~decrease in the U.S. defined contribution benefit costs for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was primarily due to the fair value adjustments related to our non-qualified deferred compensation plans.

~~Table of Contents~~

10. Leases

Revenues from finance and operating leases, primarily included in Revenues of Financial Products on the Consolidated Statement of Results of Operations, were as follows:


											Three Months Ended March 31
(Millions of dollars)	(Millions of dollars)									(Millions of dollars)		2022		2021
		Three Months Ended September 30				Nine Months Ended September 30
		2021		2020		2021		2020
Finance lease revenue	Finance lease revenue	$	120	$	125	$	369	$	369	Finance lease revenue		$	112	$	125
Operating lease revenue	Operating lease revenue	275		249		850		837		Operating lease revenue		278		294
Total	Total	$	395	$	374	$	1,219	$	1,206	Total		$	390	$	419

We present revenues net of sales and other related taxes.

11. Guarantees and product warranty

Caterpillar dealer performance guarantees

We have provided an indemnity to a third-party insurance company for potential losses related to performance bonds issued on behalf of Caterpillar dealers. The bonds have varying terms and are issued to insure governmental agencies against nonperformance by certain dealers. We also provided guarantees to third-parties related to the performance of contractual obligations by certain Caterpillar dealers. These guarantees have varying terms and cover potential financial losses incurred by the third parties resulting from the dealers’ nonperformance.

In 2016, we provided a guarantee to an end user related to the performance of contractual obligations by a Caterpillar dealer. Under the guarantee, which expires in 2025, non-performance by the Caterpillar dealer could require Caterpillar to satisfy the contractual obligations by providing goods, services or financial compensation to the end user up to an annual designated cap. This guarantee was terminated during the first quarter of 2022.No payments were made under the guarantee.

Supplier consortium performance guarantee

We have provided a guarantee to a customer in Europe related to the performance of contractual obligations by a supplier consortium to which one of our Caterpillar subsidiaries is a member. The guarantee covers potential damages incurred by the customer resulting from the supplier consortium's non-performance. The damages are capped except for failure of the consortium to meet certain obligations outlined in the contract in the normal course of business. The guarantee will expire when the supplier consortium performs all of its contractual obligations, which is expected to be completed in 2022.

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We have dealer performance guarantees and third-party performance guarantees that do not limit potential payment to end users related to indemnities and other commercial contractual obligations. In addition, we have entered into contracts involving industry standard indemnifications that do not limit potential payment. For these unlimited guarantees, we are unable to estimate a maximum potential amount of future payments that could result from claims made.

No significant loss has been experienced or is anticipated under any of these guarantees. At ~~both September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the related recorded liability was $4 million and $5 ~~million.~~million respectively. The maximum potential amount of future payments (undiscounted and without reduction for any amounts that may possibly be recovered under recourse or collateralized provisions) we could be required to make under the guarantees was as follows:

(Millions of dollars) September 30,
2021 December 31,
2020
Caterpillar dealer performance guarantees $ 908 $ 993
Supplier consortium performance guarantee 247 258
Other guarantees 248 234
Total guarantees $ 1,403 $ 1,485

~~Table of Contents~~


(Millions of dollars)	March 31, 2022		December 31, 2021
Caterpillar dealer performance guarantees	$	251	$	747

Supplier consortium performance guarantee	239		242

Other guarantees	165		232
Total guarantees	$	655	$	1,221

Cat Financial provides guarantees to purchase certain loans of Caterpillar dealers from a special-purpose corporation (SPC) that qualifies as a variable interest entity. The purpose of the SPC is to provide short-term working capital loans to Caterpillar dealers. This SPC issues commercial paper and uses the proceeds to fund its loan program. Cat Financial receives a fee for providing this guarantee. Cat Financial is the primary beneficiary of the SPC as its guarantees result in Cat Financial having both the power to direct the activities that most significantly impact the SPC’s economic performance and the obligation to absorb losses, and therefore Cat Financial has consolidated the financial statements of the SPC. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the SPC’s assets of ~~$899~~$839 million and ~~$1,026~~$888 million, respectively, were primarily comprised of loans to dealers, and the SPC’s liabilities of ~~$899~~$838 million and ~~$1,025~~$888 million, respectively, were primarily comprised of commercial paper. The assets of the SPC are not available to pay Cat Financial’s creditors. Cat Financial may be obligated to perform under the guarantee if the SPC experiences losses. No loss has been experienced or is anticipated under this loan purchase agreement.

We determine our product warranty liability by applying historical claim rate experience to the current field population and dealer inventory. Generally, we base historical claim rates on actual warranty experience for each product by machine model/engine size by customer or dealer location (inside or outside North America). We develop specific rates for each product shipment month and update them monthly based on actual warranty claim experience.

First Nine Months
(Millions of dollars) 2021 2020
Warranty liability, beginning of period $ 1,612 $ 1,541
Reduction in liability (payments) (638) (652)
Increase in liability (new warranties) 716 678
Warranty liability, end of period $ 1,690 $ 1,567

The reconciliation of the change in our product warranty liability balances for the quarters ended March 31 was as follows:


	First Three Months
(Millions of dollars)	2022		2021
Warranty liability, beginning of period	$	1,689	$	1,612
Reduction in liability (payments)	(194)		(225)
Increase in liability (new warranties)	168		244
Warranty liability, end of period	$	1,663	$	1,631

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12. Profit per share


Computations of profit per share:	Computations of profit per share:	Three Months Ended September 30				Nine Months Ended September 30				Computations of profit per share:	Three Months Ended March 31
(Dollars in millions except per share data)	(Dollars in millions except per share data)	2021		2020		2021		2020		(Dollars in millions except per share data)		2022		2021
Profit for the period (A) 1	Profit for the period (A) 1	$	1,426	$	668	$	4,369	$	2,218	Profit for the period (A) 1		$	1,537	$	1,530
Determination of shares (in millions):	Determination of shares (in millions):									Determination of shares (in millions):
Weighted-average number of common shares outstanding (B)	Weighted-average number of common shares outstanding (B)	544.0		542.3		545.8		543.9		Weighted-average number of common shares outstanding (B)		534.5		546.4
Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price	Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price	3.6		4.1		4.4		3.9		Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price		3.8		5.0
Average common shares outstanding for fully diluted computation (C) 2	Average common shares outstanding for fully diluted computation (C) 2	547.6		546.4		550.2		547.8		Average common shares outstanding for fully diluted computation (C) 2		538.3		551.4
Profit per share of common stock:	Profit per share of common stock:									Profit per share of common stock:
Assuming no dilution (A/B)	Assuming no dilution (A/B)	$	2.62	$	1.23	$	8.00	$	4.08	Assuming no dilution (A/B)		$	2.88	$	2.80
Assuming full dilution (A/C) 2	Assuming full dilution (A/C) 2	$	2.60	$	1.22	$	7.94	$	4.05	Assuming full dilution (A/C) 2		$	2.86	$	2.77
Shares outstanding as of September 30 (in millions)						540.9		543.3
Shares outstanding as of March 31 (in millions)										Shares outstanding as of March 31 (in millions)		533.4		547.8

1 Profit attributable to common shareholders.	1 Profit attributable to common shareholders.									1 Profit attributable to common shareholders.
2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.	2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.									2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we excluded ~~1.1~~2.1 million and ~~4.8~~1.1 million of outstanding stock options, respectively, from the computation of diluted earnings per share because the effect would have been antidilutive.

In July 2018, the Board approved a share repurchase authorization (the 2018 Authorization) of up to $10.0 billion of Caterpillar common stock effective January 1, 2019, with no expiration. As of ~~September 30, 2021,~~March 31, 2022, approximately ~~$3.1~~$1.4 billion remained available under the 2018 Authorization.

~~Table of Contents~~

For the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, we repurchased ~~6.6 million and 7.8~~3.6 million shares of Caterpillar common stock, at an aggregate cost of ~~$1.4 billion and $1.6 billion, respectively.~~$720 million. For the three months ended ~~September 30, 2020,~~March 31, 2021, we did not repurchase any shares of Caterpillar common stock. ~~For the nine months ended September 30, 2020, we repurchased 10.1 million shares of Caterpillar common stock at an aggregate cost of $1.3 billion.~~ We made these purchases through a combination of accelerated stock repurchase agreements with third-party financial institutions and open market transactions.

13. Accumulated other comprehensive income (loss)

We present comprehensive income and its components in the Consolidated Statement of Comprehensive Income. Changes in the balances for each component of AOCI were as follows:

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		Three Months Ended September 30			Nine Months Ended September 30							Three Months Ended March 31
(Millions of dollars)	(Millions of dollars)		2021		2020		2021		2020		(Millions of dollars)		2022		2021
Foreign currency translation:	Foreign currency translation:										Foreign currency translation:
Beginning balance											Beginning balance		$	(1,508)	$	(910)

Beginning balance			$	(1,158)	$	(1,672)	$	(910)	$	(1,487)
Gains (losses) on foreign currency translation	Gains (losses) on foreign currency translation		(230)		270		(461)		64		Gains (losses) on foreign currency translation		(104)		(323)
Less: Tax provision /(benefit)	Less: Tax provision /(benefit)		12		(21)		29		(20)		Less: Tax provision /(benefit)		11		24
Net gains (losses) on foreign currency translation	Net gains (losses) on foreign currency translation		(242)		291		(490)		84		Net gains (losses) on foreign currency translation		(115)		(347)
(Gains) losses reclassified to earnings	(Gains) losses reclassified to earnings		—		—		—		22		(Gains) losses reclassified to earnings		—		—
Less: Tax provision /(benefit)	Less: Tax provision /(benefit)		—		—		—		—		Less: Tax provision /(benefit)		—		—
Net (gains) losses reclassified to earnings	Net (gains) losses reclassified to earnings		—		—		—		22		Net (gains) losses reclassified to earnings		—		—
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax		(242)		291		(490)		106		Other comprehensive income (loss), net of tax		(115)		(347)
Ending balance	Ending balance		$	(1,400)	$	(1,381)	$	(1,400)	$	(1,381)	Ending balance		$	(1,623)	$	(1,257)

Pension and other postretirement benefits	Pension and other postretirement benefits										Pension and other postretirement benefits
Beginning balance											Beginning balance		$	(62)	$	(32)

Beginning balance			$	(47)	$	(15)	$	(32)	$	(3)
Current year prior service credit (cost)	Current year prior service credit (cost)		—		(2)		—		—		Current year prior service credit (cost)		—		—
Less: Tax provision /(benefit)	Less: Tax provision /(benefit)		—		(1)		—		(1)		Less: Tax provision /(benefit)		—		—
Net current year prior service credit (cost)	Net current year prior service credit (cost)		—		(1)		—		1		Net current year prior service credit (cost)		—		—
Amortization of prior service (credit) cost	Amortization of prior service (credit) cost		(11)		(9)		(31)		(28)		Amortization of prior service (credit) cost		(1)		(10)
Less: Tax provision /(benefit)	Less: Tax provision /(benefit)		(3)		(2)		(8)		(7)		Less: Tax provision /(benefit)		—		(2)
Net amortization of prior service (credit) cost	Net amortization of prior service (credit) cost		(8)		(7)		(23)		(21)		Net amortization of prior service (credit) cost		(1)		(8)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax		(8)		(8)		(23)		(20)		Other comprehensive income (loss), net of tax		(1)		(8)
Ending balance	Ending balance		$	(55)	$	(23)	$	(55)	$	(23)	Ending balance		$	(63)	$	(40)
Derivative financial instruments	Derivative financial instruments										Derivative financial instruments
Beginning balance											Beginning balance		$	(3)	$	—

Beginning balance			$	12	$	(169)	$	—	$	(97)
Gains (losses) deferred	Gains (losses) deferred		45		5		141		(93)		Gains (losses) deferred		47		79
Less: Tax provision /(benefit)	Less: Tax provision /(benefit)		3		2		22		(21)		Less: Tax provision /(benefit)		10		16
Net gains (losses) deferred	Net gains (losses) deferred		42		3		119		(72)		Net gains (losses) deferred		37		63
(Gains) losses reclassified to earnings	(Gains) losses reclassified to earnings		(85)		93		(164)		98		(Gains) losses reclassified to earnings		(19)		(118)
Less: Tax provision /(benefit)	Less: Tax provision /(benefit)		(12)		20		(26)		22		Less: Tax provision /(benefit)		(5)		(24)
Net (gains) losses reclassified to earnings	Net (gains) losses reclassified to earnings		(73)		73		(138)		76		Net (gains) losses reclassified to earnings		(14)		(94)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax		(31)		76		(19)		4		Other comprehensive income (loss), net of tax		23		(31)
Ending balance	Ending balance		$	(19)	$	(93)	$	(19)	$	(93)	Ending balance		$	20	$	(31)

Available-for-sale securities	Available-for-sale securities										Available-for-sale securities
Beginning balance											Beginning balance		$	20	$	54

Beginning balance			$	39	$	41	$	54	$	20
Gains (losses) deferred	Gains (losses) deferred		(4)		8		(22)		38		Gains (losses) deferred		(79)		(21)
Less: Tax provision /(benefit)	Less: Tax provision /(benefit)		—		—		(4)		9		Less: Tax provision /(benefit)		(15)		(5)
Net gains (losses) deferred	Net gains (losses) deferred		(4)		8		(18)		29		Net gains (losses) deferred		(64)		(16)
(Gains) losses reclassified to earnings	(Gains) losses reclassified to earnings		(1)		—		(3)		—		(Gains) losses reclassified to earnings		—		—
Less: Tax provision /(benefit)	Less: Tax provision /(benefit)		—		—		(1)		—		Less: Tax provision /(benefit)		—		—
Net (gains) losses reclassified to earnings	Net (gains) losses reclassified to earnings		(1)		—		(2)		—		Net (gains) losses reclassified to earnings		—		—
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax		(5)		8		(20)		29		Other comprehensive income (loss), net of tax		(64)		(16)
Ending balance	Ending balance		$	34	$	49	$	34	$	49	Ending balance		$	(44)	$	38

Total AOCI Ending Balance at September 30			$	(1,440)	$	(1,448)	$	(1,440)	$	(1,448)
Total AOCI Ending Balance at March 31											Total AOCI Ending Balance at March 31		$	(1,710)	$	(1,290)

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14. Environmental and legal matters

The Company is regulated by federal, state and international environmental laws governing its use, transport and disposal of substances and control of emissions. In addition to governing our manufacturing and other operations, these laws often impact the development of our products, including, but not limited to, required compliance with air emissions standards applicable to internal combustion engines. We have made, and will continue to make, significant research and development and capital expenditures to comply with these emissions standards.

We are engaged in remedial activities at a number of locations, often with other companies, pursuant to federal and state laws. When it is probable we will pay remedial costs at a site, and those costs can be reasonably estimated, we accrue the investigation, remediation, and operating and maintenance costs against our earnings. We accrue costs based on consideration of currently available data and information with respect to each individual site, including available technologies, current applicable laws and regulations, and prior remediation experience. Where no amount within a range of estimates is more likely, we accrue the minimum. Where multiple potentially responsible parties are involved, we consider our proportionate share of the probable costs. In formulating the estimate of probable costs, we do not consider amounts expected to be recovered from insurance companies or others. We reassess these accrued amounts on a quarterly basis. The amount recorded for environmental remediation is not material and is included in Accrued expenses in the Consolidated Statement of Financial Position. We believe there is no more than a remote chance that a material amount for remedial activities at any individual site, or at all the sites in the aggregate, will be required.

On January 7, 2015, the Company received a grand jury subpoena from the U.S. District Court for the Central District of Illinois. The subpoena requested documents and information from the Company relating to, among other things, financial information concerning U.S. and non-U.S. Caterpillar subsidiaries (including undistributed profits of non-U.S. subsidiaries and the movement of cash among U.S. and non-U.S. subsidiaries). The Company has received additional subpoenas relating to this investigation requesting additional documents and information relating to, among other things, the purchase and resale of replacement parts by Caterpillar Inc. and non-U.S. Caterpillar subsidiaries, dividend distributions of certain non-U.S. Caterpillar subsidiaries, and Caterpillar SARL (CSARL) and related structures. On March 2-3, 2017, agents with the Department of Commerce, the Federal Deposit Insurance Corporation and the Internal Revenue Service executed search and seizure warrants at 3 facilities of the Company in the Peoria, Illinois area, including its former corporate headquarters. The warrants identify, and agents seized, documents and information related to, among other things, the export of products from the United States, the movement of products between the United States and Switzerland, the relationship between Caterpillar Inc. and CSARL, and sales outside the United States. It is the Company’s understanding that the warrants, which concern both tax and export activities, are related to the ongoing grand jury investigation. The Company is continuing to cooperate with this investigation. The Company is unable to predict the outcome or reasonably estimate any potential loss; however, we currently believe that this matter will not have a material adverse effect on the Company’s consolidated results of operations, financial position or liquidity.

In addition, we are involved in other unresolved legal actions that arise in the normal course of business. The most prevalent of these unresolved actions involve disputes related to product design, manufacture and performance liability (including claimed asbestos exposure), contracts, employment issues, environmental matters, intellectual property rights, taxes (other than income taxes) and securities laws. The aggregate range of reasonably possible losses in excess of accrued liabilities, if any, associated with these unresolved legal actions is not material. In some cases, we cannot reasonably estimate a range of loss because there is insufficient information regarding the matter. However, we believe there is no more than a remote chance that any liability arising from these matters would be material. Although it is not possible to predict with certainty the outcome of these unresolved legal actions, we believe that these actions will not individually or in the aggregate have a material adverse effect on our consolidated results of operations, financial position or liquidity.

15. Income taxes

The provision for income taxes for the ~~nine~~first three months ~~ended September 30, 2021~~of 2022 reflected an estimated annual tax rate of 2524 percent, compared with 3126 percent for the ~~nine~~first three months ~~ended September 30, 2020,~~of 2021, excluding the discrete items discussed in the following paragraph. The comparative tax rate for full-year ~~2020~~2021 was approximately 2823 percent. The ~~decrease~~increase in the estimated annual tax rate from full-year ~~2020~~2021 was primarily related to changes in the expected geographic mix of profits from a tax perspective for ~~2021.~~2022.

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In addition, ~~we recorded~~ a discrete tax benefit of ~~$61~~$12 million ~~for~~was recorded in the ~~nine~~first three months ~~ended September 30, 2021,~~of 2022, compared with ~~$21~~a $43 million ~~for~~benefit in the ~~nine~~first three months ~~ended September 30, 2020,~~of 2021, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense. The company also recorded a discrete tax benefit of $36 million to reflect changes in estimates related to prior year U.S. taxes for the nine months ended September 30, 2021 compared to $80 million for the nine months ended September 30, 2020. Finally, we recorded a $10 million tax charge related to the $55 million of remeasurement net gain resulting from the settlements of pension obligations for the nine months ended September 30, 2020.

~~On January 31, 2018, we received a~~In Revenue ~~Agent’s Report from the Internal Revenue Service (IRS) indicating~~Agent’s Reports issued at the end of the field ~~examination~~examinations of our U.S. income tax returns for ~~2010 to 2012. In the audits of~~ 2007 to 2012 including the impact of a loss carryback to 2005, the ~~IRS~~Internal Revenue Service has proposed to tax in the United States profits earned from certain parts transactions by Caterpillar SARL (CSARL), based on the ~~IRS~~ examination team’s application of the “substance-over-form” or “assignment-of-income” judicial doctrines. We are vigorously contesting the proposed increases to tax and penalties for these years of approximately $2.3 billion. We believe that the relevant transactions complied with applicable tax laws and did not violate judicial doctrines. We have filed U.S. income tax returns on this same basis for years after 2012. Based on the information currently available, we do not anticipate a significant change to our unrecognized tax benefits for this position within the next 12 months. We currently believe the ultimate disposition of this matter will not have a material adverse effect on our consolidated financial position, liquidity or results of operations.

16. Segment information

A. Basis for segment information

Our Executive Office is comprised of a Chief Executive Officer (CEO), 4 Group Presidents, a Chief Financial Officer (CFO), a Chief Legal Officer and General Counsel and a Chief Human Resources Officer. The Group Presidents and CFO are accountable for a related set of end-to-end businesses that they manage. The Chief Legal Officer and General Counsel leads the Law, Security and Public Policy Division. The Chief Human Resources Officer leads the Human Resources Organization. The CEO allocates resources and manages performance at the Group President/CFO level. As such, the CEO serves as our Chief Operating Decision Maker, and operating segments are primarily based on the Group President/CFO reporting structure.

NaN of our operating segments, Construction Industries, Resource Industries and Energy & Transportation are led by Group Presidents. NaN operating segment, Financial Products, is led by the CFO who also has responsibility for Corporate Services. Corporate Services is a cost center primarily responsible for the performance of certain support functions globally and to provide centralized services; it does not meet the definition of an operating segment. NaN Group President leads 1 smaller operating segment that is included in the All Other operating segment. The Law, Security and Public Policy Division and the Human Resources Organization are cost centers and do not meet the definition of an operating segment.

Segment information for 2021 has been recast due to a methodology change related to how we assign intersegment sales and segment profit from our technology products and services to Construction Industries, Resource Industries and Energy & Transportation. This methodology change did not have a material impact on our segment results.

B. Description of segments

We have 5 operating segments, of which 4 are reportable segments. Following is a brief description of our reportable segments and the business activities included in the All Other operating segment:

Construction Industries: A segment primarily responsible for supporting customers using machinery in infrastructure and building construction applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes asphalt pavers; backhoe loaders; compactors; cold planers; compact track and multi-terrain loaders; mini, small, medium and large track excavators; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; small and medium track-type tractors; track-type loaders; ~~utility vehicles;~~ wheel excavators; compact, small and medium wheel loaders; and related parts and work tools. Inter-segment sales are a source of revenue for this segment.

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Resource Industries: A segment primarily responsible for supporting customers using machinery in mining, heavy construction and quarry and aggregates. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes large track-type tractors; large mining trucks; hard rock vehicles; longwall miners; electric rope shovels; draglines; hydraulic shovels; rotary drills; large wheel loaders; off-highway trucks; articulated trucks; wheel tractor scrapers; wheel dozers; landfill compactors; soil compactors; select work tools; machinery components; electronics and control systems and related parts. In addition to equipment, Resource Industries also develops and sells technology products and services to provide customers fleet management, equipment management analytics, autonomous machine capabilities, safety services and mining performance solutions. Resource Industries also manages areas that provide services to other parts of the company, including strategic procurement, lean center of excellence, integrated manufacturing, research and development for ~~drivetrains,~~ hydraulic systems, automation, electronics and software for Cat machines and engines. Inter-segment sales are a source of revenue for this segment.

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, development and ~~development,~~testing 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 and solutions used in the electric power generation industry; reciprocating engines, drivetrain and integrated systems and solutions for the marine and oil and gas industries; reciprocating engines, drivetrain and integrated systems and solutions 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 and services, 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® 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.

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•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 3326 to 3628 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.

Table of Contents

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ sales and revenues by geographic region reconciled to consolidated sales and revenues were as follows:

~~Table of Contents~~


Sales and Revenues by Geographic Region	Sales and Revenues by Geographic Region																Sales and Revenues by Geographic Region
(Millions of dollars)	(Millions of dollars)	North America		Latin America		EAME		Asia/ Pacific		External Sales and Revenues			Intersegment Sales and Revenues		Total Sales and Revenues		(Millions of dollars)	North America		Latin America		EAME		Asia/ Pacific		External Sales and Revenues			Intersegment Sales and Revenues		Total Sales and Revenues
Three Months Ended September 30, 2021
Three Months Ended March 31, 2022																	Three Months Ended March 31, 2022
Construction Industries	Construction Industries	$	2,417	$	528	$	1,240	$	1,076	$	5,261		$	(6)	$	5,255	Construction Industries	$	2,720	$	627	$	1,277	$	1,462	$	6,086		$	29	$	6,115
Resource Industries	Resource Industries	674		417		456		744		2,291			115		2,406		Resource Industries	1,018		399		594		748		2,759			71		2,830
Energy & Transportation	Energy & Transportation	1,924		329		1,144		744		4,141			936		5,077		Energy & Transportation	1,938		310		1,184		600		4,032			1,006		5,038
Financial Products Segment	Financial Products Segment	478		68		105		111		762		1	—		762		Financial Products Segment	503		73		96		111		783		1	—		783
Total sales and revenues from reportable segments	Total sales and revenues from reportable segments	5,493		1,342		2,945		2,675		12,455			1,045		13,500		Total sales and revenues from reportable segments	6,179		1,409		3,151		2,921		13,660			1,106		14,766
All Other operating segment	All Other operating segment	18		—		3		14		35			84		119		All Other operating segment	18		—		5		16		39			79		118
Corporate Items and Eliminations	Corporate Items and Eliminations	(56)		(13)		(9)		(15)		(93)			(1,129)		(1,222)		Corporate Items and Eliminations	(60)		(16)		(11)		(23)		(110)			(1,185)		(1,295)
Total Sales and Revenues	Total Sales and Revenues	$	5,455	$	1,329	$	2,939	$	2,674	$	12,397		$	—	$	12,397	Total Sales and Revenues	$	6,137	$	1,393	$	3,145	$	2,914	$	13,589		$	—	$	13,589

Three Months Ended September 30, 2020
Three Months Ended March 31, 2021																	Three Months Ended March 31, 2021
Construction Industries	Construction Industries	$	1,781	$	230	$	796	$	1,241	$	4,048		$	8	$	4,056	Construction Industries	$	2,126	$	392	$	1,081	$	1,842	$	5,441		$	18	$	5,459
Resource Industries	Resource Industries	487		269		384		564		1,704			112		1,816		Resource Industries	657		405		474		561		2,097			81		2,178
Energy & Transportation	Energy & Transportation	1,584		221		1,113		557		3,475			686		4,161		Energy & Transportation	1,782		256		1,093		527		3,658			849		4,507
Financial Products Segment	Financial Products Segment	448		63		100		113		724		1	—		724		Financial Products Segment	476		62		100		123		761		1	—		761
Total sales and revenues from reportable segments	Total sales and revenues from reportable segments	4,300		783		2,393		2,475		9,951			806		10,757		Total sales and revenues from reportable segments	5,041		1,115		2,748		3,053		11,957			948		12,905
All Other operating segment	All Other operating segment	10		1		1		13		25			81		106		All Other operating segment	13		—		3		22		38			92		130
Corporate Items and Eliminations	Corporate Items and Eliminations	(59)		(12)		(10)		(14)		(95)			(887)		(982)		Corporate Items and Eliminations	(63)		(11)		(8)		(26)		(108)			(1,040)		(1,148)
Total Sales and Revenues	Total Sales and Revenues	$	4,251	$	772	$	2,384	$	2,474	$	9,881		$	—	$	9,881	Total Sales and Revenues	$	4,991	$	1,104	$	2,743	$	3,049	$	11,887		$	—	$	11,887

1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of ~~$87~~$100 million and ~~$81~~$84 million in the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

Sales and Revenues by Geographic Region
(Millions of dollars)
North
America
Latin
America
EAME
Asia/
Pacific
External Sales and Revenues Intersegment Sales and Revenues Total Sales and Revenues
Nine Months Ended September 30, 2021
Construction Industries $ 7,041 $ 1,350 $ 3,612 $ 4,302 $ 16,305 $ 65 $ 16,370
Resource Industries 2,130 1,309 1,455 1,965 6,859 342 7,201
Energy & Transportation 5,698 835 3,433 1,953 11,919 2,640 14,559
Financial Products Segment 1,442 195 301 359 2,297 1 — 2,297
Total sales and revenues from reportable segments 16,311 3,689 8,801 8,579 37,380 3,047 40,427
All Other operating segment 42 1 10 54 107 270 377
Corporate Items and Eliminations (188) (36) (27) (63) (314) (3,317) (3,631)
Total Sales and Revenues $ 16,165 $ 3,654 $ 8,784 $ 8,570 $ 37,173 $ — $ 37,173
Nine Months Ended September 30, 2020
Construction Industries $ 5,470 $ 707 $ 2,618 $ 3,597 $ 12,392 $ 18 $ 12,410
Resource Industries 1,690 859 1,158 1,686 5,393 333 5,726
Energy & Transportation 5,138 667 3,095 1,734 10,634 2,025 12,659
Financial Products Segment 1,466 193 298 344 2,301 1 — 2,301
Total sales and revenues from reportable segments 13,764 2,426 7,169 7,361 30,720 2,376 33,096
All Other operating segment 22 4 17 38 81 249 330
Corporate Items and Eliminations (169) (36) (32) (51) (288) (2,625) (2,913)
Total Sales and Revenues $ 13,617 $ 2,394 $ 7,154 $ 7,348 $ 30,513 $ — $ 30,513

1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of $263 million and $274 million in the nine months ended September 30, 2021 and 2020, respectively.

~~Table of Contents~~

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ Energy & Transportation segment sales by end user application were as follows:


Energy & Transportation External Sales	Energy & Transportation External Sales									Energy & Transportation External Sales
		Three Months Ended September 30				Nine Months Ended September 30					Three Months Ended March 31
(Millions of dollars)	(Millions of dollars)	2021		2020		2021		2020		(Millions of dollars)		2022		2021
Oil and gas	Oil and gas	$	1,088	$	734	$	3,140	$	2,622	Oil and gas		$	948	$	915
Power generation	Power generation	1,010		1,034		3,025		2,783		Power generation		1,012		963
Industrial	Industrial	948		730		2,660		2,209		Industrial		1,020		813
Transportation	Transportation	1,095		977		3,094		3,020		Transportation		1,052		967
Energy & Transportation External Sales	Energy & Transportation External Sales	$	4,141	$	3,475	$	11,919	$	10,634	Energy & Transportation External Sales		$	4,032	$	3,658

Reconciliation of Consolidated profit before taxes:
(Millions of dollars) Three Months Ended September 30 Nine Months Ended September 30
2021 2020 2021 2020
Profit from reportable segments:
Construction Industries $ 859 $ 585 $ 2,918 $ 1,743
Resource Industries 297 167 986 623
Energy & Transportation 696 492 2,093 1,718
Financial Products Segment 173 142 660 395
Total profit from reportable segments 2,025 1,386 6,657 4,479
Profit from All Other operating segment 5 27 (2) 31
Cost centers 19 9 51 18
Corporate costs (189) (122) (576) (409)
Timing (40) (39) (230) (90)
Restructuring costs (35) (87) (124) (211)
Methodology differences:
Inventory/cost of sales 73 (7) 80 (25)
Postretirement benefit expense 116 (32) 270 253
Stock-based compensation expense (58) (55) (169) (169)
Financing costs (103) (125) (342) (324)
Currency 19 (22) 255 (230)
Other income/expense methodology differences (80) (72) (201) (244)
Other methodology differences 23 2 (27) (25)
Total consolidated profit before taxes $ 1,775 $ 863 $ 5,642 $ 3,054

3426

Table of Contents

Reconciliation of Assets:
(Millions of dollars) September 30, 2021 December 31, 2020
Assets from reportable segments:
Construction Industries $ 4,592 $ 4,259
Resource Industries 5,985 6,035
Energy & Transportation 9,305 8,582
Financial Products Segment 34,182 34,278
Total assets from reportable segments 54,064 53,154
Assets from All Other operating segment 1,622 1,717
Items not included in segment assets:
Cash and cash equivalents 8,554 8,822
Deferred income taxes 1,639 1,413
Goodwill and intangible assets 4,894 4,847
Property, plant and equipment – net and other assets 3,208 2,833
Inventory methodology differences (2,648) (2,536)
Liabilities included in segment assets 9,810 8,466
Other (359) (392)
Total assets $ 80,784 $ 78,324


Reconciliation of Consolidated profit before taxes:

(Millions of dollars)	Three Months Ended March 31
		2022		2021
Profit from reportable segments:
Construction Industries		$	1,057	$	1,042
Resource Industries		361		312
Energy & Transportation		538		675
Financial Products Segment		238		244
Total profit from reportable segments		2,194		2,273
Profit from All Other operating segment		3		3
Cost centers		10		21
Corporate costs		(198)		(185)
Timing		(98)		(66)
Restructuring costs		(13)		(64)
Methodology differences:
Inventory/cost of sales		168		—
Postretirement benefit expense		81		68
Stock-based compensation expense		(40)		(42)
Financing costs		(100)		(130)
Currency		106		186
Other income/expense methodology differences		(81)		(49)
Other methodology differences		(33)		(18)
Total consolidated profit before taxes		$	1,999	$	1,997


Reconciliation of Assets:

(Millions of dollars)	March 31, 2022		December 31, 2021
Assets from reportable segments:
Construction Industries	$	5,019	$	4,547
Resource Industries	5,717		5,962
Energy & Transportation	9,480		9,253
Financial Products Segment	35,108		34,860
Total assets from reportable segments	55,324		54,622
Assets from All Other operating segment	2,568		1,678
Items not included in segment assets:
Cash and cash equivalents	5,662		8,428
Deferred income taxes	1,862		1,735
Goodwill and intangible assets	4,842		4,859
Property, plant and equipment – net and other assets	3,149		4,056
Inventory methodology differences	(2,901)		(2,656)
Liabilities included in segment assets	11,378		10,777
Other	392		(706)
Total assets	$	82,276	$	82,793

Reconciliation of Depreciation and amortization:
(Millions of dollars)
Three Months Ended September 30 Nine Months Ended September 30
2021 2020 2021 2020
Depreciation and amortization from reportable segments:
   Construction Industries $ 60 $ 61 $ 178 $ 183
   Resource Industries 101 105 301 312
   Energy & Transportation 144 147 428 442
   Financial Products Segment 195 174 582 577
Total depreciation and amortization from reportable segments 500 487 1,489 1,514
Items not included in segment depreciation and amortization:
All Other operating segment 59 71 181 196
Cost centers 24 31 74 96
Other 10 4 22 9
Total depreciation and amortization $ 593 $ 593 $ 1,766 $ 1,815

3527

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Reconciliation of Capital expenditures:
Reconciliation of Depreciation and amortization:										Reconciliation of Depreciation and amortization:
(Millions of dollars)	(Millions of dollars)									(Millions of dollars)
		Three Months Ended September 30				Nine Months Ended September 30					Three Months Ended March 31
		2021		2020		2021		2020				2022		2021
Capital expenditures from reportable segments:
Depreciation and amortization from reportable segments:										Depreciation and amortization from reportable segments:
Construction Industries	Construction Industries	$	56	$	37	$	120	$	85	Construction Industries		$	58	$	59
Resource Industries	Resource Industries	44		10		101		63		Resource Industries		92		99
Energy & Transportation	Energy & Transportation	115		100		339		331		Energy & Transportation		134		142
Financial Products Segment	Financial Products Segment	311		280		900		783		Financial Products Segment		188		196
Total capital expenditures from reportable segments		526		427		1,460		1,262
Items not included in segment capital expenditures:
Total depreciation and amortization from reportable segments										Total depreciation and amortization from reportable segments		472		496
Items not included in segment depreciation and amortization:										Items not included in segment depreciation and amortization:
All Other operating segment	All Other operating segment	59		46		106		84		All Other operating segment		58		62
Cost centers	Cost centers	15		8		34		23		Cost centers		21		26
Timing		(13)		1		96		147
Other	Other	—		11		(9)		(25)		Other		6		2
Total capital expenditures		$	587	$	493	$	1,687	$	1,491
Total depreciation and amortization										Total depreciation and amortization		$	557	$	586


Reconciliation of Capital expenditures:
(Millions of dollars)
	Three Months Ended March 31
		2022		2021
Capital expenditures from reportable segments:
Construction Industries		$	32	$	28
Resource Industries		22		23
Energy & Transportation		177		81
Financial Products Segment		241		228
Total capital expenditures from reportable segments		472		360
Items not included in segment capital expenditures:
All Other operating segment		16		15
Cost centers		9		19
Timing		192		124
Other		(10)		(14)
Total capital expenditures		$	679	$	504

17. Cat Financial financing activities

Allowance for credit losses

Portfolio segments

A portfolio segment is the level at which Cat Financial develops a systematic methodology for determining its allowance for credit losses. Cat Financial's portfolio segments and related methods for estimating expected credit losses are as follows:

Customer

Cat Financial provides loans and finance leases to end-user customers primarily for the purpose of financing new and used Caterpillar machinery, engines and equipment for commercial use, the majority of which operate in construction-related industries. Cat Financial also provides financing for vehicles, power generation facilities and marine vessels that, in most cases, incorporate Caterpillar products. The average original term of Cat Financial's customer finance receivable portfolio was approximately 50 months with an average remaining term of approximately 27 months as of ~~September 30, 2021.~~March 31, 2022.

Table of Contents

Cat Financial typically maintains a security interest in financed equipment and requires physical damage insurance coverage on the financed equipment, both of which provide Cat Financial with certain rights and protections. If Cat Financial's collection efforts fail to bring a defaulted account current, Cat Financial generally can repossess the financed equipment, after satisfying local legal requirements, and sell it within the Caterpillar dealer network or through third-party auctions.

Cat Financial estimates the allowance for credit losses related to its customer finance receivables based on loss forecast models utilizing probabilities of default and the estimated loss given default based on past loss experience adjusted for current conditions and reasonable and supportable forecasts capturing country and industry-specific economic factors.

During the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, Cat Financial's forecasts for the markets in which it operates reflected a ~~general improvement in economic conditions, which had deteriorated due to~~continuation of the ~~COVID-19 pandemic, resulting from~~trend of a growing economy, improved unemployment rates and ~~a decrease~~relatively low delinquencies. However, an increase in ~~delinquencies.~~inflation, exacerbated by an increase in commodity prices, dampened the expectations of global economic growth. The company believes the economic forecasts employed represent reasonable and supportable forecasts, followed by a reversion to long-term trends.

Dealer

Cat Financial provides financing to Caterpillar dealers in the form of wholesale financing plans. Cat Financial's wholesale financing plans provide assistance to dealers by financing their mostly new Caterpillar equipment inventory and rental fleets on a secured and unsecured basis. In addition, Cat Financial provides a variety of secured and unsecured loans to Caterpillar dealers.

~~Table of Contents~~

Cat Financial estimates the allowance for credit losses for dealer finance receivables based on historical loss rates with consideration of current economic conditions and reasonable and supportable forecasts.

In general, Cat Financial's Dealer portfolio segment has not historically experienced large increases or decreases in credit losses based on changes in economic conditions due to its close working relationships with the dealers and their financial strength. Therefore, Cat Financial made no adjustments to historical loss rates during the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022.

Classes of finance receivables

Cat Financial further evaluates portfolio segments by the class of finance receivables, which is defined as a level of information (below a portfolio segment) in which the finance receivables have the same initial measurement attribute and a similar method for assessing and monitoring credit risk. Cat Financial's classes, which align with management reporting for credit losses, are as follows:

•North America - Finance receivables originated in the United States and Canada.

•EAME - Finance receivables originated in Europe, Africa, the Middle East and the Commonwealth of Independent States.

•Asia/Pacific - Finance receivables originated in Australia, New Zealand, China, Japan, Southeast Asia and India.

•Mining - Finance receivables related to large mining customers worldwide.

•Latin America - Finance receivables originated in Mexico and Central and South American countries.

•Caterpillar Power Finance - Finance receivables originated worldwide related to marine vessels with Caterpillar engines and Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems.

Receivable balances, including accrued interest, are written off against the allowance for credit losses when, in the judgment of management, they are considered uncollectible (generally upon repossession of the collateral). The amount of the write-off is determined by comparing the fair value of the collateral, less cost to sell, to the amortized cost. Subsequent recoveries, if any, are credited to the allowance for credit losses when received.

3729

Table of Contents

An analysis of the allowance for credit losses was as follows:



(Millions of dollars)	(Millions of dollars)	Three Months Ended September 30, 2021						Three Months Ended September 30, 2020						(Millions of dollars)	Three Months Ended March 31, 2022							Three Months Ended March 31, 2021
Allowance for Credit Losses:		Customer		Dealer		Total		Customer		Dealer		Total
															Customer			Dealer		Total		Customer		Dealer		Total
Beginning balance	Beginning balance	$	354	$	44	$	398	$	467	$	45	$	512	Beginning balance	$	251		$	82	$	333	$	431	$	44	$	475
Write-offs	Write-offs	(91)		—		(91)		(139)		—		(139)		Write-offs	(20)			—		(20)		(34)		—		(34)
Recoveries	Recoveries	15		—		15		14		—		14		Recoveries	12			—		12		10		—		10
Provision for credit losses	Provision for credit losses	17		38		55		67		—		67		Provision for credit losses	26		1	(1)		25		(10)		—		(10)
Other	Other	(3)		—		(3)		3		—		3		Other	2			—		2		(4)		—		(4)
Ending balance	Ending balance	$	292	$	82	$	374	$	412	$	45	$	457	Ending balance	$	271		$	81	$	352	$	393	$	44	$	437

		Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020
Allowance for Credit Losses:		Customer		Dealer		Total		Customer		Dealer		Total
Beginning balance		$	431	$	44	$	475	$	375	$	45	$	420
Adjustment to adopt new accounting guidance 1		—		—		—		12		—		12
Write-offs		(193)		—		(193)		(212)		—		(212)
Recoveries		39		—		39		27		—		27
Provision for credit losses		20		38		58		213		—		213
Other		(5)		—		(5)		(3)		—		(3)
Ending balance		$	292	$	82	$	374	$	412	$	45	$	457

Individually evaluated		$	118	$	78	$	196	$	172	$	39	$	211
Collectively evaluated		174		4		178		240		6		246
Ending Balance		$	292	$	82	$	374	$	412	$	45	$	457

Finance Receivables:
Individually evaluated		$	374	$	78	$	452	$	612	$	78	$	690
Collectively evaluated		19,593		1,853		21,446		17,967		2,975		20,942
Ending Balance		$	19,967	$	1,931	$	21,898	$	18,579	$	3,053	$	21,632
1 Adjustment to adopt new accounting guidance related to credit losses.

Finance Receivables														Finance Receivables	$	20,289		$	1,722	$	22,011	$	19,103	$	2,633	$	21,736

1 Included a higher reserve for the Russia and Ukraine portfolios.														1 Included a higher reserve for the Russia and Ukraine portfolios.

Credit quality of finance receivables

At origination, Cat Financial evaluates credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit ratings, loan-to-value ratios, probabilities of default, industry trends, macroeconomic factors and other internal metrics. On an ongoing basis, Cat Financial monitors credit quality based on past-due status as there is a meaningful correlation between the past-due status of customers and the risk of loss. In determining past-due status, Cat Financial considers the entire finance receivable past due when any installment is over 30 days past due.

Customer

The tables below summarize the aging category of Cat Financial's amortized cost of finance receivables in the Customer portfolio segment by origination year:

3830

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(Millions of dollars)	(Millions of dollars)	September 30, 2021														(Millions of dollars)	March 31, 2022
		2021		2020		2019		2018		2017		Prior		Revolving Finance Receivables				Total Finance Receivables			2022		2021		2020		2019		2018		Prior		Revolving Finance Receivables		Total Finance Receivables
North America	North America																			North America
Current	Current	$	3,635	$	2,914	$	1,675	$	785	$	246	$	66	$	167			$	9,488	Current	$	1,204	$	4,442	$	2,323	$	1,213	$	503	$	154	$	188	$	10,027
31-60 days past due	31-60 days past due	13		31		23		15		6		1		3				92		31-60 days past due	5		29		22		15		7		3		6		87
61-90 days past due	61-90 days past due	6		9		8		5		2		—		3				33		61-90 days past due	—		8		4		4		2		1		2		21
91+ days past due	91+ days past due	5		17		22		12		8		5		6				75		91+ days past due	—		10		13		10		11		8		5		57

EAME	EAME																			EAME
Current	Current	1,330		1,117		571		269		93		25		—				3,405		Current	307		1,369		739		496		295		136		—		3,342
31-60 days past due	31-60 days past due	8		7		5		1		1		—		—				22		31-60 days past due	1		12		6		5		1		—		—		25
61-90 days past due	61-90 days past due	3		4		9		2		—		—		—				18		61-90 days past due	—		4		4		1		1		1		—		11
91+ days past due	91+ days past due	2		15		7		5		1		24		—				54		91+ days past due	—		4		11		3		2		2		—		22

Asia/Pacific	Asia/Pacific																			Asia/Pacific
Current	Current	1,071		929		390		102		22		4		—				2,518		Current	333		1,145		667		225		53		13		—		2,436
31-60 days past due	31-60 days past due	9		17		14		5		2		—		—				47		31-60 days past due	1		14		18		9		1		—		—		43
61-90 days past due	61-90 days past due	3		10		7		1		—		—		—				21		61-90 days past due	—		4		8		5		1		—		—		18
91+ days past due	91+ days past due	1		11		11		6		—		—		—				29		91+ days past due	—		7		9		7		2		—		—		25

Mining	Mining																			Mining
Current	Current	656		382		417		230		67		164		66				1,982		Current	195		780		312		274		167		167		48		1,943
31-60 days past due	31-60 days past due	2		—		8		9		3		—		—				22		31-60 days past due	—		—		—		—		—		—		—		—
61-90 days past due	61-90 days past due	—		2		—		—		—		—		—				2		61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	91+ days past due	—		1		2		4		2		—		—				9		91+ days past due	—		1		1		8		12		8		—		30

Latin America	Latin America																			Latin America
Current	Current	472		377		192		71		19		10		—				1,141		Current	204		607		270		137		45		29		—		1,292
31-60 days past due	31-60 days past due	4		11		4		3		2		—		—				24		31-60 days past due	—		6		7		5		16		—		—		34
61-90 days past due	61-90 days past due	2		3		3		2		1		1		—				12		61-90 days past due	—		5		1		1		1		—		—		8
91+ days past due	91+ days past due	—		18		8		5		5		4		—				40		91+ days past due	—		9		14		9		5		18		—		55

Caterpillar Power Finance	Caterpillar Power Finance																			Caterpillar Power Finance
Current	Current	109		141		98		75		197		141		102				863		Current	12		105		144		92		65		236		115		769
31-60 days past due	31-60 days past due	—		—		—		2		—		—		—				2		31-60 days past due	2		—		—		—		—		—		—		2
61-90 days past due	61-90 days past due	—		—		—		—		—		—		—				—		61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	91+ days past due	1		2		—		20		1		44		—				68		91+ days past due	—		—		—		—		—		42		—		42

Totals by Aging Category																				Totals by Aging Category
Current																				Current	$	2,255	$	8,448	$	4,455	$	2,437	$	1,128	$	735	$	351	$	19,809
31-60 days past due																				31-60 days past due	9		61		53		34		25		3		6		191
61-90 days past due																				61-90 days past due	—		21		17		11		5		2		2		58
91+ days past due																				91+ days past due	—		31		48		37		32		78		5		231
Total Customer	Total Customer	$	7,332	$	6,018	$	3,474	$	1,629	$	678	$	489	$	347			$	19,967	Total Customer	$	2,264	$	8,561	$	4,573	$	2,519	$	1,190	$	818	$	364	$	20,289

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(Millions of dollars)	(Millions of dollars)	December 31, 2020														(Millions of dollars)	December 31, 2021
		2020		2019		2018		2017		2016		Prior		Revolving Finance Receivables				Total Finance Receivables			2020		2019		2018		2017		2016		Prior		Revolving Finance Receivables		Total Finance Receivables
North America	North America																			North America
Current	Current	$	3,777	$	2,423	$	1,344	$	522	$	212	$	27	$	89			$	8,394	Current	$	4,792	$	2,596	$	1,426	$	630	$	182	$	32	$	182	$	9,840
31-60 days past due	31-60 days past due	52		49		33		16		7		2		—				159		31-60 days past due	27		32		20		12		4		1		5		101
61-90 days past due	61-90 days past due	22		25		16		9		2		1		—				75		61-90 days past due	7		8		5		3		1		1		5		30
91+ days past due	91+ days past due	14		35		31		20		9		4		2				115		91+ days past due	9		17		12		13		5		4		5		65

EAME	EAME																			EAME
Current	Current	1,605		931		501		203		60		18		—				3,318		Current	1,499		836		577		352		140		26		—		3,430
31-60 days past due	31-60 days past due	5		15		3		2		—		—		—				25		31-60 days past due	5		4		3		1		1		—		—		14
61-90 days past due	61-90 days past due	1		1		2		1		—		—		—				5		61-90 days past due	3		3		3		1		—		—		—		10
91+ days past due	91+ days past due	7		7		12		4		39		43		—				112		91+ days past due	3		11		2		2		—		2		—		20

Asia/Pacific	Asia/Pacific																			Asia/Pacific
Current	Current	1,375		745		321		61		10		3		—				2,515		Current	1,271		803		307		71		16		2		—		2,470
31-60 days past due	31-60 days past due	12		22		13		6		—		—		—				53		31-60 days past due	10		14		10		2		—		—		—		36
61-90 days past due	61-90 days past due	7		11		7		1		—		—		—				26		61-90 days past due	3		7		4		1		—		—		—		15
91+ days past due	91+ days past due	4		10		9		3		—		—		—				26		91+ days past due	2		10		10		3		—		—		—		25

Mining	Mining																			Mining
Current	Current	490		571		287		152		92		151		137				1,880		Current	851		347		307		193		36		161		36		1,931
31-60 days past due	31-60 days past due	5		—		5		1		—		—		—				11		31-60 days past due	6		—		—		—		—		—		—		6
61-90 days past due	61-90 days past due	—		—		—		—		—		—		—				—		61-90 days past due	1		—		—		—		4		—		—		5
91+ days past due	91+ days past due	—		11		8		2		—		—		1				22		91+ days past due	—		1		8		9		3		1		—		22

Latin America	Latin America																			Latin America
Current	Current	561		348		151		48		13		34		—				1,155		Current	617		299		160		70		17		18		—		1,181
31-60 days past due	31-60 days past due	3		6		4		3		—		—		—				16		31-60 days past due	4		7		3		3		1		—		—		18
61-90 days past due	61-90 days past due	1		7		6		3		2		—		—				19		61-90 days past due	3		3		1		1		—		—		—		8
91+ days past due	91+ days past due	2		14		11		24		5		4		—				60		91+ days past due	4		9		9		7		7		14		—		50

Caterpillar Power Finance	Caterpillar Power Finance																			Caterpillar Power Finance
Current	Current	217		172		111		273		99		117		119				1,108		Current	117		145		97		70		180		104		101		814
31-60 days past due	31-60 days past due	—		—		6		—		—		—		—				6		31-60 days past due	—		—		—		—		—		—		—		—
61-90 days past due	61-90 days past due	—		—		—		—		—		9		—				9		61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	91+ days past due	2		—		20		3		25		79		—				129		91+ days past due	—		—		—		—		—		44		—		44

Totals by Aging Category																				Totals by Aging Category
Current																				Current	$	9,147	$	5,026	$	2,874	$	1,386	$	571	$	343	$	319	$	19,666
31-60 days past due																				31-60 days past due	52		57		36		18		6		1		5		175
61-90 days past due																				61-90 days past due	17		21		13		6		5		1		5		68
91+ days past due																				91+ days past due	18		48		41		34		15		65		5		226
Total Customer	Total Customer	$	8,162	$	5,403	$	2,901	$	1,357	$	575	$	492	$	348			$	19,238	Total Customer	$	9,234	$	5,152	$	2,964	$	1,444	$	597	$	410	$	334	$	20,135

Finance receivables in the Customer portfolio segment are substantially secured by collateral, primarily in the form of Caterpillar and other machinery. For those contracts where the borrower is experiencing financial difficulty, repayment of the outstanding amounts is generally expected to be provided through the operation or repossession and sale of the machinery.

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Dealer

As of ~~September 30,~~March 31, 2022, Cat Financial's total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $74 million. Of these past due receivables, $73 million were 91+ days past due in Latin America and were originated in 2017. As of December 31, 2021, Cat Financial's total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $78 million that was 91+ days past due in Latin America, all of which was originated in 2017. As of December 31, 2020, Cat Financial's total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $81 million that was 91+ days past due in Latin America. Of these past due receivables, $78 million were originated in 2017 and $3 million were originated prior to 2016.

~~Table of Contents~~

Non-accrual finance receivables

Recognition of income is suspended and the finance receivable is placed on non-accrual status when management determines that collection of future income is not probable. Contracts on non-accrual status are generally more than 120 days past due or have been restructured in a troubled debt restructuring (TDR). Recognition is resumed and previously suspended income is recognized when ~~the~~ collection ~~of remaining amounts~~ is considered probable. Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms. Interest earned but uncollected prior to the receivable being placed on non-accrual status is written off through Provision for credit losses when, in the judgment of management, it is considered uncollectible.

In Cat Financial's Customer portfolio segment, finance receivables which were on non-accrual status and finance receivables over 90 days past due and still accruing income were as follows:



		September 30, 2021						December 31, 2020							March 31, 2022						December 31, 2021
		Amortized Cost						Amortized Cost						Amortized Cost					Amortized Cost
(Millions of dollars)	(Millions of dollars)	Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing		Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing				(Millions of dollars)	Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing		Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing

North America	North America	$	54	$	7	$	17	$	86	$	1	$	34			North America	$	43	$	6	$	13	$	47	$	9	$	12
EAME	EAME	50		1		4		113		1		1				EAME	20		1		2		18		1		2
Asia/Pacific	Asia/Pacific	21		—		9		13		—		13				Asia/Pacific	13		—		13		19		—		7
Mining	Mining	9		1		—		21		1		—				Mining	28		1		1		8		1		14
Latin America	Latin America	42		—		1		63		—		1				Latin America	51		—		1		52		4		1
Caterpillar Power Finance	Caterpillar Power Finance	75		—		—		170		17		—				Caterpillar Power Finance	31		12		—		40		11		—
Total	Total	$	251	$	9	$	31	$	466	$	20	$	49			Total	$	186	$	20	$	30	$	184	$	26	$	36

There was $1 million and $2$3 million of interest income recognized during the three months ended ~~September 30,~~March 31, 2022 and 2021, and 2020, respectively, for customer finance receivables on non-accrual status. There was $9 million and $8 million of interest income recognized during the nine months ended September 30, 2021 and 2020, respectively, for customer finance receivables on non-accrual status.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, finance receivables in Cat Financial's Dealer portfolio segment on non-accrual status were ~~$78~~$73 million and ~~$81~~$78 million, respectively, all of which was in Latin America. There were no finance receivables in Cat Financial's Dealer portfolio segment more than 90 days past due and still accruing income as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 and no interest income was recognized on dealer finance receivables on non-accrual status during the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

Troubled debt restructurings

A restructuring of a finance receivable constitutes a TDR when the lender grants a concession it would not otherwise consider to a borrower experiencing financial difficulties. Concessions granted may include extended contract maturities, inclusion of interest only periods, below market interest rates, payment deferrals and reduction of principal and/or accrued interest. Cat Financial individually evaluates TDR contracts and establishes an allowance based on the present value of expected future cash flows discounted at the receivable's effective interest rate, the fair value of the collateral for collateral-dependent receivables or the observable market price of the receivable.

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There were no finance receivables modified as TDRs during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ for the Dealer portfolio segment. Cat Financial’s finance receivables in the Customer portfolio segment modified as TDRs were as follows:



(Millions of dollars)	(Millions of dollars)	Three Months Ended September 30, 2021				Three Months Ended September 30, 2020				(Millions of dollars)	Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
		Pre-TDR Amortized Cost		Post-TDR Amortized Cost		Pre-TDR Amortized Cost		Post-TDR Amortized Cost			Pre-TDR Amortized Cost		Post-TDR Amortized Cost		Pre-TDR Amortized Cost		Post-TDR Amortized Cost
Customer	Customer									Customer
North America		$	1	$	1	$	1	$	1

EAME	EAME	1		1		—		—		EAME	$	1	$	1	$	—	$	—
Asia/Pacific		4		4		4		4

Mining	Mining	—		—		5		5		Mining	—		—		11		5
Latin America		4		4		16		16

Caterpillar Power Finance	Caterpillar Power Finance	7		3		50		50		Caterpillar Power Finance	6		6		—		—
Total	Total	$	17	$	13	$	76	$	76	Total	$	7	$	7	$	11	$	5

		Nine Months Ended September 30, 2021				Nine Months Ended September 30, 2020
		Pre-TDR Amortized Cost		Post-TDR Amortized Cost		Pre-TDR Amortized Cost		Post-TDR Amortized Cost
North America		$	5	$	5	$	10	$	10
EAME		1		1		—		—
Asia/Pacific		4		4		12		12
Mining		11		5		22		22
Latin America		10		10		18		18
Caterpillar Power Finance		23		19		87		87
Total		$	54	$	44	$	149	$	149

The Post-TDR amortized costs in the Customer portfolio segment with a payment default (defined as 91+ days past due) which had been modified within twelve months prior to the default date, were as follows:


		Three Months Ended September 30				Nine Months Ended September 30
(Millions of dollars)										(Millions of dollars)	Three Months Ended March 31
Customer	Customer	2021		2020		2021		2020		Customer		2022		2021
North America	North America	$	—	$	6	$	1	$	6	North America		$	—	$	1
EAME		—		—		—		10

Asia/Pacific	Asia/Pacific	—		—		6		—		Asia/Pacific		—		4
Mining	Mining	—		1		—		1		Mining		5		—
Latin America		—		—		15		1

Caterpillar Power Finance	Caterpillar Power Finance	—		18		5		18		Caterpillar Power Finance		—		5
Total	Total	$	—	$	25	$	27	$	36	Total		$	5	$	10

~~Table of Contents~~

18. Fair value disclosures

A. Fair value measurements

The guidance on fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. This guidance also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with this guidance, fair value measurements are classified under the following hierarchy:

•Level 1 – Quoted prices for identical instruments in active markets.

•Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.

•Level 3 – Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.

When available, we use quoted market prices to determine fair value, and we classify such measurements within Level 1. In some cases where market prices are not available, we make use of observable market based inputs to calculate fair value, in which case the measurements are classified within Level 2. If quoted or observable market prices are not available, fair value is based upon valuations in which one or more significant inputs are unobservable, including internally developed models that use, where possible, current market-based parameters such as interest rates, yield curves and currency rates. These measurements are classified within Level 3.

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We classify fair value measurements according to the lowest level input or value-driver that is significant to the valuation. We may therefore classify a measurement within Level 3 even though there may be significant inputs that are readily observable.

Fair value measurement includes the consideration of nonperformance risk. Nonperformance risk refers to the risk that an obligation (either by a counterparty or Caterpillar) will not be fulfilled. For financial assets traded in an active market (Level 1 and certain Level 2), the nonperformance risk is included in the market price. For certain other financial assets and liabilities (certain Level 2 and Level 3), our fair value calculations have been adjusted accordingly.

Investments in debt and equity securities

We have investments in certain debt and equity securities ~~primarily at Insurance Services,~~ that are recorded at fair value. Fair values for our U.S. treasury bonds and large capitalization value and smaller company growth equity securities are based upon valuations for identical instruments in active markets. Fair values for other government bonds, corporate bonds and mortgage-backed debt securities are based upon models that take into consideration such market-based factors as recent sales, risk-free yield curves and prices of similarly rated bonds.

We also have investments in time deposits classified as held-to-maturity debt securities. The fair value of these investments is based upon valuations observed in less active markets than Level 1. These investments have a maturity of less than one year and are recorded at amortized costs, which approximate fair value.

In addition, Insurance Services has an equity investment in a real estate investment trust (REIT) which is recorded at fair value based on the net asset value (NAV) of the investment and is not classified within the fair value hierarchy.

See Note 8 for additional information on our investments in debt and equity securities.

Derivative financial instruments

The fair value of interest rate contracts is primarily based on a standard industry accepted valuation model that utilizes the appropriate market-based forward swap curves and zero-coupon interest rates to determine discounted cash flows. The fair value of foreign currency and commodity forward, option and cross currency contracts is based on standard industry accepted valuation models that discount cash flows resulting from the differential between the contract price and the market-based forward rate.

43See Note 5 for additional information.

~~Table of Contents~~

Assets and liabilities measured on a recurring basis at fair value ~~primarily related to Financial Products,~~ included in our Consolidated Statement of Financial Position as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were as follows:

September 30, 2021
(Millions of dollars)
Level 1 Level 2 Level 3 Measured at NAV Total
Assets / Liabilities,
at Fair Value
Assets
Debt securities
Government debt
U.S. treasury bonds $ 10 $ — $ — $ — $ 10
Other U.S. and non-U.S. government bonds — 57 — — 57
Corporate bonds
Corporate bonds — 1,035 — — 1,035
Asset-backed securities — 148 — — 148
Mortgage-backed debt securities
U.S. governmental agency — 349 — — 349
Residential — 4 — — 4
Commercial — 100 — — 100
Total debt securities 10 1,693 — — 1,703
Equity securities
Large capitalization value 196 — — — 196
Smaller company growth 86 — — — 86
REIT — — — 158 158
Total equity securities 282 — — 158 440
Derivative financial instruments, net — 227 — — 227
Total assets $ 292 $ 1,920 $ — $ 158 $ 2,370

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		December 31, 2020											March 31, 2022
(Millions of dollars)	(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets / Liabilities, at Fair Value		(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets / Liabilities, at Fair Value
Assets	Assets											Assets
Debt securities	Debt securities											Debt securities
Government debt	Government debt											Government debt
U.S. treasury bonds	U.S. treasury bonds	$	10	$	—	$	—	$	—	$	10	U.S. treasury bonds	$	9	$	—	$	—	$	—	$	9
Other U.S. and non-U.S. government bonds	Other U.S. and non-U.S. government bonds	—		59		—		—		59		Other U.S. and non-U.S. government bonds	—		60		—		—		60
Corporate bonds	Corporate bonds											Corporate bonds
Corporate bonds	Corporate bonds	—		1,012		—		—		1,012		Corporate bonds	—		1,988		—		—		1,988
Asset-backed securities	Asset-backed securities	—		159		—		—		159		Asset-backed securities	—		183		—		—		183
Mortgage-backed debt securities	Mortgage-backed debt securities											Mortgage-backed debt securities
U.S. governmental agency	U.S. governmental agency	—		374		—		—		374		U.S. governmental agency	—		319		—		—		319
Residential	Residential	—		5		—		—		5		Residential	—		3		—		—		3
Commercial	Commercial	—		64		—		—		64		Commercial	—		100		—		—		100
Total debt securities	Total debt securities	10		1,673		—		—		1,683		Total debt securities	9		2,653		—		—		2,662
Equity securities	Equity securities											Equity securities
Large capitalization value	Large capitalization value	199		—		—		—		199		Large capitalization value	214		—		—		—		214
Smaller company growth	Smaller company growth	58		—		—		—		58		Smaller company growth	72		—		—		—		72
REIT	REIT	—		—		—		148		148		REIT	—		—		—		185		185
Total equity securities	Total equity securities	257		—		—		148		405		Total equity securities	286		—		—		185		471
Derivative financial instruments - assets												Derivative financial instruments - assets
Foreign currency contracts - net												Foreign currency contracts - net	—		85		—		—		85

Commodity contracts - net												Commodity contracts - net	—		87		—		—		87
Total assets	Total assets	$	267	$	1,673	$	—	$	148	$	2,088	Total assets	$	295	$	2,825	$	—	$	185	$	3,305
Liabilities	Liabilities											Liabilities
Derivative financial instruments, net		$	—	$	17	$	—	$	—	$	17
Derivative financial instruments - liabilities												Derivative financial instruments - liabilities

Interest rate contracts - net												Interest rate contracts - net	$	—	$	12	$	—	$	—	$	12

Total liabilities	Total liabilities	$	—	$	17	$	—	$	—	$	17	Total liabilities	$	—	$	12	$	—	$	—	$	12

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	December 31, 2021
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets / Liabilities, at Fair Value
Assets
Debt securities
Government debt
U.S. treasury bonds	$	10	$	—	$	—	$	—	$	10
Other U.S. and non-U.S. government bonds	—		61		—		—		61
Corporate bonds
Corporate bonds	—		1,046		—		—		1,046
Asset-backed securities	—		176		—		—		176
Mortgage-backed debt securities
U.S. governmental agency	—		325		—		—		325
Residential	—		4		—		—		4
Commercial	—		99		—		—		99
Total debt securities	10		1,711		—		—		1,721
Equity securities
Large capitalization value	217		—		—		—		217
Smaller company growth	98		—		—		—		98
REIT	—		—		—		167		167
Total equity securities	315		—		—		167		482
Derivative financial instruments - assets
Foreign currency contracts - net	—		168		—		—		168
Interest rate contracts - net	—		23		—		—		23
Commodity contracts - net	—		21		—		—		21
Total Assets	$	325	$	1,923	$	—	$	167	$	2,415

In addition to the amounts above, certain Cat Financial loans are subject to measurement at fair value on a nonrecurring basis and are classified as Level 3 measurements. A loan is measured at fair value when management determines that collection of contractual amounts due is not probable and the loan is individually evaluated. In these cases, an allowance for credit losses may be established based either on the present value of expected future cash flows discounted at the receivables’ effective interest rate, the fair value of the collateral for collateral-dependent receivables, or the observable market price of the receivable. In determining collateral value, Cat Financial estimates the current fair market value of the collateral less selling costs. Cat Financial had loans carried at fair value of ~~$150~~$108 million and ~~$243~~$100 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

B. Fair values of financial instruments

In addition to the methods and assumptions we use to record the fair value of financial instruments as discussed in the Fair value measurements section above, we use the following methods and assumptions to estimate the fair value of our financial instruments:

Cash and cash equivalents

Carrying amount approximates fair value. We classify cash and cash equivalents as Level 1. See Consolidated Statement of Financial Position.

Restricted cash and short-term investments

Carrying amount approximates fair value. We include restricted cash and short-term investments in Prepaid expenses and other current assets in the Consolidated Statement of Financial Position. We classify these instruments as Level 1 except for time deposits which are Level 2. See Note 8 for additional information.

Finance receivables

We estimate fair value by discounting the future cash flows using current rates, representative of receivables with similar remaining maturities.

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Wholesale inventory receivables

We estimate fair value by discounting the future cash flows using current rates, representative of receivables with similar remaining maturities.

~~Table of Contents~~

Short-term borrowings

Carrying amount approximates fair value. We classify short-term borrowings as Level 1. See Consolidated Statement of Financial Position.

Long-term debt

We estimate fair value for fixed and floating rate debt based on quoted market prices.

Guarantees

The fair value of guarantees is based upon our estimate of the premium a market participant would require to issue the same guarantee in a stand-alone arms-length transaction with an unrelated party. If quoted or observable market prices are not available, fair value is based upon internally developed models that utilize current market-based assumptions. We classify guarantees as Level 3. See Note 11 for additional information.

~~Fair values of our~~Our financial instruments not carried at fair value were as follows:

Fair Value of Financial Instruments
September 30, 2021 December 31, 2020
(Millions of dollars)
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Fair Value Levels Reference
Assets
Cash and cash equivalents $ 9,446 $ 9,446 $ 9,352 $ 9,352 1
Restricted cash and short-term investments 1
546 546 14 14 1 & 2 Note 8
Investments in AFS debt and equity securities 2,143 2,143 2,088 2,088 1 & 2 Note 8
Finance receivables – net (excluding finance leases 2 )
13,785 13,921 14,028 14,357 3 Note 17
Wholesale inventory receivables – net (excluding finance leases 2)
819 800 929 911 3
Foreign currency contracts – net 193 193 — — 2 Note 5
Interest rate contracts – net 27 27 58 58 2 Note 5
Commodity contracts – net 7 7 37 37 2 Note 5
Liabilities
Short-term borrowings 3,247 3,247 2,015 2,015 1
Long-term debt (including amounts due within one year)
Machinery, Energy & Transportation 9,807 12,449 11,169 14,549 2
Financial Products 23,730 24,118 23,979 24,614 2
Foreign currency contracts – net — — 112 112 2 Note 5
Guarantees 5 5 5 5 3 Note 11

1 ~~Includes time deposits of $543 million as of September 30, 2021. There were no time deposits as of December 31, 2020. See Note 8 for additional information.~~



	March 31, 2022				December 31, 2021
(Millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Levels	Reference
Assets
Finance receivables – net (excluding finance leases 1 )	$	14,077	$	13,848	$	13,837	$	13,836	3	Note 17
Wholesale inventory receivables – net (excluding finance leases 1)	714		690		773		753		3

Liabilities
Long-term debt (including amounts due within one year)
Machinery, Energy & Transportation	9,763		11,127		9,791		12,420		2
Financial Products	23,320		23,010		22,594		22,797		2

21 Represents finance leases and failed sale leasebacks of ~~$8,065~~$7,895 million and ~~$7,961~~$8,083 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

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19. Other income (expense)


		Three Months Ended September 30					Nine Months Ended September 30						Three Months Ended March 31
(Millions of dollars)	(Millions of dollars)	2021		2020			2021		2020			(Millions of dollars)		2022		2021
Investment and interest income	Investment and interest income	$	20	$	21		$	64	$	91		Investment and interest income		$	21	$	23
Foreign exchange gains (losses) 1	Foreign exchange gains (losses) 1	47		(43)			110		(122)			Foreign exchange gains (losses) 1		47		95
License fee income	License fee income	31		27			88		75			License fee income		32		25
Net periodic pension and OPEB income (cost), excluding service cost	Net periodic pension and OPEB income (cost), excluding service cost	111		—		2	333		270		2	Net periodic pension and OPEB income (cost), excluding service cost		68		111
Gains (losses) on securities	Gains (losses) on securities	50		9			92		(12)			Gains (losses) on securities		(12)		25
Miscellaneous income (loss)	Miscellaneous income (loss)	(34)		—			64		(37)			Miscellaneous income (loss)		97		46
Total	Total	$	225	$	14		$	751	$	265		Total		$	253	$	325

1 Includes gains (losses) from foreign exchange derivative contracts. See Note 5 ~~for further details.~~

2 Includes a net remeasurement loss of $(77) million and a net remeasurement gain of $55 million for the three and nine months ended September 30, 2020, respectively, from the settlement of certain pension obligations. See Note 9 for further details.

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20. Restructuring costs

Our accounting for employee separations is dependent upon how the particular program is designed. For voluntary programs, we recognize eligible separation costs at the time of employee acceptance unless the acceptance requires explicit approval by the company. For involuntary programs, we recognize eligible costs when management has approved the program, the affected employees have been properly notified and the costs are estimable.

Restructuring costs for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were as follows:


(Millions of dollars)	(Millions of dollars)	Three Months Ended September 30				Nine Months Ended September 30				(Millions of dollars)	Three Months Ended March 31
		2021		2020		2021		2020				2022		2021
Employee separations 1	Employee separations 1	$	17	$	98	$	79	$	232	Employee separations 1		$	5	$	45
Contract terminations 1		1		—		1		3

Long-lived asset impairments 1	Long-lived asset impairments 1	8		2		12		25		Long-lived asset impairments 1		—		11

Other 2	Other 2	9		12		32		36		Other 2		8		8
Total restructuring costs	Total restructuring costs	$	35	$	112	$	124	$	296	Total restructuring costs		$	13	$	64

1 Recognized in Other operating (income) expenses.	1 Recognized in Other operating (income) expenses.							1 Recognized in Other operating (income) expenses.
2 Represents costs related to our restructuring programs, primarily for accelerated depreciation, inventory write-downs, equipment relocation and project management, all of which are primarily included in Cost of goods sold.
2 Represents costs related to our restructuring programs, primarily for accelerated depreciation, project management, equipment relocation and inventory write-downs, all of which are primarily included in Cost of goods sold.										2 Represents costs related to our restructuring programs, primarily for accelerated depreciation, project management, equipment relocation and inventory write-downs, all of which are primarily included in Cost of goods sold.

For both the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, the restructuring costs were primarily related to actions across the company including strategic actions to address certain product lines. For the nine months ended September 30, 2020, the restructuring costs were primarily related to various voluntary and involuntary employee separation programs implemented across the company and strategic actions to address certain product lines, which were partially offset by a ~~gain on the sale~~small number of ~~a manufacturing facility that had been closed.~~products.

In 2022 and 2021, all restructuring costs are excluded from segment profit. ~~In 2020, only certain restructuring costs were excluded from segment profit. Restructuring costs included in segment profit were as follows:~~

~~Table of Contents~~

Three Months Ended September 30 Nine Months Ended September 30
(Millions of dollars) 2021 2020 2021 2020
Construction Industries $ — $ 2 $ — $ 7
Resource Industries — 2 — 18
Energy & Transportation — 18 — 39
Financial Products Segment — 1 — 2

The following table summarizes the ~~2021~~2022 and ~~2020~~2021 employee separation activity:


(Millions of dollars)	(Millions of dollars)	Nine Months Ended September 30				(Millions of dollars)	Three Months Ended March 31
		2021		2020			2022		2021
Liability balance, beginning of period	Liability balance, beginning of period	$	164	$	48	Liability balance, beginning of period	$	61	$	164
Increase in liability (separation charges)	Increase in liability (separation charges)	79		232		Increase in liability (separation charges)	5		45
Reduction in liability (payments)	Reduction in liability (payments)	(159)		(131)		Reduction in liability (payments)	(19)		(55)
Liability balance, end of period	Liability balance, end of period	$	84	$	149	Liability balance, end of period	$	47	$	154

Most of the liability balance at ~~September 30, 2021~~March 31, 2022 is expected to be paid in ~~2021 and~~ 2022.

~~21.Acquisitions~~

~~SPM Oil & Gas~~

On February 1, 2021, Caterpillar completed the acquisition of varying equity interests and assets of the Weir Group PLC, collectively known as SPM Oil & Gas (SPM). Headquartered near Fort Worth, Texas, SPM Oil & Gas produces a full line of pumps, flow iron, consumable parts, wellhead and pressure control products that are offered via an extensive global network of service centers. This acquisition, included in the Energy & Transportation segment, is consistent with our strategy of providing our customers expanded offerings and services which will now be one of the broadest in the well service industry. The purchase price, net of $22 million of acquired cash, was approximately $361 million.

We financed the transaction with available cash. Tangible assets as of the acquisition date were $515 million, recorded at their fair values, and primarily included cash of $22 million, receivables of $101 million, inventories of $159 million, leased assets of $105 million, and property, plant, and equipment of $117 million. Finite-lived intangible assets acquired of $23 million included developed technology and trade names and will be amortized on a straight-line basis over a weighted-average amortization period of approximately 8 years. Liabilities assumed as of the acquisition date were $187 million, recorded at their fair values, and primarily included lease liabilities of $105 million and accounts payable of $33 million. Goodwill of $32 million represented the excess of the consideration transferred over the net assets acquired. These values represent a preliminary allocation of purchase price subject to finalization of post-closing procedures. Assuming this transaction had been made at the beginning of any period presented, the consolidated pro forma results would not be materially different from reported results.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~This~~The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide information that will assist the reader in understanding the company’s Consolidated Financial Statements, the changes in certain key items in those financial statements between select periods and the primary factors that accounted for those changes. In addition, we discuss how certain accounting principles, policies and critical estimates affect our Consolidated Financial Statements. Our discussion also contains certain forward-looking statements related to future events and expectations. This MD&A should be read in conjunction with our ~~unaudited financial~~discussion of cautionary statements and ~~related notes included elsewhere in this report and our discussion of~~ significant risks to the company’s business under Part I, Item 1A. Risk Factors of the ~~2020~~2021 Form 10-K.

Highlights for the ~~third~~first quarter of ~~2021~~2022 include:

•Total sales and revenues for the ~~third~~first quarter of ~~2021~~2022 were ~~$12.397~~$13.589 billion, an increase of ~~$2.516~~$1.702 billion, or 2514 percent, compared with ~~$9.881~~$11.887 billion in the ~~third~~first quarter of ~~2020.~~2021. Sales were higher across the three primary segments.

•Operating profit margin was ~~13.4~~13.7 percent for the ~~third~~first quarter of ~~2021,~~2022, compared with ~~10.0~~15.3 percent for the ~~third~~first quarter of ~~2020.~~2021. Adjusted operating profit margin was 13.7 percent for the ~~third~~first quarter of ~~2021,~~2022, compared with ~~11.1~~15.8 percent for the ~~third~~first quarter of ~~2020.~~2021.

•~~Third-quarter 2021~~First-quarter 2022 profit per share was ~~$2.60,~~$2.86, and excluding the items in the table below, adjusted profit per share was ~~$2.66. Third-quarter 2020~~$2.88. First-quarter 2021 profit per share was ~~$1.22,~~$2.77, and excluding the items in the table below, adjusted profit per share was ~~$1.52.~~

•~~Caterpillar ended the third quarter of 2021 with $9.4 billion of enterprise cash.~~

~~Highlights for the nine months ended September 30, 2021 include:~~

•Total sales and revenues were $37.173 billion for the nine months ended September 30, 2021, an increase of $6.660 billion, or 22 percent, compared with $30.513 billion for the nine months ended September 30, 2020.

•Operating profit margin was 14.2 percent for the nine months ended September 30, 2021, compared with 10.4 percent for the nine months ended September 30, 2020. Adjusted operating profit margin was 14.5 percent for the nine months ended September 30, 2021, compared with 11.4 percent for the nine months ended September 30, 2020.

•Profit per share for the nine months ended September 30, 2021, was $7.94, and excluding the items in the table below, adjusted profit per share was $8.13. Profit per share for the nine months ended September 30, 2020 was $4.05, and excluding the items in the table below, adjusted profit per share was $4.44.

•~~Enterprise operating cash flow was $5.8 billion for the nine months ended September 30, 2021.~~$2.87.

•In order for our results to be more meaningful to our readers, we have separately quantified the impact of several significant items. A detailed reconciliation of GAAP to non-GAAP financial measures is included on page ~~69.~~53.

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
(Dollars in millions except per share data) Profit Before Taxes Profit
Per Share Profit Before Taxes Profit
Per Share Profit Before Taxes Profit
Per Share Profit Before Taxes Profit
Per Share
Profit................................................................................ $ 1,775 $ 2.60 $ 863 $ 1.22 $ 5,642 $ 7.94 $ 3,054 $ 4.05
Restructuring costs........................................................
35 0.06 112 0.18 124 0.19 296 0.48
Remeasurement (gains) losses of pension obligations.... — — 77 0.12 — — (55) (0.08)
Adjusted profit................................................................. $ 1,810 $ 2.66 $ 1,052 $ 1.52 $ 5,766 $ 8.13 $ 3,295 $ 4.44



	Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
(Dollars in millions except per share data)	Profit Before Taxes		Profit Per Share		Profit Before Taxes		Profit Per Share
Profit	$	1,999	$	2.86	$	1,997	$	2.77
Restructuring costs	13		0.02		64		0.10
Adjusted profit	$	2,012	$	2.88	$	2,061	$	2.87

•Enterprise operating cash flow was $0.3 billion in the first quarter of 2022. Caterpillar ended the first quarter of 2022 with $6.5 billion of enterprise cash.

Overview

Total sales and revenues for the ~~third~~first quarter of ~~2021~~2022 were ~~$12.397~~$13.589 billion, an increase of ~~$2.516~~$1.702 billion, or 2514 percent, compared with ~~$9.881~~$11.887 billion in the ~~third~~first quarter of ~~2020.~~2021. The increase was ~~primarily~~ due to higher sales volume and favorable price realization, partially offset by unfavorable currency impacts primarily related to the euro, Australian dollar and Japanese yen. The increase in sales volume was driven by higher end-user demand for equipment and services and the impact from changes in dealer inventories~~, along with favorable~~ ~~price realization~~. Dealers ~~decreased~~increased inventories by ~~$600~~$1.3 billion during the first quarter of 2022, compared with an increase of $700 million during the ~~third quarter of 2020, compared with a decrease of $300 million during the third~~first quarter of 2021. Sales were higher across the three primary segments.

~~Third-quarter 2021~~First-quarter 2022 profit per share was ~~$2.60,~~$2.86, compared with ~~$1.22~~$2.77 profit per share in the ~~third~~first quarter of ~~2020.~~2021. Profit per share for both quarters included restructuring ~~costs, while the third quarter of 2020 also included a pre-tax net remeasurement loss of $77 million, or $0.12 per share, resulting from the settlements of pension obligations.~~costs. Profit for the ~~third~~first quarter of ~~2021~~2022 was ~~$1.426~~$1.537 billion, ~~an increase of $758 million, or 113 percent,~~which was about flat compared with ~~$668 million~~$1.530 billion for the ~~third~~first quarter of ~~2020.~~2021. Unfavorable manufacturing costs and higher selling, general and administrative (SG&A) and research and development (R&D) expenses were offset by favorable price realization and higher sales volume. Unfavorable manufacturing costs primarily reflected higher material and freight costs. The increase in SG&A/R&D expenses was ~~primarily due to higher sales volume and favorable~~mainly driven by investments aligned with the company's strategy for profitable growth.

~~price realization.~~

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Sales and revenues were $37.173 billion for the nine months ended September 30, 2021, an increase of $6.660 billion, or 22 percent, compared with $30.513 billion for the nine months ended September 30, 2020. Profit per share for the nine months ended September 30, 2021, was $7.94, an increase of $3.89, or 96 percent, compared with $4.05 for the nine months ended September 30, 2020. Profit per share for both periods included restructuring costs, while the nine months ended September 30, 2020, also included a pre-tax remeasurement net gain of $55 million, or $0.08 per share, resulting from the settlements of pension obligations. Profit for the nine months ended September 30, 2021, was $4.369 billion, an increase of $2.151 billion, or 97 percent, compared with $2.218 billion for the nine months ended September 30, 2020.

~~Response to COVID-19 and~~ Global Business Conditions:

We continue to implement safeguards in our facilities to protect team members, including increased frequency of cleaning and disinfecting, social distancing practices and other measures consistent with specific governmental requirements and guidance from health authorities. We’ve offered assistance to some governments and public health authorities in the vaccine distribution process, and as vaccines become available, we are assisting in onsite vaccine distribution for employees in some of our facilities.

We continue to monitor a variety of external factors including the ongoing impact of the COVID-19 pandemic around the world, supply chain disruptions and associated cost and labor pressures. Areas of particular focus include certain components, transportation and raw materials. Transportation shortages have resulted in delays and increased costs. In addition, our suppliers are dealing with availability issues and freight delays, which leads to pressure on production in our facilities. Contingency plans have been developed and continue to be modified to minimize supply chain challenges that may impact our ability to meet increasing customer demand. ~~To help mitigate supply chain challenges, we have proactively redirected components and altered our assembly processes.~~ We continue to assess the environment and are taking appropriate price actions in response to rising costs. We will continue to monitor the situation as conditions remain fluid and evolve ~~but we expect these pressures to continue into next~~throughout the year.

Notes:

•Glossary of terms is included on pages 6247 - ~~64;~~49; first occurrence of terms shown in bold italics.

•Information on non-GAAP financial measures is included on page ~~69.~~53.

•Certain amounts may not add due to rounding.

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Consolidated Results of Operations

THREE MONTHS ENDED ~~SEPTEMBER 30, 2021~~MARCH 31, 2022 COMPARED WITH THREE MONTHS ENDED ~~SEPTEMBER 30, 2020~~MARCH 31, 2021

CONSOLIDATED SALES AND REVENUES

The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the ~~third~~first quarter of ~~2020~~2021 (at left) and the ~~third~~first quarter of ~~2021~~2022 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s Board of Directors and employees.

Total sales and revenues for the ~~third~~first quarter of ~~2021~~2022 were ~~$12.397~~$13.589 billion, an increase of ~~$2.516~~$1.702 billion, or 2514 percent, compared with ~~$9.881~~$11.887 billion in the ~~third~~first quarter of ~~2020.~~2021. The increase was ~~primarily~~ due to higher sales volume and favorable price realization, partially offset by unfavorable currency impacts primarily related to the euro, Australian dollar and Japanese yen. The increase in sales volume was driven by higher end-user demand for equipment and services and the impact from changes in dealer ~~inventories, along with favorable price realization.~~inventories. Dealers ~~decreased~~increased inventories by ~~$600~~$1.3 billion during the first quarter of 2022, compared with an increase of $700 million during the ~~third quarter of 2020, compared with a decrease of $300 million during the third~~first quarter of 2021.

Sales were higher across the three primary segments.

North America sales increased 3125 percent due to higher end-user demand for equipment and services, favorable price realization and the impact of changes in dealer inventories. Dealers increased inventories more during the first quarter of 2022 than during the first quarter of 2021.

Sales increased 27 percent in Latin America due to the impact of changes in dealer inventories, favorable price realization and higher end-user demand for equipment and services across most of the region. Dealers increased inventories during the first quarter of 2022, compared with a decrease during the first quarter of 2021.

EAME sales increased 15 percent due to higher end-user demand for equipment and services, the impact of changes in dealer inventories and favorable price ~~realization.~~realization, partially offset by unfavorable currency impacts primarily related to the euro. Dealers ~~decreased~~increased inventories more during the ~~third~~first quarter of ~~2020~~2022 than during the ~~third~~first quarter of 2021.

~~Sales increased 77~~Asia/Pacific sales decreased 4 percent in ~~Latin America~~ ~~due to higher~~driven by lower end-user demand for equipment and services ~~across most of~~and unfavorable currency impacts related to the ~~region,~~Australian dollar and Japanese yen, partially offset by favorable price realization and the impact of changes in dealer ~~inventories and favorable price realization.~~inventories. Dealers ~~decreased~~increased inventories more during the ~~third~~first quarter of ~~2020~~2022 than during the ~~third~~first quarter of 2021.

~~EAME~~ Lower sales ~~increased 24 percent due to higher end-user demand for equipment and services, the impact of changes~~ in ~~dealer inventories, favorable price realization and favorable~~ ~~currency~~ ~~impacts primarily related to the euro and British pound. Dealers decreased inventories during the third quarter of 2020, compared to remaining about flat during the third quarter of 2021.~~

~~Asia/Pacific sales increased 8 percent driven by higher end-user demand for equipment and services,~~China were partially offset by increased sales across the ~~impacts from changes in dealer inventories.~~ majority of the region.

Dealers ~~decreased~~increased inventories by $1.3 billion during the ~~third~~first quarter of ~~2021,~~2022, compared with an increase ~~during the third quarter~~ of ~~2020.~~

~~Dealers decreased inventories by $600~~$700 million during the ~~third quarter of 2020, compared with a decrease of $300 million during the third~~first quarter of 2021. Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rental rates and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers. We do not expect a significant increase in dealer inventory ~~increase~~ in ~~2021.~~

2022.

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Sales and Revenues by Segment	Sales and Revenues by Segment																	Sales and Revenues by Segment
(Millions of dollars)	(Millions of dollars)	Third Quarter 2020		Sales Volume		Price Realization		Currency		Inter-Segment / Other		Third Quarter 2021		$ Change		% Change		(Millions of dollars)	First Quarter 2021		Sales Volume		Price Realization		Currency		Inter-Segment / Other		First Quarter 2022		$ Change		% Change

Construction Industries	Construction Industries	$	4,056	$	957	$	218	$	38	$	(14)	$	5,255	$	1,199	30	%	Construction Industries	$	5,459	$	325	$	421	$	(101)	$	11	$	6,115	$	656	12	%
Resource Industries	Resource Industries	1,816		522		43		22		3		2,406		590		32	%	Resource Industries	2,178		527		169		(34)		(10)		2,830		652		30	%
Energy & Transportation	Energy & Transportation	4,161		628		(6)		44		250		5,077		916		22	%	Energy & Transportation	4,507		333		115		(74)		157		5,038		531		12	%
All Other Segment	All Other Segment	106		10		(1)		1		3		119		13		12	%	All Other Segment	130		2		—		(1)		(13)		118		(12)		(9	%)
Corporate Items and Eliminations	Corporate Items and Eliminations	(911)		1		2		—		(242)		(1,150)		(239)				Corporate Items and Eliminations	(1,083)		15		(1)		(1)		(145)		(1,215)		(132)
Machinery, Energy & Transportation Sales	Machinery, Energy & Transportation Sales	9,228		2,118		256		105		—		11,707		2,479		27	%	Machinery, Energy & Transportation Sales	11,191		1,202		704		(211)		—		12,886		1,695		15	%

Financial Products Segment	Financial Products Segment	724		—		—		—		38		762		38		5	%	Financial Products Segment	761		—		—		—		22		783		22		3	%
Corporate Items and Eliminations	Corporate Items and Eliminations	(71)		—		—		—		(1)		(72)		(1)				Corporate Items and Eliminations	(65)		—		—		—		(15)		(80)		(15)
Financial Products Revenues	Financial Products Revenues	653		—		—		—		37		690		37		6	%	Financial Products Revenues	696		—		—		—		7		703		7		1	%

Consolidated Sales and Revenues	Consolidated Sales and Revenues	$	9,881	$	2,118	$	256	$	105	$	37	$	12,397	$	2,516	25	%	Consolidated Sales and Revenues	$	11,887	$	1,202	$	704	$	(211)	$	7	$	13,589	$	1,702	14	%


Sales and Revenues by Geographic Region


		North America				Latin America				EAME				Asia/Pacific				External Sales and Revenues					Inter-Segment					Total Sales and Revenues					North America				Latin America				EAME				Asia/Pacific				External Sales and Revenues					Inter-Segment				Total Sales and Revenues
(Millions of dollars)	(Millions of dollars)	$		% Chg		$		% Chg		$		% Chg		$		% Chg		$			% Chg		$			% Chg		$		% Chg		(Millions of dollars)	$		% Chg		$		% Chg		$		% Chg		$		% Chg		$			% Chg		$		% Chg		$		% Chg
Third Quarter 2021
First Quarter 2022																									First Quarter 2022
Construction Industries	Construction Industries	$	2,417	36	%	$	528	130	%	$	1,240	56	%	$	1,076	(13	%)	$	5,261		30	%	$	(6)		(175	%)	$	5,255	30	%	Construction Industries	$	2,720	28	%	$	627	60	%	$	1,277	18	%	$	1,462	(21	%)	$	6,086		12	%	$	29	61	%	$	6,115	12	%
Resource Industries	Resource Industries	674		38	%	417		55	%	456		19	%	744		32	%	2,291			34	%	115			3	%	2,406		32	%	Resource Industries	1,018		55	%	399		(1	%)	594		25	%	748		33	%	2,759			32	%	71		(12	%)	2,830		30	%
Energy & Transportation	Energy & Transportation	1,924		21	%	329		49	%	1,144		3	%	744		34	%	4,141			19	%	936			36	%	5,077		22	%	Energy & Transportation	1,938		9	%	310		21	%	1,184		8	%	600		14	%	4,032			10	%	1,006		18	%	5,038		12	%
All Other Segment	All Other Segment	18		80	%	—		(100	%)	3		200	%	14		8	%	35			40	%	84			4	%	119		12	%	All Other Segment	18		38	%	—		—	%	5		67	%	16		(27	%)	39			3	%	79		(14	%)	118		(9	%)
Corporate Items and Eliminations	Corporate Items and Eliminations	(19)				—				—				(2)				(21)					(1,129)					(1,150)				Corporate Items and Eliminations	(24)				1				(2)				(5)				(30)					(1,185)				(1,215)
Machinery, Energy & Transportation Sales	Machinery, Energy & Transportation Sales	5,014		31	%	1,274		77	%	2,843		24	%	2,576		8	%	11,707			27	%	—			—		11,707		27	%	Machinery, Energy & Transportation Sales	5,670		25	%	1,337		27	%	3,058		15	%	2,821		(4	%)	12,886			15	%	—		—		12,886		15	%

Financial Products Segment	Financial Products Segment	478		7	%	68		8	%	105		5	%	111		(2	%)	762		1	5	%	—			—		762		5	%	Financial Products Segment	503		6	%	73		18	%	96		(4	%)	111		(10	%)	783		1	3	%	—		—		783		3	%
Corporate Items and Eliminations	Corporate Items and Eliminations	(37)				(13)				(9)				(13)				(72)					—					(72)				Corporate Items and Eliminations	(36)				(17)				(9)				(18)				(80)					—				(80)
Financial Products Revenues	Financial Products Revenues	441		7	%	55		4	%	96		7	%	98		(1	%)	690			6	%	—			—		690		6	%	Financial Products Revenues	467		3	%	56		10	%	87		(5	%)	93		(8	%)	703			1	%	—		—		703		1	%

Consolidated Sales and Revenues	Consolidated Sales and Revenues	$	5,455	28	%	$	1,329	72	%	$	2,939	23	%	$	2,674	8	%	$	12,397		25	%	$	—		—		$	12,397	25	%	Consolidated Sales and Revenues	$	6,137	23	%	$	1,393	26	%	$	3,145	15	%	$	2,914	(4	%)	$	13,589		14	%	$	—	—		$	13,589	14	%

Third Quarter 2020
First Quarter 2021																									First Quarter 2021
Construction Industries	Construction Industries	$	1,781			$	230			$	796			$	1,241			$	4,048				$	8				$	4,056			Construction Industries	$	2,126			$	392			$	1,081			$	1,842			$	5,441				$	18			$	5,459
Resource Industries	Resource Industries	487				269				384				564				1,704					112					1,816				Resource Industries	657				405				474				561				2,097					81				2,178
Energy & Transportation	Energy & Transportation	1,584				221				1,113				557				3,475					686					4,161				Energy & Transportation	1,782				256				1,093				527				3,658					849				4,507
All Other Segment	All Other Segment	10				1				1				13				25					81					106				All Other Segment	13				—				3				22				38					92				130
Corporate Items and Eliminations	Corporate Items and Eliminations	(22)				(2)				—				—				(24)					(887)					(911)				Corporate Items and Eliminations	(39)				—				—				(4)				(43)					(1,040)				(1,083)
Machinery, Energy & Transportation Sales	Machinery, Energy & Transportation Sales	3,840				719				2,294				2,375				9,228					—					9,228				Machinery, Energy & Transportation Sales	4,539				1,053				2,651				2,948				11,191					—				11,191

Financial Products Segment	Financial Products Segment	448				63				100				113				724		1			—					724				Financial Products Segment	476				62				100				123				761		1			—				761
Corporate Items and Eliminations	Corporate Items and Eliminations	(37)				(10)				(10)				(14)				(71)					—					(71)				Corporate Items and Eliminations	(24)				(11)				(8)				(22)				(65)					—				(65)
Financial Products Revenues	Financial Products Revenues	411				53				90				99				653					—					653				Financial Products Revenues	452				51				92				101				696					—				696

Consolidated Sales and Revenues	Consolidated Sales and Revenues	$	4,251			$	772			$	2,384			$	2,474			$	9,881				$	—				$	9,881			Consolidated Sales and Revenues	$	4,991			$	1,104			$	2,743			$	3,049			$	11,887				$	—			$	11,887

1 Includes revenues from Machinery, Energy & Transportation of ~~$87~~$100 million and ~~$81~~$84 million in the ~~third~~first quarter of ~~2021~~2022 and ~~2020,~~2021, respectively.

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CONSOLIDATED OPERATING PROFIT

The chart above graphically illustrates reasons for the change in consolidated operating profit between the ~~third~~first quarter of ~~2020~~2021 (at left) and the ~~third~~first quarter of ~~2021~~2022 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s Board of Directors and employees. The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation other operating (income) expenses.

Operating profit for the ~~third~~first quarter of ~~2021~~2022 was ~~$1.664~~$1.855 billion, an increase of ~~$679~~$41 million, or 692 percent, compared with ~~$985 million~~$1.814 billion in the ~~third~~first quarter of ~~2020. The increase was primarily due to higher sales volume~~2021. Unfavorable manufacturing costs and ~~favorable price realization, partially offset by~~ higher selling, general and administrative (SG&A) and research and development (R&D) expenses ~~as well as~~were more than offset by favorable price realization and higher sales volume. For 2022, price realization is expected to more than offset manufacturing ~~costs~~.cost increases.

Unfavorable manufacturing costs primarily reflected higher ~~variable labor~~material and ~~burden, primarily~~ freight higher period manufacturing and material costs, partially offset by favorable cost absorption and lower warranty expense. Cost absorption was favorable as inventory increased during the third quarter of 2021, compared with remaining about flat during the third quarter of 2020.

costs. The increase in ~~both~~ SG&A/R&D expenses ~~and period manufacturing costs~~ was mainly driven by ~~higher short-term incentive compensation expense, which was reinstated in 2021, and~~ investments aligned with the company's strategy for profitable ~~growth, including acquisition-related expenses.~~growth.

Short-term incentive compensation expense ~~which was reinstated in 2021,~~ was about ~~$350~~$340 million in the ~~third~~first quarter of 2022, compared to noabout $300 million in the first quarter of 2021. For 2022, short-term incentive compensation expense ~~recognized in the third quarter of 2020.~~is expected to be about $1.3 billion, about flat compared to 2021.

Operating profit margin was ~~13.4~~13.7 percent for the ~~third~~first quarter of ~~2021,~~2022, compared with ~~10.0~~15.3 percent for the ~~third~~first quarter of ~~2020.~~2021.


Profit (Loss) by Segment
Profit by Segment										Profit by Segment
(Millions of dollars)	(Millions of dollars)	Third Quarter 2021		Third Quarter 2020		$ Change		% Change		(Millions of dollars)	First Quarter 2022		First Quarter 2021		$ Change		% Change
Construction Industries	Construction Industries	$	859	$	585	$	274	47	%	Construction Industries	$	1,057	$	1,042	$	15	1	%
Resource Industries	Resource Industries	297		167		130		78	%	Resource Industries	361		312		49		16	%
Energy & Transportation	Energy & Transportation	696		492		204		41	%	Energy & Transportation	538		675		(137)		(20	%)
All Other Segment	All Other Segment	5		27		(22)		(81	%)	All Other Segment	3		3		—		—	%
Corporate Items and Eliminations	Corporate Items and Eliminations	(286)		(346)		60				Corporate Items and Eliminations	(244)		(368)		124
Machinery, Energy & Transportation	Machinery, Energy & Transportation	1,571		925		646		70	%	Machinery, Energy & Transportation	1,715		1,664		51		3	%

Financial Products Segment	Financial Products Segment	173		142		31		22	%	Financial Products Segment	238		244		(6)		(2	%)
Corporate Items and Eliminations	Corporate Items and Eliminations	(7)		(15)		8				Corporate Items and Eliminations	(17)		(19)		2
Financial Products	Financial Products	166		127		39		31	%	Financial Products	221		225		(4)		(2	%)
Consolidating Adjustments	Consolidating Adjustments	(73)		(67)		(6)				Consolidating Adjustments	(81)		(75)		(6)
Consolidated Operating Profit	Consolidated Operating Profit	$	1,664	$	985	$	679	69	%	Consolidated Operating Profit	$	1,855	$	1,814	$	41	2	%

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Other Profit/Loss and Tax Items

▪Interest expense excluding Financial Products in the ~~third~~first quarter of ~~2021~~2022 was ~~$114~~$109 million, compared with ~~$136~~$142 million in the ~~third~~first quarter of ~~2020.~~2021. The decrease was due to lower average debt outstanding during the ~~third~~first quarter of ~~2021,~~2022, compared with the ~~third~~first quarter of ~~2020.~~2021.

▪Other income (expense) in the ~~third~~first quarter of ~~2021~~2022 was income of ~~$225~~$253 million, compared with income of ~~$14~~$325 million in the ~~third~~first quarter of ~~2020. The change was primarily due to favorable~~2021. Favorable impacts from higher gains on commodity hedges were more than offset by the unfavorable impacts from lower foreign currency exchange net gains, ~~(losses), the absence of remeasurement losses resulting from the settlements of pension obligations that occurred in the third quarter of 2020 and favorable~~ lower pension and other postemployment benefit (OPEB) plan ~~costs.~~

~~The company experienced foreign currency exchange net~~income and the unfavorable impacts from unrealized gains ~~in the third quarter of 2021, primarily due to the euro, compared with net losses in the third quarter of 2020.~~(losses) on marketable securities.

▪The provision for income taxes for the ~~third~~first quarter of ~~2021~~2022 reflected ~~a lower~~an estimated annual tax rate of 2524 percent, compared with 3126 percent for the ~~third~~first quarter of ~~2020,~~2021, excluding the discrete items discussed below. The comparative tax rate for full-year ~~2020~~2021 was approximately 2823 percent. The ~~decrease~~increase in the estimated annual tax rate from full-year ~~2020~~2021 was primarily related to changes in the expected geographic mix of profits from a tax perspective for ~~2021.~~2022.

In ~~the third quarter of 2021, the company recorded a $39 million benefit due to the change from the second-quarter estimated annual tax rate of 26 percent. In~~ addition, the company recorded discrete tax benefits of $36 million to reflect changes in estimates related to prior year U.S. taxes in the third quarter of 2021 compared to $80 million in the third quarter of 2020. In the third quarter of 2020, a discrete tax benefit of ~~$13~~$12 million was recorded in the first quarter of 2022, compared with a $43 million benefit in the first quarter of 2021, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation ~~expense along with a $12 million tax benefit related to the $77 million of remeasurement losses resulting from the settlements of pension obligations.~~expense.

Construction Industries

Construction Industries’ total sales were ~~$5.255~~$6.115 billion in the ~~third~~first quarter of ~~2021,~~2022, an increase of ~~$1.199 billion,~~$656 million, or 3012 percent, compared with ~~$4.056~~$5.459 billion in the ~~third~~first quarter of ~~2020.~~2021. The increase was due to favorable price realization and higher sales volume, partially offset by unfavorable currency impacts related to the euro, Japanese yen and ~~favorable price realization.~~Australian dollar. The increase in sales volume was driven by ~~higher end-user demand and~~ the impact from changes in dealer ~~inventories. Overall,~~inventories and higher end-user demand for aftermarket parts. Across all regions, dealers ~~decreased~~increased inventories more during the ~~third~~first quarter of ~~2020~~2022 than during the ~~third~~first quarter of 2021.

▪In North America, sales increased due to higher sales volume and favorable price realization. Higher sales volume was driven by higher end-user demand for equipment and aftermarket parts from improving non-residential construction, as well as continued strength in residential construction and the impact from changes in dealer inventories. ~~Dealers decreased inventories more during the third quarter of 2020 than during the third quarter of 2021.~~

▪Sales increased in Latin America ~~mostly~~primarily due to higher sales volume, led by ~~the impact of changes in dealer inventories and~~ higher end-user demand across the ~~region. Dealers decreased~~region and the impact from changes in dealer inventories, ~~during the third quarter of 2020, compared with an increase during the third quarter of 2021.~~as well as favorable price realization.

▪In EAME, sales increased due to higher sales volume ~~from~~and favorable price realization, partially offset by unfavorable currency impacts related to a weaker euro. Higher sales volume was driven by higher end-user demand for equipment and aftermarket parts and the impact offrom changes in dealer ~~inventories and higher end-user demand. Dealers decreased inventories during the third quarter of 2020, compared with an increase during the third quarter of 2021.~~inventories.

▪Sales decreased in Asia/Pacific mainly due to lower sales volume ~~reflecting the impact of changes in dealer inventory. Dealers decreased inventories during the third quarter of 2021, compared with an increase during the third quarter of 2020.~~and unfavorable currency impacts driven by a weaker Japanese yen and Australian dollar, partially offset by favorable price realization. Lower sales ~~in China,~~volume was driven by lower end-user demand, ~~and impacts of~~partially offset by the impact from changes in dealer ~~inventory,~~inventories. Lower sales in China primarily driven by lower end-user demand were partially offset by increased sales across the ~~rest~~majority of the region.

Construction Industries’ profit was ~~$859 million~~$1.057 billion in the ~~third~~first quarter of ~~2021,~~2022, an increase of ~~$274~~$15 million, or 471 percent, compared with ~~$585 million~~$1.042 billion in the ~~third~~first quarter of ~~2020. The increase was mainly due to higher sales volume and~~2021. Unfavorable manufacturing costs were more than offset by favorable price realization ~~partially offset by unfavorable~~and higher sales volume. Unfavorable manufacturing costs ~~which~~ largely reflected higher ~~variable labor~~material and ~~burden, primarily~~ freight ~~and material~~ costs.

Construction Industries’ profit as a percent of total sales was ~~16.3~~17.3 percent in the ~~third~~first quarter of ~~2021,~~2022, compared with ~~14.4~~19.1 percent in the ~~third~~first quarter of ~~2020.~~2021.

Resource Industries

Resource Industries’ total sales were ~~$2.406~~$2.830 billion in the ~~third~~first quarter of ~~2021,~~2022, an increase of ~~$590~~$652 million, or 3230 percent, compared with ~~$1.816~~$2.178 billion in the ~~third~~first quarter of ~~2020.~~2021. The increase was primarily due to higher sales volume ~~driven by higher end-user demand for equipment and aftermarket parts, partially offset by the impacts of changes in dealer inventories.~~

~~Table of Contents~~

~~Dealers decreased inventories more during the third quarter of 2021 than during the third quarter of 2020. End-user demand was higher in both mining and heavy construction and quarry and aggregates.~~

Resource Industries’ profit was $297 million in the third quarter of 2021, an increase of $130 million, or 78 percent, compared with $167 million in the third quarter of 2020. The increase was mainly due to higher sales volume and favorable price ~~realization, partially offset by unfavorable manufacturing costs. Increased manufacturing costs reflected higher variable labor and burden, primarily freight, and material costs.~~

~~Resource Industries’ profit as a percent of total sales was 12.3 percent in the third quarter of 2021, compared with 9.2 percent in the third quarter of 2020.~~

~~Energy & Transportation~~

Sales by Application
(Millions of dollars) Third Quarter 2021 Third Quarter 2020 $
Change
%
Change
Oil and Gas $ 1,088 $ 734 $ 354 48 %
Power Generation 1,010 1,034 (24) (2 %)
Industrial 948 730 218 30 %
Transportation 1,095 977 118 12 %
External Sales 4,141 3,475 666 19 %
Inter-segment 936 686 250 36 %
Total Sales $ 5,077 $ 4,161 $ 916 22 %

Energy & Transportation’s total sales were $5.077 billion in the third quarter of 2021, an increase of $916 million, or 22 percent, compared with $4.161 billion in the third quarter of 2020. Sales increased across all applications and inter-segment sales except Power Generation, which decreased slightly.

•~~Oil and Gas – Sales increased for reciprocating engines aftermarket parts, primarily in North America, turbines and turbine-related services and reciprocating engines used in gas compression.~~

•Power Generation – Sales decreased slightly due to timing of turbines and turbine-related services. Reciprocating engines were about flat compared to the third quarter of 2020, with aftermarket parts slightly higher offset by slightly lower engine sales.

•~~Industrial – Sales were up due to higher demand across all regions.~~

•~~Transportation – Sales increased in rail services and marine.~~

Energy & Transportation’s profit was $696 million in the third quarter of 2021, an increase of $204 million, or 41 percent, compared with $492 million in the third quarter of 2020. The increase was due to higher sales volume, partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses. Increased manufacturing costs were mainly driven by higher variable labor and burden, primarily freight, period manufacturing costs and material, partially offset by the absence of inventory write-downs that occurred in the third quarter of 2020. In addition, segment profit was favorably impacted by other operating income/expense.

Both SG&A/R&D expenses and period manufacturing costs were driven by higher short-term incentive compensation expense and investments aligned with growth initiatives, including acquisition-related expenses.

~~Energy & Transportation’s profit as a percent of total sales was 13.7 percent in the third quarter of 2021, compared with 11.8 percent in the third quarter of 2020.~~

~~Financial Products Segment~~

~~Financial Products’ segment revenues were $762 million in the third quarter of 2021, an increase of $38 million, or 5 percent, from the third quarter of 2020.~~

Financial Products’ segment profit was $173 million in the third quarter of 2021, an increase of $31 million, or 22 percent, compared with $142 million in the third quarter of 2020. The increase was mainly due to a favorable impact from returned or repossessed equipment, lower provision for credit losses at Cat Financial and higher net yield on average ~~earning assets. These favorable impacts were partially offset by an increase in SG&A expenses primarily due to higher short-term incentive compensation expense.~~

~~Table of Contents~~

At the end of the third quarter of 2021, past dues at Cat Financial were 2.41 percent, compared with 3.81 percent at the end of the third quarter of 2020. Past dues decreased across all portfolio segments as global markets generally improved. Write-offs, net of recoveries, were $76 million for the third quarter of 2021, compared with $125 million for the third quarter of 2020. As of September 30, 2021, Cat Financial's allowance for credit losses totaled $378 million, or 1.41 percent of finance receivables, compared with $402 million, or 1.46 percent of finance receivables, at June 30, 2021. The allowance for credit losses at year-end 2020 was $479 million, or 1.77 percent of finance receivables.

~~Corporate Items and Eliminations~~

Expense for corporate items and eliminations was $293 million in the third quarter of 2021, a decrease of $68 million from the third quarter of 2020. Higher corporate costs were more than offset by lower restructuring costs, favorable impacts of segment methodology differences and a favorable change in fair value adjustments related to deferred compensation plans.

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~~NINE MONTHS ENDED SEPTEMBER 30, 2021 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2020~~

~~CONSOLIDATED SALES AND REVENUES~~

The chart above graphically illustrates reasons for the change in consolidated sales and revenues between the nine months ended September 30, 2020 (at left) and the nine months ended September 30, 2021 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s Board of Directors and employees.

Total sales and revenues were $37.173 billion for the nine months ended September 30, 2021, an increase of $6.660 billion, or 22 percent, compared with $30.513 billion for the nine months ended September 30, 2020. The increase was primarily due to higher sales volume driven by higher end-user demand for equipment and services and the impact from changes in dealer inventories. Dealers decreased inventories about $1.8 billion during the nine months ended September 30, 2020, compared with remaining about flat during the nine months ended September 30, 2021. Favorable currency impacts related to the euro, Australian dollar and Chinese yuan also contributed to the sales improvement, along with favorable price realization.

~~Sales were higher in the three primary segments and across all regions.~~

North America sales increased 21 percent driven by higher end-user demand for equipment and services and the impact from changes in dealer inventories. Dealers decreased inventories more during the nine months ended September 30, 2020, than during the nine months ended September 30, 2021.

Sales increased 57 percent in Latin America due to higher end-user demand for equipment and services and the impact from changes in dealer inventories. Dealers decreased inventories during the nine months ended September 30, 2020, compared with an increase during the nine months ended September 30, 2021.

EAME sales increased 24 percent due to higher end-user demand for equipment and services, the impact from changes in dealer inventories and favorable currency impacts related to a stronger euro and British pound. Dealers increased inventories more during the nine months ended September 30, 2021, than during the nine months ended September 30, 2020.

Asia/Pacific sales increased 17 percent driven by higher end-user demand for equipment and services, the impact from changes in dealer inventories and favorable currency impacts related to a stronger Australian dollar and Chinese yuan. Dealers decreased inventories more during the nine months ended September 30, 2020, than during the nine months ended September 30, 2021.

Dealers decreased inventories about $1.8 billion during the nine months ended September 30, 2020, compared with remaining about flat during the nine months ended September 30, 2021. Dealers are independent, and the reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rental rates and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers. We do not expect a significant dealer inventory increase in 2021.

~~Table of Contents~~

Sales and Revenues by Segment
(Millions of dollars) Nine Months Ended September 30, 2020 Sales
Volume Price
Realization Currency Inter-Segment / Other Nine Months Ended September 30, 2021 $
Change %
Change
Construction Industries $ 12,410 $ 3,134 $ 433 $ 346 $ 47 $ 16,370 $ 3,960 32 %
Resource Industries 5,726 1,366 (21) 121 9 7,201 1,475 26 %
Energy & Transportation 12,659 1,043 13 229 615 14,559 1,900 15 %
All Other Segment 330 23 (1) 4 21 377 47 14 %
Corporate Items and Eliminations (2,673) (52) 1 — (692) (3,416) (743)
Machinery, Energy & Transportation Sales 28,452 5,514 425 700 — 35,091 6,639 23 %
Financial Products Segment 2,301 — — — (4) 2,297 (4) — %
Corporate Items and Eliminations (240) — — — 25 (215) 25
Financial Products Revenues 2,061 — — — 21 2,082 21 1 %
Consolidated Sales and Revenues $ 30,513 $ 5,514 $ 425 $ 700 $ 21 $ 37,173 $ 6,660 22 %


~~Sales and Revenues by Geographic Region~~

North America Latin America EAME Asia/Pacific External Sales and Revenues Inter-Segment Total Sales and Revenues
(Millions of dollars) $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg $ % Chg
Nine Months Ended September 30, 2021
Construction Industries $ 7,041 29 % $ 1,350 91 % $ 3,612 38 % $ 4,302 20 % $ 16,305 32 % $ 65 261 % $ 16,370 32 %
Resource Industries 2,130 26 % 1,309 52 % 1,455 26 % 1,965 17 % 6,859 27 % 342 3 % 7,201 26 %
Energy & Transportation 5,698 11 % 835 25 % 3,433 11 % 1,953 13 % 11,919 12 % 2,640 30 % 14,559 15 %
All Other Segment 42 91 % 1 (75 %) 10 (41 %) 54 42 % 107 32 % 270 8 % 377 14 %
Corporate Items and Eliminations (89) (1) (1) (8) (99) (3,317) (3,416)
Machinery, Energy & Transportation Sales 14,822 21 % 3,494 57 % 8,509 24 % 8,266 17 % 35,091 23 % — — % 35,091 23 %
Financial Products Segment 1,442 (2 %) 195 1 % 301 1 % 359 4 % 2,297 1 — % — — % 2,297 — %
Corporate Items and Eliminations (99) (35) (26) (55) (215) — (215)
Financial Products Revenues 1,343 1 % 160 (1 %) 275 2 % 304 2 % 2,082 1 % — — % 2,082 1 %
Consolidated Sales and Revenues $ 16,165 19 % $ 3,654 53 % $ 8,784 23 % $ 8,570 17 % $ 37,173 22 % $ — — % $ 37,173 22 %
Nine Months Ended September 30, 2020
Construction Industries $ 5,470 $ 707 $ 2,618 $ 3,597 $ 12,392 $ 18 $ 12,410
Resource Industries 1,690 859 1,158 1,686 5,393 333 5,726
Energy & Transportation 5,138 667 3,095 1,734 10,634 2,025 12,659
All Other Segment 22 4 17 38 81 249 330
Corporate Items and Eliminations (35) (5) (4) (4) (48) (2,625) (2,673)
Machinery, Energy & Transportation Sales 12,285 2,232 6,884 7,051 28,452 — 28,452
Financial Products Segment 1,466 193 298 344 2,301 1 — 2,301
Corporate Items and Eliminations (134) (31) (28) (47) (240) — (240)
Financial Products Revenues 1,332 162 270 297 2,061 — 2,061
Consolidated Sales and Revenues $ 13,617 $ 2,394 $ 7,154 $ 7,348 $ 30,513 $ — $ 30,513

1 ~~Includes revenues from Machinery, Energy & Transportation of $263 million and $274 million in the nine months ended September 30, 2021 and 2020, respectively.~~

~~Table of Contents~~

~~CONSOLIDATED OPERATING PROFIT~~

The chart above graphically illustrates reasons for the change in consolidated operating profit between the nine months ended September 30, 2020 (at left) and the nine months ended September 30, 2021 (at right). Caterpillar management utilizes these charts internally to visually communicate with the company’s Board of Directors and employees. The bar titled Other includes consolidating adjustments and Machinery, Energy & Transportation’s other operating (income) expenses.

Operating profit for the nine months ended September 30, 2021, was $5.267 billion, an increase of $2.094 billion, or 66 percent, compared with $3.173 billion for the nine months ended September 30, 2020. The increase was due to higher sales volume, favorable price realization, lower restructuring expenses (included in other) and higher profit from Financial Products, partially offset by higher SG&A/R&D expenses and unfavorable manufacturing costs.

~~The increase in SG&A/R&D expenses was driven by higher short-term incentive compensation expense, which was reinstated in 2021.~~

Unfavorable manufacturing costs reflected increased period manufacturing costs primarily due to higher short-term incentive compensation expense and higher labor-related costs. Higher variable labor and burden, primarily freight, and higher material costs were mostly offset by favorable cost absorption and lower warranty expense. Cost absorption was favorable as inventory increased more during the nine months ended September 30, 2021, than during the nine months ended September 30, 2020.

Short-term incentive compensation expense, which was reinstated in 2021, was $1.1 billion for the nine months ended September 30, 2021, compared to no short-term incentive compensation expense recognized for the nine months ended September 30, 2020. For 2021, short-term incentive compensation expense is expected to be about $1.4 billion, compared to no short-term incentive compensation expense recognized in 2020. Short-term incentive compensation expense is directly related to financial and operational performance, measured against targets set annually.

~~Operating profit margin was 14.2 percent for the nine months ended September 30, 2021, compared with 10.4 percent for the nine months ended September 30, 2020.~~

Profit by Segment
(Millions of dollars) Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 $
Change
%
Change
Construction Industries $ 2,918 $ 1,743 $ 1,175 67 %
Resource Industries 986 623 363 58 %
Energy & Transportation 2,093 1,718 375 22 %
All Other Segment (2) 31 (33) n/a
Corporate Items and Eliminations (1,107) (1,100) (7)
Machinery, Energy & Transportation 4,888 3,015 1,873 62 %
Financial Products Segment 660 395 265 67 %
Corporate Items and Eliminations (55) (6) (49)
Financial Products 605 389 216 56 %
Consolidating Adjustments (226) (231) 5
Consolidated Operating Profit $ 5,267 $ 3,173 $ 2,094 66 %

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~~Other Profit/Loss and Tax Items~~

▪Interest expense excluding Financial Products for the nine months ended September 30, 2021, was $376 million, compared with $384 million for the nine months ended September 30, 2020. The decrease was due to lower average debt outstanding during the nine months ended September 30, 2021, compared with the nine months ended September 30, 2020.

▪Other income/expense for the nine months ended September 30, 2021, was income of $751 million, compared with income of $265 million for the nine months ended September 30, 2020. The change was primarily due to favorable impacts from foreign currency exchange gains (losses), favorable OPEB plan costs and favorable impacts from unrealized gains (losses) on marketable securities.

The company experienced foreign currency exchange net gains in the nine months ended September 30, 2021, compared with net losses in the nine months ended September 30, 2020. The favorable impact of unrealized gains (losses) on marketable securities was due to unrealized gains in the nine months ended September 30, 2021, compared with unrealized losses in the nine months ended September 30, 2020.

▪The provision for income taxes for the nine months ended September 30, 2021 reflected an estimated annual tax rate of 25 percent, compared with 31 percent for the nine months ended September 30, 2020, excluding the discrete items discussed in the following paragraph. The comparative tax rate for full-year 2020 was approximately 28 percent. The decrease in the estimated annual tax rate from full-year 2020 was primarily related to changes in the expected geographic mix of profits from a tax perspective for 2021.

In addition, we recorded a discrete tax benefit of $61 million for the nine months ended September 30, 2021, compared with $21 million for the nine months ended September 30, 2020, for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense. The company also recorded a discrete tax benefit of $36 million to reflect changes in estimates related to prior year U.S. taxes for the nine months ended September 30, 2021, compared to $80 million for the nine months ended September 30, 2020. Finally, we recorded a $10 million tax charge related to the $55 million of remeasurement net gain resulting from the settlements of pension obligations for the nine months ended September 30, 2020.

~~Construction Industries~~

Construction Industries’ total sales were $16.370 billion for the nine months ended September 30, 2021, an increase of $3.960 billion, or 32 percent, compared with $12.410 billion for the nine months ended September 30, 2020. The increase was due to higher sales volume, favorable price realization and favorable currency impacts related to the euro, Chinese yuan and Australian dollar. The increase in sales volume was driven by higher end-user demand for equipment and aftermarket parts and the impact from changes in dealer inventories. End-user demand was higher in heavy construction and quarry and aggregates as well as mining. Dealers ~~decreased~~increased inventories during the ~~nine months ended September 30, 2020,~~first quarter of 2022, compared ~~with an increase~~to remaining about flat during the ~~nine months ended September 30,~~first quarter of 2021.

•In North America, sales increased due to higher end-user demand, the impact from changes in dealer inventories and favorable price realization. Dealers decreased inventories more during the nine months ended September 30, 2020, than during the nine months ended September 30, 2021.

•Sales increased in Latin America primarily due to the impact from changes in dealer inventories and higher end-user demand. Dealers decreased inventories during the nine months ended September 30, 2020, compared with an increase during the nine months ended September 30, 2021.

•In EAME, sales increased due to higher end-user demand, the impact from changes in dealer inventories and favorable currency impacts from a stronger euro and British pound. Dealers increased inventories more during the nine months ended September 30, 2021, than during the nine months ended September 30, 2020.

•Sales increased in Asia/Pacific due to higher end-user demand for equipment and aftermarket parts, favorable currency impacts related to the Chinese yuan and Australian dollar and the impact from changes in dealer inventories. Dealers decreased inventories more during the nine months ended September 30, 2020, than during the nine months ended September 30, 2021.

~~Construction~~Resource Industries’ profit was ~~$2.918 billion for~~$361 million in the ~~nine months ended September 30, 2021,~~first quarter of 2022, an increase of ~~$1.175 billion,~~$49 million, or 6716 percent, compared with ~~$1.743 billion for~~$312 million in the ~~nine months ended September 30, 2020. The increase was mainly due to~~first quarter of 2021. Unfavorable manufacturing costs and higher SG&A/R&D expenses were more than offset by higher sales volume and favorable price ~~realization, partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses.~~

realization. Unfavorable manufacturing costs largely reflected higher ~~period manufacturing costs~~freight and ~~material. The increase in period manufacturing costs was driven by higher short-term incentive compensation expense and higher labor~~material costs. ~~Higher SG&A/R&D expenses were driven primarily by higher short-term incentive compensation expense, partially offset by other cost reductions.~~

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~~Construction Industries’ profit as a percent of total sales was 17.8 percent for the nine months ended September 30, 2021, compared with 14.0 percent for the nine months ended September 30, 2020.~~

~~Resource Industries~~

Resource Industries’ total sales were $7.201 billion for the nine months ended September 30, 2021, an increase of $1.475 billion, or 26 percent, compared with $5.726 billion for the nine months ended September 30, 2020. The increase was due to higher sales volume driven by higher end-user demand for equipment and aftermarket parts and the impact from changes in dealer inventories. Dealers decreased inventories more during the nine months ended September 30, 2020, than during the nine months ended September 30, 2021. End-user demand was higher in mining, as well as heavy construction and quarry and aggregates.

Resource Industries’ profit was $986 million for the nine months ended September 30, 2021, an increase of $363 million, or 58 percent, compared with $623 million for the nine months ended September 30, 2020. The increase was mainly due to higher sales volume, partially offset by higher SG&A/R&D expenses. The increase in SG&A/R&D expenses was driven by ~~higher short-term incentive compensation expense.~~investments aligned with growth initiatives.

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Resource Industries’ profit as a percent of total sales was ~~13.7~~12.8 percent ~~for~~in the ~~nine months ended September 30, 2021,~~first quarter of 2022, compared with ~~10.9~~14.3 percent ~~for~~in the ~~nine months ended September 30, 2020.~~first quarter of 2021.

Energy & Transportation


Sales by Application	Sales by Application									Sales by Application
(Millions of dollars)	(Millions of dollars)	Nine Months Ended September 30, 2021		Nine Months Ended September 30, 2020		$ Change		% Change		(Millions of dollars)	First Quarter 2022		First Quarter 2021		$ Change		% Change
Oil and Gas	Oil and Gas	$	3,140	$	2,622	$	518	20	%	Oil and Gas	$	948	$	915	$	33	4	%
Power Generation	Power Generation	3,025		2,783		242		9	%	Power Generation	1,012		963		49		5	%
Industrial	Industrial	2,660		2,209		451		20	%	Industrial	1,020		813		207		25	%
Transportation	Transportation	3,094		3,020		74		2	%	Transportation	1,052		967		85		9	%
External Sales	External Sales	11,919		10,634		1,285		12	%	External Sales	4,032		3,658		374		10	%
Inter-Segment		2,640		2,025		615		30	%
Inter-segment										Inter-segment	1,006		849		157		18	%
Total Sales	Total Sales	$	14,559	$	12,659	$	1,900	15	%	Total Sales	$	5,038	$	4,507	$	531	12	%

Energy & Transportation’s total sales were ~~$14.559~~$5.038 billion ~~for~~in the ~~nine months ended September 30, 2021,~~first quarter of 2022, an increase of ~~$1.900 billion,~~$531 million, or 1512 percent, compared with ~~$12.659~~$4.507 billion ~~for~~in the ~~nine months ended September 30, 2020.~~first quarter of 2021. Sales increased across all ~~applications.~~applications and inter-segment sales.

•Oil and Gas – Sales increased ~~mainly due to higher sales of~~for reciprocating ~~engine~~engines, primarily aftermarket parts, ~~in all regions as well as higher~~partially offset by lower sales infor turbines and ~~turbine related~~turbine-related services.

•Power Generation – Sales ~~increased~~rose due to higher sales volume in ~~large~~small reciprocating ~~engines, primarily datacenters,~~engine applications, partially offset by lower sales in turbines and ~~aftermarket parts. Sales also increased due to favorable currency impacts.~~turbine-related services.

•Industrial – Sales were up due to higher demand across all regions.

•Transportation – Sales increased ~~slightly due to favorable currency impacts~~in reciprocating engines, primarily aftermarket parts and ~~marine. The increase was partially offset by lower sales of locomotives and related services.~~marine applications.

Energy & Transportation’s profit was ~~$2.093 billion for~~$538 million in the ~~nine months ended September 30, 2021, an increase~~first quarter of ~~$375~~2022, a decrease of $137 million, or 2220 percent, compared with ~~$1.718 billion for~~$675 million in the ~~nine months ended September 30, 2020.~~first quarter of 2021. The ~~increase~~decrease was mainly due to unfavorable manufacturing costs and higher ~~sales volume,~~SG&A/R&D expenses, partially offset by higher sales volume and favorable price realization. Unfavorable manufacturing costs largely reflected higher freight and material costs. The increase in SG&A/R&D expenses ~~and unfavorable manufacturing costs. Increased manufacturing costs were mainly~~was driven by higher period manufacturing costs and higher variable labor and burden, primarily freight, partially offset by the absence of inventory write-downs that occurred in the third quarter of 2020. In addition, segment profit was favorably impacted by other operating income/expense.

~~The increase in both SG&A/R&D expenses and period manufacturing costs was primarily due to higher short-term incentive compensation expense and acquisition-related expenses.~~investments aligned with growth initiatives.

Energy & Transportation’s profit as a percent of total sales was ~~14.4~~10.7 percent ~~for~~in the ~~nine months ended September 30, 2021,~~first quarter of 2022, compared with ~~13.6~~15.0 percent ~~for~~in the ~~nine months ended September 30, 2020.~~

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2021.

Financial Products Segment

Financial Products’ segment revenues were ~~$2.297 billion for~~$783 million in the ~~nine months ended September 30, 2021, a decrease~~first quarter of ~~$4 million from the nine months ended September 30, 2020.~~

~~Financial Products’ segment profit was $660 million for the nine months ended September 30, 2021,~~2022, an increase of ~~$265~~$22 million, or 673 percent, ~~compared with $395 million for~~from the ~~nine months ended September 30, 2020.~~first quarter of 2021. The increase was ~~primarily due to lower provision for credit losses at Cat Financial, a favorable impact from equity securities~~mostly in ~~Insurance Services,~~North America, driven by a favorable impact from returned or repossessed equipment and higher ~~net yield on~~ average earning ~~assets. These favorable impacts were~~assets, partially offset by lower average financing rates.

Financial Products’ segment profit was $238 million in the first quarter of 2022, a decrease of $6 million, or 2 percent, compared with $244 million in the first quarter of 2021. The decrease was mainly due to higher provision for credit losses at Cat Financial and an increase in SG&A expenses, ~~primarily due to~~partially offset by a favorable impact from returned or repossessed equipment. The impact of lower average financing rates was mostly offset by lower interest expense.

At the end of the first quarter of 2022, past dues at Cat Financial were 2.05 percent, compared with 2.90 percent at the end of the first quarter of 2021. The decrease in past dues was mostly driven by the North America, Caterpillar Power Finance and EAME portfolios. Write-offs, net of recoveries, were $8 million for the first quarter of 2022, compared with $24 million for the first quarter of 2021. As of March 31, 2022, Cat Financial's allowance for credit losses totaled $357 million, or 1.29 percent of finance receivables, compared with $337 million, or 1.22 percent of finance receivables at December 31, 2021. The increase in allowance for credit losses included a higher ~~short-term incentive compensation expense.~~reserve for the Russia and Ukraine portfolios.

Corporate Items and Eliminations

Expense for corporate items and eliminations was ~~$1.162 billion~~$261 million in the ~~nine months ended September 30, 2021, an increase~~first quarter of ~~$56~~2022, a decrease of $126 million from the ~~nine months ended September 30, 2020. Favorable~~first quarter of 2021, primarily due to favorable impacts of segment reporting methodology differences and ~~lower restructuring costs were more than offset by higher corporate costs, higher expenses due to timing differences and an unfavorable~~a favorable change in fair value adjustments related to deferred compensation plans.

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RESTRUCTURING COSTS

WeIn 2022, we expect to incur ~~from $150 million to $200~~about $600 million of restructuring costs ~~in 2021.~~primarily related to strategic actions to address a small number of products. We expect that prior restructuring actions will result in an incremental benefit to operating costs, primarily Cost of goods sold and SG&A expenses of about ~~$200~~$75 million in ~~2021~~2022 compared with ~~2020.~~2021.

Additional information related to restructuring costs is included in Note 20 - "Restructuring Costs" of Part I, Item 1 "Financial Statements".

GLOSSARY OF TERMS

1.Adjusted Operating Profit Margin – Operating profit excluding restructuring costs as a percent of sales and revenues.

2.Adjusted Profit Per Share – Profit per share excluding ~~remeasurement gains/losses resulting from the settlements of pension obligations in 2020 and~~ restructuring costs.

3.All Other 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® 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.

4.Consolidating Adjustments– Elimination of transactions between Machinery, Energy & Transportation and Financial Products.

5.Construction Industries– A segment primarily responsible for supporting customers using machinery in infrastructure and building construction applications. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes asphalt pavers; backhoe loaders; compactors; cold planers; compact track and multi-terrain loaders; mini, small, medium and large track excavators; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; small and medium track-type tractors; track-type loaders; ~~utility vehicles;~~ wheel excavators; compact, small and medium wheel loaders; and related parts and work tools.

6.Corporate Items and Eliminations– Includes corporate-level expenses, timing differences (as some expenses are reported in segment profit on a cash basis), methodology differences between segment and consolidated external reporting, certain restructuring costs and inter-segment eliminations.

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7.Currency– With respect to sales and revenues, currency represents the translation impact on sales resulting from changes in foreign currency exchange rates versus the U.S. dollar. With respect to operating profit, currency represents the net translation impact on sales and operating costs resulting from changes in foreign currency exchange rates versus the U.S. dollar. Currency only includes the impact on sales and operating profit for the Machinery, Energy & Transportation ~~lines~~line of business; currency impacts on Financial Products revenues and operating profit are included in the Financial Products portions of the respective analyses. With respect to other income/expense, currency represents the effects of forward and option contracts entered into by the company to reduce the risk of fluctuations in exchange rates (hedging) and the net effect of changes in foreign currency exchange rates on our foreign currency assets and liabilities for consolidated results (translation).

8.Dealer Inventories– Represents dealer machine and engine inventories, excluding aftermarket parts.

9.EAME– A geographic region including Europe, Africa, the Middle East and the Commonwealth of Independent States (CIS).

10.Earning Assets– Assets consisting primarily of total finance receivables net of unearned income, plus equipment on operating leases, less accumulated depreciation at Cat Financial.

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11.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, development and ~~development,~~testing 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 and solutions used in the electric power generation industry; reciprocating engines, drivetrain and integrated systems and solutions for the marine and oil and gas industries; reciprocating engines, drivetrain and integrated systems and solutions 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.

12.Financial Products – The company defines Financial Products as our finance and insurance subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance Services). Financial Products’ information relates to the financing to customers and dealers for the purchase and lease of Caterpillar and other equipment.

13.Financial Products Segment – Provides financing alternatives to customers and dealers around the world for Caterpillar products and services, 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 Machinery, Energy & Transportation, 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.

14.Latin America– A geographic region including Central and South American countries and Mexico.

15.Machinery, Energy & Transportation (ME&T)– The company defines ME&T as Caterpillar Inc. and its subsidiaries, excluding Financial Products. ME&T’s information relates to the design, manufacturing and marketing of its products.

16.Machinery, Energy & Transportation Other Operating (Income) Expenses– Comprised primarily of gains/losses on disposal of long-lived assets, gains/losses on divestitures and legal settlements and accruals.

17.Manufacturing Costs– Manufacturing costs exclude the impacts of currency and represent the volume-adjusted change for variable costs and the absolute dollar change for period manufacturing costs. Variable manufacturing costs are defined as having a direct relationship with the volume of production. This includes material costs, direct labor and other costs that vary directly with production volume, such as freight, power to operate machines and supplies that are consumed in the manufacturing process. Period manufacturing costs support production but are defined as generally not having a direct relationship to short-term changes in volume. Examples include machinery and equipment repair, depreciation on manufacturing assets, facility support, procurement, factory scheduling, manufacturing planning and operations management.

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18.Mark-to-market gains/losses– Represents the net gain or loss of actual results differing from the company’s assumptions and the effects of changing assumptions for our defined benefit pension and OPEB plans. These gains and losses are immediately recognized through earnings upon the annual remeasurement in the fourth quarter, or on an interim basis as triggering events warrant remeasurement.

19.Pension and Other Postemployment ~~Benefit~~Benefits (OPEB)– The company’s defined-benefit pension and postretirement benefit plans.

20.Price Realization– The impact of net price changes excluding currency and new product introductions. Price realization includes geographic mix of sales, which is the impact of changes in the relative weighting of sales prices between geographic regions.

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21.Resource Industries– A segment primarily responsible for supporting customers using machinery in mining, heavy construction and quarry and aggregates. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support. The product portfolio includes large track-type tractors; large mining trucks; hard rock vehicles; longwall miners; electric rope shovels; draglines; hydraulic shovels; rotary drills; large wheel loaders; off-highway trucks; articulated trucks; wheel tractor scrapers; wheel dozers; landfill compactors; soil compactors; select work tools; machinery components; electronics and control systems and related parts. In addition to equipment, Resource Industries also develops and sells technology products and services to provide customers fleet management, equipment management analytics, autonomous machine capabilities, safety services and mining performance solutions. Resource Industries also manages areas that provide services to other parts of the company, including strategic procurement, lean center of excellence, integrated manufacturing, research and development for ~~drivetrains,~~ hydraulic systems, automation, electronics and software for Cat machines and engines.

22.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.

23.Sales Volume – With respect to sales and revenues, sales volume represents the impact of changes in the quantities sold for Machinery, Energy & Transportation as well as the incremental sales impact of new product introductions, including emissions-related product updates. With respect to operating profit, sales volume represents the impact of changes in the quantities sold for Machinery, Energy & Transportation combined with product mix as well as the net operating profit impact of new product introductions, including emissions-related product updates. Product mix represents the net operating profit impact of changes in the relative weighting of Machinery, Energy & Transportation sales with respect to total sales. The impact of sales volume on segment profit includes inter-segment sales.

24.Services – Enterprise services include, but are not limited to, aftermarket parts, Financial Products revenues and other service-related revenues. Machinery, Energy & Transportation segments exclude most Financial Products revenues.

LIQUIDITY AND CAPITAL RESOURCES

Sources of funds

We generate significant capital resources from operating activities, which are the primary source of funding for our ME&T operations. Funding for these businesses is also available from commercial paper and long-term debt issuances. Financial Products’ operations are funded primarily from commercial paper, term debt issuances and collections from its existing portfolio. WeOn a consolidated basis, we had positive operating cash flow in the first ~~nine~~three months of ~~2021 within both our ME&T~~2022 and ~~Financial Products' operations. On a consolidated basis, we~~ ended the first ~~nine months of 2021~~quarter with ~~$9.45~~$6.53 billion of cash, ~~an increase~~a decrease of ~~$94 million~~$2.72 billion from year-end ~~2020.~~2021. In addition, ME&T has invested in available-for-sale debt securities and bank time deposits with varying maturity dates within one year that are considered highly liquid and are available for current operations. These securities are included in Prepaid expenses and other current assets and Other assets in the Consolidated Statement of Financial Position and were $1.73 billion at the end of March 31, 2022. We intend to maintain a strong cash and liquidity position.

Consolidated operating cash flow for the first ~~nine~~three months of ~~2021~~2022 was ~~$5.79 billion, up $1.53~~$313 million, down $1.62 billion compared to the same period ~~last year.~~a year ago. The ~~increase~~decrease was primarily due to ~~higher profit before taxes adjusted for non-cash items, including higher accruals for short-term incentive compensation. In addition, lower~~ payments for short-term incentive compensation ~~favorably impacted cash flow. Partially offsetting these items~~in the first quarter of 2022. In addition, there were increased working capital requirements during the first ~~nine~~three months of ~~2021~~2022 compared to the same period last year. Within working capital, changes in inventory, accounts payable and ~~accounts receivable~~accrued expenses unfavorably impacted cash flow but were partially offset by favorable changes in customer advances and accounts ~~payable and accrued expenses.~~

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receivable.

Total debt as of ~~September 30, 2021~~March 31, 2022 was ~~$36.78~~$37.58 billion, a decrease of ~~$379~~$205 million from year-end ~~2020.~~2021. Debt related to ME&T decreased ~~$1.37 billion~~$35 million in the first ~~nine~~three months of 2021 due to the repayment of debt. In addition, during the first quarter of 2021, we issued $500 million of ten-year bonds at 1.9 percent and utilized the net proceeds to redeem all of our $500 million 2.6 percent notes due in 2022. Debt2022 while debt related to Financial Products ~~increased $993 million, primarily due to an increase in commercial paper due to short term funding needs.~~

decreased $168 million.

As of ~~September 30, 2021,~~March 31, 2022, we had three global credit facilities with a syndicate of banks totaling $10.50 billion (Credit Facility) available in the aggregate to both Caterpillar and Cat Financial for general liquidity purposes. Based on management’s allocation decision, which can be revised from time to time, the portion of the Credit Facility available to ME&T as of ~~September 30, 2021~~March 31, 2022 was $2.75 billion. Information on our Credit Facility is as follows:

•~~In September 2021, we entered into a new 364-day facility.~~ The 364-day facility of $3.15 billion (of which ~~$824~~$825 million is available to ME&T) expires inon September 1, 2022.

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•~~In September 2021, we~~The three-year facility, as amended and restated ~~the three-year facility (as amended and restated, the "three-year facility"). The three-year facility~~in September 2021, of $2.73 billion (of which $715 million is available to ME&T) expires in September 2024.

•~~In September 2021, we~~The five-year facility, as amended and restated ~~the five-year facility (as amended and restated, the "five-year facility"). The five-year facility~~in September 2021, of $4.62 billion (of which $1.21 billion is available to ME&T) expires in September 2026.

At ~~September 30, 2021,~~March 31, 2022, Caterpillar’s consolidated net worth was ~~$16.75~~$17.16 billion, which was above the $9.00 billion required under the Credit Facility. The consolidated net worth is defined in the Credit Facility as the consolidated shareholders’ equity including preferred stock but excluding the pension and other postretirement benefits balance within Accumulated other comprehensive income (loss).

At ~~September 30, 2021,~~March 31, 2022, Cat Financial’s covenant interest coverage ratio was ~~2.31~~2.56 to 1. This was above the 1.15 to 1 minimum ratio calculated as (1) profit excluding income taxes, interest expense and net gain (loss) from interest rate derivatives to (2) interest expense calculated at the end of each calendar quarter for the rolling four quarter period then most recently ended, required by the Credit Facility.

In addition, at ~~September 30, 2021,~~March 31, 2022, Cat Financial’s six-month covenant leverage ratio was ~~7.06~~7.53 to 1. This was below the maximum ratio of debt to net worth of 10 to 1, calculated (1) on a monthly basis as the average of the leverage ratios determined on the last day of each of the six preceding calendar months and (2) at each December 31, required by the Credit Facility.

In the event Caterpillar or Cat Financial does not meet one or more of their respective financial covenants under the Credit Facility in the future (and are unable to obtain a consent or waiver), the syndicate of banks may terminate the commitments allocated to the party that does not meet its covenants. Additionally, in such event, certain of Cat Financial’s other lenders under other loan agreements where similar financial covenants or cross default provisions are applicable may, at their election, choose to pursue remedies under those loan agreements, including accelerating the repayment of outstanding borrowings. At ~~September 30, 2021,~~March 31, 2022, there were no borrowings under the Credit Facility.

Our total credit commitments and available credit as of ~~September 30, 2021~~March 31, 2022 were:


		September 30, 2021							March 31, 2022
(Millions of dollars)	(Millions of dollars)	Consolidated		Machinery, Energy & Transportation		Financial Products		(Millions of dollars)	Consolidated		Machinery, Energy & Transportation		Financial Products
Credit lines available:	Credit lines available:							Credit lines available:
Global credit facilities	Global credit facilities	$	10,500	$	2,750	$	7,750	Global credit facilities	$	10,500	$	2,750	$	7,750
Other external	Other external	3,278		184		3,094		Other external	3,376		182		3,194
Total credit lines available	Total credit lines available	13,778		2,934		10,844		Total credit lines available	13,876		2,932		10,944
Less: Commercial paper outstanding	Less: Commercial paper outstanding	(2,619)		—		(2,619)		Less: Commercial paper outstanding	(4,044)		—		(4,044)
Less: Utilized credit	Less: Utilized credit	(669)		—		(669)		Less: Utilized credit	(666)		—		(666)
Available credit	Available credit	$	10,490	$	2,934	$	7,556	Available credit	$	9,166	$	2,932	$	6,234

The other external consolidated credit lines with banks as of ~~September 30, 2021~~March 31, 2022 totaled ~~$3.28~~$3.38 billion. These committed and uncommitted credit lines, which may be eligible for renewal at various future dates or have no specified expiration date, are used primarily by our subsidiaries for local funding requirements. Caterpillar or Cat Financial may guarantee subsidiary borrowings under these lines.

~~Table of Contents~~

We receive debt ratings from the major credit rating agencies. Moody’s, Fitch and S&P maintain a “mid-A” debt rating. A downgrade of our credit ratings by any of the major credit rating agencies would result in increased borrowing costs and could make access to certain credit markets more difficult. In the event economic conditions deteriorate such that access to debt markets becomes unavailable, ME&T’s operations would rely on cash flow from operations, use of existing cash balances, borrowings from Cat Financial and access to our committed credit facilities. Our Financial Products’ operations would rely on cash flow from its existing portfolio, existing cash balances, access to our committed credit facilities and other credit line facilities of Cat Financial, and potential borrowings from Caterpillar. In addition, we maintain a support agreement with Cat Financial, which requires Caterpillar to remain the sole owner of Cat Financial and may, under certain circumstances, require Caterpillar to make payments to Cat Financial should Cat Financial fail to maintain certain financial ratios.

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We facilitate voluntary supply chain finance programs (the “Programs”) through participating financial institutions. The Programs are available to a wide range of suppliers and allows them the option to manage their cash flow. We are not a party to the agreements between the participating financial institutions and the suppliers in connection with the Programs. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the Programs. The amounts payable to participating financial institutions for suppliers who voluntarily participate in the Programs and included in ~~Accounts~~accounts payable in the Consolidated Statement of Financial Position were ~~$725~~$942 million and ~~$533~~$822 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The amounts settled through the Programs and paid to participating financial institutions were ~~$2.9~~$1.2 billion and ~~$2.4 billion~~$845 million during the first ~~nine~~three months of ~~2021~~2022 and ~~2020,~~2021, respectively. We account for payments made under the Programs, the same as our other ~~Accounts~~accounts payable, as a reduction to our cash flows from operations. We do not believe that changes in the availability of supply chain financing will have a significant impact on our liquidity.

Machinery, Energy & Transportation

Net cash ~~provided~~used by operating activities was ~~$4.90 billion~~$78 million in the first ~~nine~~three months of ~~2021,~~2022, compared with ~~$2.07~~net cash provided of $1.92 billion for the same period in ~~2020.~~2021. The ~~increase~~decrease was primarily due to ~~higher profit before taxes adjusted for non-cash items, including higher accruals for short-term incentive compensation. In addition, lower~~ payments for short-term incentive compensation ~~favorably impacted cash flow. Partially offsetting these items~~in the first quarter of 2022. In addition, there were increased working capital requirements during the first ~~nine~~three months of ~~2021~~2022 compared to the same period last year. Within working capital, changes in inventory, ~~and~~accounts payable, accounts receivable and accrued expenses unfavorably impacted cash flow but were partially offset by favorable changes in ~~accounts payable and accrued expenses.~~customer advances.

Net cash used by investing activities in the first ~~nine~~three months of ~~2021~~2022 was ~~$487 million,~~$1.09 billion, compared with net cash ~~used~~provided of ~~$66~~$427 million in the first ~~nine~~three months of ~~2020.~~2021. The change was primarily due to ~~increased investment activity mostly offset by increased~~decreased activity related to intercompany lending with Financial ~~Products.~~Products and increases in investment activity. During ~~2021,~~the first quarter of 2022, we ~~invested $543~~had net investment activity of $796 million which included $944 million of investments in ~~bank~~debt securities and proceeds related to maturing time deposits ~~with varying maturity dates within one year. We also acquired the Oil & Gas division~~ of ~~the Weir Group PLC for $361 million, net of cash acquired, in February 2021.~~$150 million.

Net cash used for financing activities during the first ~~nine~~three months of ~~2021~~2022 was ~~$4.67~~$1.57 billion, compared with net cash used of ~~$742~~$659 million in the same period of ~~2020.~~2021. The change was primarily due to the ~~repayment~~repurchase of ~~debt and lower proceeds from debt issuances. In addition, during the first nine months of 2021, we repurchased $1.62 billion~~$820 million of Caterpillar common stock ~~compared with $1.13 billion~~ during the ~~same period a year ago.~~first three months of 2022.

While our short-term priorities for the use of cash may vary from time to time as business needs and conditions dictate, our long-term cash deployment strategy is focused on the following priorities. Our top priority is to maintain a strong financial position in support of a mid-A rating. Next, we intend to fund operational requirements and commitments. Then, we intend to fund priorities that profitably grow the company and return capital to shareholders through dividend growth and share repurchases. Additional information on cash deployment is as follows:

Strong financial position – Our top priority is to maintain a strong financial position in support of a mid-A rating. We track a diverse group of financial metrics that focus on liquidity, leverage, cash flow and margins which align with our cash deployment actions and the various methodologies used by the major credit rating agencies.

Operational excellence and commitments – Capital expenditures were ~~$693~~$348 million during the first ~~nine~~three months of ~~2021,~~2022, compared to ~~$685~~$255 million for the same period in ~~2020.~~2021. We expect ME&T’s capital expenditures in ~~2021~~2022 to be about ~~$1.0 billion to $1.1~~$1.5 billion. We made ~~$229~~$210 million of contributions to our pension and other postretirement benefit plans during the first ~~nine~~three months of ~~2021.~~2022. We currently anticipate full-year ~~2021~~2022 contributions of approximately ~~$310~~$357 million. In comparison, we made ~~$217~~$106 million of contributions to our pension and other postretirement benefit plans during the first ~~nine~~three months of ~~2020.~~2021.

Fund strategic growth initiatives and return capital to shareholders – We intend to utilize our liquidity and debt capacity to fund targeted investments that drive long-term profitable growth focused in the areas of expanded offerings and services, including acquisitions.

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As part of our capital allocation strategy, ME&T free cash flow is a liquidity measure we use to determine the cash generated and available for financing activities including debt repayments, dividends and share repurchases. We define ME&T free cash flow as cash from ME&T operations excluding discretionary pension and other postretirement benefit plan contributions less capital expenditures. A goal of our capital allocation strategy is to return substantially all ME&T free cash flow to shareholders ~~through the cycles~~over time in the form of dividends and share repurchases, while maintaining our mid-A rating.

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Our share repurchase plans are subject to the company’s cash deployment priorities and are evaluated on an ongoing basis considering the financial condition of the company and the economic outlook, corporate cash flow, the company’s liquidity needs, and the health and stability of global credit markets. The timing and amount of future repurchases may vary depending on market conditions and investing priorities. In July 2018, the Board of Directors approved an authorization to repurchase up to $10 billion of Caterpillar common stock (the 2018 Authorization) effective January 1, 2019, with no expiration. In the ~~second quarter of 2021, we resumed our share repurchase program under the 2018 Authorization. In the~~ first ~~nine~~three months of ~~2021,~~2022, we repurchased ~~$1.62~~$0.82 billion of Caterpillar common stock, with ~~$3.1~~$1.37 billion remaining under the 2018 Authorization as of ~~September 30, 2021.~~March 31, 2022. Our basic shares outstanding as of ~~September 30, 2021~~March 31, 2022 were approximately ~~541~~533 million.

Each quarter, our Board of Directors reviews the company’s dividend for the applicable quarter. The Board evaluates the financial condition of the company and considers the economic outlook, corporate cash flow, the company’s liquidity needs, and the health and stability of global credit markets to determine whether to maintain or change the quarterly dividend. In ~~October 2021,~~April 2022, the Board of Directors approved maintaining our quarterly dividend at $1.11 per share and we continue to expect our strong financial position to support the dividend. Dividends paid totaled ~~$1.73 billion~~$595 million in the first ~~nine~~three months of ~~2021.~~2022.

Financial Products

Financial Products operating cash flow was ~~$1.10 billion~~$393 million in the first ~~nine~~three months of ~~2021,~~2022, compared with ~~$1.04 billion~~$369 million for the same period a year ago. Net cash used for investing activities was ~~$468~~$221 million for the first ~~nine~~three months of ~~2021,~~2022, compared with net cash ~~provided~~used of ~~$885~~$261 million for the same period in ~~2020.~~2021. The change was primarily due to portfolio related activity. Net cash used for financing activities was ~~$289~~$142 million for the first ~~nine~~three months of ~~2021~~2022 compared with ~~$2.10 billion~~net cash provided of $205 million for the same period in ~~2020.~~2021. The change was primarily due to ~~higher~~lower portfolio funding ~~requirements.~~requirements related to net intercompany purchased receivables.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements, see Part I, Item 1. Note 2 - “New accounting guidance”.

CRITICAL ACCOUNTING ESTIMATES

For a discussion of the company’s critical accounting estimates, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2020~~2021 Annual Report on Form 10-K. There have been no significant changes to our critical accounting estimates since our ~~2020~~2021 Annual Report on Form 10-K.

OTHER MATTERS

Information related to legal proceedings appears in Note 14—Environmental and Legal Matters of Part II, Item 8 “Financial Statements and Supplementary Data.”

~~Retirement Benefits~~

~~We recognize mark-to-market gains and losses immediately through earnings upon the remeasurement of our pension and OPEB plans.~~ ~~Mark-to-market gains and losses~~ represent the effects of actual results differing from our assumptions and the effects of changing assumptions. We will record the annual mark-to-market adjustment as of the measurement date, December 31, 2021. The discount rates for our U.S. pension plans were 2.8 percent and 2.4 percent as of September 30, 2021 and December 31, 2020, respectively. Asset returns as of September 30, 2021 for our U.S. pension plans were 1.5 percent compared to an expected return on plan assets for 2021 of 4.2 percent. It is difficult to predict the December 31, 2021 adjustment amount, as it is dependent on several factors including discount rate, actual returns on plan assets and other actuarial assumptions.

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Order Backlog

At the end of the ~~third~~first quarter of ~~2021,~~2022, the dollar amount of backlog believed to be firm was approximately ~~$20.6~~$26.5 billion, about ~~$2.2~~$3.4 billion higher than the ~~second~~fourth quarter of 2021. The order backlog increased across the three primary segments, with the largest increase in ~~Resource Industries.~~Energy & Transportation. Of the total backlog at ~~September 30, 2021,~~March 31, 2022, approximately ~~$3.9~~$4.5 billion was not expected to be filled in the following twelve months.

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NON-GAAP FINANCIAL MEASURES

We provide the following definitions for the non-GAAP financial measures used in this report. These non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP and therefore are unlikely to be comparable to the calculation of similar measures for other companies. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measures.

We believe it is important to separately quantify the profit impact of ~~two~~one significant ~~items~~item in order for our results to be meaningful to our readers. ~~These items consist~~This item consists of (i) restructuring costs, which were incurred to generate longer-term ~~benefits and (ii) remeasurement (gains) losses resulting from the settlements of pension obligations in 2020.~~benefits. We do not consider ~~these items~~this item indicative of earnings from ongoing business activities and believe the non-GAAP measure provides investors with useful perspective on underlying business results and trends and aids with assessing our period-over-period results. In addition, we provide a calculation of ME&T free cash flow as we believe it is an important measure for investors to determine the cash generation available for financing activities including debt repayments, dividends and share repurchases.

Reconciliations of adjusted results to the most directly comparable GAAP measures are as follows:

(Dollars in millions except per share data) Operating Profit Operating Profit Margin Profit Before Taxes Provision (Benefit) for Income Taxes Effective Tax Rate Profit Profit per Share
Three Months Ended September 30, 2021 - U.S. GAAP $ 1,664 13.4 % $ 1,775 $ 368 20.7 % $ 1,426 $ 2.60
Restructuring costs 35 0.3 % 35 6 15.0 % 29 $ 0.06
Three Months Ended September 30, 2021 - Adjusted $ 1,699 13.7 % $ 1,810 $ 374 20.7 % $ 1,455 $ 2.66
Three Months Ended September 30, 2020 - U.S. GAAP $ 985 10.0 % $ 863 $ 187 21.7 % $ 668 $ 1.22
Restructuring costs 112 1.1 % 112 13 12.0 % 99 $ 0.18
Remeasurement (gains) losses of pension obligations — — % 77 12 15.6 % 65 $ 0.12
Three Months Ended September 30, 2020 - Adjusted $ 1,097 11.1 % $ 1,052 $ 212 20.2 % $ 832 $ 1.52
Nine Months Ended September 30, 2021 - U.S. GAAP $ 5,267 14.2 % $ 5,642 $ 1,313 23.3 % $ 4,369 $ 7.94
Restructuring costs 124 0.3 % 124 19 15.0 % 105 $ 0.19
Nine Months Ended September 30, 2021 - Adjusted $ 5,391 14.5 % $ 5,766 $ 1,332 23.1 % $ 4,474 $ 8.13
Nine Months Ended September 30, 2020 - U.S. GAAP $ 3,173 10.4 % $ 3,054 $ 839 27.5 % $ 2,218 $ 4.05
Restructuring costs 296 1.0 % 296 35 12.0 % 261 $ 0.48
Remeasurement (gains) losses of pension obligations — — % (55) (10) 18.2 % (45) $ (0.08)
Nine Months Ended September 30, 2020 - Adjusted $ 3,469 11.4 % $ 3,295 $ 864 26.2 % $ 2,434 $ 4.44


(Dollars in millions except per share data)	Operating Profit		Operating Profit Margin		Profit Before Taxes		Provision (Benefit) for Income Taxes		Effective Tax Rate		Profit		Profit per Share

Three Months Ended March 31, 2022 - U.S. GAAP	$	1,855	13.7	%	$	1,999	$	469	23.4	%	$	1,537	$	2.86
Restructuring costs	13		0.1	%	13		2		13.0	%	11		$	0.02
Three Months Ended March 31, 2022 - Adjusted	$	1,868	13.7	%	$	2,012	$	471	23.4	%	$	1,548	$	2.88

Three Months Ended March 31, 2021 - U.S. GAAP	$	1,814	15.3	%	$	1,997	$	475	23.8	%	$	1,530	$	2.77
Restructuring costs	64		0.5	%	64		10		15.0	%	54		$	0.10

Three Months Ended March 31, 2021 - Adjusted	$	1,878	15.8	%	$	2,061	$	485	23.5	%	$	1,584	$	2.87

Reconciliations of ME&T free cash flow to the most directly comparable GAAP measure, net cash provided by operating activities are as follows:


(Millions of dollars)	(Millions of dollars)	Nine Months Ended September 30			(Millions of dollars)			Three Months Ended March 31
			2021			2020				2022		2021
ME&T net cash provided by operating activities 1	ME&T net cash provided by operating activities 1		$	4,899		$	2,065		ME&T net cash provided by operating activities 1	$	(78)	$	1,916

ME&T capital expenditures	ME&T capital expenditures		$	(693)		$	(685)		ME&T capital expenditures	(348)		(255)
ME&T free cash flow	ME&T free cash flow		$	4,206		$	1,380		ME&T free cash flow	$	(426)	$	1,661
1 See reconciliation of ME&T net cash provided by operating activities to consolidated net cash provided by operating activities on pages 77 - 78.
1 See reconciliation of ME&T net cash provided by operating activities to consolidated net cash provided by operating activities on pages 59 - 60.									1 See reconciliation of ME&T net cash provided by operating activities to consolidated net cash provided by operating activities on pages 59 - 60.

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Supplemental Consolidating Data

We are providing supplemental consolidating data for the purpose of additional analysis. The data has been grouped as follows:

Consolidated – Caterpillar Inc. and its subsidiaries.

Machinery, Energy & Transportation – We define ME&T as it is presented in the supplemental data as Caterpillar Inc. and its subsidiaries, excluding Financial Products. ME&T’s information relates to the design, manufacturing and marketing of our products.

Financial Products – We define Financial Products as it is presented in the supplemental data as our finance and insurance subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance Services). Financial Products’ information relates to the financing to customers and dealers for the purchase and lease of Caterpillar and other equipment.

Consolidating Adjustments – Eliminations of transactions between ME&T and Financial Products.

The nature of the ME&T and Financial Products businesses is different, especially with regard to the financial position and cash flow items. Caterpillar management utilizes this presentation internally to highlight these differences. We believe this presentation will assist readers in understanding our business.

Pages 7155 to 7860 reconcile ME&T and Financial Products to Caterpillar Inc. consolidated financial information. Certain amounts for prior periods have been reclassified to conform to the current period presentation.

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Caterpillar Inc.

Supplemental Data for Results of Operations

For the Three Months Ended ~~September 30, 2021~~March 31, 2022

(Unaudited)

(Millions of dollars)


				Supplemental Consolidating Data										Supplemental Consolidating Data
		Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments				Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments
Sales and revenues:	Sales and revenues:										Sales and revenues:
Sales of Machinery, Energy & Transportation	Sales of Machinery, Energy & Transportation	$	11,707	$	11,707	$	—	$	—		Sales of Machinery, Energy & Transportation	$	12,886	$	12,886	$	—	$	—
Revenues of Financial Products	Revenues of Financial Products	690		—		787		(97)		1	Revenues of Financial Products	703		—		813		(110)		1
Total sales and revenues	Total sales and revenues	12,397		11,707		787		(97)			Total sales and revenues	13,589		12,886		813		(110)

Operating costs:	Operating costs:										Operating costs:
Cost of goods sold	Cost of goods sold	8,617		8,618		—		(1)		2	Cost of goods sold	9,559		9,560		—		(1)		2
Selling, general and administrative expenses	Selling, general and administrative expenses	1,340		1,147		200		(7)		2	Selling, general and administrative expenses	1,346		1,182		172		(8)		2
Research and development expenses	Research and development expenses	427		427		—		—			Research and development expenses	457		457		—		—
Interest expense of Financial Products	Interest expense of Financial Products	111		—		111		—			Interest expense of Financial Products	106		—		106		—
Other operating (income) expenses	Other operating (income) expenses	238		(56)		310		(16)		2	Other operating (income) expenses	266		(28)		314		(20)		2
Total operating costs	Total operating costs	10,733		10,136		621		(24)			Total operating costs	11,734		11,171		592		(29)

Operating profit	Operating profit	1,664		1,571		166		(73)			Operating profit	1,855		1,715		221		(81)

Interest expense excluding Financial Products	Interest expense excluding Financial Products	114		114		—		—			Interest expense excluding Financial Products	109		109		—		—
Other income (expense)	Other income (expense)	225		143		9		73		3	Other income (expense)	253		157		15		81		3

Consolidated profit before taxes	Consolidated profit before taxes	1,775		1,600		175		—			Consolidated profit before taxes	1,999		1,763		236		—

Provision (benefit) for income taxes	Provision (benefit) for income taxes	368		331		37		—			Provision (benefit) for income taxes	469		412		57		—
Profit of consolidated companies	Profit of consolidated companies	1,407		1,269		138		—			Profit of consolidated companies	1,530		1,351		179		—

Equity in profit (loss) of unconsolidated affiliated companies	Equity in profit (loss) of unconsolidated affiliated companies	21		23		—		(2)		4	Equity in profit (loss) of unconsolidated affiliated companies	7		8		—		(1)		4

Profit of consolidated and affiliated companies	Profit of consolidated and affiliated companies	1,428		1,292		138		(2)			Profit of consolidated and affiliated companies	1,537		1,359		179		(1)

Less: Profit (loss) attributable to noncontrolling interests	Less: Profit (loss) attributable to noncontrolling interests	2		1		3		(2)		5	Less: Profit (loss) attributable to noncontrolling interests	—		—		1		(1)		5

Profit 6	Profit 6	$	1,426	$	1,291	$	135	$	—		Profit 6	$	1,537	$	1,359	$	178	$	—

1Elimination of Financial Products’ revenues earned from ME&T.

2Elimination of net expenses recorded by ME&T paid to Financial Products.

3Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T.

4Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.

5Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T subsidiaries.

6Profit attributable to common shareholders.

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Caterpillar Inc.

Supplemental Data for Results of Operations

For the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2021

(Unaudited)

(Millions of dollars)


				Supplemental Consolidating Data										Supplemental Consolidating Data
		Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments				Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments
Sales and revenues:	Sales and revenues:										Sales and revenues:
Sales of Machinery, Energy & Transportation	Sales of Machinery, Energy & Transportation	$	35,091	$	35,091	$	—	$	—		Sales of Machinery, Energy & Transportation	$	11,191	$	11,191	$	—	$	—
Revenues of Financial Products	Revenues of Financial Products	2,082		—		2,371		(289)		1	Revenues of Financial Products	696		—		788		(92)		1
Total sales and revenues	Total sales and revenues	37,173		35,091		2,371		(289)			Total sales and revenues	11,887		11,191		788		(92)

Operating costs:	Operating costs:										Operating costs:
Cost of goods sold	Cost of goods sold	25,510		25,515		—		(5)		2	Cost of goods sold	8,012		8,013		—		(1)		2
Selling, general and administrative expenses	Selling, general and administrative expenses	3,943		3,471		483		(11)		2	Selling, general and administrative expenses	1,239		1,114		124		1		2
Research and development expenses	Research and development expenses	1,247		1,247		—		—			Research and development expenses	374		374		—		—
Interest expense of Financial Products	Interest expense of Financial Products	352		—		352		—			Interest expense of Financial Products	125		—		125		—
Other operating (income) expenses	Other operating (income) expenses	854		(30)		931		(47)		2	Other operating (income) expenses	323		26		314		(17)		2
Total operating costs	Total operating costs	31,906		30,203		1,766		(63)			Total operating costs	10,073		9,527		563		(17)

Operating profit	Operating profit	5,267		4,888		605		(226)			Operating profit	1,814		1,664		225		(75)

Interest expense excluding Financial Products	Interest expense excluding Financial Products	376		376		—		—			Interest expense excluding Financial Products	142		142		—		—
Other income (expense)	Other income (expense)	751		819		56		(124)		3	Other income (expense)	325		231		19		75		3

Consolidated profit before taxes	Consolidated profit before taxes	5,642		5,331		661		(350)			Consolidated profit before taxes	1,997		1,753		244		—

Provision (benefit) for income taxes	Provision (benefit) for income taxes	1,313		1,158		155		—			Provision (benefit) for income taxes	475		412		63		—
Profit of consolidated companies	Profit of consolidated companies	4,329		4,173		506		(350)			Profit of consolidated companies	1,522		1,341		181		—

Equity in profit (loss) of unconsolidated affiliated companies	Equity in profit (loss) of unconsolidated affiliated companies	44		52		—		(8)		4	Equity in profit (loss) of unconsolidated affiliated companies	9		12		—		(3)		4

Profit of consolidated and affiliated companies	Profit of consolidated and affiliated companies	4,373		4,225		506		(358)			Profit of consolidated and affiliated companies	1,531		1,353		181		(3)

Less: Profit (loss) attributable to noncontrolling interests	Less: Profit (loss) attributable to noncontrolling interests	4		3		9		(8)		5	Less: Profit (loss) attributable to noncontrolling interests	1		1		3		(3)		5

Profit 6	Profit 6	$	4,369	$	4,222	$	497	$	(350)		Profit 6	$	1,530	$	1,352	$	178	$	—

1Elimination of Financial Products’ revenues earned from ME&T.

2Elimination of net expenses recorded by ME&T paid to Financial Products.

3Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T.

4Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.

5Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T subsidiaries.

6Profit attributable to common shareholders.

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~~Caterpillar Inc.~~

~~Supplemental Data for Results of Operations~~

~~For the Three Months Ended September 30, 2020~~

~~(Unaudited)~~

~~(Millions of dollars)~~

Supplemental Consolidating Data
Consolidated Machinery,
Energy &
Transportation Financial
Products Consolidating
Adjustments
Sales and revenues:
Sales of Machinery, Energy & Transportation $ 9,228 $ 9,228 $ — $ —
Revenues of Financial Products 653 — 740 (87) 1
Total sales and revenues 9,881 9,228 740 (87)
Operating costs:
Cost of goods sold 6,919 6,921 — (2) 2
Selling, general and administrative expenses 1,126 943 189 (6) 2
Research and development expenses 344 344 — —
Interest expense of Financial Products 137 — 137 —

Other operating (income) expenses 370 95 287 (12) 2
Total operating costs 8,896 8,303 613 (20)
Operating profit 985 925 127 (67)
Interest expense excluding Financial Products 136 136 — —
Other income (expense) 14 (62) 9 67 3
Consolidated profit before taxes 863 727 136 —
Provision (benefit) for income taxes 187 133 54 —
Profit of consolidated companies 676 594 82 —
Equity in profit (loss) of unconsolidated affiliated companies (5) (4) — (1) 4
Profit of consolidated and affiliated companies 671 590 82 (1)
Less: Profit (loss) attributable to noncontrolling interests 3 — 4 (1) 5
Profit 6
$ 668 $ 590 $ 78 $ —

1~~Elimination of Financial Products’ revenues earned from ME&T.~~

2~~Elimination of net expenses recorded by ME&T paid to Financial Products.~~

3~~Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T.~~

4~~Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.~~

5~~Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T subsidiaries.~~

6~~Profit attributable to common shareholders.~~

~~Table of Contents~~

~~Caterpillar Inc.~~

~~Supplemental Data for Results of Operations~~

~~For the Nine Months Ended September 30, 2020~~

~~(Unaudited)~~

~~(Millions of dollars)~~

Supplemental Consolidating Data
Consolidated Machinery,
Energy &
Transportation Financial
Products Consolidating
Adjustments
Sales and revenues:
Sales of Machinery, Energy & Transportation $ 28,452 $ 28,452 $ — $ —
Revenues of Financial Products 2,061 — 2,350 (289) 1
Total sales and revenues 30,513 28,452 2,350 (289)
Operating costs:
Cost of goods sold 21,298 21,302 — (4) 2
Selling, general and administrative expenses 3,426 2,867 572 (13) 2
Research and development expenses 1,041 1,041 — —
Interest expense of Financial Products 461 — 462 (1) 3
Other operating (income) expenses 1,114 227 927 (40) 2
Total operating costs 27,340 25,437 1,961 (58)
Operating profit 3,173 3,015 389 (231)
Interest expense excluding Financial Products 384 383 — 1 3
Other income (expense) 265 60 (7) 212 4
Consolidated profit before taxes 3,054 2,692 382 (20)
Provision (benefit) for income taxes 839 720 119 —
Profit of consolidated companies 2,215 1,972 263 (20)
Equity in profit (loss) of unconsolidated affiliated companies 8 18 — (10) 5
Profit of consolidated and affiliated companies 2,223 1,990 263 (30)
Less: Profit (loss) attributable to noncontrolling interests 5 2 13 (10) 6
Profit 7
$ 2,218 $ 1,988 $ 250 $ (20)

1~~Elimination of Financial Products’ revenues earned from ME&T.~~

2~~Elimination of net expenses recorded by ME&T paid to Financial Products.~~

3~~Elimination of interest expense recorded between Financial Products and ME&T.~~

4~~Elimination of discount recorded by ME&T on receivables sold to Financial Products and of interest earned between ME&T and Financial Products as well as dividends paid by Financial Products to ME&T.~~

5~~Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.~~

6~~Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T subsidiaries.~~

7~~Profit attributable to common shareholders.~~

7456

Table of Contents

Caterpillar Inc.

Supplemental Data for Financial Position

At ~~September 30, 2021~~March 31, 2022

(Unaudited)

(Millions of dollars)


				Supplemental Consolidating Data										Supplemental Consolidating Data
		Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments				Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments
Assets	Assets										Assets
Current assets:	Current assets:										Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	9,446	$	8,554	$	892	$	—		Cash and cash equivalents	$	6,526	$	5,662	$	864	$	—
Receivables – trade and other	Receivables – trade and other	7,647		3,175		430		4,042		1,2	Receivables – trade and other	9,135		3,734		435		4,966		1,2
Receivables – finance	Receivables – finance	8,919		—		13,095		(4,176)		2	Receivables – finance	9,003		—		14,117		(5,114)		2

Prepaid expenses and other current assets	Prepaid expenses and other current assets	2,215		1,831		425		(41)		3	Prepaid expenses and other current assets	2,868		2,626		345		(103)		3
Inventories	Inventories	13,666		13,666		—		—			Inventories	15,038		15,038		—		—
Total current assets	Total current assets	41,893		27,226		14,842		(175)			Total current assets	42,570		27,060		15,761		(251)

Property, plant and equipment – net	Property, plant and equipment – net	11,904		7,957		3,947		—			Property, plant and equipment – net	11,932		8,010		3,922		—
Long-term receivables – trade and other	Long-term receivables – trade and other	1,273		389		215		669		1,2	Long-term receivables – trade and other	1,204		434		216		554		1,2
Long-term receivables – finance	Long-term receivables – finance	12,605		—		13,301		(696)		2	Long-term receivables – finance	12,665		—		13,247		(582)		2

Noncurrent deferred and refundable income taxes	Noncurrent deferred and refundable income taxes	1,744		2,279		105		(640)		4	Noncurrent deferred and refundable income taxes	1,973		2,506		111		(644)		4
Intangible assets	Intangible assets	1,121		1,121		—		—			Intangible assets	967		967		—		—
Goodwill	Goodwill	6,353		6,353		—		—			Goodwill	6,293		6,293		—		—
Other assets	Other assets	3,891		3,233		1,869		(1,211)		5	Other assets	4,672		3,919		1,960		(1,207)		5
Total assets	Total assets	$	80,784	$	48,558	$	34,279	$	(2,053)		Total assets	$	82,276	$	49,189	$	35,217	$	(2,130)

Liabilities	Liabilities										Liabilities
Current liabilities:	Current liabilities:										Current liabilities:
Short-term borrowings	Short-term borrowings	$	3,247	$	—	$	3,247	$	—		Short-term borrowings	$	4,501	$	—	$	4,501	$	—

Accounts payable	Accounts payable	7,218		7,112		240		(134)		6	Accounts payable	8,361		8,238		271		(148)		6
Accrued expenses	Accrued expenses	3,579		3,234		345		—			Accrued expenses	3,846		3,403		443		—
Accrued wages, salaries and employee benefits	Accrued wages, salaries and employee benefits	2,075		2,031		44		—			Accrued wages, salaries and employee benefits	1,275		1,247		28		—
Customer advances	Customer advances	1,155		1,155		—		—			Customer advances	1,388		1,387		1		—

Other current liabilities	Other current liabilities	2,319		1,694		689		(64)		4,7	Other current liabilities	2,355		1,780		701		(126)		4,7
Long-term debt due within one year	Long-term debt due within one year	6,383		48		6,335		—			Long-term debt due within one year	7,806		127		7,679		—
Total current liabilities	Total current liabilities	25,976		15,274		10,900		(198)			Total current liabilities	29,532		16,182		13,624		(274)

Long-term debt due after one year	Long-term debt due after one year	27,154		9,786		17,395		(27)		8	Long-term debt due after one year	25,277		9,664		15,641		(28)		8
Liability for postemployment benefits	Liability for postemployment benefits	6,395		6,394		1		—			Liability for postemployment benefits	5,363		5,363		—		—
Other liabilities	Other liabilities	4,564		3,905		1,371		(712)		4	Other liabilities	5,007		4,169		1,542		(704)		4
Total liabilities	Total liabilities	64,089		35,359		29,667		(937)			Total liabilities	65,179		35,378		30,807		(1,006)
Commitments and contingencies	Commitments and contingencies										Commitments and contingencies
Shareholders’ equity	Shareholders’ equity										Shareholders’ equity
Common stock	Common stock	6,352		6,352		919		(919)		9	Common stock	6,281		6,281		919		(919)		9
Treasury stock	Treasury stock	(26,608)		(26,608)		—		—			Treasury stock	(28,326)		(28,326)		—		—
Profit employed in the business	Profit employed in the business	38,361		34,138		4,212		11		9	Profit employed in the business	40,820		36,750		4,059		11		9
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(1,440)		(715)		(725)		—			Accumulated other comprehensive income (loss)	(1,710)		(928)		(782)		—
Noncontrolling interests	Noncontrolling interests	30		32		206		(208)		9	Noncontrolling interests	32		34		214		(216)		9
Total shareholders’ equity	Total shareholders’ equity	16,695		13,199		4,612		(1,116)			Total shareholders’ equity	17,097		13,811		4,410		(1,124)
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	80,784	$	48,558	$	34,279	$	(2,053)		Total liabilities and shareholders’ equity	$	82,276	$	49,189	$	35,217	$	(2,130)

1 Elimination of receivables between ME&T and Financial Products.

2 Reclassification of ME&T’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables.

3 Elimination of ME&T’s insurance premiums that are prepaid to Financial Products.

4 Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction.

5 Elimination of other intercompany assets between ME&T and Financial Products.

6 Elimination of payables between ME&T and Financial Products.

7 Elimination of prepaid insurance in Financial Products’ other liabilities.

8 Elimination of debt between ME&T and Financial Products.

9 Eliminations associated with ME&T’s investments in Financial Products’ subsidiaries.

7557

Table of Contents

Caterpillar Inc.

Supplemental Data for Financial Position

At December 31, ~~2020~~2021

(Unaudited)

(Millions of dollars)


				Supplemental Consolidating Data										Supplemental Consolidating Data
		Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments				Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments
Assets	Assets										Assets
Current assets:	Current assets:										Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	9,352	$	8,822	$	530	$	—		Cash and cash equivalents	$	9,254	$	8,428	$	826	$	—
Receivables – trade and other	Receivables – trade and other	7,317		3,846		397		3,074		1,2	Receivables – trade and other	8,477		3,279		435		4,763		1,2
Receivables – finance	Receivables – finance	9,463		—		13,681		(4,218)		2	Receivables – finance	8,898		—		13,828		(4,930)		2

Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,930		1,376		624		(70)		3	Prepaid expenses and other current assets	2,788		2,567		358		(137)		3
Inventories	Inventories	11,402		11,402		—		—			Inventories	14,038		14,038		—		—
Total current assets	Total current assets	39,464		25,446		15,232		(1,214)			Total current assets	43,455		28,312		15,447		(304)

Property, plant and equipment – net	Property, plant and equipment – net	12,401		8,309		4,092		—			Property, plant and equipment – net	12,090		8,172		3,918		—
Long-term receivables – trade and other	Long-term receivables – trade and other	1,185		363		164		658		1,2	Long-term receivables – trade and other	1,204		375		204		625		1,2
Long-term receivables – finance	Long-term receivables – finance	12,222		—		12,895		(673)		2	Long-term receivables – finance	12,707		—		13,358		(651)		2

Noncurrent deferred and refundable income taxes	Noncurrent deferred and refundable income taxes	1,523		2,058		110		(645)		4	Noncurrent deferred and refundable income taxes	1,840		2,396		105		(661)		4
Intangible assets	Intangible assets	1,308		1,308		—		—			Intangible assets	1,042		1,042		—		—
Goodwill	Goodwill	6,394		6,394		—		—			Goodwill	6,324		6,324		—		—
Other assets	Other assets	3,827		3,158		1,871		(1,202)		5	Other assets	4,131		3,388		1,952		(1,209)		5
Total assets	Total assets	$	78,324	$	47,036	$	34,364	$	(3,076)		Total assets	$	82,793	$	50,009	$	34,984	$	(2,200)

Liabilities	Liabilities										Liabilities
Current liabilities:	Current liabilities:										Current liabilities:
Short-term borrowings	Short-term borrowings	$	2,015	$	10	$	2,005	$	—		Short-term borrowings	$	5,404	$	9	$	5,395	$	—
Short-term borrowings with consolidated companies		—		—		1,000		(1,000)		6

Accounts payable	Accounts payable	6,128		6,060		212		(144)		7	Accounts payable	8,154		8,079		242		(167)		6
Accrued expenses	Accrued expenses	3,642		3,099		543		—			Accrued expenses	3,757		3,385		372		—
Accrued wages, salaries and employee benefits	Accrued wages, salaries and employee benefits	1,096		1,081		15		—			Accrued wages, salaries and employee benefits	2,242		2,186		56		—
Customer advances	Customer advances	1,108		1,108		—		—			Customer advances	1,087		1,086		1		—
Dividends payable	Dividends payable	562		562		—		—			Dividends payable	595		595		—		—
Other current liabilities	Other current liabilities	2,017		1,530		580		(93)		4,8	Other current liabilities	2,256		1,773		642		(159)		4,7
Long-term debt due within one year	Long-term debt due within one year	9,149		1,420		7,729		—			Long-term debt due within one year	6,352		45		6,307		—
Total current liabilities	Total current liabilities	25,717		14,870		12,084		(1,237)			Total current liabilities	29,847		17,158		13,015		(326)

Long-term debt due after one year	Long-term debt due after one year	25,999		9,764		16,250		(15)		6	Long-term debt due after one year	26,033		9,772		16,287		(26)		8
Liability for postemployment benefits	Liability for postemployment benefits	6,872		6,872		—		—			Liability for postemployment benefits	5,592		5,592		—		—
Other liabilities	Other liabilities	4,358		3,691		1,385		(718)		4	Other liabilities	4,805		4,106		1,425		(726)		4
Total liabilities	Total liabilities	62,946		35,197		29,719		(1,970)			Total liabilities	66,277		36,628		30,727		(1,078)
Commitments and contingencies	Commitments and contingencies										Commitments and contingencies
Shareholders’ equity	Shareholders’ equity										Shareholders’ equity
Common stock	Common stock	6,230		6,230		919		(919)		9	Common stock	6,398		6,398		919		(919)		9
Treasury stock	Treasury stock	(25,178)		(25,178)		—		—			Treasury stock	(27,643)		(27,643)		—		—
Profit employed in the business	Profit employed in the business	35,167		31,091		4,065		11		9	Profit employed in the business	39,282		35,390		3,881		11		9
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(888)		(352)		(536)		—			Accumulated other comprehensive income (loss)	(1,553)		(799)		(754)		—
Noncontrolling interests	Noncontrolling interests	47		48		197		(198)		9	Noncontrolling interests	32		35		211		(214)		9
Total shareholders’ equity	Total shareholders’ equity	15,378		11,839		4,645		(1,106)			Total shareholders’ equity	16,516		13,381		4,257		(1,122)
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	78,324	$	47,036	$	34,364	$	(3,076)		Total liabilities and shareholders’ equity	$	82,793	$	50,009	$	34,984	$	(2,200)

1 Elimination of receivables between ME&T and Financial Products.

2 Reclassification of ME&T’s trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables.

3 Elimination of ME&T’s insurance premiums that are prepaid to Financial Products.

4 Reclassification reflecting required netting of deferred tax assets/liabilities by taxing jurisdiction.

5 Elimination of other intercompany assets between ME&T and Financial Products.

6 Elimination of ~~debt~~payables between ME&T and Financial Products.

7 Elimination of ~~payables between ME&T and~~prepaid insurance in Financial ~~Products.~~Products' other liabilities.

8 Elimination of ~~prepaid insurance in~~debt between ME&T and Financial ~~Products’ other liabilities.~~Products.

9 Eliminations associated with ME&T’s investments in Financial Products’ subsidiaries.

7658

Table of Contents

Caterpillar Inc.

Supplemental Data for Cash Flow

For the ~~Nine~~Three Months Ended ~~September 30, 2021~~March 31, 2022

(Unaudited)

(Millions of dollars)


				Supplemental Consolidating Data										Supplemental Consolidating Data
		Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments				Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments
Cash flow from operating activities:	Cash flow from operating activities:										Cash flow from operating activities:
Profit of consolidated and affiliated companies	Profit of consolidated and affiliated companies	$	4,373	$	4,225	$	506	$	(358)	1, 5	Profit of consolidated and affiliated companies	$	1,537	$	1,359	$	179	$	(1)	1
Adjustments for non-cash items:	Adjustments for non-cash items:										Adjustments for non-cash items:
Depreciation and amortization	Depreciation and amortization	1,766		1,162		604		—			Depreciation and amortization	557		358		199		—

Provision (benefit) for deferred income taxes	Provision (benefit) for deferred income taxes	(321)		(255)		(66)		—			Provision (benefit) for deferred income taxes	(99)		(83)		(16)		—
Other	Other	102		104		(135)		133		2	Other	(52)		(46)		(89)		83		2
Changes in assets and liabilities, net of acquisitions and divestitures:	Changes in assets and liabilities, net of acquisitions and divestitures:										Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other	Receivables – trade and other	(326)		(338)		40		(28)		2, 3	Receivables – trade and other	(372)		(257)		(7)		(108)		2,3
Inventories	Inventories	(2,195)		(2,194)		—		(1)		2	Inventories	(1,032)		(1,030)		—		(2)		2
Accounts payable	Accounts payable	1,232		1,194		28		10		2	Accounts payable	452		393		40		19		2
Accrued expenses	Accrued expenses	46		117		(71)		—			Accrued expenses	(74)		(1)		(73)		—
Accrued wages, salaries and employee benefits	Accrued wages, salaries and employee benefits	934		905		29		—			Accrued wages, salaries and employee benefits	(965)		(940)		(25)		—
Customer advances	Customer advances	39		39		—		—			Customer advances	311		311		—		—
Other assets – net	Other assets – net	138		133		24		(19)		2	Other assets – net	99		137		(17)		(21)		2
Other liabilities – net	Other liabilities – net	(2)		(193)		144		47		2	Other liabilities – net	(49)		(279)		202		28		2
Net cash provided by (used for) operating activities	Net cash provided by (used for) operating activities	5,786		4,899		1,103		(216)			Net cash provided by (used for) operating activities	313		(78)		393		(2)

Cash flow from investing activities:	Cash flow from investing activities:										Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others	Capital expenditures – excluding equipment leased to others	(673)		(670)		(11)		8		2	Capital expenditures – excluding equipment leased to others	(346)		(344)		(3)		1		2
Expenditures for equipment leased to others	Expenditures for equipment leased to others	(1,014)		(23)		(997)		6		2	Expenditures for equipment leased to others	(333)		(4)		(335)		6		2
Proceeds from disposals of leased assets and property, plant and equipment	Proceeds from disposals of leased assets and property, plant and equipment	877		71		818		(12)		2	Proceeds from disposals of leased assets and property, plant and equipment	269		33		241		(5)		2
Additions to finance receivables	Additions to finance receivables	(9,603)		—		(10,292)		689		3	Additions to finance receivables	(2,988)		—		(3,139)		151		3
Collections of finance receivables	Collections of finance receivables	9,221		—		9,946		(725)		3	Collections of finance receivables	2,966		—		3,159		(193)		3
Net intercompany purchased receivables	Net intercompany purchased receivables	—		—		100		(100)		3	Net intercompany purchased receivables	—		—		(42)		42		3
Proceeds from sale of finance receivables	Proceeds from sale of finance receivables	44		—		44		—			Proceeds from sale of finance receivables	9		—		9		—
Net intercompany borrowings	Net intercompany borrowings	—		1,000		3		(1,003)		4	Net intercompany borrowings	—		—		1		(1)		4
Investments and acquisitions (net of cash acquired)	Investments and acquisitions (net of cash acquired)	(449)		(449)		—		—			Investments and acquisitions (net of cash acquired)	(8)		(8)		—		—
Proceeds from sale of businesses and investments (net of cash sold)		23		23		—		—

Proceeds from sale of securities	Proceeds from sale of securities	424		44		380		—			Proceeds from sale of securities	571		478		93		—
Investments in securities	Investments in securities	(934)		(542)		(392)		—			Investments in securities	(1,438)		(1,266)		(172)		—
Other – net	Other – net	(8)		59		(67)		—			Other – net	(15)		18		(33)		—
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	(2,092)		(487)		(468)		(1,137)			Net cash provided by (used for) investing activities	(1,313)		(1,093)		(221)		1

Cash flow from financing activities:	Cash flow from financing activities:										Cash flow from financing activities:
Dividends paid	Dividends paid	(1,733)		(1,733)		(350)		350		5	Dividends paid	(595)		(595)		—		—
Common stock issued, including treasury shares reissued	Common stock issued, including treasury shares reissued	122		122		—		—			Common stock issued, including treasury shares reissued	(28)		(28)		—		—
Common shares repurchased	Common shares repurchased	(1,622)		(1,622)		—		—			Common shares repurchased	(820)		(820)		—		—

Net intercompany borrowings	Net intercompany borrowings	—		(3)		(1,000)		1,003		4	Net intercompany borrowings	—		(1)		—		1		4
Proceeds from debt issued (original maturities greater than three months)	Proceeds from debt issued (original maturities greater than three months)	6,931		494		6,437		—			Proceeds from debt issued (original maturities greater than three months)	2,131		—		2,131		—
Payments on debt (original maturities greater than three months)	Payments on debt (original maturities greater than three months)	(8,620)		(1,910)		(6,710)		—			Payments on debt (original maturities greater than three months)	(1,387)		(6)		(1,381)		—
Short-term borrowings – net (original maturities three months or less)	Short-term borrowings – net (original maturities three months or less)	1,324		(10)		1,334		—			Short-term borrowings – net (original maturities three months or less)	(1,016)		(124)		(892)		—
Other – net		(4)		(4)		—		—

Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	(3,602)		(4,666)		(289)		1,353			Net cash provided by (used for) financing activities	(1,715)		(1,574)		(142)		1
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(9)		(14)		5		—			Effect of exchange rate changes on cash	(16)		(21)		5		—
Increase (decrease) in cash, cash equivalents and restricted cash	Increase (decrease) in cash, cash equivalents and restricted cash	83		(268)		351		—			Increase (decrease) in cash, cash equivalents and restricted cash	(2,731)		(2,766)		35		—
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	9,366		8,822		544		—			Cash, cash equivalents and restricted cash at beginning of period	9,263		8,433		830		—
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	9,449	$	8,554	$	895	$	—		Cash, cash equivalents and restricted cash at end of period	$	6,532	$	5,667	$	865	$	—

1 Elimination of equity profit earned from Financial Products' subsidiaries partially owned by ME&T subsidiaries.

2 Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.

3 Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory.

4 Elimination of net proceeds and payments to/from ME&T and Financial Products.

5 ~~Elimination of dividend activity between Financial Products and ME&T.~~

7759

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Caterpillar Inc.

Supplemental Data for Cash Flow

For the ~~Nine~~Three Months Ended ~~September 30, 2020~~March 31, 2021

(Unaudited)

(Millions of dollars)


				Supplemental Consolidating Data										Supplemental Consolidating Data
		Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments				Consolidated		Machinery, Energy & Transportation		Financial Products		Consolidating Adjustments
Cash flow from operating activities:	Cash flow from operating activities:										Cash flow from operating activities:
Profit of consolidated and affiliated companies	Profit of consolidated and affiliated companies	$	2,223	$	1,990	$	263	$	(30)	1,5	Profit of consolidated and affiliated companies	$	1,531	$	1,353	$	181	$	(3)	1
Adjustments for non-cash items:	Adjustments for non-cash items:										Adjustments for non-cash items:
Depreciation and amortization	Depreciation and amortization	1,815		1,217		598		—			Depreciation and amortization	586		383		203		—

Net gain on remeasurement of pension obligations		(55)		(55)		—		—

Provision (benefit) for deferred income taxes	Provision (benefit) for deferred income taxes	(38)		(5)		(33)		—			Provision (benefit) for deferred income taxes	109		127		(18)		—
Other	Other	919		494		167		258		2	Other	(104)		(52)		(83)		31		2
Changes in assets and liabilities, net of acquisitions and divestitures:	Changes in assets and liabilities, net of acquisitions and divestitures:										Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other	Receivables – trade and other	1,473		616		(54)		911		2, 3	Receivables – trade and other	(543)		(104)		(32)		(407)		2,3
Inventories	Inventories	(139)		(130)		—		(9)		2	Inventories	(657)		(657)		—		—
Accounts payable	Accounts payable	(596)		(599)		(6)		9		2	Accounts payable	733		706		13		14		2
Accrued expenses	Accrued expenses	(286)		(314)		28		—			Accrued expenses	84		58		26		—
Accrued wages, salaries and employee benefits	Accrued wages, salaries and employee benefits	(547)		(512)		(35)		—			Accrued wages, salaries and employee benefits	191		179		12		—
Customer advances	Customer advances	13		13		—		—			Customer advances	58		58		—		—
Other assets – net	Other assets – net	(15)		(136)		26		95		2	Other assets – net	56		(4)		(12)		72		2
Other liabilities – net	Other liabilities – net	(512)		(514)		83		(81)		2	Other liabilities – net	(116)		(131)		79		(64)		2
Net cash provided by (used for) operating activities	Net cash provided by (used for) operating activities	4,255		2,065		1,037		1,153			Net cash provided by (used for) operating activities	1,928		1,916		369		(357)

Cash flow from investing activities:	Cash flow from investing activities:										Cash flow from investing activities:
Capital expenditures – excluding equipment leased to others	Capital expenditures – excluding equipment leased to others	(686)		(687)		(11)		12		2	Capital expenditures – excluding equipment leased to others	(252)		(251)		(4)		3		2
Expenditures for equipment leased to others	Expenditures for equipment leased to others	(805)		2		(823)		16		2	Expenditures for equipment leased to others	(252)		(4)		(249)		1		2
Proceeds from disposals of leased assets and property, plant and equipment	Proceeds from disposals of leased assets and property, plant and equipment	550		119		451		(20)		2	Proceeds from disposals of leased assets and property, plant and equipment	309		27		286		(4)		2
Additions to finance receivables	Additions to finance receivables	(9,278)		—		(10,234)		956		3	Additions to finance receivables	(2,629)		—		(2,867)		238		3
Collections of finance receivables	Collections of finance receivables	9,656		—		10,822		(1,166)		3	Collections of finance receivables	2,770		—		3,062		(292)		3
Net intercompany purchased receivables	Net intercompany purchased receivables	—		—		971		(971)		3	Net intercompany purchased receivables	—		—		(411)		411		3
Proceeds from sale of finance receivables	Proceeds from sale of finance receivables	37		—		37		—			Proceeds from sale of finance receivables	5		—		5		—
Net intercompany borrowings	Net intercompany borrowings	—		599		6		(605)		4	Net intercompany borrowings	—		1,000		—		(1,000)		4
Investments and acquisitions (net of cash acquired)	Investments and acquisitions (net of cash acquired)	(93)		(93)		—		—			Investments and acquisitions (net of cash acquired)	(386)		(386)		—		—
Proceeds from sale of businesses and investments (net of cash sold)	Proceeds from sale of businesses and investments (net of cash sold)	13		13		—		—			Proceeds from sale of businesses and investments (net of cash sold)	28		28		—		—
Proceeds from sale of securities	Proceeds from sale of securities	239		17		222		—			Proceeds from sale of securities	126		11		115		—
Investments in securities	Investments in securities	(512)		(15)		(497)		—			Investments in securities	(148)		—		(148)		—
Other – net	Other – net	(80)		(21)		(59)		—			Other – net	(48)		2		(50)		—
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	(959)		(66)		885		(1,778)			Net cash provided by (used for) investing activities	(477)		427		(261)		(643)

Cash flow from financing activities:	Cash flow from financing activities:										Cash flow from financing activities:
Dividends paid	Dividends paid	(1,683)		(1,683)		(20)		20		5	Dividends paid	(562)		(562)		—		—
Common stock issued, including treasury shares reissued	Common stock issued, including treasury shares reissued	110		110		—		—			Common stock issued, including treasury shares reissued	65		65		—		—
Common shares repurchased		(1,130)		(1,130)		—		—

Net intercompany borrowings	Net intercompany borrowings	—		(6)		(599)		605		4	Net intercompany borrowings	—		—		(1,000)		1,000		4
Proceeds from debt issued (original maturities greater than three months)	Proceeds from debt issued (original maturities greater than three months)	9,418		1,991		7,427		—			Proceeds from debt issued (original maturities greater than three months)	2,273		494		1,779		—
Payments on debt (original maturities greater than three months)	Payments on debt (original maturities greater than three months)	(6,789)		(18)		(6,771)		—			Payments on debt (original maturities greater than three months)	(2,887)		(644)		(2,243)		—
Short-term borrowings – net (original maturities three months or less)	Short-term borrowings – net (original maturities three months or less)	(2,138)		(5)		(2,133)		—			Short-term borrowings – net (original maturities three months or less)	1,659		(10)		1,669		—
Other – net	Other – net	(1)		(1)		—		—			Other – net	(2)		(2)		—		—
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	(2,213)		(742)		(2,096)		625			Net cash provided by (used for) financing activities	546		(659)		205		1,000
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(56)		(47)		(9)		—			Effect of exchange rate changes on cash	(12)		(14)		2		—
Increase (decrease) in cash, cash equivalents and restricted cash	Increase (decrease) in cash, cash equivalents and restricted cash	1,027		1,210		(183)		—			Increase (decrease) in cash, cash equivalents and restricted cash	1,985		1,670		315		—
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	8,292		7,302		990		—			Cash, cash equivalents and restricted cash at beginning of period	9,366		8,822		544		—
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	9,319	$	8,512	$	807	$	—		Cash, cash equivalents and restricted cash at end of period	$	11,351	$	10,492	$	859	$	—

1 Elimination of equity profit earned from Financial Products' subsidiaries partially owned by ME&T subsidiaries.

2 Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.

3 Reclassification of Financial Products’ cash flow activity from investing to operating for receivables that arose from the sale of inventory.

4 Elimination of net proceeds and payments to/from ME&T and Financial Products.

5 ~~Elimination of dividend activity between Financial Products and ME&T.~~

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Forward-looking Statements

Certain statements in this Form 10-Q relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “forecast,” “target,” “guide,” “project,” “intend,” “could,” “should” or other similar words or expressions often identify forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future performance and speak only as of the date they are made, and we do not undertake to update our forward-looking statements.

Caterpillar’s actual results may differ materially from those described or implied in our forward-looking statements based on a number of factors, including, but not limited to: (i) global and regional economic conditions and economic conditions in the industries we serve; (ii) commodity price changes, material price increases, fluctuations in demand for our products or significant shortages of material; (iii) government monetary or fiscal policies; (iv) political and economic risks, commercial instability and events beyond our control in the countries in which we operate; (v) international trade policies and their impact on demand for our products and our competitive position, including the imposition of new tariffs or changes in existing tariff rates; (vi) our ability to develop, produce and market quality products that meet our customers’ needs; (vii) the impact of the highly competitive environment in which we operate on our sales and pricing; (viii) information technology security threats and computer crime; (ix) inventory management decisions and sourcing practices of our dealers and our OEM customers; (x) a failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xi) union disputes or other employee relations issues; (xii) adverse effects of unexpected events; (xiii) disruptions or volatility in global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xiv) failure to maintain our credit ratings and potential resulting increases to our cost of borrowing and adverse effects on our cost of funds, liquidity, competitive position and access to capital markets; (xv) our Financial Products segment’s risks associated with the financial services industry; (xvi) changes in interest rates or market liquidity conditions; (xvii) an increase in delinquencies, repossessions or net losses of Cat Financial’s customers; (xviii) currency fluctuations; (xix) our or Cat Financial’s compliance with financial and other restrictive covenants in debt agreements; (xx) increased pension plan funding obligations; (xxi) alleged or actual violations of trade or anti-corruption laws and regulations; (xxii) additional tax expense or exposure, including the impact of U.S. tax reform; (xxiii) significant legal proceedings, claims, lawsuits or government investigations; (xxiv) new regulations or changes in financial services regulations; (xxv) compliance with environmental laws and regulations; (xxvi) the duration and geographic spread of, business disruptions caused by, and the overall global economic impact of, the COVID-19 pandemic; and (xxvii) other factors described in more detail under the section entitled "Part I - Item 1A. Risk Factors" of Caterpillar's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, as such factors may be updated from time to time in Caterpillar's periodic filings with the Securities and Exchange Commission.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information required by this Item is incorporated by reference from Note 5 – “Derivative financial instruments and risk management” included in Part I, Item 1 and Management’s Discussion and Analysis included in Part I, Item 2 of this Form 10-Q.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

An evaluation was performed under the supervision and with the participation of the company’s management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the company’s disclosure controls and procedures, as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this quarterly report. Based on that evaluation, the CEO and CFO concluded that the company’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in internal control over financial reporting

During the ~~third~~first quarter of ~~2021,~~2022, there has been no change in the company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information required by this Item is incorporated by reference from Note 14 – “Environmental and legal matters” included in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors

There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Period
Total Number
of Shares
Purchased2,3
Average Price
Paid per Share2,3
Total Number
of Shares Purchased
as Part of Publicly Announced Program
Approximate Dollar
Value of Shares that
may yet be Purchased
under the Program (in billions)1
July 1-31, 2021 2,134,721 $ 211.64 2,134,721 $ 4.064
August 1-31, 2021 3,117,946 $ 207.19 3,117,946 $ 3.418
September 1-30, 2021 1,357,771 $ 201.53 1,357,771 $ 3.144
Total 6,610,438 $ 207.46 6,610,438
1 In July 2018, the Board approved a share repurchase authorization of up to $10.0 billion of Caterpillar common stock effective January 1, 2019, with no expiration (the 2018 Authorization). As of September 30, 2021, approximately $3.1 billion remained available under the 2018 Authorization.
2 During the third quarter of 2021, we entered into an ASR with a third-party financial institution to purchase $750 million of our common stock. In August 2021, upon payment of the $750 million to the financial institution, we received 2.9 million shares. In September 2021, upon final settlement of the ASR, we received an additional 0.7 million shares. In total, we repurchased 3.6 million shares under this ASR at an average price per share of $206.21.
3 In July, August and September of 2021, we repurchased 2.2 million, 0.2 million and 0.6 million shares respectively, for an aggregate of $622 million in open market transactions at an average price per share of $211.64, $208.70 and $200.00, respectively.


Period	Total Number of Shares Purchased2,3	Average Price Paid per Share2,3		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet be Purchased under the Program (in billions)1
January 1-31, 2022	405,023	$	210.71	405,023	$	2.013
February 1-28, 2022	2,724,039	$	203.19	2,724,039	$	1.460
March 1-31, 2022	442,622	$	193.89	442,622	$	1.374
Total	3,571,684	$	202.89	3,571,684

1 In July 2018, the Board approved a share repurchase authorization of up to $10.0 billion of Caterpillar common stock effective January 1, 2019, with no expiration (the 2018 Authorization). As of March 31, 2022, approximately $1.4 billion remained available under the 2018 Authorization.
2 During the first quarter of 2022, we entered into an ASR with a third-party financial institution to purchase $500 million of our common stock. In February 2022, upon payment of the $500 million to the financial institution, we received 2.0 million shares. In April 2022, upon final settlement of the ASR, we received an additional 0.4 million shares. In total, we repurchased 2.4 million shares under this ASR at an average price per share of $206.37.
3 In January, February and March of 2022, we repurchased 0.4 million, 0.8 million and 0.4 million shares respectively, for an aggregate of $320 million in open market transactions at an average price per share of $210.71, $195.00 and $193.89, respectively.

Non-U.S. Employee Stock Purchase Plans

As of ~~September 30, 2021,~~March 31, 2022, we had 28 employee stock purchase plans (the “EIP Plans”) that are administered outside the United States for our non-U.S. employees, which had approximately ~~12,000~~13,000 active participants in the aggregate. During the ~~third~~first quarter of ~~2021,~~2022, approximately ~~73,000~~72,000 shares of Caterpillar common stock were purchased by the EIP Plans pursuant to the terms of such plans.

Item 5. Other Information

Disclosures Required Pursuant to Section 13(r) of the Securities Exchange Act of 1934

During the first quarter ended March 31, 2022, Caterpillar Eurasia LLC, one of our affiliates, engaged in limited transactions or dealings with the Federal Security Service of Russia (the “FSB”). Specifically, Caterpillar Eurasia LLC, from time to time, directly or indirectly, makes required submissions to and receives regulatory authorizations from the FSB related to the importation of software used in the on-board telematics and control systems of Caterpillar machines that are imported into Russia. Caterpillar Eurasia LLC did not generate any net revenue or net profits from such approval activity and does not make any sales to or have other dealings with the FSB. Caterpillar Eurasia LLC plans to continue these activities as long as it remains lawful to do so.

Table of Contents

Item 6. Exhibits



10.1						Credit Agreement (2021 364-Day Facility), dated September 2, 2021,among Caterpillar Inc., Caterpillar Financial Services Corporation, Caterpillar International Finance Designated Activity Company, and Caterpillar Finance Kabushiki Kaisha, certain financial institutions named therein, Citibank, N.A., as agent, Citibank Europe PLC, UK Branch, as Local Currency Agent, and MUFG Bank, Ltd. as Japan Local Currency Agent (incorporated by reference from Exhibit 10.1Form of Restricted Stock Unit Award pursuant to the ~~Company's Current Report on Form 8-K filed on September 8, 2021)~~2014 Long-Term Incentive Plan*

10.2						~~Local Currency Addendum, dated as~~Form of ~~September 2, 2021,~~Restricted Stock Unit Award for Directors pursuant to the ~~Credit Agreement (2021 364-Day Facility) (incorporated by reference from Exhibit 10.2 to the Company's Current Report on Form 8-K filed September 8, 2021)~~2014 Long-Term Incentive Plan*

10.3						~~Japan Local Currency Addendum, dated as~~Form of ~~September 2, 2021,~~Nonqualified Stock Options Award pursuant to the ~~Credit Agreement (2021 364-Day Facility) (incorporated by reference from Exhibit 10.3 to the Company's Current Report on Form 8-K filed September 8, 2021)~~2014 Long-Term Incentive Plan*

10.4						A ~~mendment~~ N o ~~. 1~~ to S ~~econd~~ A ~~mended~~ ~~and~~ R ~~estated~~ C ~~redit~~ A ~~greement~~ (T ~~hree~~-Y ~~ear~~ F ~~acility), Amendment~~ N o ~~. 1~~ to L ~~ocal~~ C ~~urrency Addendum~~ ~~and Amendment~~ N o ~~. 1~~ ~~to Japan Local Currency Addendum, dated as~~Form of ~~September 2, 2021~~, among Caterpillar Inc., Caterpillar Financial Services Corporation, Caterpillar International Finance Designated Activity Company, and Caterpillar Finance Kabushiki Kaisha, certain financial institutions named therein, Citibank, N.A., as agent, Citibank Europe PLC, UK Branch, as Local Currency Agent, and MUFG Bank, Ltd. as Japan Local Currency Agent

~~10.5~~						~~Amendment No. 1 to Second Amended and Restated Credit Agreement (Five~~-Year Facility), Amendment No. 1 to Local Currency Addendum and Amendment No. 1 to Japan Local Currency Addendum, dated as of September 2, 2021, among Caterpillar Inc., Caterpillar Financial Services Corporation, Caterpillar International Finance Designated Activity Company, and Caterpillar Finance Kabushiki Kaisha, certain financial institutions named therein, Citibank, N.A., as agent, Citibank Europe PLC, UK Branch, as Local Currency Agent, and MUFG Bank, Ltd. as Japan Local Currency Agent (incorporated by reference from Exhibit 10.5 Performance-Based Restricted Stock Unit Award pursuant to the ~~Company's Current Report on Form 8-K filed on September 8, 2021)~~2014 Long-Term Incentive Plan*

31.1						Certification of Chief Executive Officer of Caterpillar Inc., as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of Chief Financial Officer of Caterpillar Inc., as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32						Certification of Chief Executive Officer of Caterpillar Inc. and Chief Financial Officer of Caterpillar Inc., as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



101.INS						Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive File (embedded within the Inline XBRL document and included in Exhibit 101)

*Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 6 of this report.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	CATERPILLAR INC.


~~November 3, 2021~~May 4, 2022	/s/ D. James Umpleby III	Chairman of the Board & Chief Executive Officer
	D. James Umpleby III



~~November 3, 2021~~May 4, 2022	/s/ Andrew R.J. Bonfield	Chief Financial Officer
	Andrew R.J. Bonfield



~~November 3, 2021~~May 4, 2022	/s/ Suzette M. Long	Chief Legal Officer and General Counsel
	Suzette M. Long



~~November 3, 2021~~May 4, 2022	/s/ ~~G. Michael Marvel~~William E. Schaupp	Chief Accounting Officer
	~~G. Michael Marvel~~William E. Schaupp

8264



(Millions of dollars)	Consolidated Statement of Financial	Asset (Liability) Fair Value
	Position Location	September 30, 2021		December 31, 2020
Designated derivatives
Foreign exchange contracts
Machinery, Energy & Transportation	Receivables – trade and other	$	44	$	74
Machinery, Energy & Transportation	Long-term receivables – trade and other	33		71
Machinery, Energy & Transportation	Accrued expenses	(23)		(36)
Machinery, Energy & Transportation	Other liabilities	(7)		(1)
Financial Products	Receivables – trade and other	—		1
Financial Products	Long-term receivables – trade and other	115		1
Financial Products	Accrued expenses	(21)		(148)
Interest rate contracts

Machinery, Energy & Transportation	Long-term receivables – trade and other	—		4


Financial Products	Receivables – trade and other	8		2
Financial Products	Long-term receivables – trade and other	27		57
Financial Products	Accrued expenses	(8)		(5)
		$	168	$	20
Undesignated derivatives
Foreign exchange contracts
Machinery, Energy & Transportation	Receivables – trade and other	$	13	$	10
Machinery, Energy & Transportation	Long-term receivables – trade and other	1		—
Machinery, Energy & Transportation	Accrued expenses	(10)		(1)

Financial Products	Receivables – trade and other	54		17
Financial Products	Long-term receivables – trade and other	6		7
Financial Products	Accrued expenses	(12)		(107)




Commodity contracts
Machinery, Energy & Transportation	Receivables – trade and other	29		35
Machinery, Energy & Transportation	Long-term receivables – trade and other	2		2
Machinery, Energy & Transportation	Accrued expenses	(23)		—
Machinery, Energy & Transportation	Other liabilities	(1)		—
		$	59	$	(37)



Cash Flow Hedges
	Three Months Ended September 30, 2021
			Recognized in Earnings
(Millions of dollars)	Amount of Gains (Losses) Recognized in AOCI		Classification of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI		Amount of the line items in the Consolidated Statement of Results of Operations
Foreign exchange contracts
Machinery, Energy & Transportation	$	(47)	Sales of Machinery, Energy & Transportation	$	2	$	11,707
			Cost of goods sold	4		8,617
Financial Products	89		Interest expense of Financial Products	(3)		111
			Other income (expense)	87		225
Interest rate contracts


Financial Products	3		Interest expense of Financial Products	(5)		111
	$	45		$	85



(Millions of dollars)	Classification of Gains (Losses)	Three Months Ended September 30, 2021		Three Months Ended September 30, 2020
Foreign exchange contracts
Machinery, Energy & Transportation	Other income (expense)	$	2	$	8
Financial Products	Other income (expense)	44		(73)
Commodity contracts
Machinery, Energy & Transportation	Other income (expense)	(30)		6
		$	16	$	(59)

	Classification of Gains (Losses)	Nine Months Ended September 30, 2021		Nine Months Ended September 30, 2020
Foreign exchange contracts
Machinery, Energy & Transportation	Other income (expense)	$	5	$	21
Financial Products	Other income (expense)	72		12
Commodity contracts
Machinery, Energy & Transportation	Other income (expense)	35		(25)
		$	112	$	8



September 30, 2021							Gross Amounts Not Offset in the Statement of Financial Position
(Millions of dollars)	Gross Amount of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amount of Assets Presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount of Assets
Derivatives
Machinery, Energy & Transportation	$	122	$	—	$	122	$	(53)	$	—	$	69
Financial Products	210		—		210		(39)		—		171
Total	$	332	$	—	$	332	$	(92)	$	—	$	240


(Millions of dollars)

Remaining Three Months of 2021	2022	2023	2024	2025	Thereafter
$74	$287	$228	$170	$160	$202


	First Nine Months
(Millions of dollars)	2021		2020
Warranty liability, beginning of period	$	1,612	$	1,541
Reduction in liability (payments)	(638)		(652)
Increase in liability (new warranties)	716		678
Warranty liability, end of period	$	1,690	$	1,567


	Fair Value of Financial Instruments
	September 30, 2021				December 31, 2020
(Millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Levels	Reference
Assets
Cash and cash equivalents	$	9,446	$	9,446	$	9,352	$	9,352	1
Restricted cash and short-term investments 1	546		546		14		14		1 & 2	Note 8
Investments in AFS debt and equity securities	2,143		2,143		2,088		2,088		1 & 2	Note 8
Finance receivables – net (excluding finance leases 2 )	13,785		13,921		14,028		14,357		3	Note 17
Wholesale inventory receivables – net (excluding finance leases 2)	819		800		929		911		3
Foreign currency contracts – net	193		193		—		—		2	Note 5
Interest rate contracts – net	27		27		58		58		2	Note 5
Commodity contracts – net	7		7		37		37		2	Note 5

Liabilities
Short-term borrowings	3,247		3,247		2,015		2,015		1
Long-term debt (including amounts due within one year)
Machinery, Energy & Transportation	9,807		12,449		11,169		14,549		2
Financial Products	23,730		24,118		23,979		24,614		2
Foreign currency contracts – net	—		—		112		112		2	Note 5


Guarantees	5		5		5		5		3	Note 11