Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
cat-20220930_g1.jpg
FORM 10-Q
[X]☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172022
OR
[  ]☐ 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)
37-0602744
(IRS Employer I.D. No.)
5205 N. O'Connor Boulevard,Suite 100,Irving,Texas75039
100 NE Adams Street, Peoria, Illinois
(Address of principal executive offices)
61629
(Zip Code)
Registrant’s telephone number, including area code: (309) 675-1000(972) 891-7700

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 classTrading Symbol (s)Name of each exchange on which registered
Common Stock ($1.00 par value)CATNew York Stock Exchange¹
8% Debentures due February 15, 2023CAT23New York Stock Exchange
5.3% Debentures due September 15, 2035CAT35New 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 x☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes x☒   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“emerging growth company"company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerx☒Accelerated filero☐
Non-accelerated filero☐(Do not check if a smaller reporting company)
Smaller reporting companyo☐
Emerging growth companyo☐
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. o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o☐  No x☒

At September 30, 2017, 594,933,5822022, 520,409,355 shares of common stock of the registrant were outstanding.


Table of Contents
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
*
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Item 2.
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Item 3.Defaults Upon Senior Securities*
Item 4.Mine Safety Disclosures*
Item 5.Other Information*
Item 6.
9477
 
* Item omitted because no answer is called for or item is not applicable.



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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 September 30
2017 2016 20222021
Sales and revenues:   Sales and revenues:  
Sales of Machinery, Energy & Transportation$10,713
 $8,463
Sales of Machinery, Energy & Transportation$14,278 $11,707 
Revenues of Financial Products700
 697
Revenues of Financial Products716 690 
Total sales and revenues11,413
 9,160
Total sales and revenues14,994 12,397 
   
Operating costs: 
  
Operating costs:  
Cost of goods sold7,633
 6,527
Cost of goods sold10,202 8,617 
Selling, general and administrative expenses1,237
 992
Selling, general and administrative expenses1,401 1,340 
Research and development expenses455
 453
Research and development expenses476 427 
Interest expense of Financial Products163
 147
Interest expense of Financial Products151 111 
Other operating (income) expenses348
 560
Other operating (income) expenses339 238 
Total operating costs9,836
 8,679
Total operating costs12,569 10,733 
   
Operating profit1,577
 481
Operating profit2,425 1,664 
   
Interest expense excluding Financial Products118
 126
Interest expense excluding Financial Products109 114 
Other income (expense)64
 28
Other income (expense)242 225 
   
Consolidated profit before taxes1,523
 383
Consolidated profit before taxes2,558 1,775 
   
Provision (benefit) for income taxes470
 96
Provision (benefit) for income taxes527 368 
Profit of consolidated companies1,053
 287
Profit of consolidated companies2,031 1,407 
   
Equity in profit (loss) of unconsolidated affiliated companies8
 (4)Equity in profit (loss) of unconsolidated affiliated companies9 21 
   
Profit of consolidated and affiliated companies1,061
 283
Profit of consolidated and affiliated companies2,040 1,428 
   
Less: Profit (loss) attributable to noncontrolling interests2
 —
Less: Profit (loss) attributable to noncontrolling interests(1)2 
   
Profit 1
$1,059
 $283
Profit 1
$2,041 $1,426 
   
Profit per common share$1.79
 $0.48
Profit per common share$3.89 $2.62 
   
Profit per common share – diluted 2
$1.77
 $0.48
Profit per common share – diluted 2
$3.87 $2.60 
   
Weighted-average common shares outstanding (millions) 
  
Weighted-average common shares outstanding (millions)  
– Basic592.9
 584.7
– Basic525.0 544.0 
– Diluted 2
600.1
 589.6
– Diluted 2
527.6 547.6 
   
Cash dividends declared per common share$—
 $—
 
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.

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Caterpillar Inc.
Consolidated Statement of Comprehensive Income
(Unaudited)
(Dollars in millions)
 Three Months Ended September 30
 20222021
Profit of consolidated and affiliated companies$2,040 $1,428 
Other comprehensive income (loss), net of tax (Note 13):
   Foreign currency translation:(618)(242)
Pension and other postretirement benefits:(1)(8)
Derivative financial instruments:(191)(31)
Available-for-sale securities:(44)(5)
Total other comprehensive income (loss), net of tax(854)(286)
Comprehensive income1,186 1,142 
Less: comprehensive income attributable to the noncontrolling interests(1)2 
Comprehensive income attributable to shareholders$1,187 $1,140 
 Three Months Ended
September 30
 2017 2016
    
Profit of consolidated and affiliated companies$1,061
 $283
Other comprehensive income (loss), net of tax:   
   Foreign currency translation, net of tax (provision)/benefit of: 2017 - $28; 2016 - $4248
 137
    
   Pension and other postretirement benefits:
  
        Current year prior service credit (cost), net of tax (provision)/benefit of: 2017 - $0; 2016 - $0—
 2
        Amortization of prior service (credit) cost, net of tax (provision)/benefit of: 2017 - $2; 2016 - $5(4) (10)
    
   Derivative financial instruments:   
        Gains (losses) deferred, net of tax (provision)/benefit of: 2017 - $2; 2016 - $16(4) (28)
        (Gains) losses reclassified to earnings, net of tax (provision)/benefit of: 2017 - $(5); 2016 - $(2)11
 6
    
   Available-for-sale securities:   
        Gains (losses) deferred, net of tax (provision)/benefit of: 2017 - $(8); 2016 - $(1)11
 5
        (Gains) losses reclassified to earnings, net of tax (provision)/benefit of: 2017 - $12; 2016 - $3(24) (6)
    
Total other comprehensive income (loss), net of tax238
 106
Comprehensive income1,299
 389
Less: comprehensive income attributable to the noncontrolling interests(2) —
Comprehensive income attributable to shareholders$1,297
 $389
    


See accompanying notes to Consolidated Financial Statements.



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Caterpillar Inc.
Consolidated Statement of Results of Operations
(Unaudited)
(Dollars in millions except per share data)
 Nine Months Ended September 30
 20222021
Sales and revenues:  
Sales of Machinery, Energy & Transportation$40,703 $35,091 
Revenues of Financial Products2,127 2,082 
Total sales and revenues42,830 37,173 
Operating costs:  
Cost of goods sold29,736 25,510 
Selling, general and administrative expenses4,172 3,943 
Research and development expenses1,413 1,247 
Interest expense of Financial Products377 352 
Other operating (income) expenses908 854 
Total operating costs36,606 31,906 
Operating profit6,224 5,267 
Interest expense excluding Financial Products326 376 
Other income (expense)755 751 
Consolidated profit before taxes6,653 5,642 
Provision (benefit) for income taxes1,423 1,313 
Profit of consolidated companies5,230 4,329 
Equity in profit (loss) of unconsolidated affiliated companies20 44 
Profit of consolidated and affiliated companies5,250 4,373 
Less: Profit (loss) attributable to noncontrolling interests(1)4 
Profit 1
$5,251 $4,369 
Profit per common share$9.91 $8.00 
Profit per common share – diluted 2
$9.85 $7.94 
Weighted-average common shares outstanding (millions) 
– Basic530.1 545.8 
– Diluted 2
533.2 550.2 
 Nine Months Ended
September 30
 2017 2016
Sales and revenues:   
Sales of Machinery, Energy & Transportation$30,482
 $26,888
Revenues of Financial Products2,084
 2,075
Total sales and revenues32,566
 28,963
    
Operating costs: 
  
Cost of goods sold22,160
 20,768
Selling, general and administrative expenses3,571
 3,203
Research and development expenses1,326
 1,429
Interest expense of Financial Products484
 447
Other operating (income) expenses1,780
 1,356
Total operating costs29,321
 27,203
    
Operating profit3,245
 1,760
    
Interest expense excluding Financial Products362
 385
Other income (expense)88
 112
    
Consolidated profit before taxes2,971
 1,487
    
Provision (benefit) for income taxes921
 372
Profit of consolidated companies2,050
 1,115
    
Equity in profit (loss) of unconsolidated affiliated companies8
 (7)
    
Profit of consolidated and affiliated companies2,058
 1,108
    
Less: Profit (loss) attributable to noncontrolling interests5
 4
    
Profit 1
$2,053
 $1,104
    
Profit per common share$3.48
 $1.89
    
Profit per common share – diluted 2
$3.44
 $1.88
    
Weighted-average common shares outstanding (millions)   
– Basic590.3
 583.8
– Diluted 2
596.5
 588.7
    
Cash dividends declared per common share$1.55
 $1.54


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.

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Caterpillar Inc.
Consolidated Statement of Comprehensive Income
(Unaudited)
(Dollars in millions)
 Nine Months Ended September 30
 20222021
Profit of consolidated and affiliated companies$5,250 $4,373 
Other comprehensive income (loss), net of tax (Note 13):
   Foreign currency translation:(1,392)(490)
Pension and other postretirement benefits:(3)(23)
Derivative financial instruments:(254)(19)
Available-for-sale securities:(151)(20)
Total other comprehensive income (loss), net of tax(1,800)(552)
Comprehensive income3,450 3,821 
Less: comprehensive income attributable to the noncontrolling interests(1)4 
Comprehensive income attributable to shareholders$3,451 $3,817 
 Nine Months Ended
September 30
 2017 2016
    
Profit of consolidated and affiliated companies$2,058
 $1,108
Other comprehensive income (loss), net of tax:   
   Foreign currency translation, net of tax (provision)/benefit of: 2017 - $86; 2016 - $16719
 442
    
   Pension and other postretirement benefits:   
        Current year prior service credit (cost), net of tax (provision)/benefit of: 2017 - $(4); 2016 - $(69)8
 119
        Amortization of prior service (credit) cost, net of tax (provision)/benefit of: 2017 - $6; 2016 - $16(12) (29)
    
   Derivative financial instruments:   
        Gains (losses) deferred, net of tax (provision)/benefit of: 2017 - $(3); 2016 - $216
 (37)
        (Gains) losses reclassified to earnings, net of tax (provision)/benefit of: 2017 - $(41); 2016 - $(8)77
 16
    
   Available-for-sale securities:   
        Gains (losses) deferred, net of tax (provision)/benefit of: 2017 - $(17); 2016 - $(9)29
 21
        (Gains) losses reclassified to earnings, net of tax (provision)/benefit of: 2017 - $11; 2016 - $12(21) (24)
    
Total other comprehensive income (loss), net of tax806
 508
Comprehensive income2,864
 1,616
Less: comprehensive income attributable to the noncontrolling interests(5) (4)
Comprehensive income attributable to shareholders$2,859
 $1,612
    


See accompanying notes to Consolidated Financial Statements.







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Caterpillar Inc.
Consolidated Statement of Financial Position
(Unaudited)
(Dollars in millions)
September 30,
2017		 December 31,
2016		 September 30,
2022		December 31,
2021
Assets   Assets  
Current assets: 
  
Current assets:  
Cash and short-term investments$9,591
 $7,168
Cash and cash equivalentsCash and cash equivalents$6,346 $9,254 
Receivables – trade and other6,691
 5,981
Receivables – trade and other8,158 8,477 
Receivables – finance8,984
 8,522
Receivables – finance8,918 8,898 
Prepaid expenses and other current assets1,707
 1,682
Prepaid expenses and other current assets2,295 2,788 
Inventories10,212
 8,614
Inventories16,860 14,038 
Total current assets37,185
 31,967
Total current assets42,577 43,455 
   
Property, plant and equipment – net14,187
 15,322
Property, plant and equipment – net11,643 12,090 
Long-term receivables – trade and other969
 1,029
Long-term receivables – trade and other1,278 1,204 
Long-term receivables – finance13,192
 13,556
Long-term receivables – finance11,859 12,707 
Noncurrent deferred and refundable income taxes2,845
 2,790
Noncurrent deferred and refundable income taxes2,218 1,840 
Intangible assets2,175
 2,349
Intangible assets806 1,042 
Goodwill6,196
 6,020
Goodwill6,092 6,324 
Other assets1,811
 1,671
Other assets4,434 4,131 
Total assets$78,560
 $74,704
Total assets$80,907 $82,793 
   
Liabilities 
  
Liabilities  
Current liabilities: 
  
Current liabilities:  
Short-term borrowings: 
  
Short-term borrowings:  
Machinery, Energy & Transportation$11
 $209
Machinery, Energy & Transportation$3 $9 
Financial Products5,459
 7,094
Financial Products4,199 5,395 
Accounts payable6,113
 4,614
Accounts payable8,260 8,154 
Accrued expenses3,114
 3,003
Accrued expenses4,013 3,757 
Accrued wages, salaries and employee benefits2,333
 1,296
Accrued wages, salaries and employee benefits2,204 2,242 
Customer advances1,510
 1,167
Customer advances1,831 1,087 
Dividends payable—
 452
Dividends payable— 595 
Other current liabilities1,744
 1,635
Other current liabilities2,878 2,256 
Long-term debt due within one year: 
  
Long-term debt due within one year:  
Machinery, Energy & Transportation5

507
Machinery, Energy & Transportation120 45 
Financial Products5,614
 6,155
Financial Products6,694 6,307 
Total current liabilities25,903
 26,132
Total current liabilities30,202 29,847 
   
Long-term debt due after one year: 
  
Long-term debt due after one year:  
Machinery, Energy & Transportation8,820
 8,436
Machinery, Energy & Transportation9,479 9,746 
Financial Products16,015
 14,382
Financial Products16,030 16,287 
Liability for postemployment benefits8,973
 9,357
Liability for postemployment benefits5,038 5,592 
Other liabilities3,152
 3,184
Other liabilities4,536 4,805 
Total liabilities62,863
 61,491
Total liabilities65,285 66,277 
Commitments and contingencies (Notes 10 and 13)

 

Commitments and contingencies (Notes 11 and 14)Commitments and contingencies (Notes 11 and 14)
Shareholders’ equity 
  
Shareholders’ equity  
Common stock of $1.00 par value: 
  
Common stock of $1.00 par value:  
Authorized shares: 2,000,000,000
Issued shares: (9/30/17 and 12/31/16 – 814,894,624) at paid-in amount		5,460
 5,277
Treasury stock (9/30/17 – 219,961,042 shares; 12/31/16 – 228,408,600 shares) at cost(17,130) (17,478)
Authorized shares: 2,000,000,000
Issued shares: (9/30/22 and 12/31/21 – 814,894,624) at paid-in amount
Authorized shares: 2,000,000,000
Issued shares: (9/30/22 and 12/31/21 – 814,894,624) at paid-in amount
6,523 6,398 
Treasury stock: (9/30/22 – 294,485,269 shares; 12/31/21 – 279,006,573 shares) at costTreasury stock: (9/30/22 – 294,485,269 shares; 12/31/21 – 279,006,573 shares) at cost(30,883)(27,643)
Profit employed in the business28,530
 27,377
Profit employed in the business43,304 39,282 
Accumulated other comprehensive income (loss)(1,233) (2,039)Accumulated other comprehensive income (loss)(3,353)(1,553)
Noncontrolling interests70
 76
Noncontrolling interests31 32 
Total shareholders’ equity15,697
 13,213
Total shareholders’ equity15,622 16,516 
Total liabilities and shareholders’ equity$78,560
 $74,704
Total liabilities and shareholders’ equity$80,907 $82,793 
 
See accompanying notes to Consolidated Financial Statements.

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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
Three Months Ended September 30, 2021      
Balance at June 30, 2021$6,293 $(25,240)$36,934 $(1,154)$47 $16,880 
Profit of consolidated and affiliated companies— — 1,426 — 2 1,428 
Foreign currency translation, net of tax— — — (242)— (242)
Pension and other postretirement benefits, net of tax— — — (8)— (8)
Derivative financial instruments, net of tax— — — (31)— (31)
Available-for-sale securities, net of tax— — — (5)— (5)
Change in ownership from noncontrolling interests— — — — (16)(16)
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)
Stock-based compensation expense58 — — — — 58 
Common shares repurchased: 6,610,438 1
— (1,371)— — — (1,371)
Other6 (1)— — (1)4 
Balance at September 30, 2021$6,352 $(26,608)$38,361 $(1,440)$30 $16,695 
Three Months Ended September 30, 2022      
Balance at June 30, 2022$6,464 $(29,501)$41,263 $(2,499)$32 $15,759 
Profit of consolidated and affiliated companies— — 2,041 — (1)2,040 
Foreign currency translation, net of tax— — — (618)— (618)
Pension and other postretirement benefits, net of tax— — — (1)— (1)
Derivative financial instruments, net of tax— — — (191)— (191)
Available-for-sale securities, net of tax— — — (44)— (44)
Common shares issued from treasury stock for stock-based compensation: 75,534(5)4 — — — (1)
Stock-based compensation expense55 — — — — 55 
Common shares repurchased: 7,575,322 1
— (1,385)— — — (1,385)
Other9 (1)— — — 8 
Balance at September 30, 2022$6,523 $(30,883)$43,304 $(3,353)$31 $15,622 
 
Common
stock
 
Treasury
stock
 
Profit
employed
in the
business
 
Accumulated
other
comprehensive
income (loss)
 
Noncontrolling
interests
 Total
Nine Months Ended September 30, 2016           
Balance at December 31, 2015$5,238
 $(17,640) $29,246
 $(2,035) $76
 $14,885
Profit of consolidated and affiliated companies—
 —
 1,104
 —
 4
 1,108
Foreign currency translation, net of tax—
 —
 —
 442
 —
 442
Pension and other postretirement benefits, net of tax—
 —
 —
 90
 —
 90
Derivative financial instruments, net of tax—
 —
 —
 (21) —
 (21)
Available-for-sale securities, net of tax—
 —
 —
 (3) —
 (3)
Dividends declared—
 —
 (900) —
 —
 (900)
Distribution to noncontrolling interests—
 —
 —
 —
 (10) (10)
Common shares issued from treasury stock for stock-based compensation:  2,750,695(150) 96
 —
 —
 —
 (54)
Stock-based compensation expense187
 —
 —
 —
 —
 187
Net excess tax benefits from stock-based compensation(18) —
 —
 —
 —
 (18)
Other9
 —
 —
 —
 —
 9
Balance at September 30, 2016$5,266
 $(17,544) $29,450
 $(1,527) $70
 $15,715
            
Nine Months Ended September 30, 2017 
  
  
  
  
  
Balance at December 31, 2016$5,277
 $(17,478) $27,377
 $(2,039) $76
 $13,213
Adjustment to adopt stock-based compensation guidance1
—
 —
 15
 —
 —
 15
Balance at January 1, 2017$5,277
 $(17,478) $27,392
 $(2,039) $76
 $13,228
Profit of consolidated and affiliated companies—
 —
 2,053
 —
 5
 2,058
Foreign currency translation, net of tax—
 —
 —
 719
 —
 719
Pension and other postretirement benefits, net of tax—
 —
 —
 (4) —
 (4)
Derivative financial instruments, net of tax—
 —
 —
 83
 —
 83
Available-for-sale securities, net of tax—
 —
 —
 8
 —
 8
Change in ownership from noncontrolling interests4
 —
 —
 —
 (3) 1
Dividends declared—
 —
 (915) —
 —
 (915)
Distribution to noncontrolling interests—
 —
 —
 —
 (8) (8)
Common shares issued from treasury stock for stock-based compensation: 8,447,5585
 348
 —
 —
 —
 353
Stock-based compensation expense165
 —
 —
 —
 —
 165
Other9
 —
 —
 —
 —
 9
Balance at September 30, 2017$5,460
 $(17,130) $28,530
 $(1,233) $70
 $15,697
            
1 See Note 2 for additional information.
           

1 See Note 12 for additional information.



See accompanying notes to Consolidated Financial Statements.



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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, 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 expense169 — — — — 169 
Common shares repurchased: 7,772,393 2
— (1,622)— — — (1,622)
Other23 — — — (1)22 
Balance at September 30, 2021$6,352 $(26,608)$38,361 $(1,440)$30 $16,695 
Nine Months Ended September 30, 2022      
Balance at December 31, 2021$6,398 $(27,643)$39,282 $(1,553)$32 $16,516 
Profit of consolidated and affiliated companies— — 5,251 — (1)5,250 
Foreign currency translation, net of tax— — — (1,392)— (1,392)
Pension and other postretirement benefits, net of tax— — — (3)— (3)
Derivative financial instruments, net of tax— — — (254)— (254)
Available-for-sale securities, net of tax— — — (151)— (151)
Dividends declared 1
— — (1,229)— — (1,229)
Common shares issued from treasury stock for stock-based compensation: 1,529,753(67)69 — — — 2 
Stock-based compensation expense162 — — — — 162 
Common shares repurchased: 17,007,819 2
— (3,309)— — — (3,309)
Other30 — — — — 30 
Balance at September 30, 2022$6,523 $(30,883)$43,304 $(3,353)$31 $15,622 

1 Dividends per share of common stock of $2.31 and $2.14 were declared in the nine months ended September 30, 2022 and 2021, respectively.
2 See Note 12 for additional information.

See accompanying notes to Consolidated Financial Statements.

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Caterpillar Inc.
Consolidated Statement of Cash Flow
(Unaudited)
(Millions of dollars)
 Nine Months Ended September 30
 20222021
Cash flow from operating activities:  
Profit of consolidated and affiliated companies$5,250 $4,373 
Adjustments for non-cash items:  
Depreciation and amortization1,661 1,766 
Provision (benefit) for deferred income taxes(349)(321)
Other132 102 
Changes in assets and liabilities, net of acquisitions and divestitures:  
Receivables – trade and other365 (326)
Inventories(3,088)(2,195)
Accounts payable786 1,232 
Accrued expenses70 46 
Accrued wages, salaries and employee benefits15 934 
Customer advances751 39 
Other assets – net57 138 
Other liabilities – net(623)(2)
Net cash provided by (used for) operating activities5,027 5,786 
Cash flow from investing activities:  
Capital expenditures – excluding equipment leased to others(868)(673)
Expenditures for equipment leased to others(1,023)(1,014)
Proceeds from disposals of leased assets and property, plant and equipment666 877 
Additions to finance receivables(9,914)(9,603)
Collections of finance receivables9,738 9,221 
Proceeds from sale of finance receivables50 44 
Investments and acquisitions (net of cash acquired)(44)(449)
Proceeds from sale of businesses and investments (net of cash sold)1 23 
Proceeds from sale of securities2,080 424 
Investments in securities(2,399)(934)
Other – net15 (8)
Net cash provided by (used for) investing activities(1,698)(2,092)
Cash flow from financing activities:  
Dividends paid(1,820)(1,733)
Common stock issued, including treasury shares reissued2 122 
Common shares repurchased(3,309)(1,622)
Proceeds from debt issued (original maturities greater than three months):  
        Machinery, Energy & Transportation— 494 
        Financial Products5,570 6,437 
Payments on debt (original maturities greater than three months):  
        Machinery, Energy & Transportation(20)(1,910)
        Financial Products(5,269)(6,710)
Short-term borrowings – net (original maturities three months or less)(1,311)1,324 
Other – net(1)(4)
Net cash provided by (used for) financing activities(6,158)(3,602)
Effect of exchange rate changes on cash(79)(9)
Increase (decrease) in cash, cash equivalents and restricted cash(2,908)83 
Cash, cash equivalents and restricted cash at beginning of period9,263 9,366 
Cash, cash equivalents and restricted cash at end of period$6,355 $9,449 
 Nine Months Ended
September 30
 2017 2016
Cash flow from operating activities:   
Profit of consolidated and affiliated companies$2,058
 $1,108
Adjustments for non-cash items: 
  
Depreciation and amortization2,153
 2,255
Other592
 640
Changes in assets and liabilities, net of acquisitions and divestitures: 
  
Receivables – trade and other(455) 1,128
Inventories(1,489) 331
Accounts payable1,371
 (163)
Accrued expenses121
 (153)
Accrued wages, salaries and employee benefits962
 (727)
Customer advances310
 (24)
Other assets – net(137) (141)
Other liabilities – net(325) (279)
Net cash provided by (used for) operating activities5,161
 3,975
    
Cash flow from investing activities: 
  
Capital expenditures – excluding equipment leased to others(566) (807)
Expenditures for equipment leased to others(1,071) (1,393)
Proceeds from disposals of leased assets and property, plant and equipment864
 572
Additions to finance receivables(8,246) (6,911)
Collections of finance receivables8,532
 6,968
Proceeds from sale of finance receivables98
 55
Investments and acquisitions (net of cash acquired)(47) (72)
Proceeds from sale of businesses and investments (net of cash sold)93
 —
Proceeds from sale of securities431
 304
Investments in securities(594) (339)
Other – net38
 5
Net cash provided by (used for) investing activities(468) (1,618)
    
Cash flow from financing activities: 
  
Dividends paid(1,367) (1,348)
Distribution to noncontrolling interests(7) (8)
Common stock issued, including treasury shares reissued353
 (54)
Proceeds from debt issued (original maturities greater than three months): 
  
        Machinery, Energy & Transportation362
 6
        Financial Products6,972
 4,424
Payments on debt (original maturities greater than three months): 
  
        Machinery, Energy & Transportation(506) (525)
        Financial Products(5,714) (5,077)
Short-term borrowings – net (original maturities three months or less)(2,403) (111)
Net cash provided by (used for) financing activities(2,310) (2,693)
Effect of exchange rate changes on cash40
 (11)
Increase (decrease) in cash and short-term investments2,423
 (347)
Cash and short-term investments at beginning of period7,168
 6,460
Cash and short-term investments at end of period$9,591
 $6,113


AllCash equivalents primarily represent short-term, investments, which consist primarily of highly liquid investments with original maturities of generally three months or less are considered to be cash equivalents.
Non-cash activities: In September 2016, $381 million of medium-term notes with varying interest rates and maturity dates were exchanged for $366 million of
1.93% medium-term notes due in 2021 and $15 million of cash. In addition, a debt exchange premium of $33 million was paid and is included in the operating
activities section of the Consolidated Statement of Cash Flow.
See accompanying notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1.A.  Nature of operations
1.A.  Nature of operations
 
Information in our financial statements and related commentary are presented in the following categories:
 
Machinery, Energy & Transportation (ME&T) – RepresentsWe define ME&T as Caterpillar Inc. and its subsidiaries, excluding Financial Products. ME&T’s information relates to the aggregate totaldesign, manufacturing and marketing of Construction Industries, Resource Industries, Energy & Transportation and All Other operating segments and related corporate items and eliminations.our products.
 
Financial Products – Primarily includes the company’sWe define Financial Products Segment.  This category includesas our finance and insurance subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial), and Caterpillar Financial Insurance ServicesHoldings Inc. (Insurance Services). Financial Products’ information relates to the financing to customers and their respective subsidiaries.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, 20172022 and 2016,2021, (b) the consolidated comprehensive income for the three and nine months ended September 30, 20172022 and 2016,2021, (c) the consolidated financial position at September 30, 20172022 and December 31, 2016,2021, (d) the consolidated changes in shareholders’ equity for the three and nine months ended September 30, 20172022 and 20162021 and (e) the consolidated cash flow for the nine months ended September 30, 20172022 and 2016.2021.  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, 2016 (20162021 (2021 Form 10-K).
 
The December 31, 20162021 financial position data included herein is derived from the audited consolidated financial statements included in the 20162021 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. See Note 2 for more information.


Unconsolidated Variable Interest Entities (VIEs)

We have affiliates, suppliersCat Financial has end-user customers and dealers that are VIEsvariable interest entities (VIEs) of which we are not the primary beneficiary. Although we have provided financial support, we do not have the power to direct the activities that most significantly impact the economic performance of each entity.

Our maximum exposure to loss from VIEs for which we are not the primary beneficiary was as follows:

      
(Millions of dollars) September 30, 2017 December 31, 2016 
Receivables - trade and other $18
 $55
 
Receivables - finance 161
 174
 
Long-term receivables - finance 218
 246
 
Investments in unconsolidated affiliated companies 38
 31
 
Guarantees 270
 210
 
Total $705
 $716
 
      


In addition, Cat Financial has end-user customers that are 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 areCredit risk was 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

Revenue recognition - In May 2014,A. Adoption of new accounting standards

We consider the Financial Accounting Standards Board (FASB) issued new revenue recognition guidance to provide a single, comprehensive revenue recognition model forapplicability and impact of all contracts with customers. UnderASUs. We adopted the new guidance, an entity will recognize revenue to depict the transfer of promised goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. A five step model has been introduced for an entity to apply when recognizing revenue. The new guidance also includes enhanced disclosure requirements, and isfollowing ASUs effective January 1, 2018. Entities have the option to apply the new guidance under a retrospective approach to each prior reporting period presented, or a modified retrospective approach with the cumulative effect2022, none of initially applying the new guidance recognized at the date of initial application within the Consolidated Statement of Changes in Shareholders' Equity. We will adopt the new guidance effective January 1, 2018 under the modified retrospective approach. We have completed our evaluation of the impact of the new standard. Under the new guidance, sales of certain turbine machinery units will change to a point-in-time recognition model. Under current guidance, we account for these sales under an over-time model following the percentage-of-completion method as the product is manufactured. In addition, under the new guidance we will begin to recognize an asset for the value of expected replacement part returns and will discontinue lease accounting treatment for certain product sales containing residual value guarantees. We are currently in the process of updating our accounting policies and internal controls over financial reporting. The actual impact from adoption on our financial statements will be based on the specific revenue contracts existing as of January 1, 2018, however we have not identified any impacts to our financial statements or disclosures that we believe will be material in the year of adoption.

Simplifying the measurement of inventory – In July 2015, the FASB issued accounting guidance which requires that inventory be measured at the lower of cost or net realizable value. Prior to the issuance of the new guidance, inventory was measured at the lower of cost or market. Replacing the concept of market with the single measurement of net realizable value is intended to create efficiencies for preparers. Inventory measured using the last-in, first-out (LIFO) method and the retail inventory method are not impacted by the new guidance. The guidance was effective January 1, 2017, and was applied prospectively. The adoption did not havehad a material impact on our financial statements.statements:

ASUDescription
2020-06Debt with conversion and other options and derivatives and hedging
2021-05Lessor - Variable lease payments
2021-10Government assistance
Recognition
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B. Accounting standards issued but not yet adopted

We consider the applicability and measurementimpact of financial assetsall ASUs. We assessed the ASUs and financial liabilities– In January 2016, the FASB issued accounting guidancedetermined that affects the accounting for equity investments, financial liabilities accounted for under the fair value option and the presentation and disclosure requirements for financial instruments. Under the new guidance, all equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) will generally be measured at fair value through earnings. There will no longer be an available-for-sale classification for equity securities with readily determinable fair values. For financial liabilities when the fair value option has been elected, changes in fair value duethey either were not applicable or were not expected to instrument-specific credit risk will be recognized separately in other comprehensive income. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new guidance is effective January 1, 2018, with the cumulative effect adjustment from initially applying the new guidance recognized in the Consolidated Statement of Financial Position as of the beginning of the year of adoption. The impact on our financial statements at the time of adoption will primarily be based on changes in the fair value of our available-for-sale equity securities subsequent to January 1, 2018, which will be recorded through earnings.

Lease accounting– In February 2016, the FASB issued accounting guidance that revises the accounting for leases. Under the new guidance, lessees are required to recognize a right-of-use asset and a lease liability for all leases. The new guidance will continue to classify leases as either financing or operating, with classification affecting the pattern of expense recognition. The accounting applied by a lessor under the new guidance will be substantially equivalent to current lease accounting guidance. The new guidance is effective January 1, 2019, with early adoption permitted. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented and provides for certain practical expedients. We have formed an implementation team and are in the process of evaluating the effect of the new guidance on our financial statements.

Stock-based compensation– In March 2016, the FASB issued accounting guidance to simplify several aspects of the accounting for share-based payments. The new guidance changes how reporting entities account for certain aspects of

share-based payments, including the accounting for income taxes and the classification of the tax impact on the Consolidated Statement of Cash Flow. Under the new guidance all excess tax benefits and deficiencies during the period are recognized in income (rather than equity) on a prospective basis. The guidance removes the requirement to delay recognition of excess tax benefits until it reduces income taxes currently payable. This change was required to be applied on a modified retrospective basis, resulting in a cumulative-effect adjustment to opening retained earnings in the period of adoption. In addition, Cash flows related to excess tax benefits are now included in Cash provided by operating activities and will no longer be separately classified as a financing activity. This change was adopted retrospectively. The guidance was effective January 1, 2017, and did not have a material impact on our financial statements.


Measurement
3.Sales and revenue contract information

Trade receivables represent amounts due from dealers and end users for the sale of credit losses on financial instruments– In June 2016, the FASB issued accounting guidance to introduceour products, and include amounts due from wholesale inventory financing provided by Cat Financial for a new model for recognizing credit losses on financial instruments based on an estimatedealer’s purchase of current expected credit losses. The new guidance will apply to loans, accounts receivable,inventory. We recognize trade receivables other financial assets measured at amortized cost, loan commitmentsfrom dealers (including wholesale inventory financing) and end users in Receivables – trade and other off-balance sheet credit exposures. The new guidance will also apply to debt securitiesand Long-term receivables – trade and other financial assets measured at fair value through other comprehensive income. The new guidance is effective January 1, 2020, with early adoption permitted beginning January 1, 2019. We are in the process of evaluating the effect of the new guidance on our financial statements.

Classification for certain cash receipts and cash payments– In August 2016, the FASB issued accounting guidance related to the presentation and classification of certain transactions in the statement of cash flows where diversity in practice exists. The guidance is effective January 1, 2018, with early adoption permitted. We do not expect the adoption to have a material impact on our financial statements.

Tax accounting for intra-entity asset transfers– In October 2016, the FASB issued accounting guidance that will require the tax effects of intra-entity asset transfers to be recognized in the period when the transfer occurs. Under current guidance, the tax effects of intra-entity sales of assets are deferred until the transferred asset is sold to a third party or otherwise recovered through use. The new guidance does not apply to intra-entity transfers of inventory. The guidance is effective January 1, 2018, and is required to be applied on a modified retrospective basis through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. Based on our current assessment, we do not expect the adoption to have a material impact on our financial statements.

Classification of restricted cash– In November 2016, the FASB issued accounting guidance related to the presentation and classification of changes in restricted cash on the statement of cash flows where diversity in practice exists. The new standard is required to be applied with a retrospective approach. The guidance is effective January 1, 2018, with early adoption permitted. We do not expect the adoption to have a material impact on our financial statements.

Clarification on the definition of a business– In January 2017, the FASB issued accounting guidance to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective January 1, 2018, with early adoption permitted. We adopted the guidance effective January 1, 2017, and the adoption did not have a material impact on our financial statements.

Simplifying the measurement for goodwill – In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The new guidance will be applied prospectively and is effective January 1, 2020, with early adoption permitted beginning January 1, 2017. We adopted the guidance effective January 1, 2017. The adoption did not have a material impact on our financial statements.

Presentation of net periodic pension costs and net periodic postretirement benefit costs – In March 2017, the FASB issued accounting guidance that will require that an employer disaggregate the service cost component from the other components of net benefit cost. Service cost is required to be reported in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit cost are required to be reported outside the subtotal for income from operations. Additionally, only the service cost component of net benefit costs are eligible for capitalization. The guidance is effective January 1, 2018, with early adoption permitted. We will adopt this guidance on January 1, 2018, and apply the presentation changes retrospectively and the capitalization change prospectively. The impact on our financial statements at the time of adoption will primarily be reclassification of other components of net periodic benefit cost outside of Operating profit in the Consolidated Statement of ResultsFinancial Position. Trade receivables from dealers and end users were $6,736 million, $7,267 million and $6,310 million as of Operations.

Premium amortization on purchased callable debt securities – In March 2017, the FASB issued accounting guidance related to the amortization period for certain purchased callable debt securities held at a premium. Securities held at a premium will be required to be amortized to the earliest call date rather than the maturity date. The new standard is required to be applied with a modified retrospective approach through a cumulative-effect adjustment directly to retained earningsSeptember 30, 2022, December 31, 2021 and December 31, 2020, respectively. Long-term trade receivables from dealers and end users were $448 million, $624 million and $657 million as of September 30, 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 $2,290 million, $1,557 million and $1,526 million as of September 30, 2022, December 31, 2021 and December 31, 2020, respectively. We reduce the contract liability when revenue is recognized. During the three and nine months ended September 30, 2022, we recognized $124 million and $781 million, respectively, of revenue that was recorded as a contract liability at the beginning of 2022. During the periodthree and nine months ended September 30, 2021, we recognized $121 million and $795 million, respectively, of adoption.revenue that was recorded as a contract liability at the beginning of 2021.

As of September 30, 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 guidancedollar amount of unsatisfied performance obligations for contracts with an original duration greater than one year is effective January 1, 2019,$10.9 billion, with early adoption permitted. We do not expectabout one-half of the adoption to have a material impact on our financial statements.

Clarification on stock-based compensation– In May 2017, the FASB issued accounting guidance to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The new standard is requiredamount expected to be applied prospectively. The guidance is effective January 1, 2018, with early adoption permitted. We do not expect the adoption to have a material impact on our financial statements.

Derivativescompleted and hedging– In August 2017, the FASB issued accounting guidance to better align hedge accounting with a company’s risk management activities, simplify the application of hedge accounting and improve the disclosures of hedging arrangements. The new guidance is required to be applied on a modified retrospective basis, resulting in a cumulative-effect adjustment to opening retained earningsrevenue recognized in the periodtwelve months following September 30, 2022. We have elected the practical expedient not to disclose unsatisfied performance obligations with an original contract duration of adoption. The guidance is effective January 1, 2019,one year or less. Contracts with early adoption permitted. Wean original duration of one year or less are in the process of evaluating the effect of the new guidance on our financial statements.primarily sales to dealers for machinery, engines and replacement parts.


See Note 16 for further disaggregated sales and revenues information.
3.
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) and stock-settled stock appreciation rights (SARs).

Upon separation from service, if the participant is 55 years of age or older with more than five years of service, the participant meets the criteria for a "Long Service Separation." Award terms for awards granted in 2016 allow for immediate vesting upon separation of all outstanding options and RSUs with no requisite service period for employees who meet the criteria for a "Long Service Separation." Compensation expense was fully recognized immediately on the grant date for these employees. Award terms for the 2017 grant allow for continued vesting as of each vesting date specified in the award document for employees who meet the criteria for a "Long Service Separation" and fulfill a requisite service period of six months. Compensation expense for eligible employees for the 2017 grant is recognized over the period from the grant date to the end date of the six-month requisite service period. For employees who become eligible for a "Long Service Separation" subsequent to the end date of the six-month requisite service period and prior to the completion of the vesting period, compensation expense is recognized over the period from the grant date to the date eligibility is achieved.

Prior to 2017, all outstanding PRSU awards granted to employees eligible for a "Long Service Separation" may vest at the end of the performance period based upon achievement of the performance target. Compensation expense for the 2016 PRSU grant was fully recognized immediately on the grant date for these employees. For PRSU awards granted in 2017, only a prorated number of shares may vest at the end of the performance period based upon achievement of the performance target, with the proration based upon the number of months of continuous employment during the three-year performance period. Employees with a "Long Service Separation" must also fulfill a six-month requisite service period in order to be eligible for the prorated vesting of outstanding PRSU awards granted in 2017. Compensation expense for the 2017 PRSU grant is recognized on a straight-line basis over the three-year performance period for all participants.

During the second quarter of 2017, the 2014 Long-Term Incentive Plan (the Plan) was amended and restated. The Plan initially provided that up to 38,800,000 Common Shares would be reserved for future issuance under the Plan, subject to adjustment in certain events. Upon shareholder approval of the amendment and restatement of the Plan, an additional 36,000,000 Common Shares became available for all awards under the Plan.


We recognized pretax stock-based compensation expense of $48$55 million and $165$162 million for the three and nine months ended September 30, 2017,2022, respectively, and $41$58 million and $187$169 million for the three and nine months ended September 30, 2016,2021, respectively.



The following table illustrates the type and fair value of the stock-based compensation awards granted during the nine months ended September 30, 20172022 and 2016,2021, respectively:


           
Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2022Nine Months Ended September 30, 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 GrantedWeighted-Average Fair Value Per ShareWeighted-Average Grant Date Stock PriceShares GrantedWeighted-Average Fair Value Per ShareWeighted-Average Grant Date Stock Price
Stock options2,701,644
 $25.01
 $95.66
 4,243,272
 $20.64
 $74.77
Stock options1,029,202 $51.69 $196.70 1,084,821 $56.30 $219.76 
RSUs924,421
 $90.11
 $96.01
 1,085,505
 $68.04
 $74.77
RSUs484,025 $196.70 $196.70 448,311 $219.76 $219.76 
PRSUs437,385
 $86.78
 $95.66
 614,347
 $64.71
 $74.77
PRSUs258,900 $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 months ended September 30, 20172022 and 2016,2021, respectively:
 
 
Grant Year Grant Year
2017 2016 20222021
Weighted-average dividend yield3.42% 3.23%Weighted-average dividend yield2.60%2.60%
Weighted-average volatility29.2% 31.1%Weighted-average volatility31.7%32.9%
Range of volatilities22.1-33.0% 22.5-33.4%Range of volatilities25.3% - 36.8%29.2% - 45.8%
Range of risk-free interest rates0.81-2.35% 0.62-1.73%Range of risk-free interest rates1.03% - 2.00%0.06% - 1.41%
Weighted-average expected lives8 years 8 yearsWeighted-average expected lives8 years8 years
 
 
As of September 30, 2017,2022, the total remaining unrecognized compensation expense related to nonvested stock-based compensation awards was $188$173 million, which will be amortized over the weighted-average remaining requisite service periods of approximately 1.91.8 years.
 
4.5.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.  Risk management practices, including the use of financial derivative instruments, are presentedWe present at least annually to the Audit Committee of the Board of Directors at least annually.on our risk management practices, including our use of financial derivative instruments.
 
AllWe recognize all derivatives are recognizedat their fair value on the Consolidated Statement of Financial Position at their fair value.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. ChangesWe 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, are recordedrisk. We record in current earnings. ChangesAccumulated 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, are recorded in Accumulated other comprehensive income (loss) (AOCI), to the extent effective, on the Consolidated Statement of Financial Position until they are reclassifiedwe reclassify them to earnings in the same period or periods during which the hedged transaction affects earnings.  ChangesWe report changes in the fair value of undesignated derivative instruments and the ineffective portion of designated derivative instruments are reported in current earnings. CashWe classify cash flows from designated derivative financial instruments are classified within the same category as the item being hedged on the Consolidated Statement of Cash Flow.  CashWe include cash flows from undesignated derivative financial instruments are included 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.


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 Machinery, Energy & TransportationME&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, 2017,2022, the maximum term of these outstanding contracts at inception was approximately 5160 months.
 
We generally designate as cash flow hedges at inception of the contract any Australian dollar, Brazilian real, British pound, Canadian dollar, Chinese yuan, euro, Indian rupee, Japanese yen, Mexican peso, Norwegian krona, Singapore dollar or Thailand bahtforeign currency forward or option contracts that meet the requirements for hedge accounting and the maturity extends beyond the current quarter-end. Designation is performedWe perform designation on a specific exposure basis to support hedge accounting. The remainder of Machinery, Energy & TransportationME&T foreign currency contracts are undesignated.  
As of September 30, 2017, $4 million of deferred net gains, net of tax, included in equity (AOCI in the Consolidated Statement of Financial Position), are expected to be reclassified to current earnings (Other income (expense) in the Consolidated Statement of Results of Operations) over the next twelve months when earnings are affected by the hedged transactions.  The actual amount recorded in Other income (expense) will vary based on exchange rates at the time the hedged transactions impact earnings.
 
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 option and cross currencyoption 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 ratefixed-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 Machinery, Energy & TransportationME&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)rate and duration) of Cat Financial’s debt portfolio with the interest rate profile of theirour 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.
 
We have, at certain times, liquidated fixed-to-floating and floating-to-fixed interest rate contracts at both Machinery, Energy & TransportationME&T and Financial Products. TheWe amortize the gains or losses associated with these contracts at the time of liquidation are amortized 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 material.materials. Our policy is to use commodity forward and option contracts to manage the commodity risk and reduce the cost of purchased materials.
 
Our Machinery, Energy & TransportationME&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 arewere as follows:

      
 (Millions of dollars)
Consolidated Statement of Financial Asset (Liability) Fair Value
 Position Location September 30, 2017 December 31, 2016
Designated derivatives     
Foreign exchange contracts   
  
Machinery, Energy & TransportationReceivables – trade and other $14
 $13
Machinery, Energy & TransportationLong-term receivables – trade and other 3
 —
Machinery, Energy & TransportationAccrued expenses (8) (93)
Machinery, Energy & TransportationOther liabilities (5) (36)
Financial ProductsLong-term receivables – trade and other 8
 29
Financial ProductsAccrued expenses (41) (3)
Interest rate contracts     
Financial ProductsLong-term receivables – trade and other 3
 4
Financial ProductsAccrued expenses (1) (1)
   $(27) $(87)
Undesignated derivatives   
  
Foreign exchange contracts   
  
Machinery, Energy & TransportationReceivables – trade and other $11
 $—
Machinery, Energy & TransportationAccrued expenses (2) (30)
Financial ProductsReceivables – trade and other 42
 39
Financial ProductsAccrued expenses (8) (4)
Commodity contracts     
Machinery, Energy & TransportationReceivables – trade and other 12
 10
   $55
 $15
      
(Millions of dollars)Fair Value
September 30, 2022December 31, 2021
Assets1
Liabilities2
Assets1
Liabilities2
Designated derivatives
Foreign exchange contracts$692 $(394)$228 $(64)
Interest rate contracts94 (302)38 (15)
Total$786 $(696)$266 $(79)
Undesignated derivatives
Foreign exchange contracts$118 $(78)$46 $(42)
Commodity contracts9 (43)30 (9)
Total$127 $(121)$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.







The total notional amounts of the derivative instruments are as follows:

     
(Millions of dollars) September 30, 2017 December 31, 2016
     
Machinery, Energy & Transportation $2,081
 $2,530
Financial Products $3,560
 $2,626
     

of September 30, 2022 and December 31, 2021 were $24.8 billion and $18.9 billion, respectively. The notional amounts of the derivative financial instruments do not represent amounts exchanged by the parties. TheWe calculate the amounts exchanged by the parties are calculated by reference toreferencing the notional amounts and by other terms of the derivatives, such as foreign currency exchange rates, interest rates or commodity prices.


Gains (Losses) on derivative instruments are categorized as follows:

(Millions of dollars)Three Months Ended September 30
Fair Value / Undesignated HedgesCash Flow Hedges
Gains (Losses) Recognized on the Consolidated Statement of Results of Operations1
Gains (Losses) Recognized in AOCI
Gains (Losses) Reclassified from AOCI2
202220212022202120222021
Foreign exchange contracts$(2)$46 $18 $42 $289 $90 
Interest rate contracts(5)5 26 3 7 (5)
Commodity contracts(42)(30)— — — — 
Total$(49)$21 $44 $45 $296 $85 
1 Foreign exchange contract and Commodity contract gains (losses) are included in Other income (expense). Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products.
2 Foreign exchange contract gains (losses) are primarily included in Other income (expense) in the Consolidated Statement of Results of Operations. Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products in the Consolidated Statement of Results of Operations.
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(Millions of dollars)Nine Months Ended September 30
Fair Value / Undesignated HedgesCash Flow Hedges
Gains (Losses) Recognized on the Consolidated Statement of Results of Operations1
Gains (Losses) Recognized in AOCI
Gains (Losses) Reclassified from AOCI2
202220212022202120222021
Foreign exchange contracts$(32)$77 $195 $130 $638 $187 
Interest rate contracts12 18 103 11 (2)(23)
Commodity contract3 35 — — — — 
Total$(17)$130 $298 $141 $636 $164 
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 excluding Financial Products.
2 Foreign exchange contract gains (losses) are primarily included in Other income (expense). Interest rate contract gains (losses) are primarily included in Interest expense excluding Financial Products.

The effect of derivatives designated as hedging instrumentsfollowing amounts were recorded on the Consolidated Statement of Results of Operations is as follows: Financial Position related to cumulative basis adjustments for fair value hedges:


Fair Value Hedges      
   Three Months Ended
September 30, 2017		 Three Months Ended
September 30, 2016		 
 (Millions of dollars)
Classification 
Gains (Losses) 
on Derivatives
 
Gains (Losses) 
on Borrowings
 
Gains (Losses) 
on Derivatives
 
Gains (Losses) 
on Borrowings
 
Interest rate contracts         
 
Financial ProductsOther income (expense) $—
 $—
 $(11) $11
 
   $—
 $—
 $(11) $11
 
           
   Nine Months Ended
September 30, 2017		 Nine Months Ended
September 30, 2016		 
 Classification 
Gains (Losses) 
on Derivatives
 
Gains (Losses) 
on Borrowings
 
Gains (Losses) 
on Derivatives
 
Gains (Losses) 
on Borrowings
 
Interest rate contracts          
Financial ProductsOther income (expense) $(1) $1
 $(11) $10
 
   $(1) $1
 $(11) $10
 
           
(Millions of dollars)Carrying Value of the Hedged LiabilitiesCumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Liabilities
September 30, 2022December 31, 2021September 30, 2022December 31, 2021
Long-term debt due within one year$— $755 $— $5 
Long-term debt due after one year3,796 1,304 (227)(2)
Total$3,796 $2,059 $(227)$3 



         
Cash Flow Hedges        
 Three Months Ended September 30, 2017 
   Recognized in Earnings 
 (Millions of dollars)
Amount of Gains
(Losses) Recognized 
in AOCI
(Effective Portion)
 
Classification of 
Gains (Losses)
 
Amount of
Gains (Losses)
Reclassified 
from AOCI to
Earnings
 
Recognized
in Earnings 
(Ineffective
Portion)
 
Foreign exchange contracts 
    
  
 
Machinery, Energy & Transportation$16
 Other income (expense) $4
 $—
 
Financial Products(21) Other income (expense) (20) —
 
Interest rate contracts        
Machinery, Energy & Transportation—
 Interest expense excluding Financial Products (2) —
 
Financial Products(1) Interest expense of Financial Products 2
 —

 $(6)   $(16) $—
 
 Three Months Ended September 30, 2016 
   Recognized in Earnings 
 
Amount of Gains
(Losses) Recognized 
in AOCI
(Effective Portion)
 
Classification of 
Gains (Losses)
 
Amount of
Gains (Losses)
Reclassified 
from AOCI to
Earnings
 
Recognized
in Earnings 
(Ineffective
Portion)
 
Foreign exchange contracts        
Machinery, Energy & Transportation$(29) Other income (expense) $4
 $—
 
Financial Products(17) Other income (expense) (10) —
 
Interest rate contracts 
    
  
 
Machinery, Energy & Transportation—
 Interest expense excluding Financial Products (2) —
 
Financial Products2
 Interest expense of Financial Products —
 —

 $(44)   $(8) $—
 
         
 Nine Months Ended September 30, 2017 
   Recognized in Earnings 
 
Amount of Gains
(Losses) Recognized 
in AOCI
(Effective Portion)
 
Classification of 
Gains (Losses)
 
Amount of
Gains (Losses)
Reclassified 
from AOCI to
Earnings
 
Recognized
in Earnings 
(Ineffective
Portion)
 
Foreign exchange contracts        
Machinery, Energy & Transportation$72
 Other income (expense) $(49)
$—
 
Financial Products(62) Other income (expense) (69) —
 
Interest rate contracts     
  
 
Machinery, Energy & Transportation—
 Interest expense excluding Financial Products (5) —
 
Financial Products(1) Interest expense of Financial Products 5
 —

 $9
   $(118) $—
 
         
 Nine Months Ended September 30, 2016 
   Recognized in Earnings 
 
Amount of Gains
(Losses) Recognized 
in AOCI
(Effective Portion)
 
Classification of 
Gains (Losses)
 
Amount of
Gains (Losses)
Reclassified 
from AOCI to
Earnings
 
Recognized
in Earnings 
(Ineffective
Portion)
 
Foreign exchange contracts        
Machinery, Energy & Transportation$(35) Other income (expense) $—

$—
 
Financial Products(23) Other income (expense) (16) —
 
Interest rate contracts 
    
  
 
Machinery, Energy & Transportation—
 Interest expense excluding Financial Products (5) —
 
Financial Products—
 Interest expense of Financial Products (3) —

 $(58)   $(24) $—
 
         


The effect of derivatives not designated as hedging instruments on the Consolidated Statement of Results of Operations is as follows: 

    
  
 (Millions of dollars)
Classification of Gains (Losses) Three Months Ended
September 30, 2017		 Three Months Ended
September 30, 2016
Foreign exchange contracts     
Machinery, Energy & TransportationOther income (expense) $15
 $2
Financial ProductsOther income (expense) 11
 (5)
Commodity contracts   
  
Machinery, Energy & TransportationOther income (expense) 11
 3
   $37
 $—
      
 Classification of Gains (Losses) Nine Months Ended
September 30, 2017		 Nine Months Ended
September 30, 2016
Foreign exchange contracts     
Machinery, Energy & TransportationOther income (expense) $67
 $24
Financial ProductsOther income (expense) 21
 (33)
Commodity contracts     
Machinery, Energy & TransportationOther income (expense) 12
 9
   $100
 $—
      

We enter into International Swaps and Derivatives Association (ISDA) master netting agreements within Machinery, Energy & TransportationME&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 generallymay 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 generallytypically not required of the counterparties or of our company under the master netting agreements. As of September 30, 20172022 and December 31, 2016,2021, no cash collateral was received or pledged under the master netting agreements.



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


(Millions of dollars)September 30, 2022December 31, 2021
AssetsLiabilitiesAssetsLiabilities
Gross Amounts Recognized$913 $(817)$342 $(130)
Financial Instruments Not Offset(282)282 (114)114 
Cash Collateral Received— — — — 
Net Amount$631 $(535)$228 $(16)

16
             
September 30, 2017       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 $40
 $—
 $40
 $(14) $—
 $26
Financial Products 53
 —
 53
 (8) —
 45
 Total $93
 $—
 $93
 $(22) $—
 $71
Table of Contents
September 30, 2017       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 $(15) $—
 $(15) $14
 $—
 $(1)
Financial Products (50) —
 (50) 8
 —
 (42)
 Total $(65) $—
 $(65) $22
 $—
 $(43)
December 31, 2016       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 $23
 $—
 $23
 $(21) $—
 $2
Financial Products 72
 —
 72
 (7) —
 65
 Total $95
 $—
 $95
 $(28) $—
 $67
December 31, 2016       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 $(159) $—
 $(159) $21
 $—
 $(138)
Financial Products (8) —
 (8) 7
 —
 (1)
 Total $(167) $—
 $(167) $28
 $—
 $(139)
             


5.6.Inventories
 
Inventories (principally using the last-in, first-out (LIFO) method) arewere comprised of the following:
 
    
(Millions of dollars)September 30,
2017		 December 31,
2016
Raw materials$2,777
 $2,102
Work-in-process2,241
 1,719
Finished goods4,990
 4,576
Supplies204
 217
Total inventories$10,212
 $8,614
    

During the first nine months of 2017, there was a liquidation of LIFO inventory resulting from closure of our facility in Gosselies, Belgium. The liquidated inventory was carried at lower costs prevailing in prior years as compared with current costs. The effect of this reduction of inventory decreased Cost of goods sold by approximately $62 million and increased Profit by approximately $45 million or $0.07 per share.

6.Investments in unconsolidated affiliated companies
(Millions of dollars)September 30,
2022		December 31,
2021
Raw materials$6,335 $5,528 
Work-in-process1,836 1,318 
Finished goods8,387 6,907 
Supplies302 285 
Total inventories$16,860 $14,038 
    
Investments in unconsolidated affiliated companies, included in Other assets in the Consolidated Statement of Financial Position, were as follows:

    
(Millions of dollars)September 30,
2017		 December 31,
2016
Investments in equity method companies$219
 $192
Plus: Investments in cost method companies33
 57
Total investments in unconsolidated affiliated companies$252
 $249
    

In May 2017, we sold our equity interest in IronPlanet Holdings Inc. for $93 million. We recognized a pretax gain of $85 million (included in Other income (expense)) and derecognized the carrying value of our noncontrolling interest, which was included in Other assets in the Consolidated Statement of Financial Position. The gain on the disposal is included as a reconciling item between Segment profit and Consolidated profit before taxes.


7.Intangible assets and goodwill
 
A.  Intangible assets
 
Intangible assets arewere comprised of the following:
 
  September 30, 2022
(Millions of dollars)Weighted
Amortizable
Life (Years)		Gross
Carrying
Amount		Accumulated
Amortization		Net
Customer relationships16$2,183 $(1,604)$579 
Intellectual property121,470 (1,287)183 
Other16128 (84)44 
Total finite-lived intangible assets14$3,781 $(2,975)$806 
        
   September 30, 2017
(Millions of dollars)
Weighted
Amortizable
Life (Years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 Net
Customer relationships15 $2,433
 $(1,077) $1,356
Intellectual property11 1,529
 (812) 717
Other13 191
 (89) 102
Total finite-lived intangible assets14 $4,153
 $(1,978) $2,175

  December 31, 2021
Weighted
Amortizable
Life (Years)		Gross
Carrying
Amount		Accumulated
Amortization		Net
Customer relationships15$2,421 $(1,709)$712 
Intellectual property121,472 (1,192)280 
Other14156 (106)50 
Total finite-lived intangible assets14$4,049 $(3,007)$1,042 
   December 31, 2016
 
Weighted
Amortizable
Life (Years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 Net
Customer relationships15 $2,378
 $(934) $1,444
Intellectual property11 1,496
 (706) 790
Other14 192
 (77) 115
Total finite-lived intangible assets14 $4,066
 $(1,717) $2,349
        


Amortization expense for the three and nine months ended September 30, 20172022 was $82$70 million and $241$213 million, respectively. Amortization expense for the three and nine months ended September 30, 20162021 was $82$75 million and $246$228 million, respectively. Amortization expense related to intangible assets is expected to be:


(Millions of dollars)
           
Remaining Three Months of 2017 2018 2019 2020 2021 Thereafter
$81 $319 $313 $302 $284 $876
           
(Millions of dollars)
Remaining Three Months of 20222023202420252026Thereafter
$70$222$163$153$85$113
 
B.  Goodwill
 
No goodwill was impaired during the three or nine months ended September 30, 20172022 or 2016.2021.



17
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The changes in carrying amount of goodwill by reportable segment for the nine months ended September 30, 20172022 were as follows: 


(Millions of dollars)December 31,
2021		Acquisitions
Other Adjustments 1
September 30,
2022
Construction Industries
Goodwill$302 $— $(39)$263 
Impairments(22)— — (22)
Net goodwill280 — (39)241 
Resource Industries
Goodwill4,182 — (127)4,055 
Impairments(1,175)— — (1,175)
Net goodwill3,007 — (127)2,880 
Energy & Transportation
Goodwill2,985 25 (81)2,929 
All Other 2
Goodwill52 — (10)42 
Consolidated total
Goodwill7,521 25 (257)7,289 
Impairments(1,197)— — (1,197)
Net goodwill$6,324 $25 $(257)$6,092 
       
(Millions of dollars) December 31,
2016		 
Other Adjustments 1
 September 30,
2017
Construction Industries     

Goodwill $296
 $10
 $306
Impairments (22) —
 (22)
Net goodwill 274
 10
 284
Resource Industries      
Goodwill 4,110
 111
 4,221
Impairments (1,175) —
 (1,175)
Net goodwill 2,935
 111
 3,046
Energy & Transportation      
Goodwill 2,756
 54
 2,810
All Other 2
      
Goodwill 55
 1
 56
Consolidated total      
Goodwill 7,217
 176
 7,393
Impairments (1,197) —
 (1,197)
Net goodwill $6,020
 $176
 $6,196



1Other adjustments are comprised primarily of foreign currency translation.
2 Includes All Other operating segmentssegment (See Note 15)16).



8.Investments in debt and equity securities
 
We have investments in certain debt and equity securities, primarily at Insurance Services, that have been classified as available-for-sale and recorded at fair value. In addition, Insurance Services has an equity security investment in a real estate investment trust (REIT) which is recordedwe record at fair value based on the net asset value (NAV) of the investment. These investments areand primarily includedinclude in Other assets in the Consolidated Statement of Financial Position. Unrealized

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 and equity securities, are included, net of applicable deferred income taxes, in equity (Accumulated other comprehensive income (loss)(AOCI in the Consolidated Statement of Financial Position). RealizedWe 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 are generally determined using the specific identification method for available-for-sale debt and equity securities and are includedinclude 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 securities(AOCI in the Consolidated Statement of Financial Position) were as follows:
18
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September 30, 2017 December 31, 2016
Available-for-sale debt securitiesAvailable-for-sale debt securitiesSeptember 30, 2022December 31, 2021
(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 securitiesGovernment debt securities      
U.S. treasury bonds$10
 $—
 $10
 $9
 $—
 $9
U.S. treasury bonds$10 $— $10 $10 $— $10 
Other U.S. and non-U.S. government bonds48
 —
 48
 60
 —
 60
Other U.S. and non-U.S. government bonds51 (2)49 61 — 61 
           
Corporate bonds 
  
    
  
  
Corporate bonds529
 3
 532
 489
 3
 492
Corporate debt securitiesCorporate debt securities     
Corporate bonds and other debt securitiesCorporate bonds and other debt securities2,156 (108)2,048 1,027 19 1,046 
Asset-backed securities76
 —
 76
 90
 —
 90
Asset-backed securities185 (5)180 175 1 176 
           
Mortgage-backed debt securities       
  
  
Mortgage-backed debt securities  
U.S. governmental agency245
 (2) 243
 225
 (2) 223
U.S. governmental agency384 (36)348 319 6 325 
Residential8
 —
 8
 10
 —
 10
Residential3 — 3 4 — 4 
Commercial17
 —
 17
 36
 —
 36
Commercial139 (10)129 98 1 99 
Total available-for-sale debt securitiesTotal available-for-sale debt securities$2,928 $(161)$2,767 $1,694 $27 $1,721 
           
Equity securities       
  
  
Large capitalization value313
 36
 349
 280
 32
 312
Real estate investment trust (REIT)104
 5
 109
 77
 2
 79
Smaller company growth43
 22
 65
 41
 15
 56
Total$1,393
 $64
 $1,457
 $1,317
 $50
 $1,367
           
Available-for-sale investments in an unrealized loss position that are not other-than-temporarily impaired:
  
 September 30, 2017
 
Less than 12 months 1
 
12 months or more 1
 Total
(Millions of dollars)
Fair 
Value
 
Unrealized
Losses
 
Fair 
Value
 
Unrealized
Losses
 
Fair 
Value
 
Unrealized
Losses
Mortgage-backed debt securities           
U.S. governmental agency102
 1
 89
 2
 191
 3
Equity securities           
Large capitalization value72
 5
 14
 3
 86
 8
Small company growth9
 1
 2
 —
 11
 1
Total$183
 $7
 $105
 $5
 $288
 $12
Available-for-sale debt securities in an unrealized loss position:
 September 30, 2022
 
Less than 12 months 1
12 months or more 1
Total
(Millions of dollars)
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Government debt securities      
Other U.S. and non-U.S. government bonds$31 $1 $15 $1 $46 $2 
Corporate debt securities
Corporate bonds1,774 75 218 33 1,992 108 
Asset-backed securities102 4 35 1 137 5 
Mortgage-backed debt securities
U.S. governmental agency293 27 51 9 344 36 
Commercial88 7 41 3 129 10 
$2,288 $114 $360 $47 $2,648 $161 
December 31, 2016 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)
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 debt securitiesCorporate debt securities      
Corporate bonds           Corporate bonds$270 $4 $33 $1 $303 $5 
Corporate bonds$131
 $1
 $13
 $—
 $144
 $1
Mortgage-backed debt securities 
  
  
  
  
  
Mortgage-backed debt securities      
U.S. governmental agency167
 2
 11
 —
 178
 2
U.S. governmental agency89 1 22 — 111 1 
Equity securities 
  
  
  
  
  
Large capitalization value68
 6
 11
 2
 79
 8
Smaller company growth10
 1
 3
 1
 13
 2
Total$376
 $10
 $38
 $3
 $414
 $13
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 length of time that individual securities have been in a continuous unrealized loss position.

Mortgage-Backed Debt Securities.The unrealized losses on our investments in U.S. government agencydebt securities, corporate debt securities, 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 respective amortized cost basis. We doIn addition, we did not considerexpect credit-related losses on these investments to be other-than-temporarily impaired as of September 30, 2017.2022.

Equity Securities.  The unrealized losses on our investments in equity securities relate to inherent risks
19
Table of individual holdings and/or their respective sectors. We do not consider these investments to be other-than-temporarily impaired as of September 30, 2017.Contents

The cost basis and fair value of the available-for-sale debt securities at September 30, 2017,2022, by contractual maturity, isare 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, 2022
(Millions of dollars)Cost BasisFair Value
Due in one year or less$696 $687 
Due after one year through five years1,354 1,277 
Due after five years through ten years282 256 
Due after ten years70 67 
U.S. governmental agency mortgage-backed securities384 348 
Residential mortgage-backed securities3 3 
Commercial mortgage-backed securities139 129 
Total debt securities – available-for-sale$2,928 $2,767 
  
Sales of available-for-sale debt securities:  
 Three Months Ended September 30Nine Months Ended September 30
(Millions of dollars)2022202120222021
Proceeds from the sale of available-for-sale securities$204 $97 $474 $322 
Gross gains from the sale of available-for-sale securities— 1 1 3 
Gross losses from the sale of available-for-sale securities— — 1 — 
We did not have any investments classified as held-to-maturity debt securities as of September 30, 2022. We had $964 million of investments in time deposits classified as held-to-maturity debt securities as of December 31, 2021. 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 record held-to-maturity debt securities at amortized cost, which approximates fair value.
For the three months ended September 30, 2022 and 2021, the net unrealized gains (losses) for equity securities held at September 30, 2022 and 2021 were $(12) million and $46 million, respectively. For the nine months ended September 30, 2022 and 2021, the net unrealized gains (losses) for equity securities held at September 30, 2022 and 2021 were $(97) million and $65 million, respectively.
20
 September 30, 2017
(Millions of dollars)Cost Basis Fair Value
Due in one year or less$169
 $170
Due after one year through five years415
 417
Due after five years through ten years55
 55
Due after ten years24
 24
U.S. governmental agency mortgage-backed securities245
 243
Residential mortgage-backed securities8
 8
Commercial mortgage-backed securities17
 17
Total debt securities – available-for-sale$933
 $934
    
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9.Postretirement benefits
 
Sales of Securities:   
 Three Months Ended
September 30		 Nine Months Ended
September 30
(Millions of dollars)2017 2016 2017 2016
Proceeds from the sale of available-for-sale securities$244
 $109
 $431
 $304
Gross gains from the sale of available-for-sale securities$38
 $10
 $40
 $43
Gross losses from the sale of available-for-sale securities$1
 $1
 $3
 $3
        

9.Postretirement benefits
A.  Pension and postretirement benefit costs

U.S. Pension
Benefits
Non-U.S. Pension
Benefits
Other
Postretirement
Benefits
September 30September 30September 30
(Millions of dollars)202220212022202120222021
For the three months ended:      
Components of net periodic benefit cost:      
Service cost$— $— $15 $15 $24 $25 
Interest cost100 82 17 16 20 16 
Expected return on plan assets(167)(180)(33)(33)(3)(1)
Amortization of prior service cost (credit)— — — — (1)(11)
Net periodic benefit cost (benefit) 1
$(67)$(98)$(1)$(2)$40 $29 
For the nine months ended:
Components of net periodic benefit cost:
Service cost$— $— $40 $44 $74 $75 
Interest cost301 247 53 43 60 48 
Expected return on plan assets(502)(538)(100)(98)(9)(4)
Amortization of prior service cost (credit)— — — — (4)(31)
Net periodic benefit cost (benefit) 1
$(201)$(291)$(7)$(11)$121 $88 
In1    The service cost component is included in Operating costs in the first quarterConsolidated Statement of 2017, we announcedResults of Operations. All other components are included in Other income (expense) in the closureConsolidated Statement of our Gosselies, Belgium, facility. This announcement impacted certain employees that participate in a defined benefit pension plan and resulted in a curtailment and the recognitionResults of termination benefits. In March 2017, we recognized a net loss of $20 million for the curtailment and termination benefits. In addition, during the first quarter of 2017, we announced the decision to phase out production at our Aurora, Illinois, facility which resulted in termination benefits of $9 million for certain hourly employees that participate in our U.S. hourly defined benefit pension plan.Operations.
See Note 18 for more information on the Gosselies closure.

 
U.S. Pension 
Benefits
 
Non-U.S. Pension 
Benefits
 
Other
Postretirement 
Benefits
(Millions of dollars)

September 30 September 30 September 30
 2017 2016 2017 2016 2017 2016
For the three months ended:           
Components of net periodic benefit cost:           
Service cost$29
 $30
 $23
 $22
 $19
 $20
Interest cost131
 129
 23
 30
 33
 33
Expected return on plan assets(184) (190) (55) (59) (10) (11)
Amortization of prior service cost (credit) 1
—
 —
 —
 —
 (6) (15)
Net periodic benefit cost (benefit)(24) (31) (9) (7) 36
 27
Curtailments and termination benefits 2
—
 —
 —
 1
 —
 —
Total cost (benefit) included in operating profit$(24) $(31) $(9) $(6) $36
 $27
            
For the nine months ended:           
Components of net periodic benefit cost:           
Service cost$87
 $89
 $70
 $68
 $58
 $61
Interest cost393
 388
 73
 90
 98
 98
Expected return on plan assets(551) (568) (168) (176) (28) (33)
Amortization of prior service cost (credit) 1
—
 —
 (1) —
 (17) (45)
Net periodic benefit cost (benefit)(71) (91) (26) (18) 111
 81
Curtailments and termination benefits 2
9
 —
 20
 1
 —
 (2)
Total cost (benefit) included in operating profit$(62) $(91) $(6) $(17) $111
 $79
 
 
 
 
    
Weighted-average assumptions used to determine net cost:          
Discount rate used to measure service cost4.2% 4.5% 2.3% 2.9% 3.9% 4.4%
Discount rate used to measure interest cost3.3% 3.4% 2.3% 2.8% 3.3% 3.3%
Expected rate of return on plan assets6.7% 6.9% 5.9% 6.1% 7.5% 7.5%
Rate of compensation increase4.0% 4.0% 4.0% 3.5% 4.0% 4.0%
            
1
Prior service cost (credit) for both pension and other postretirement benefits is generally amortized using the straight-line method over the average remaining service period of active employees expected to receive benefits from the plan. For pension plans in which all or almost all of the plan's participants are inactive and other postretirement benefit plans in which all or almost all of the plan's participants are fully eligible for benefits under the plan, prior service cost (credit) is amortized using the straight-line method over the remaining life expectancy of those participants.
2
Curtailments and termination benefits were recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations.


We made $324$44 million and $522$299 million of contributions to our pension and other postretirement plans during the three and nine months ended September 30, 2017.2022. We currently anticipate full-year 20172022 contributions of approximately $610$357 million. We made $71 million and $270 million of contributions to our pension and other postretirement plans during the three and nine months ended September 30, 2016.
 
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 30Nine Months Ended September 30
(Millions of dollars)2022202120222021
U.S. Plans$87 $81 $236 $321 
Non-U.S. Plans29 29 85 83 
 $116 $110 $321 $404 
        
 Three Months Ended
September 30		 Nine Months Ended
September 30
(Millions of dollars)2017 2016 2017 2016
U.S. Plans$97
 $83
 $267
 $235
Non-U.S. Plans19
 16
 54
 51
 $116
 $99
 $321
 $286
        


The decrease in the U.S. defined contribution benefit costs for the nine months ended September 30, 2022 was primarily due to the fair value adjustments related to our non-qualified deferred compensation plans.
 
21
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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 September 30Nine Months Ended September 30
(Millions of dollars)2022202120222021
Finance lease revenue$105 $120 $326 $369 
Operating lease revenue270 275 819 850 
Total$375 $395 $1,145 $1,219 
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-partiesthird 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 expireswas set to expire 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.
 
Customer loan guarantees
We provide loan guarantees to third-party lenders for financing associated with machinery purchased by customers. These guarantees have varying terms and are secured by the machinery. In addition, Cat Financial participates in standby letters of credit issued to third parties on behalf of their customers. These standby letters of credit have varying terms and beneficiaries and are secured by customer assets.

Supplier consortium performance guarantee
We have provided guaranteesa guarantee to a customer in Brazil and a customer in Europe related to the performance of contractual obligations by a supplier consortiumsconsortium to which one of our Caterpillar subsidiaries are members.was a member. The guarantees coverguarantee covered potential damages incurred by the customerscustomer resulting from the supplier consortiums'consortium's non-performance. The damages arewere capped except for failure of the consortiumsconsortium to meet certain obligations outlined in the contract in the normal course of business. The guarantees will expire whenguarantee expired during the supplier consortiums perform all their contractual obligations, which is expected to be completed in 2022 for the customer in Europe and 2025 for the customer in Brazil.

Third party logistics business lease guarantees
We have provided guarantees to third-party lessors for certain properties leased by a third party logistics business, formerly Caterpillar Logistics Services LCC, in which we sold our 35 percent equity interest in the firstsecond quarter of 2015. The guarantees are for the possibility that the third party logistics business would default on real estate lease payments. The guarantees were granted at lease inception and generally will expire at the end of the lease terms.2022.


We have dealer performance guarantees and third partythird-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, 20172022 and December 31, 2016,2021, the related recorded liability was $8 million.$3 million and $5 million, respectively. The maximum potential amount of future payments that we can estimate (undiscounted and without reduction for any amounts that may possibly be recovered under recourse or collateralized provisions) and we could be required to make under the guarantees arewas as follows:
(Millions of dollars)September 30,
2022		December 31,
2021
Caterpillar dealer performance guarantees$137 $747 
Supplier consortium performance guarantee17 242 
Other guarantees284 232 
Total guarantees$438 $1,221 
 
22
(Millions of dollars)September 30,
2017		 December 31,
2016
Caterpillar dealer performance guarantees$1,425
 $1,384
Customer loan guarantees51
 51
Supplier consortium performance guarantee564
 278
Third party logistics business lease guarantees73
 87
Other guarantees100
 56
Total guarantees$2,213
 $1,856
    
Table of Contents
Cat Financial provides guarantees to repurchasepurchase 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 has a loan purchase agreement with the SPC that obligates Cat Financial to purchase certain loans that are not paid at maturity.  Cat Financial receives a fee for providing this guarantee, which provides a source of liquidity for the SPC.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, 20172022 and December 31, 2016,2021, the SPC’s assets of $1,096$1.09 billion and $888 million, and $1,088 million, respectively, were primarily comprised of loans to dealers, and the SPC’s liabilities of $1,095$1.09 billion and $888 million, and $1,087 million, respectively, were primarily comprised of commercial paper.  The assets of the SPC are not available to pay Cat Financial'sFinancial’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.


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

(Millions of dollars)2017 
Warranty liability, January 1$1,258
 
Reduction in liability (payments)(637) 
Increase in liability (new warranties)749
 
Warranty liability, September 30$1,370
 
  
 

(Millions of dollars)2016 
Warranty liability, January 1$1,354
 
Reduction in liability (payments)(909) 
Increase in liability (new warranties)813
 
Warranty liability, December 31$1,258
 
  
 

11.Profit per share
          
Computations of profit per share:Three Months Ended
September 30		 Nine Months Ended
September 30
(Dollars in millions except per share data)2017 2016 2017 2016
Profit for the period (A) 1
$1,059
 $283
 $2,053
 $1,104
Determination of shares (in millions):   
    
Weighted-average number of common shares outstanding (B)592.9
 584.7
 590.3
 583.8
Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price7.2
 4.9
 6.2
 4.9
Average common shares outstanding for fully diluted computation (C) 2
600.1
 589.6
 596.5
 588.7
Profit per share of common stock: 
  
    
Assuming no dilution (A/B)$1.79
 $0.48
 $3.48
 $1.89
Assuming full dilution (A/C) 2
$1.77
 $0.48
 $3.44
 $1.88
Shares outstanding as of September 30 (in millions)    594.9

585.1
        
1 Profit attributable to common shareholders.
       
2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.
          


ForThe reconciliation of the three months ended September 30, 2017, no outstanding SARs and stock options were excluded from the computation of diluted earnings per share because all outstanding SARs and stock options had a dilutive effect. Forchange in our product warranty liability balances for the nine months ended September 30 2017,was as follows:
First Nine Months
(Millions of dollars)20222021
Warranty liability, beginning of period$1,689 $1,612 
Reduction in liability (payments)(589)(638)
Increase in liability (new warranties)562 716 
Warranty liability, end of period$1,662 $1,690 
  

12.Profit per share
Computations of profit per share:Three Months Ended September 30Nine Months Ended September 30
(Dollars in millions except per share data)2022202120222021
Profit for the period (A) 1
$2,041 $1,426 $5,251 $4,369 
Determination of shares (in millions): 
Weighted-average number of common shares outstanding (B)525.0544.0530.1 545.8 
Shares issuable on exercise of stock awards, net of shares assumed to be purchased out of proceeds at average market price2.63.63.14.4
Average common shares outstanding for fully diluted computation (C) 2
527.6547.6533.2 550.2 
Profit per share of common stock:  
Assuming no dilution (A/B)$3.89 $2.62 $9.91 $8.00 
Assuming full dilution (A/C) 2
$3.87 $2.60 $9.85 $7.94 
Shares outstanding as of September 30 (in millions)520.4 540.9 
1 Profit attributable to common shareholders.
2 Diluted by assumed exercise of stock-based compensation awards using the treasury stock method.

For the three and nine months ended September 30, 2022 and 2021, we excluded 2.1 million and 1.1 million of outstanding SARs and stock options, to purchase 5,136,715 common shares were not included inrespectively, from the computation of diluted earnings per share because the effect would have been anti-dilutive. antidilutive.

23
Table of Contents
For the three and nine months ended September 30, 2016, there were outstanding SARs2022, we repurchased 7.6 million and 17.0 million shares of Caterpillar common stock, options to purchase 21,874,118respectively, at an aggregate cost of $1.4 billion and 26,088,324$3.3 billion, respectively. For the three and nine months ended September 30, 2021, we repurchased 6.6 million and 7.8 million shares of Caterpillar common shares,stock, respectively, which were anti-dilutive.at an aggregate cost of $1.4 billion and $1.6 billion, respectively. We made these purchases through a combination of accelerated stock repurchase agreements with third-party financial institutions and open market transactions.


In January 2014,July 2018, the Board authorized theapproved a share repurchase authorization (the 2018 Authorization) of up to $10.0 billion of Caterpillar common stock which will expireeffective January 1, 2019, with no expiration. In May 2022, the Board approved a new share repurchase authorization (the 2022 Authorization) of up to $15.0 billion of Caterpillar common stock effective August 1, 2022, with no expiration. Utilization of the 2022 Authorization for all share repurchases commenced on December 31, 2018.August 1, 2022, leaving approximately $70 million unutilized under the 2018 Authorization as of September 30, 2022. As of September 30, 2017, approximately $4.52022, $13.7 billion ofremained available under the $10.0 billion authorization was spent.2022 Authorization.



12.
13.Accumulated other comprehensive income (loss)


ComprehensiveWe present comprehensive income and its components are presented in the Consolidated Statement of Comprehensive Income. Changes in Accumulated other comprehensive income (loss), netthe balances for each component of tax, included in the Consolidated Statement of Changes in Shareholders’ Equity, consisted of the following:

           
(Millions of dollars) Foreign currency translation Pension and other postretirement benefits Derivative financial instruments Available-for-sale securities Total
           
Three Months Ended September 30, 2017          
Balance at June 30, 2017 $(1,499) $14
 $(39) $53
 $(1,471)
Other comprehensive income (loss) before reclassifications 237
 —
 (4) 11
 244
Amounts reclassified from accumulated other comprehensive (income) loss 11
 (4) 11
 (24) (6)
Other comprehensive income (loss) 248
 (4) 7
 (13) 238
Balance at September 30, 2017 $(1,251) $10
 $(32) $40
 $(1,233)
           
Three Months Ended September 30, 2016          
Balance at June 30, 2016 $(1,648) $29
 $(49) $35
 $(1,633)
Other comprehensive income (loss) before reclassifications 124
 2
 (28) 5
 103
Amounts reclassified from accumulated other comprehensive (income) loss 13
 (10) 6
 (6) 3
Other comprehensive income (loss) 137
 (8) (22) (1) 106
Balance at September 30, 2016 $(1,511) $21
 $(71) $34
 $(1,527)
           


(Millions of dollars) Foreign currency translation Pension and other postretirement benefits Derivative financial instruments Available-for-sale securities Total
           
Nine Months Ended September 30, 2017          
Balance at December 31, 2016 $(1,970) $14
 $(115) $32
 $(2,039)
Other comprehensive income (loss) before reclassifications 706
 8
 6
 29
 749
Amounts reclassified from accumulated other comprehensive (income) loss 13
 (12) 77
 (21) 57
Other comprehensive income (loss) 719
 (4) 83
 8
 806
Balance at September 30, 2017 $(1,251) $10
 $(32) $40
 $(1,233)
           
Nine Months Ended September 30, 2016          
Balance at December 31, 2015 $(1,953) $(69) $(50) $37
 $(2,035)
Other comprehensive income (loss) before reclassifications 429
 119
 (37) 21
 532
Amounts reclassified from accumulated other comprehensive (income) loss 13
 (29) 16
 (24) (24)
Other comprehensive income (loss) 442
 90
 (21) (3) 508
Balance at September 30, 2016 $(1,511) $21
 $(71) $34
 $(1,527)
           
           

The effect of the reclassifications out of Accumulated other comprehensive income (loss) on the Consolidated Statement of Results of Operations isAOCI were as follows:


24
Table of Contents
       
    Three Months Ended September 30
(Millions of dollars) 
Classification of
income (expense)
 2017
2016
       
Foreign currency translation      
Gain (loss) on foreign currency translation Other income (expense) $(11) $(13)
Tax (provision) benefit —
 —
Reclassifications net of tax $(11) $(13)
       
Pension and other postretirement benefits:      
Amortization of prior service credit (cost) 
Note 9 1
 $6
 $15
Tax (provision) benefit (2) (5)
Reclassifications net of tax $4
 $10
       
Derivative financial instruments:      
Foreign exchange contracts Other income (expense) $(16) $(6)
Interest rate contracts Interest expense excluding Financial Products (2) (2)
Interest rate contracts Interest expense of Financial Products 2
 —
Reclassifications before tax (16) (8)
Tax (provision) benefit 5
 2
Reclassifications net of tax $(11) $(6)
       
Available-for-sale securities:      
Realized gain (loss) Other income (expense) $36
 $9
Tax (provision) benefit (12) (3)
Reclassifications net of tax $24
 $6
       
Total reclassifications from Accumulated other comprehensive income (loss) $6
 $(3)
       
        1Amounts are included in the calculation of net periodic benefit cost. See Note 9 for additional information.
       
Three Months Ended September 30Nine Months Ended September 30
(Millions of dollars)2022202120222021
Foreign currency translation:
Beginning balance$(2,282)$(1,158)$(1,508)$(910)
Gains (losses) on foreign currency translation(592)(230)(1,328)(461)
Less: Tax provision /(benefit)26 12 64 29 
Net gains (losses) on foreign currency translation(618)(242)(1,392)(490)
(Gains) losses reclassified to earnings— — — — 
Less: Tax provision /(benefit)— — — — 
Net (gains) losses reclassified to earnings— — — — 
Other comprehensive income (loss), net of tax(618)(242)(1,392)(490)
Ending balance$(2,900)$(1,400)$(2,900)$(1,400)
Pension and other postretirement benefits
Beginning balance$(64)$(47)$(62)$(32)
Current year prior service credit (cost)— — — — 
Less: Tax provision /(benefit)— — — — 
Net current year prior service credit (cost)— — — — 
Amortization of prior service (credit) cost(1)(11)(4)(31)
Less: Tax provision /(benefit)— (3)(1)(8)
Net amortization of prior service (credit) cost(1)(8)(3)(23)
Other comprehensive income (loss), net of tax(1)(8)(3)(23)
Ending balance$(65)$(55)$(65)$(55)
Derivative financial instruments
Beginning balance$(66)$12 $(3)$— 
Gains (losses) deferred44 45 298 141 
Less: Tax provision /(benefit)35 3 71 22 
Net gains (losses) deferred9 42 227 119 
(Gains) losses reclassified to earnings(296)(85)(636)(164)
Less: Tax provision /(benefit)(96)(12)(155)(26)
Net (gains) losses reclassified to earnings(200)(73)(481)(138)
Other comprehensive income (loss), net of tax(191)(31)(254)(19)
Ending balance$(257)$(19)$(257)$(19)
Available-for-sale securities
Beginning balance$(87)$39 $20 $54 
Gains (losses) deferred(55)(4)(188)(22)
Less: Tax provision /(benefit)(11)— (37)(4)
Net gains (losses) deferred(44)(4)(151)(18)
(Gains) losses reclassified to earnings— (1)— (3)
Less: Tax provision /(benefit)— — — (1)
Net (gains) losses reclassified to earnings— (1)— (2)
Other comprehensive income (loss), net of tax(44)(5)(151)(20)
Ending balance$(131)$34 $(131)$34 
Total AOCI Ending Balance at September 30$(3,353)$(1,440)$(3,353)$(1,440)




25
       
    Nine Months Ended September 30
(Millions of dollars) 
Classification of
income (expense)
 2017 2016
       
Foreign currency translation      
Gain (loss) on foreign currency translation Other income (expense) $(13) $(13)
Tax (provision) benefit —
 —
Reclassifications net of tax $(13) $(13)
       
Pension and other postretirement benefits:      
Amortization of prior service credit (cost) 
Note 9 1
 $18
 $45
Tax (provision) benefit (6) (16)
Reclassifications net of tax $12
 $29
       
Derivative financial instruments:      
Foreign exchange contracts Other income (expense) $(118) $(16)
Interest rate contracts Interest expense excluding Financial Products (5) (5)
Interest rate contracts Interest expense of Financial Products 5
 (3)
Reclassifications before tax (118) (24)
Tax (provision) benefit 41
 8
Reclassifications net of tax $(77) $(16)
       
Available-for-sale securities:      
Realized gain (loss) Other income (expense) $32
 $36
Tax (provision) benefit (11) (12)
Reclassifications net of tax $21
 $24
       
Total reclassifications from Accumulated other comprehensive income (loss) $(57) $24
       
        1Amounts are included in the calculation of net periodic benefit cost. See Note 9 for additional information.
       
Table of Contents

13.14.Environmental and legal matters


The Company is regulated by federal, state and international environmental laws governing ourits 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 are accrued against our earnings. Costs are accruedWe 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.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 requestsrequested 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 three 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 Caterpillar SARL,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.

On March 20, 2014, Brazil’s Administrative Council for Economic Defense (CADE) published a Technical Opinion which named 18 companies and over 100 individuals as defendants, including two subsidiaries of Caterpillar Inc., MGE - Equipamentos e Serviços Ferroviários Ltda. (MGE) and Caterpillar Brasil Ltda. The publication of the Technical Opinion opened CADE's official administrative investigation into allegations that the defendants participated in anticompetitive bid activity for the construction and maintenance of metro and train networks in Brazil. While companies cannot be held criminally liable for anticompetitive conduct in Brazil, criminal charges have been brought against two current employees of MGE and one former employee of MGE involving the same conduct alleged by CADE. The Company has responded to all requests for information from the authorities. The Company is unable to predict the outcome or reasonably estimate the 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.

On October 24, 2013, Progress Rail received a grand jury subpoena from the U.S. District Court for the Central District of California. The subpoena requests documents and information from Progress Rail, United Industries Corporation, a wholly-owned subsidiary of Progress Rail, and Caterpillar Inc. relating to allegations that Progress Rail conducted improper or unnecessary railcar inspections and repairs and improperly disposed of parts, equipment, tools and other items. In connection with this subpoena, Progress Rail was informed by the U.S. Attorney for the Central District of California that it is a target of a criminal investigation into potential violations of environmental laws and alleged improper business practices. The Company is cooperating with the authorities and is currently in discussions regarding a potential resolution of the matter. Although the Company believes a loss is probable, 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 and welding fumes 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.


14.15.Income taxes
 
The provision for income taxes for the first nine months of 2017 reflectsended September 30, 2022, reflected an estimated annual tax rate of 3223 percent, which excludes the discrete items discussed in the following paragraph, compared with 25 percent for the first nine months ended September 30, 2021, excluding the discrete items discussed below. The comparative tax rate for full-year 2021 was approximately 23 percent.

26
Table of 2016.Contents
On September 8, 2022, the company reached a settlement with the U.S. Internal Revenue Service (IRS) that resolves all issues for tax years 2007 through 2016, without any penalties. The increase is primarily due to higher non-U.S. restructuring costs in 2017 that are taxed at relatively lower non-U.S.company's settlement includes, among other issues, the resolution of disputed tax rates along with other changes in the geographic mixtreatment of profits from a tax perspective. Under the terms of a manufacturing service agreement,earned by Caterpillar SARL (CSARL) will bear substantially allfrom certain parts transactions. We vigorously contested the IRS's application of the restructuring costs"substance-over-form" or "assignment-of-income" judicial doctrines and its proposed increases to tax and imposition of accuracy related penalties. The settlement does not include any increases to tax in the closure of our Gosselies, Belgium, facility, reducing CSARL's profits taxableUnited States based on those judicial doctrines and does not include any penalties. The final tax assessed by the IRS for all issues under the settlement was $490 million for the ten-year period. This amount was primarily paid in Switzerland.


In addition, during the first nine months ending September 30, 2022, and the associated estimated interest of 2017,$250 million is expected to be paid by the end of 2022. The settlement was within the total amount of gross unrecognized tax benefits for uncertain tax positions and enables us to avoid the costs and burdens of further disputes with the IRS. As a result of the settlement, we recorded a discrete tax benefit of $45$41 million wasto reflect changes in estimates of prior years' taxes and related interest, net of tax. We are subject to the continuous examination of our income tax returns by the IRS, and tax years subsequent to 2016 are not yet under examination.

In the nine months ended September 30, 2022, the company also recorded discrete tax benefits of $49 million to reflect other changes in estimates related to prior years' U.S. taxes, compared to $36 million in the nine months ended September 30, 2021. In addition, the company recorded a discrete tax benefit of $18 million for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense. Thisexpense, compared with a $61 million benefit was partially offset by a $15 million increase to prior year taxes related to the Gosselies, Belgium, facility, restructuring costs.

In January 2015, we received a Revenue Agent's Report from the Internal Revenue Service (IRS) indicating the end of the field examination of our U.S. income tax returns for 2007 to 2009 including the impact of a loss carryback to 2005. The IRS field examination for 2010 to 2012 that began in 2015 is expected to be completed in 2017. In November 2016, we received notices of proposed adjustments from the IRS for the 2010 to 2012 exam. In both these audits, the IRS has proposed to tax in the United States profits earned from certain parts transactions by 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 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 increase or decrease to our unrecognized tax benefits for this matter 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.nine months ended September 30, 2021.


Due to better than previously forecasted 2017 U.S. GAAP results in certain U.S. state jurisdictions, it is reasonably possible the valuation allowance for U.S. state deferred tax assets will decrease in the next twelve months.

15.16.Segment information
 
A.Basis for segment information
A.    Basis for segment information
 
Our Executive Office is comprised of a Chief Executive Officer (CEO), fivefour Group Presidents, a Chief Financial Officer (CFO), a Chief Legal Officer and General Counsel & Corporate Secretary 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 & Corporate Secretary leads the Law, Security and Public Policy Division. The Chief Human Resources Officer leads the Human Services Division.Resources Organization. The CEO allocates resources and manages performance at the Group PresidentPresident/CFO level.  As such, the CEO serves as our Chief Operating Decision Maker, and operating segments are primarily based on the Group PresidentPresident/CFO reporting structure.
 
Three of our operating segments, Construction Industries, Resource Industries and Energy & Transportation are led by Group Presidents.  One operating segment, Financial Products, is led by a Group Presidentthe 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. One Group President leads twoone smaller operating segmentssegment that areis included in the All Other operating segments.segment.  The Law, Security and Public Policy Division and the Human Services DivisionResources Organization are cost centers and do not meet the definition of an operating segment.


B.Description of segments
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 sixfive operating segments, of which four are reportable segments. Following is a brief description of our reportable segments and the business activities included in the All Other operating segments:segment:
 
Construction Industries: A segment primarily responsible for supporting customers using machinery in infrastructure forestry 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, small wheel loaders, small track-type tractors, skid steer loaders,loaders; compactors; cold planers; compact track loaders,and multi-terrain loaders,loaders; mini, excavators, compact wheel loaders, telehandlers, select work tools, small, medium and large track excavators,excavators; forestry machines; material handlers; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; small and medium track-type tractors; track-type loaders; wheel excavators,excavators; compact, small and medium wheel loaders, medium track-type tractors, track-type loaders, motor graders, pipelayers, forestry and paving productsloaders; and related parts.parts and work tools. Inter-segment sales are a source of revenue for this segment.


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Table of Contents
Resource Industries:A segment primarily responsible for supporting customers using machinery in mining, heavy construction and quarry waste, and material handling applications.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,tractors; large mining trucks,trucks; hard rock vehicles,vehicles; longwall miners,miners; electric rope shovels, draglines,shovels; draglines; hydraulic shovels, track andshovels; rotary drills, highwall miners,drills; large wheel loaders,loaders; off-highway trucks,trucks; articulated trucks,trucks; wheel tractor scrapers,

scrapers; wheel dozers,dozers; landfill compactors,compactors; soil compactors, material handlers, continuous miners, scoops and haulers, hardrock continuous mining systems,compactors; select work tools,tools; machinery components,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, and autonomous machine capabilities.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, and research and development.development for 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 partsservices across industries serving power generation, industrial, oilOil and gasGas, Power Generation, Industrial and transportationTransportation applications, including marinemarine- and rail-related businesses. Responsibilities include business strategy, product design, product management, development and development,testing manufacturing, marketing and sales and product support ofsupport. The product and services portfolio includes turbines, centrifugal gas compressors, and turbine-related services,services; reciprocating engine poweredengine-powered generator sets,sets; integrated systems and solutions used in the electric power generation industry,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; the remanufacturing of Cat engineselectrified powertrain and components and remanufacturing services for other companies; the business strategy, product design, product management and development, manufacturing, remanufacturing, leasingzero-emission power sources and service ofsolutions development; 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 ourCaterpillar 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 segmentssegment:Primarily includes activities such as: business strategy,strategy; product management and development,development; manufacturing and manufacturingsourcing of filters and fluids, undercarriage, tires and rims, ground engagingground-engaging tools, fluid transfer products, precision seals, and rubber sealing and connecting components primarily for CatCat® products; parts distribution; integrated logistics solutions; distribution services responsible for dealer development and administration, including a wholly owned dealer in Japan,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 artstate-of-the-art digital technologies while transforming the buying experience. Results for the All Other operating segmentssegment are included as a reconciling item between reportable segments and consolidated external reporting.
 
C.Segment measurement and reconciliations
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:
 
Machinery, Energy & Transportation•ME&T segment net assets generally include inventories, receivables, property, plant and equipment, goodwill, intangibles, accounts payable and customer advances. LiabilitiesWe generally manage at the corporate level liabilities other than accounts payable and customer advances, are generally managed at the corporate level and arewe do not includedinclude these in segment operations.  Financial Products Segment assets generally include all categories of assets.
 
Segment
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•We value segment inventories and cost of sales are valued using a current cost methodology.


Goodwill•We amortize goodwill allocated to segments is amortized using a fixed amount based on a 20 year20-year useful life.  This methodology difference only impacts segment assets; noassets. We do not include goodwill amortization expense is included in segment profit. In addition, we have allocated to segments only a portion of goodwill for certain acquisitions made in 2011 or later has been allocated to segments.later.


The present value of future lease payments for certain Machinery, Energy & Transportation operating leases is included in segment assets.  The estimated financing component of the lease payments is excluded.

Currency•We generally manage currency exposures for Machinery, Energy & Transportation are generally managedME&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 are not included in segment

profit.  Theyear.  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 is reported as a methodology difference.


Stock-based•We do not include stock-based compensation expense is not included in segment profit.


•Postretirement benefit expenses are split; segments are generally responsible for service and prior service costs, with the remaining elements of net periodic benefit cost included as a methodology difference.


Machinery, Energy & Transportation•We determine ME&T segment profit is determined on a pretax basis and excludesexclude interest expense and most other income/expense items.  We determine Financial Products Segment profit is determined on a pretax basis and includesinclude other income/expense items.

Reconciling items are created based on accounting differences between segment reporting and our consolidated external reporting. Please refer to pages 3930 to 4533 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: PrimarilyMay include costs for employee separation, long-lived asset impairments and contract terminations. These costs are included in Other Operating (Income) Expenses.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, primarily forwhich may consist of accelerated depreciation, inventory write-downs, building demolition, equipment relocation and project management costs and also LIFO inventory decrement benefits from inventory liquidations at closed facilities, all of which are primarily included in Cost of goods sold. A table, Reconciliation of Restructuring costs on page 42, has been included to illustrate how segment profit would have been impacted by the restructuring costs. See Note 1820 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 are reported on the cash basis for segment reporting and the accrual basis for consolidated external reporting.
For the three and nine months ended September 30, 2022 and 2021, sales and revenues by geographic region reconciled to consolidated sales and revenues were as follows:
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Table of Contents

Sales and Revenues by Geographic Region
(Millions of dollars)
North
America
Latin
America
EAME
Asia/
Pacific
External Sales and RevenuesIntersegment Sales and RevenuesTotal Sales and Revenues
Three Months Ended September 30, 2022    
Construction Industries$3,106 $799 $1,247 $1,084 $6,236 $40 $6,276 
Resource Industries1,122 472 526 893 3,013 74 3,087 
Energy & Transportation2,422 468 1,280 827 4,997 1,189 6,186 
Financial Products Segment522 90 100 107 819 1— 819 
Total sales and revenues from reportable segments7,172 1,829 3,153 2,911 15,065 1,303 16,368 
All Other operating segment16 — 4 15 35 68 103 
Corporate Items and Eliminations(53)(20)(12)(21)(106)(1,371)(1,477)
Total Sales and Revenues$7,135 $1,809 $3,145 $2,905 $14,994 $— $14,994 
Three Months Ended September 30, 2021    
Construction Industries$2,417 $528 $1,240 $1,076 $5,261 $(6)$5,255 
Resource Industries674 417 456 744 2,291 75 2,366 
Energy & Transportation1,924 329 1,144 744 4,141 936 5,077 
Financial Products Segment478 68 105 111 762 1— 762 
Total sales and revenues from reportable segments5,493 1,342 2,945 2,675 12,455 1,005 13,460 
All Other operating segment18 — 3 14 35 84 119 
Corporate Items and Eliminations(56)(13)(9)(15)(93)(1,089)(1,182)
Total Sales and Revenues$5,455 $1,329 $2,939 $2,674 $12,397 $— $12,397 
              
Reportable Segments
Three Months Ended September 30
(Millions of dollars)
 2017
 
External 
sales and
revenues
 
Inter-
segment 
sales and
revenues
 
Total sales
and 
revenues
 
Depreciation
and 
amortization
 
Segment 
profit
 
Segment
assets at
September 30
 
Capital 
expenditures
Construction Industries$4,854
 $32
 $4,886
 $99
 $884
 $4,739
 $50
Resource Industries1,870
 86
 1,956
 129
 226
 6,596
 41
Energy & Transportation3,961
 877
 4,838
 165
 750
 7,502
 113
Machinery, Energy & Transportation$10,685
 $995
 $11,680
 $393
 $1,860
 $18,837
 $204
Financial Products Segment774
 —
 774
 204
 185
 35,415
 308
Total$11,459
 $995
 $12,454
 $597
 $2,045
 $54,252
 $512
              
 2016
 
External 
sales and
revenues
 
Inter-
segment 
sales and
revenues
 
Total sales
and 
revenues
 
Depreciation 
and
amortization
 
Segment 
profit (loss)
 
Segment 
assets at
December 31
 
Capital 
expenditures
Construction Industries$3,554
 $27
 $3,581
 $117
 $326
 $5,367
 $46
Resource Industries1,377
 69
 1,446
 150
 (77) 7,135
 68
Energy & Transportation3,534
 629
 4,163
 170
 572
 7,791
 97
Machinery, Energy & Transportation$8,465
 $725
 $9,190
 $437
 $821
 $20,293
 $211
Financial Products Segment749
 —
 749
 215
 183
 35,224
 357
Total$9,214
 $725
 $9,939
 $652
 $1,004
 $55,517
 $568
              

              
Reportable Segments
Nine Months Ended September 30
(Millions of dollars)
 2017
 
External 
sales and
revenues
 
Inter-
segment 
sales and
revenues
 
Total sales
and 
revenues
 
Depreciation
and 
amortization
 
Segment 
profit
 Segment
assets at
September 30		 
Capital 
expenditures
Construction Industries$13,875
 $70
 $13,945
 $301
 $2,420
 $4,739
 $107
Resource Industries5,299
 254
 5,553
 386
 481
 6,596
 93
Energy & Transportation11,258
 2,484
 13,742
 485
 2,002
 7,502
 320
Machinery, Energy & Transportation$30,432
 $2,808
 $33,240
 $1,172
 $4,903
 $18,837
 $520
Financial Products Segment2,310
 —
 2,310
 616
 559
 35,415
 1,018
Total$32,742
 $2,808
 $35,550
 $1,788
 $5,462
 $54,252
 $1,538
              
 2016
 
External 
sales and
revenues
 
Inter-
segment 
sales and
revenues
 
Total sales
and 
revenues
 
Depreciation 
and
amortization
 
Segment 
profit (loss)
 
Segment 
assets at
December 31
 
Capital 
expenditures
Construction Industries$12,023
 $47
 $12,070
 $346
 $1,316
 $5,367
 $114
Resource Industries4,283
 197
 4,480
 458
 (336) 7,135
 162
Energy & Transportation10,562
 1,919
 12,481
 505
 1,584
 7,791
 340
Machinery, Energy & Transportation$26,868
 $2,163
 $29,031
 $1,309
 $2,564
 $20,293
 $616
Financial Products Segment2,251
 —
 2,251
 633
 553
 35,224
 1,266
Total$29,119
 $2,163
 $31,282
 $1,942
 $3,117
 $55,517
 $1,882
              
              

Reconciliation of Sales and revenues:       
(Millions of dollars)
Machinery,
Energy &
Transportation
 
Financial
Products
 
Consolidating
 Adjustments
 
Consolidated
 Total
Three Months Ended September 30, 2017       
Total external sales and revenues from reportable segments$10,685
 $774
 $—
 $11,459
All Other operating segments56
 —
 —
 56
Other(28) 19
 (93)
1 
(102)
Total sales and revenues$10,713
 $793
 $(93) $11,413
        
Three Months Ended September 30, 2016 
  
  
  
Total external sales and revenues from reportable segments$8,465
 $749
 $—
 $9,214
All Other operating segments28
 —
 —
 28
Other(30) 19
 (71)
1 
(82)
Total sales and revenues$8,463
 $768
 $(71) $9,160
1  Elimination of Financial Products revenues from Machinery, Energy & Transportation. 
    

Reconciliation of Sales and revenues:       
(Millions of dollars)
Machinery,
Energy &
Transportation
 
Financial
Products
 
Consolidating
 Adjustments
 
Consolidated
 Total
Nine Months Ended September 30, 2017       
Total external sales and revenues from reportable segments$30,432
 $2,310
 $—
 $32,742
All Other operating segments126
 —
 —
 126
Other(76) 53
 (279)
1 
(302)
Total sales and revenues$30,482
 $2,363
 $(279) $32,566
        
Nine Months Ended September 30, 2016 
  
  
  
Total external sales and revenues from reportable segments$26,868
 $2,251
 $—
 $29,119
All Other operating segments107
 —
 —
 107
Other(87) 54
 (230)
1 
(263)
Total sales and revenues$26,888
 $2,305
 $(230) $28,963
1  Elimination of Financial Products revenues from Machinery, Energy & Transportation. 
    
        

Reconciliation of Consolidated profit before taxes:     
(Millions of dollars)
Machinery,
Energy &
Transportation
 
Financial
Products
 
Consolidated
 Total
Three Months Ended September 30, 2017     
Total profit from reportable segments$1,860
 $185
 $2,045
All Other operating segments6
 —
 6
Cost centers17
 —
 17
Corporate costs(158) —
 (158)
Timing(21) —
 (21)
Restructuring costs(89) (1) (90)
Methodology differences:   
 

Inventory/cost of sales(4) —
 (4)
Postretirement benefit expense32
 —
 32
Stock-based compensation expense(46) (2) (48)
Financing costs(116) —
 (116)
Currency(37) —
 (37)
Other income/expense methodology differences(71) —
 (71)
Other methodology differences(31) (1) (32)
Total consolidated profit before taxes$1,342
 $181
 $1,523
      
Three Months Ended September 30, 2016 
  
  
Total profit from reportable segments$821
 $183
 $1,004
All Other operating segments(22) —
 (22)
Cost centers29
 —
 29
Corporate costs(121) —
 (121)
Timing12
 —
 12
Restructuring costs(323) (1) (324)
Methodology differences:    —
Inventory/cost of sales19
 —
 19
Postretirement benefit expense37
 —
 37
Stock-based compensation expense(40) (1) (41)
Financing costs(129) —
 (129)
Currency(10) —
 (10)
Other income/expense methodology differences(60) —
 (60)
Other methodology differences(11) —
 (11)
Total consolidated profit before taxes$202
 $181
 $383
      

Reconciliation of Consolidated profit before taxes:     
(Millions of dollars)
Machinery,
Energy &
Transportation
 
Financial
Products
 
Consolidated
 Total
Nine Months Ended September 30, 2017     
Total profit from reportable segments$4,903
 $559
 $5,462
All Other operating segments(27) —
 (27)
Cost centers13
 —
 13
Corporate costs(447) —
 (447)
Timing(128) —
 (128)
Restructuring costs(1,009) (2) (1,011)
Methodology differences:    

Inventory/cost of sales(80) —
 (80)
Postretirement benefit expense111
 —
 111
Stock-based compensation expense(158) (7) (165)
Financing costs(369) —
 (369)
Currency(195) —
 (195)
Other income/expense methodology differences(105) —
 (105)
Other methodology differences(91) 3
 (88)
Total consolidated profit before taxes$2,418
 $553
 $2,971
      
Nine Months Ended September 30, 2016 
  
  
Total profit from reportable segments$2,564
 $553
 $3,117
All Other operating segments(43) —
 (43)
Cost centers68
 —
 68
Corporate costs(429) —
 (429)
Timing53
 —
 53
Restructuring costs(619) (5) (624)
Methodology differences:     
Inventory/cost of sales—
 —
 —
Postretirement benefit expense148
 —
 148
Stock-based compensation expense(180) (7) (187)
Financing costs(396) —
 (396)
Currency(22) —
 (22)
Other income/expense methodology differences(170) —
 (170)
Other methodology differences(34) 6
 (28)
Total consolidated profit before taxes$940
 $547
 $1,487
      
      


Reconciliation1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of Restructuring costs:

As noted above, restructuring costs are a reconciling item between Segment profit$124 million and Consolidated profit before taxes. Had we included the amounts$87 million in the segments' results,three months ended September 30, 2022 and 2021, respectively.
Sales and Revenues by Geographic Region
(Millions of dollars)
North
America
Latin
America
EAME
Asia/
Pacific
External Sales and RevenuesIntersegment Sales and RevenuesTotal Sales and Revenues
Nine Months Ended September 30, 2022    
Construction Industries$8,832 $2,061 $3,726 $3,694 $18,313 $111 $18,424 
Resource Industries3,167 1,337 1,609 2,554 8,667 211 8,878 
Energy & Transportation6,637 1,160 3,679 2,193 13,669 3,260 16,929 
Financial Products Segment1,530 250 293 327 2,400 1— 2,400 
Total sales and revenues from reportable segments20,166 4,808 9,307 8,768 43,049 3,582 46,631 
All Other operating segment52 — 14 46 112 227 339 
Corporate Items and Eliminations(175)(59)(33)(64)(331)(3,809)(4,140)
Total Sales and Revenues$20,043 $4,749 $9,288 $8,750 $42,830 $— $42,830 
Nine Months Ended September 30, 2021    
Construction Industries$7,041 $1,350 $3,612 $4,302 $16,305 $65 $16,370 
Resource Industries2,130 1,309 1,455 1,965 6,859 232 7,091 
Energy & Transportation5,698 835 3,433 1,953 11,919 2,640 14,559 
Financial Products Segment1,442 195 301 359 2,297 1— 2,297 
Total sales and revenues from reportable segments16,311 3,689 8,801 8,579 37,380 2,937 40,317 
All Other operating segment42 1 10 54 107 270 377 
Corporate Items and Eliminations(188)(36)(27)(63)(314)(3,207)(3,521)
Total Sales and Revenues$16,165 $3,654 $8,784 $8,570 $37,173 $— $37,173 
1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of $332 million and $263 million in the profit would have beennine months ended September 30, 2022 and 2021, respectively.
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For the three and nine months ended September 30, 2022 and 2021, Energy & Transportation segment sales by end user application were as shown below:follows:

Energy & Transportation External Sales
Three Months Ended September 30Nine Months Ended September 30
(Millions of dollars)2022202120222021
Oil and gas$1,323 $1,088 $3,503 $3,140 
Power generation1,320 1,010 3,518 3,025 
Industrial1,158 948 3,295 2,660 
Transportation1,196 1,095 3,353 3,094 
Energy & Transportation External Sales$4,997 $4,141 $13,669 $11,919 


Reconciliation of Consolidated profit before taxes:  
(Millions of dollars)Three Months Ended September 30Nine Months Ended September 30
2022202120222021
Profit from reportable segments:
Construction Industries$1,209 $866 $3,255 $2,937 
Resource Industries506 280 1,222 941 
Energy & Transportation935 706 2,132 2,119 
Financial Products Segment220 173 675 660 
Total profit from reportable segments2,870 2,025 7,284 6,657 
Profit from All Other operating segment8 5 42 (2)
Cost centers(37)19 1 51 
Corporate costs(168)(189)(670)(576)
Timing(84)(40)(129)(230)
Restructuring costs(49)(35)(90)(124)
Methodology differences:
Inventory/cost of sales138 73 407 80 
Postretirement benefit expense82 116 293 270 
Stock-based compensation expense(55)(58)(162)(169)
Financing costs(75)(103)(269)(342)
Currency53 19 315 255 
Other income/expense methodology differences(109)(80)(287)(201)
Other methodology differences(16)23 (82)(27)
Total consolidated profit before taxes$2,558 $1,775 $6,653 $5,642 

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Reconciliation of Assets:Reconciliation of Assets:
Reconciliation of Restructuring costs:      
(Millions of dollars) 
Segment
profit (loss)
 Restructuring costs 
Segment profit (loss) with
restructuring costs
(Millions of dollars)September 30, 2022December 31, 2021
Three Months Ended September 30, 2017      
Assets from reportable segments:Assets from reportable segments:
Construction Industries $884
 $(15) $869
Construction Industries$5,439 $4,547 
Resource Industries 226
 (59) 167
Resource Industries5,841 5,962 
Energy & Transportation 750
 (28) 722
Energy & Transportation9,394 9,253 
Financial Products Segment 185
 —
 185
Financial Products Segment33,982 34,860 
All Other operating segments 6
 (13) (7)
Total $2,051
 $(115) $1,936
Total assets from reportable segmentsTotal assets from reportable segments54,656 54,622 
Assets from All Other operating segmentAssets from All Other operating segment1,729 1,678 
Items not included in segment assets:Items not included in segment assets:  
Cash and cash equivalentsCash and cash equivalents5,403 8,428 
Deferred income taxesDeferred income taxes2,112 1,735 
Goodwill and intangible assetsGoodwill and intangible assets4,681 4,859 
Property, plant and equipment – net and other assetsProperty, plant and equipment – net and other assets3,714 4,056 
Inventory methodology differencesInventory methodology differences(2,833)(2,656)
Liabilities included in segment assetsLiabilities included in segment assets11,973 10,777 
OtherOther(528)(706)
Total assetsTotal assets$80,907 $82,793 
      
Three Months Ended September 30, 2016      
Construction Industries $326
 $(9) $317
Resource Industries (77) (254) (331)
Energy & Transportation 572
 (39) 533
Financial Products Segment 183
 (1) 182
All Other operating segments (22) (15) (37)
Total $982
 $(318) $664
      



Reconciliation of Depreciation and amortization:
(Millions of dollars)
Three Months Ended September 30Nine Months Ended September 30
2022202120222021
Depreciation and amortization from reportable segments:
   Construction Industries$57 $60 $172 $178 
   Resource Industries92 101 275 301 
   Energy & Transportation136 144 405 428 
   Financial Products Segment183 195 556 582 
Total depreciation and amortization from reportable segments468 500 1,408 1,489 
Items not included in segment depreciation and amortization:
All Other operating segment56 59 172 181 
Cost centers20 24 63 74 
Other7 10 18 22 
Total depreciation and amortization$551 $593 $1,661 $1,766 

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Table of Contents
Reconciliation of Capital expenditures:Reconciliation of Capital expenditures:    
(Millions of dollars)(Millions of dollars)
Three Months Ended September 30Nine Months Ended September 30
2022202120222021
Reconciliation of Restructuring costs:      
(Millions of dollars) 
Segment
profit (loss)
 Restructuring costs 
Segment profit (loss) with
restructuring costs
Nine Months Ended September 30, 2017      
Capital expenditures from reportable segments:Capital expenditures from reportable segments:
Construction Industries $2,420
 $(709) $1,711
Construction Industries$74 $56 $149 $120 
Resource Industries 481
 (229) 252
Resource Industries65 44 129 101 
Energy & Transportation 2,002
 (86) 1,916
Energy & Transportation167 115 444 339 
Financial Products Segment 559
 (2) 557
Financial Products Segment295 311 870 900 
All Other operating segments (27) (32) (59)
Total $5,435
 $(1,058) $4,377
Total capital expenditures from reportable segmentsTotal capital expenditures from reportable segments601 526 1,592 1,460 
Items not included in segment capital expenditures:Items not included in segment capital expenditures:
All Other operating segmentAll Other operating segment54 59 116 106 
Cost centersCost centers16 15 41 34 
TimingTiming(35)(13)173 96 
OtherOther(19)— (31)(9)
Total capital expendituresTotal capital expenditures$617 $587 $1,891 $1,687 
      
Nine Months Ended September 30, 2016      
Construction Industries $1,316
 $(34) $1,282
Resource Industries (336) (348) (684)
Energy & Transportation 1,584
 (194) 1,390
Financial Products Segment 553
 (5) 548
All Other operating segments (43) (29) (72)
Total $3,074
 $(610) $2,464
      
      


Reconciliation of Assets:       
(Millions of dollars)
Machinery,
Energy &
Transportation
 
Financial
Products
 
Consolidating
 Adjustments
 
Consolidated
 Total
September 30, 2017       
Total assets from reportable segments$18,837
 $35,415
 $—
 $54,252
All Other operating segments1,345
 —
 —
 1,345
Items not included in segment assets: 
  
  
  
Cash and short-term investments8,736
 —
 —
 8,736
Intercompany receivables1,567
 —
 (1,567) —
Investment in Financial Products4,435
 —
 (4,435) —
Deferred income taxes3,595
 —
 (855) 2,740
Goodwill and intangible assets4,203
 —
 —
 4,203
Property, plant and equipment – net and other assets1,979
 —
 —
 1,979
Operating lease methodology difference(189) —
 —
 (189)
Inventory methodology differences(2,207) —
 —
 (2,207)
Intercompany loan included in Financial Products' assets—
 —
 (1,000) (1,000)
Liabilities included in segment assets9,153
 —
 —
 9,153
Other(378) (29) (45) (452)
Total assets$51,076
 $35,386
 $(7,902) $78,560
        
December 31, 2016 
  
  
  
Total assets from reportable segments$20,293
 $35,224
 $—
 $55,517
All Other operating segments1,381
 —
 —
 1,381
Items not included in segment assets: 
  
  
  
Cash and short-term investments5,257
 —
 —
 5,257
Intercompany receivables1,713
 —
 (1,713) —
Investment in Financial Products3,638
 —
 (3,638) —
Deferred income taxes3,648
 —
 (947) 2,701
Goodwill and intangible assets3,883
 —
 —
 3,883
Property, plant and equipment – net and other assets1,645
 —
 —
 1,645
Operating lease methodology difference(186) —
 —
 (186)
Inventory methodology differences(2,373) —
 —
 (2,373)
Liabilities included in segment assets7,400
 —
 —
 7,400
Other(436) (29) (56) (521)
Total assets$45,863
 $35,195
 $(6,354) $74,704
        

Reconciliations of Depreciation and amortization:     
(Millions of dollars)
Machinery,
Energy &
Transportation
 
Financial
Products
 
Consolidated
 Total
Three Months Ended September 30, 2017     
Total depreciation and amortization from reportable segments$393
 $204
 $597
Items not included in segment depreciation and amortization: 
  
  
All Other operating segments52
 —
 52
Cost centers36
 —
 36
Other28
 10
 38
Total depreciation and amortization$509
 $214
 $723
      
Three Months Ended September 30, 2016 
  
  
Total depreciation and amortization from reportable segments$437
 $215
 $652
Items not included in segment depreciation and amortization: 
  
  
All Other operating segments53
 —
 53
Cost centers39
 —
 39
Other6
 11
 17
Total depreciation and amortization$535
 $226
 $761
      

Reconciliations of Depreciation and amortization:     
(Millions of dollars)
Machinery,
Energy &
Transportation
 
Financial
Products
 
Consolidated
 Total
Nine Months Ended September 30, 2017     
Total depreciation and amortization from reportable segments$1,172
 $616
 $1,788
Items not included in segment depreciation and amortization:     
All Other operating segments162
 —
 162
Cost centers106
 —
 106
Other67
 30
 97
Total depreciation and amortization$1,507
 $646
 $2,153
      
Nine Months Ended September 30, 2016 
  
  
Total depreciation and amortization from reportable segments$1,309
 $633
 $1,942
Items not included in segment depreciation and amortization:     
All Other operating segments158
 —
 158
Cost centers117
 —
 117
Other7
 31
 38
Total depreciation and amortization$1,591
 $664
 $2,255
      
      

Reconciliations of Capital expenditures:       
(Millions of dollars)
Machinery,
Energy &
Transportation
 
Financial
Products
 
Consolidating
 Adjustments
 
Consolidated
 Total
Three Months Ended September 30, 2017 
  
  
  
Total capital expenditures from reportable segments$204
 $308
 $—
 $512
Items not included in segment capital expenditures: 
  
  
  
All Other operating segments26
 —
 —
 26
Cost centers17
 —
 —
 17
Timing(21) —
 —
 (21)
Other(31) 19
 (9) (21)
Total capital expenditures$195
 $327
 $(9) $513
        
Three Months Ended September 30, 2016 
  
  
  
Total capital expenditures from reportable segments$211
 $357
 $—
 $568
Items not included in segment capital expenditures: 
  
  
  
All Other operating segments35
 —
 —
 35
Cost centers20
 —
 —
 20
Timing4
 —
 —
 4
Other(30) 22
 (24) (32)
Total capital expenditures$240
 $379
 $(24) $595
        
Reconciliations of Capital expenditures:       
(Millions of dollars)
Machinery,
Energy &
Transportation
 
Financial
Products
 
Consolidating
 Adjustments
 
Consolidated
 Total
Nine Months Ended September 30, 2017 
  
  
  
Total capital expenditures from reportable segments$520
 $1,018
 $—
 $1,538
Items not included in segment capital expenditures:     
  
All Other operating segments71
 —
 —
 71
Cost centers40
 —
 —
 40
Timing58
 —
 —
 58
Other(115) 62
 (17) (70)
Total capital expenditures$574
 $1,080
 $(17) $1,637
        
Nine Months Ended September 30, 2016 
  
  
  
Total capital expenditures from reportable segments$616
 $1,266
 $—
 $1,882
Items not included in segment capital expenditures:     
  
All Other operating segments102
 —
 —
 102
Cost centers48
 —
 —
 48
Timing221
 —
 —
 221
Other(129) 117
 (41) (53)
Total capital expenditures$858
 $1,383
 $(41) $2,200
        
        

16.17.Cat Financial financing activities
 
Allowance for credit losses

The allowance for credit losses is an estimate of the losses inherent in Cat Financial’s finance receivable portfolio and includes consideration of accounts that have been individually identified as impaired, as well as pools of finance receivables where it is probable that certain receivables in the pool are impaired but the individual accounts cannot yet be identified. In identifying and measuring impairment, management takes into consideration past loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of underlying collateral and current economic conditions.  

Accounts are identified for individual review based on past-due status and using information available about the customer, such as financial statements, news reports and published credit ratings, as well as general information regarding industry trends and the economic environment in which Cat Financial’s customers operate. The allowance for credit losses attributable to finance receivables that are individually evaluated and determined to be impaired is based either on the present value of expected future cash flows discounted at the receivables' effective interest rate or 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 also considers credit enhancements such as additional collateral and contractual third-party guarantees. The allowance for credit losses attributable to the remaining accounts not yet individually identified as impaired is estimated based on loss forecast models utilizing probabilities of default, our estimate of the loss emergence period and the estimated loss given default.  In addition, qualitative factors not able to be fully captured in the loss forecast models including industry trends, macroeconomic factors and model imprecision are considered in the evaluation of the adequacy of the allowance for credit losses.  These qualitative factors are subjective and require a degree of management judgment.

Cat Financial’s allowance for credit losses is segregated into two portfolio segments:
•Customer - Finance receivables with retail customers.
•Dealer - Finance receivables with Caterpillar dealers.

Portfolio segments
A portfolio segment is the level at which the companyCat 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 26 months as of September 30, 2022.

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, 2022, Cat Financial's forecasts for the markets in which it operates reflected a continuation of the trend of relatively low unemployment rates and delinquencies. However, high inflation rates and consequent central bank actions are weakening 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.
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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, 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. Typically, Cat Financial’s finance receivables within a geographic area have similar credit risk profiles and methods for assessing and monitoring credit risk.  Cat Financial’sFinancial's classes, which align with management reporting for credit losses, are as follows:

•North America - Includes financeFinance receivables originated in the United States orand Canada.
Europe•EAME - Includes financeFinance receivables originated in Europe, Africa, the Middle East and the Commonwealth of Independent States.
Asia •Asia/Pacific - Includes financeFinance receivables originated in Australia, New Zealand, China, Japan, Southeast Asia and Southeast Asia.India.
•Mining - Includes financeFinance receivables related to large mining customers worldwide and project financing in various countries.worldwide.
•Latin America - Includes financeFinance receivables originated in Mexico and Central and South American countries and Mexico.countries.
•Caterpillar Power Finance - Includes financeFinance receivables originated worldwide related to marine vessels with Caterpillar engines worldwide and Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems worldwide.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.

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

   
 (Millions of dollars)Three Months Ended September 30, 2022Three Months Ended September 30, 2021
CustomerDealerTotalCustomerDealerTotal
Beginning balance$290 $82 $372 $354 $44 $398 
Write-offs(30)— (30)(91)— (91)
Recoveries17 — 17 15 — 15 
Provision for credit losses 1
(2)(17)(19)17 38 55 
Other(5)— (5)(3)— (3)
Ending balance$270 $65 $335 $292 $82 $374 
   
Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021
Allowance for Credit Losses:CustomerDealerTotalCustomerDealerTotal
Beginning balance$251 $82 $333 $431 $44 $475 
Write-offs(68)— (68)(193)— (193)
Recoveries47 — 47 39 — 39 
Provision for credit losses 1
46 (17)29 20 38 58 
Other(6)— (6)(5)— (5)
Ending balance$270 $65 $335 $292 $82 $374 
Finance Receivables$19,363 $1,737 $21,100 $19,967 $1,931 $21,898 
1 Excludes provision for credit losses on unfunded commitments and other miscellaneous receivables.

34
      
 (Millions of dollars)
September 30, 2017
Allowance for Credit Losses:Customer Dealer Total
Balance at beginning of year$331
 $10
 $341
Receivables written off(119) —
 (119)
Recoveries on receivables previously written off31
 —
 31
Provision for credit losses80
 —
 80
Other8
 —
 8
Balance at end of period$331
 $10
 $341
  
  
  
Individually evaluated for impairment$100
 $—
 $100
Collectively evaluated for impairment231
 10
 241
Ending Balance$331
 $10
 $341
      
Recorded Investment in Finance Receivables: 
  
  
Individually evaluated for impairment$869
 $—
 $869
Collectively evaluated for impairment18,086
 3,533
 21,619
Ending Balance$18,955
 $3,533
 $22,488
      

Table of Contents
      
 (Millions of dollars)
December 31, 2016
Allowance for Credit Losses:Customer Dealer Total
Balance at beginning of year$327
 $9
 $336
Receivables written off(158) —
 (158)
Recoveries on receivables previously written off35
 —
 35
Provision for credit losses132
 1
 133
Other(5) —
 (5)
Balance at end of year$331
 $10
 $341
      
Individually evaluated for impairment$85
 $—
 $85
Collectively evaluated for impairment246
 10
 256
Ending Balance$331
 $10
 $341
      
Recorded Investment in Finance Receivables: 
  
  
Individually evaluated for impairment$786
 $—
 $786
Collectively evaluated for impairment18,236
 3,375
 21,611
Ending Balance$19,022
 $3,375
 $22,397
      

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-rating agencycredit 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 and collection experience 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 recorded investment in finance receivablesreceivable past due when any installment is over 30 days past due.
Customer
The tables below summarize the recorded investment inaging category of Cat Financial's amortized cost of finance receivables by aging category.


              
 September 30, 2017
 (Millions of dollars)
31-60
Days
Past Due
 
61-90
Days
Past Due
 
91+
Days
Past Due
 
Total Past
Due
 Current 
Recorded Investment in Finance
Receivables
 
91+ Still
Accruing
Customer 
  
  
  
  
  
  
North America$64
 $17
 $49
 $130
 $7,820
 $7,950
 $8
Europe27
 9
 56
 92
 2,642
 2,734
 4
Asia Pacific26
 13
 17
 56
 1,793
 1,849
 9
Mining8
 4
 52
 64
 1,682
 1,746
 1
Latin America53
 28
 180
 261
 1,657
 1,918
 —
Caterpillar Power Finance11
 34
 124
 169
 2,589
 2,758
 11
Dealer 
  
  
        
North America—
 —
 —
 —
 2,129
 2,129
 —
Europe—
 —
 —
 —
 132
 132
 —
Asia Pacific—
 —
 —
 —
 555
 555
 —
Mining—
 —
 —
 —
 3
 3
 —
Latin America5
 —
 3
 8
 704
 712
 —
Caterpillar Power Finance—
 —
 —
 —
 2
 2
 —
Total$194
 $105
 $481
 $780
 $21,708
 $22,488
 $33
              

              
 December 31, 2016
 (Millions of dollars)
31-60
Days
Past Due
 
61-90
Days
Past Due
 
91+
Days
Past Due
 
Total Past
Due
 Current 
Recorded Investment in Finance
Receivables
 
91+ Still
Accruing
Customer 
  
  
  
  
  
  
North America$50
 $16
 $59
 $125
 $7,938
 $8,063
 $5
Europe16
 12
 39
 67
 2,388
 2,455
 6
Asia Pacific17
 7
 15
 39
 1,435
 1,474
 4
Mining3
 2
 63
 68
 1,756
 1,824
 2
Latin America40
 33
 214
 287
 1,808
 2,095
 —
Caterpillar Power Finance11
 9
 73
 93
 3,018
 3,111
 1
Dealer 
  
  
  
  
  
  
North America—
 —
 —
 —
 1,916
 1,916
 —
Europe—
 —
 —
 —
 161
 161
 —
Asia Pacific—
 —
 —
 —
 541
 541
 —
Mining—
 —
 —
 —
 3
 3
 —
Latin America—
 —
 —
 —
 752
 752
 —
Caterpillar Power Finance—
 —
 —
 —
 2
 2
 —
Total$137
 $79
 $463
 $679
 $21,718
 $22,397
 $18
              

Impaired finance receivables

For all classes, a finance receivable is considered impaired, based on current information and events, if it is probable that Cat Financial will be unable to collect all amounts due according to the contractual terms.  Impaired finance receivables include finance receivables that have been restructured and are considered to be troubled debt restructurings.


There were no impaired finance receivables as of September 30, 2017 or December 31, 2016, for the Dealer portfolio segment.  Cat Financial’s recorded investment in impaired finance receivables and the related unpaid principal balances and allowance for the Customer portfolio segment were as follows: by origination year:


35
Table of Contents
September 30, 2017 December 31, 2016      
(Millions of dollars)
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 (Millions of dollars)September 30, 2022
Impaired Finance Receivables With No Allowance Recorded 
  
  
  
  
  
20222021202020192018PriorRevolving
Finance
Receivables		Total Finance Receivables
North America$16
 $21
 $—
 $10
 $10
 $—
North America      
Europe47
 47
 —
 49
 48
 —
Asia Pacific32
 31
 —
 3
 2
 —
CurrentCurrent$3,151 $3,632 $1,765 $811 $289 $64 $233 $9,945 
31-60 days past due31-60 days past due18 25 19 13 6 2 4 87 
61-90 days past due61-90 days past due5 9 4 2 1 1 2 24 
91+ days past due91+ days past due5 16 13 8 5 5 5 57 
EAMEEAME
CurrentCurrent873 1,014 511 309 179 81 — 2,967 
31-60 days past due31-60 days past due6 12 5 4 — — — 27 
61-90 days past due61-90 days past due2 4 5 1 1 — — 13 
91+ days past due91+ days past due3 21 11 5 2 1 — 43 
Asia/PacificAsia/Pacific
CurrentCurrent805 765 385 95 23 4 — 2,077 
31-60 days past due31-60 days past due5 13 11 2 1 — — 32 
61-90 days past due61-90 days past due1 6 6 2 — — — 15 
91+ days past due91+ days past due1 8 6 6 1 — — 22 
Mining127
 125
 —
 129
 129
 —
Mining
CurrentCurrent568 625 240 203 117 112 79 1,944 
31-60 days past due31-60 days past due— — — — — — — — 
61-90 days past due61-90 days past due— — — — — 3 — 3 
91+ days past due91+ days past due— — 1 — 3 1 — 5 
Latin America60
 60
 —
 68
 68
 —
Latin America
CurrentCurrent584 443 176 86 24 14 — 1,327 
31-60 days past due31-60 days past due5 9 5 2 12 — — 33 
61-90 days past due61-90 days past due4 4 2 1 — — — 11 
91+ days past due91+ days past due— 14 14 5 4 17 — 54 
Caterpillar Power Finance187
 200
 —
 271
 271
 —
Caterpillar Power Finance
Total$469
 $484
 $—
 $530
 $528
 $—
CurrentCurrent40 91 145 75 30 170 118 669 
31-60 days past due31-60 days past due— — — — — — — — 
61-90 days past due61-90 days past due— — — — — — — — 
91+ days past due91+ days past due— — — — — 8 — 8 
           
Impaired Finance Receivables With An Allowance Recorded 
  
  
  
  
  
North America$36
 $35
 $13
 $61
 $60
 $22
Europe8
 8
 5
 7
 7
 3
Asia Pacific25
 25
 3
 50
 50
 8
Mining—
 —
 —
 —
 —
 —
Latin America92
 104
 35
 93
 104
 34
Caterpillar Power Finance239
 241
 44
 45
 44
 18
Total$400
 $413
 $100
 $256
 $265
 $85
           
Total Impaired Finance Receivables 
  
  
  
  
  
North America$52
 $56
 $13
 $71
 $70

$22
Europe55
 55
 5
 56
 55

3
Asia Pacific57
 56
 3
 53
 52

8
Mining127
 125
 —
 129
 129
 —
Latin America152
 164
 35
 161
 172

34
Caterpillar Power Finance426
 441
 44
 316
 315

18
Total$869
 $897
 $100
 $786
 $793
 $85
Totals by Aging CategoryTotals by Aging Category
CurrentCurrent$6,021 $6,570 $3,222 $1,579 $662 $445 $430 $18,929 
31-60 days past due31-60 days past due34 59 40 21 19 2 4 179 
61-90 days past due61-90 days past due12 23 17 6 2 4 2 66 
91+ days past due91+ days past due9 59 45 24 15 32 5 189 
Total CustomerTotal Customer$6,076 $6,711 $3,324 $1,630 $698 $483 $441 $19,363 
           



36
Table of Contents
Three Months Ended
September 30, 2017		 Three Months Ended
September 30, 2016		      
(Millions of dollars)
Average Recorded
Investment
 
Interest Income
Recognized
 
Average Recorded
Investment
 
Interest Income
Recognized
 (Millions of dollars)December 31, 2021
Impaired Finance Receivables With No Allowance Recorded 
  
  
  
20212020201920182017PriorRevolving
Finance
Receivables		Total Finance Receivables
North America$14
 $1
 $24
 $—
North America      
Europe47
 —
 49
 1
Asia Pacific30
 1
 1
 —
CurrentCurrent$4,792 $2,596 $1,426 $630 $182 $32 $182 $9,840 
31-60 days past due31-60 days past due27 32 20 12 4 1 5 101 
61-90 days past due61-90 days past due7 8 5 3 1 1 5 30 
91+ days past due91+ days past due9 17 12 13 5 4 5 65 
EAMEEAME
CurrentCurrent1,499 836 577 352 140 26 — 3,430 
31-60 days past due31-60 days past due5 4 3 1 1 — — 14 
61-90 days past due61-90 days past due3 3 3 1 — — — 10 
91+ days past due91+ days past due3 11 2 2 — 2 — 20 
Asia/PacificAsia/Pacific
CurrentCurrent1,271 803 307 71 16 2 — 2,470 
31-60 days past due31-60 days past due10 14 10 2 — — — 36 
61-90 days past due61-90 days past due3 7 4 1 — — — 15 
91+ days past due91+ days past due2 10 10 3 — — — 25 
Mining128
 1
 90
 2
Mining
CurrentCurrent851 347 307 193 36 161 36 1,931 
31-60 days past due31-60 days past due6 — — — — — — 6 
61-90 days past due61-90 days past due1 — — — 4 — — 5 
91+ days past due91+ days past due— 1 8 9 3 1 — 22 
Latin America68
 1
 58
 —
Latin America
CurrentCurrent617 299 160 70 17 18 — 1,181 
31-60 days past due31-60 days past due4 7 3 3 1 — — 18 
61-90 days past due61-90 days past due3 3 1 1 — — — 8 
91+ days past due91+ days past due4 9 9 7 7 14 — 50 
Caterpillar Power Finance171
 1
 282
 3
Caterpillar Power Finance
Total$458
 $5
 $504
 $6
CurrentCurrent117 145 97 70 180 104 101 814 
31-60 days past due31-60 days past due— — — — — — — — 
61-90 days past due61-90 days past due— — — — — — — — 
91+ days past due91+ days past due— — — — — 44 — 44 
       
Impaired Finance Receivables With An Allowance Recorded 
  
  
  
North America$44
 $—
 $42
 $—
Europe6
 —
 10
 —
Asia Pacific28
 1
 35
 —
Mining—
 —
 19
 —
Latin America102
 1
 67
 1
Caterpillar Power Finance251
 3
 43
 —
Total$431
 $5
 $216
 $1
       
Total Impaired Finance Receivables 
  
  
  
North America$58
 $1
 $66
 $—
Europe53
 —
 59
 1
Asia Pacific58
 2
 36
 —
Mining128
 1
 109
 2
Latin America170
 2
 125
 1
Caterpillar Power Finance422
 4
 325
 3
Total$889
 $10
 $720
 $7
Totals by Aging CategoryTotals by Aging Category
CurrentCurrent$9,147 $5,026 $2,874 $1,386 $571 $343 $319 $19,666 
31-60 days past due31-60 days past due52 57 36 18 6 1 5 175 
61-90 days past due61-90 days past due17 21 13 6 5 1 5 68 
91+ days past due91+ days past due18 48 41 34 15 65 5 226 
Total CustomerTotal 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.




37
Table of Contents
 Nine Months Ended
September 30, 2017		 Nine Months Ended
September 30, 2016
(Millions of dollars)
Average Recorded
Investment
 
Interest Income
Recognized
 
Average Recorded
Investment
 
Interest Income
Recognized
Impaired Finance Receivables With No Allowance Recorded 
  
  
  
North America$12
 $1
 $19
 $1
Europe48
 1
 45
 1
Asia Pacific22
 2
 2
 —
Mining128
 5
 84
 3
Latin America69
 2
 39
 —
Caterpillar Power Finance233
 7
 269
 8
Total$512
 $18
 $458
 $13
        
Impaired Finance Receivables With An Allowance Recorded 
  
  
  
North America$52
 $1
 $28
 $—
Europe6
 —
 11
 —
Asia Pacific35
 2
 34
 2
Mining—
 —
 15
 —
Latin America101
 3
 59
 2
Caterpillar Power Finance141
 4
 50
 1
Total$335
 $10
 $197
 $5
        
Total Impaired Finance Receivables 
  
  
  
North America$64
 $2
 $47
 $1
Europe54
 1
 56
 1
Asia Pacific57
 4
 36
 2
Mining128
 5
 99
 3
Latin America170
 5
 98
 2
Caterpillar Power Finance374
 11
 319
 9
Total$847
 $28
 $655
 $18
        
        
Dealer

As of September 30, 2022 and December 31, 2021, Cat Financial's total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $58 million and $78 million, respectively, that were 91+ days past due in Latin America, all of which were originated in 2017.


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 (generally afterprobable. Contracts on non-accrual status are generally more than 120 days past due)due or have been restructured in a troubled debt restructuring (TDR). Recognition is resumed and previously suspended income is recognized when the finance receivable becomes current and 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, 2022December 31, 2021
 Amortized CostAmortized Cost
 (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$54 $5 $10 $47 $9 $12 
EAME42 — 4 18 1 2 
Asia/Pacific15 — 7 19 — 7 
Mining6 1 — 8 1 14 
Latin America57 — — 52 4 1 
Caterpillar Power Finance9 11 — 40 11 — 
Total$183 $17 $21 $184 $26 $36 

There was $2 million and $1 million of interest income recognized during the three months ended September 30, 2022 and 2021, respectively, for customer finance receivables on non-accrual status. There was $11 million and $9 million of interest income recognized during the nine months ended September 30, 2022 and 2021, respectively, for customer finance receivables on non-accrual status.

As of September 30, 2017, there2022 and December 31, 2021, finance receivables in Cat Financial's Dealer portfolio segment on non-accrual status were $58 million and $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, 2022 and December 31, 2021 and no interest income was recognized on dealer finance receivables on non-accrual status forduring the Dealer portfolio segment of $3 million, all of which were in the Latin America finance receivable class. As of December 31, 2016, there were no finance receivables on non-accrual status for the Dealer portfolio segment. The recorded investment in customer finance receivables on non-accrual status was as follows:three and nine months ended September 30, 2022 and 2021.


    
 (Millions of dollars)
September 30, 2017 December 31, 2016
North America$48
 $66
Europe56
 35
Asia Pacific11
 12
Mining55
 69
Latin America242
 307
Caterpillar Power Finance277
 90
Total$689
 $579
    




Troubled Debt Restructuringsdebt restructurings


A restructuring of a finance receivable constitutes a troubled debt restructuring (TDR)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, extended skip payment periodsdeferrals 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.


As
38
Table of September 30, 2017, there were no additional funds committed to lend to a borrower whose terms have been modified in a TDR. As of December 31, 2016, there was $11 million of additional funds committed to lend to a borrower whose terms have been modified in a TDR.Contents
There were no finance receivables modified as TDRs during the three and nine months ended September 30, 2017 or 20162022 and 2021 for the Dealer portfolio segment. Our recorded investment inCat Financial’s finance receivables in the Customer portfolio segment modified as TDRs during the three and nine months ended September 30, 2017 and 2016, were as follows:

  
(Millions of dollars)Three Months Ended September 30, 2022Three Months Ended September 30, 2021
Pre-TDR
Amortized Cost		Post-TDR
Amortized Cost		Pre-TDR
Amortized Cost		Post-TDR
Amortized Cost
Customer   
North America$3 $3 $1 $1 
EAME— — 1 1 
Asia/Pacific— — 4 4 
Mining15 15 — — 
Latin America— — 4 4 
Caterpillar Power Finance11 11 7 3 
Total$29 $29 $17 $13 
 Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021
 Pre-TDR
Amortized Cost		Post-TDR
Amortized Cost		Pre-TDR
Amortized Cost		Post-TDR
Amortized Cost
North America$4 $4 $5 $5 
EAME1 1 1 1 
Asia/Pacific— — 4 4 
Mining15 15 11 5 
Latin America— — 10 10 
Caterpillar Power Finance20 19 23 19 
Total 
$40 $39 $54 $44 
             
  Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
  (Millions of dollars)
 
Number 
of
Contracts
 
Pre-TDR
Recorded
Investment
 
Post-TDR
Recorded
Investment
 
Number
of
Contracts
 
Pre-TDR
Recorded
Investment
 
Post-TDR
Recorded
Investment
North America 11 $4
 $5
 2 $—
 $—
Europe 1 —
 —
 — —
 —
Asia Pacific — —
 —
 4 1
 1
Mining — —
 —
 1 33
 30
Latin America1 
 3 21
 22
 341 105
 74
Caterpillar Power Finance 5 51
 44
 4 13
 13
Total 20 $76
 $71
 352 $152
 $118
             
  Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
  
Number 
of
Contracts
 
Pre-TDR
Recorded
Investment
 
Post-TDR
Recorded
Investment
 
Number 
of
Contracts
 
Pre-TDR
Recorded
Investment
 
Post-TDR
Recorded
Investment
North America 37 $13
 $13
 15 $16
 $16
Europe 2 —
 —
 3 11
 8
Asia Pacific 6 39
 30
 8 4
 4
Mining 2 57
 56
 2 43
 35
Latin America 17 26
 27
 431 117
 87
Caterpillar Power Finance2
 59 319
 305
 34 196
 177
Total 123 $454
 $431
 493 $387
 $327
             
1
For the three months ended September 30, 2016, 321 contracts with a pre-TDR recorded investment of $94 million and a post-TDR recorded investment of $64 million are related to four customers.
2
For the nine months ended September 30, 2017, 44 contracts with a pre-TDR recorded investment of $200 million and a post-TDR recorded investment of $200 million are related to four customers.

17.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:

(Millions of dollars)Three Months Ended September 30Nine Months Ended September 30
Customer2022202120222021
North America$— $— $— $1 
Asia/Pacific— — — 6 
Mining— — 5 — 
Latin America— — — 15 
Caterpillar Power Finance— — — 5 
Total$— $— $5 $27 


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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.
 
FairWe classify fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation.  A measurementWe may therefore be classifiedclassify 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
InvestmentsWe have investments in certain debt and equity securities primarily at Insurance Services, have been classified as available-for-sale andthat 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,debt securities, corporate bondsdebt securities 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.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 modelsa standard industry accepted valuation model that utilizeutilizes 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 astandard industry accepted valuation modelmodels that discountsdiscount cash flows resulting from the differential between the contract price and the market-based forward rate.



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See Note 5 for additional information.

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, 20172022 and December 31, 2016 are summarized below:
 September 30, 2017
 (Millions of dollars)
Level 1 Level 2 Level 3 
Total
Assets / Liabilities,
at Fair Value
Assets 
  
  
  
Available-for-sale securities 
  
  
  
Government debt 
  
  
  
U.S. treasury bonds$10
 $—
 $—
 $10
Other U.S. and non-U.S. government bonds—
 48
 —
 48
Corporate bonds 
  
  
  
Corporate bonds—
 532
 —
 532
Asset-backed securities—
 76
 —
 76
Mortgage-backed debt securities 
  
  
  
U.S. governmental agency—
 243
 —
 243
Residential—
 8
 —
 8
Commercial—
 17
 —
 17
Equity securities 
  
  
  
Large capitalization value349
 —
 —
 349
Smaller company growth65
 —
 —
 65
Total available-for-sale securities424
 924
 —
 1,348
REIT—
 —
 109
 109
Derivative financial instruments, net—
 28
 —
 28
Total Assets$424
 $952
 $109
 $1,485
        
        
 December 31, 2016
 (Millions of dollars)
Level 1 Level 2 Level 3 
Total
Assets / Liabilities,
at Fair Value
Assets 
  
  
  
Available-for-sale securities 
  
  
  
Government debt 
  
  
  
U.S. treasury bonds$9
 $—
 $—
 $9
Other U.S. and non-U.S. government bonds—
 60
 —
 60
Corporate bonds 
  
  
  
Corporate bonds—
 492
 —
 492
Asset-backed securities—
 90
 —
 90
Mortgage-backed debt securities 
    
  
U.S. governmental agency—
 223
 —
 223
Residential—
 10
 —
 10
Commercial—
 36
 —
 36
Equity securities 
  
  
  
Large capitalization value312
 —
 —
 312
Smaller company growth56
 —
 —
 56
Total available-for-sale securities377
 911
 —
 1,288
REIT—
 —
 79
 79
Total Assets$377
 $911
 $79
 $1,367
Liabilities 
  
  
  
Derivative financial instruments, net$—
 $72
 $—
 $72
Total Liabilities$—
 $72
 $—
 $72
        
        

The fair value of our REIT investment is measured based on NAV, which is considered a Level 3 input. A roll-forward for the nine months ended September 30, 2017 of our REIT investment is2021 were as follows:

September 30, 2022
 (Millions of dollars)
Level 1Level 2Level 3Measured at NAVTotal
Assets / Liabilities,
at Fair Value
Assets    
Debt securities    
Government debt securities    
U.S. treasury bonds$10 $— $— $— $10 
Other U.S. and non-U.S. government bonds— 49 — — 49 
Corporate debt securities    
Corporate bonds and other debt securities— 1,998 50 — 2,048 
Asset-backed securities— 180 — — 180 
Mortgage-backed debt securities    
U.S. governmental agency— 348 — — 348 
Residential— 3 — — 3 
Commercial— 129 — — 129 
Total debt securities10 2,707 50 — 2,767 
Equity securities    
Large capitalization value183 — — — 183 
Smaller company growth40 — — — 40 
REIT— — — 208 208 
Total equity securities223 — — 208 431 
Derivative financial instruments - assets
Foreign currency contracts - net— 338 — — 338 
Total assets$233 $3,045 $50 $208 $3,536 
Liabilities    
Derivative financial instruments - liabilities
Interest rate contracts - net$— $208 $— $— $208 
Commodity contracts - net— 34 — — 34 
Total liabilities$— $242 $— $— $242 
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(Millions of dollars) REIT
Balance at December 31, 2016 $79
Purchases of securities 27
Sale of securities —
Gains (losses) included in Accumulated other comprehensive income (loss) 3
Balance at September 30, 2017 $109
   
   
December 31, 2021
 (Millions of dollars)
Level 1Level 2Level 3Measured at NAVTotal
Assets / Liabilities,
at Fair Value
Assets    
Debt securities    
Government debt securities    
U.S. treasury bonds$10 $— $— $— $10 
Other U.S. and non-U.S. government bonds— 61 — — 61 
Corporate debt securities    
Corporate bonds and other debt securities— 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 securities10 1,711 — — 1,721 
Equity securities    
Large capitalization value217 — — — 217 
Smaller company growth98 — — — 98 
REIT— — — 167 167 
Total equity securities315 — — 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 impaired loans are subject to measurement at fair value on a nonrecurring basis and are classified as Level 3 measurements. A loan is considered impairedmeasured at fair value when management determines that collection of contractual amounts due is not probable.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'receivables’ effective interest rate, or the fair value of the collateral for collateral-dependent receivables.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 impaired loans with acarried at fair value of $251$90 million and $137$100 million as of September 30, 20172022 and December 31, 2016,2021, 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 useduse the following methods and assumptions to estimate the fair value of our financial instruments:


Cash and short-term investmentscash equivalents
Carrying amount approximatedapproximates 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 approximatedapproximates fair value.  RestrictedWe include restricted cash and short-term investments are included 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, and certain corporate debt securities which are Level 3. See Note 8 for additional information.
 
Finance receivables
FairWe estimate fair value was estimated by discounting the future cash flows using current rates, representative of receivables with similar remaining maturities.
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Wholesale inventory receivables
FairWe estimate fair value was estimated by discounting the future cash flows using current rates, representative of receivables with similar remaining maturities.
 
Short-term borrowings
Carrying amount approximatedapproximates fair value. We classify short-term borrowings as Level 1. See Consolidated Statement of Financial Position.
 
Long-term debt
FairWe estimate fair value for fixed and floating rate debt was estimated 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.


Please refer to the table below for theOur financial instruments not carried at fair values of our financial instruments.value were as follows:
 
 September 30, 2022December 31, 2021 
(Millions of dollars)
Carrying
 Amount
Fair
 Value
Carrying
 Amount
Fair
 Value
Fair Value LevelsReference
Assets     
Finance receivables – net (excluding finance leases 1 )
$13,931 $13,356 $13,837 $13,836 3Note 17
Wholesale inventory receivables – net (excluding finance leases 1)
768 724 773 753 3
Liabilities     
Long-term debt (including amounts due within one year)    
Machinery, Energy & Transportation9,599 9,072 9,791 12,420 2 
Financial Products22,724 21,886 22,594 22,797 2 
  Fair Value of Financial Instruments    
  September 30, 2017 December 31, 2016    
(Millions of dollars) 
Carrying
 Amount
 
Fair
 Value
 
Carrying
 Amount
 
Fair
 Value
 Fair Value Levels Reference
Assets  
  
  
  
    
Cash and short-term investments $9,591
 $9,591
 $7,168
 $7,168
 1  
Restricted cash and short-term investments $202
 $202
 $31
 $31
 1  
Investments in debt and equity securities $1,457
 $1,457
 $1,367
 $1,367
 1, 2 & 3 Note 8
Finance receivables – net (excluding finance leases 1)
 $15,583
 $15,604
 $16,172
 $16,056
 3 Note 16
Wholesale inventory receivables – net (excluding finance leases 1)
 $1,393
 $1,362
 $1,500
 $1,464
 3 Note 16
Foreign currency contracts – net $14
 $14
 $—
 $—
 2 Note 4
Interest rate contracts – net $2
 $2
 $3
 $3
 2 Note 4
Commodity contracts – net $12
 $12
 $10
 $10
 2 Note 4
            
Liabilities  
  
  
  
    
Short-term borrowings $5,470
 $5,470
 $7,303
 $7,303
 1  
Long-term debt (including amounts due within one year)  
  
  
  
    
Machinery, Energy & Transportation $8,825
 $10,708
 $8,943
 $10,348
 2  
Financial Products $21,629
 $21,854
 $20,537
 $20,724
 2  
Foreign currency contracts – net $—
 $—
 $85
 $85
 2 Note 4
Guarantees $8
 $8
 $8
 $8
 3 Note 10


1    Represents finance leases and failed sale leasebacks of $7,083 million and $8,083 million at September 30, 2022 andDecember 31, 2021, respectively.
1
Total excluded items have a net carrying value at September 30, 2017 and December 31, 2016 of $6,800 million and $6,111 million, respectively.


19.Other income (expense)
 Three Months Ended September 30Nine Months Ended September 30
(Millions of dollars)2022202120222021
Investment and interest income$52 $20 $98 $64 
Foreign exchange gains (losses) 1
134 47 405 110 
License fee income37 31 106 88 
Net periodic pension and OPEB income (cost), excluding service cost67 111 201 333 
Gains (losses) on securities— 50 (59)92 
Miscellaneous income (loss)(48)(34)4 64 
Total$242 $225 $755 $751 

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



18.
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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 are recognized at the time of employee acceptance unless the acceptance requires explicit approval by the company. For involuntary programs, we recognize eligible costs are recognized 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, 20172022 and 20162021 were as follows:

(Millions of dollars)Three Months Ended September 30Nine Months Ended September 30
2022202120222021
Employee separations 1
$39 $17 $62 $79 
Contract terminations 1
1 1 1 1 
Long-lived asset impairments 1
(4)8 1 12 
Other 2
13 9 26 32 
Total restructuring costs$49 $35 $90 $124 
1 Recognized in Other operating (income) expenses.
2 Represents costs related to our restructuring programs, primarily for accelerated depreciation, equipment relocation, inventory write-downs and project management, all of which are primarily included in Cost of goods sold.

     
(Millions of dollars) Three Months Ended September 30
  2017 2016
Employee separations 1
 $8
 $99
Contract terminations 1
 6
 9
Long-lived asset impairments 1
 31
 158
Other 2
 45
 58
Total restructuring costs $90
 $324
     
     
  Nine Months Ended September 30
  2017 2016
Employee separations 1
 $514
 $175
Contract terminations 1
 32
 55
Long-lived asset impairments 1
 306
 254
Defined benefit plan curtailments and termination benefits 1
 29
 —
Other 2
 130
 140
Total restructuring costs $1,011
 $624
     
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 costs and also LIFO inventory decrement benefits from inventory liquidations at closed facilities (all of which are
   primarily included in Cost of goods sold).
     

In March 2017, Caterpillar informed Belgian authorities ofFor both the decision to proceed to a collective dismissal, which will lead tonine months ended September 30, 2022 and 2021, the closure of the Gosselies site, impacting about 2,000 employees. Production of Caterpillar products at the Gosselies site ended during the second quarter of 2017. The other operations and functions at the Gosselies site are expected to be gradually phased out by the end of the second quarter of 2018. We estimate restructuring costs incurred under this program to be about $700 million. For the first nine months of 2017, we recognized $649 million of restructuring costs which included $443 million of employee separation costs, $201 million for long-lived asset impairments and $67 million of other costs partially offset by a $62 million LIFO inventory decrement benefit. The majority of the remaining costs are expected to be recognized in 2017. The remaining restructuring costs for the first nine months of 2017 were primarily related to restructuring actions in Resource Industries.

The restructuring costs for the first nine months of 2016 were primarily related to actions in Resource Industries in response to continued weakness in the mining industry. In addition, costs resulted from our decision to discontinue production of on-highway vocational trucks, as discussed below, and other restructuring actions across the company.company including strategic actions to address a small number of products.


RestructuringIn 2022 and 2021, all restructuring costs are a reconciling item between Segment profit and Consolidated profit before taxes. See Note 15 for more information.excluded from segment profit.


The following table summarizes the 20162022 and 20172021 employee separation activity:

(Millions of dollars)Nine Months Ended September 30
20222021
Liability balance, beginning of period$61 $164 
Increase in liability (separation charges)62 79 
Reduction in liability (payments)(63)(159)
Liability balance, end of period$60 $84 
   
(Millions of dollars)  
Liability balance at December 31, 2015$483
Increase in liability (separation charges)297
Reduction in liability (payments)(633)
Liability balance at December 31, 2016$147
Increase in liability (separation charges)514
Reduction in liability (payments)(339)
Liability balance at September 30, 2017$322
  


Most of the liability balance at September 30, 20172022 is expected to be paid in 20172022 and 2018 and primarily includes employee separation payments related to closure2023.
44
Table of the Gosselies facility.Contents
Restructuring costs for the year ended December 31, 2016 were $1,019 million. Throughout 2016, we initiated the following restructuring plans:
In February 2016, we made the decision to discontinue production of on-highway vocational trucks. Based on the business climate in the truck industry and a thorough evaluation of the business, the company decided it would withdraw from this market. We recognized $104 million of restructuring costs, primarily related to long-lived asset impairments and sales discounts, which is substantially all the costs expected under this program.
In the second half of 2016, we took additional restructuring actions in Resource Industries, including ending the production of track drills; pursuing strategic alternatives related to room and pillar products; consolidation of two product development divisions; and additional actions in response to ongoing weakness in the mining industry. For the year ended December 31, 2016, we incurred $369 million of restructuring costs for these plans primarily related to long-lived asset impairments, employee separation costs and inventory write-downs.
In September 2015, we announced a large scale restructuring plan (the Plan) including a voluntary retirement enhancement program for qualifying U.S. employees, several voluntary separation programs outside of the U.S., additional involuntary programs throughout the company and manufacturing facility consolidations and closures expected to occur through 2018. The largest action among those included in the Plan was related to our European manufacturing footprint, which led to the Gosselies facility closure as discussed above. In the first nine months of 2017, we incurred $772 million of restructuring costs related to the Plan, and we incurred $281 million and $569 million in 2016 and 2015, respectively, for a total of $1,622 million through September 30, 2017. We expect to recognize approximately $70 million of additional restructuring costs related to the Plan in 2017.

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


Overview
Third-quarter 2017 salesThe following Management’s Discussion and revenues were $11.413 billion,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 as well as a 25 percent increase from third-quarter 2016 sales and revenues of $9.160 billion. The increase was primarily due to higher sales volume, with about halfdiscussion of the increase duemany factors that we believe may have an impact on our business on an ongoing basis. This MD&A should be read in conjunction with our discussion of cautionary statements and significant risks to improved end-user demand and about halfthe company’s business under Part I, Item 1A. Risk Factors of the increase due to favorable changes in dealer inventories. The improvement in end-user demand was across all regions and most end markets. The favorable change in dealer inventories was primarily due to a decrease in dealer inventories during the third quarter of 2016. By segment, the most significant increase in sales volume was in Construction Industries, mostly due to the favorable impact of changes in dealer inventories and higher end-user demand for construction equipment. Sales volume for Resource Industries increased due to the favorable impact of changes in dealer inventories and higher end-user demand for aftermarket parts. Energy & Transportation's sales volume increased due to higher demand across all applications. Profit per share2021 Form 10-K.
Highlights for the third quarter of 2017 was $1.77, an increase from $0.48 profit per share in2022 include:
•Total sales and revenues for the third quarter of 2016. Profit was $1.0592022 were $14.994 billion, an increase of $2.597 billion, or 21 percent, compared with $12.397 billion in the third quarter of 2017, an increase from $283 million in2021. Sales were higher across the three primary segments.
•Operating profit margin was 16.2 percent for the third quarter of 2016. Profit increased primarily due to higher sales volume. Improved price realization, lower restructuring costs2022, compared with 13.4 percent for the third quarter of 2021. Adjusted operating profit margin was 16.5 percent for the third quarter of 2022, compared with 13.7 percent for the third quarter of 2021.
•Third-quarter 2022 profit per share was $3.87, and variable manufacturing costs were partially offset by higher period costs.excluding the items in the table below, adjusted profit per share was $3.95. Third-quarter 2021 profit per share was $2.60 and, excluding the items in the table below, adjusted profit per share was $2.66.
Sales and revenues•Caterpillar ended the third quarter of 2022 with $6.3 billion of enterprise cash.
Highlights for the nine months ended September 30, 2017,2022 include:
•Total sales and revenues were $32.566 billion, up $3.603 billion, or 12 percent, from $28.963$42.830 billion for the nine months ended September 30, 2016. 2022, an increase of $5.657 billion, or 15 percent, compared with $37.173 billion for the nine months ended September 30, 2021.
•Operating profit margin was 14.5 percent for the nine months ended September 30, 2022, compared with 14.2 percent for the nine months ended September 30, 2021. Adjusted operating profit margin was 14.7 percent for the nine months ended September 30, 2022, compared with 14.5 percent for the nine months ended September 30, 2021.
•Profit per share for the nine months ended September 30, 2017,2022, was $3.44, an increase of 83 percent from profit per share of $1.88 for$9.85 and, excluding the same period last year. Profit was $2.053 billion for the nine months ended September 30, 2017, an increase of 86 percent from $1.104 billion for the nine months ended September 30, 2016.
Highlights for the third quarter of 2017 include:
Third-quarter sales and revenues were $11.413 billion, compared with $9.160 billionitems in the third quarter of 2016. Sales increased in Construction Industries, Resource Industries and Energy & Transportation. Financial Products’ revenues were about flat.
Profit per share was $1.77 in the third quarter of 2017, compared with $0.48 in the third quarter of 2016. Excluding restructuring costs of $0.18 per share, third-quarter 2017 adjusted profit per share was $1.95, compared to third-quarter 2016table below, adjusted profit per share of $0.85.
Machinery, Energy & Transportation (ME&T) debt-to-capital ratiowas 36.1 percent at September 30, 2017, compared to 41.0 percent at the end of 2016.
As a result of increasing sales volume during 2017, we are increasing production levels and working with our supply chain to reduce lead times in response to improved end-user demand in a number of end markets.
Highlights for the nine months ended September 30, 2017, include:
Sales and revenues for the nine months ended September 30, 2017, were $32.566 billion, compared with $28.963 billion for the nine months ended September 30, 2016. Sales increased in Construction Industries, Resource Industries and Energy & Transportation. Financial Products’ revenues were about flat.
Restructuring costs were $1.011 billion for the nine months ended September 30, 2017, with an after-tax impact of $1.37 per share, compared with restructuring costs of $624 million for the nine months ended September 30, 2016, with an after-tax impact of $0.70 per share.
$9.99. Profit per share was $3.44 for the nine months ended September 30, 2017, compared with $1.88 in the nine months ended September 30, 2016. Excluding restructuring costs of $1.37 per share and a gain on the sale of an equity investment of $0.09 per share, adjusted profit per share for the nine months ended September 30, 20172021, was $4.72, compared to $2.58$7.94, and excluding the items in the table below, adjusted profit per share in the nine months ended September 30, 2016.was $8.13.
ME&T•Enterprise operating cash flow was $4.164$5.0 billion for the nine months ended September 30, 2017, compared2022.
•In order for our results to $1.795 billionbe 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 65.
Three Months Ended September 30, 2022Three Months Ended September 30, 2021Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021
(Dollars in millions except per share data)Profit Before TaxesProfit
Per Share		Profit Before TaxesProfit
Per Share		Profit Before TaxesProfit
Per Share		Profit Before TaxesProfit
Per Share
Profit$2,558 $3.87 $1,775 $2.60 $6,653 $9.85 $5,642 $7.94 
Restructuring costs49 0.08 35 0.06 90 0.14 124 0.19 
Adjusted profit$2,607 $3.95 $1,810 $2.66 $6,743 $9.99 $5,766 $8.13 
Overview
Total sales and revenues for the nine months ended September 30, 2016.
Restructuring Costs
In the third quarter of 2017, we continued our focus on structural cost reduction2022 were $14.994 billion, an increase of $2.597 billion, or 21 percent, compared with $12.397 billion in the third quarter of 2021. The increase was due to help improve our long-term cost structure. Restructuring costs of $90 million were primarily related to restructuring programs in Resource Industriesfavorable price realization and Energy & Transportation. During the first nine months of 2017, we incurred $1.011 billion of restructuring costs,higher sales volume, partially offset by unfavorable currency impacts primarily related to the closureeuro, Japanese yen and Australian dollar. The increase in sales volume was driven by the impact from changes in dealer inventories, higher sales of equipment to end users and higher services. Dealers increased inventories by $700 million during the facilitythird quarter of 2022, compared with a decrease of $300 million during the third quarter of 2021. Sales were higher across the three primary segments.
Third-quarter 2022 profit per share was $3.87, compared with $2.60 profit per share in Gosselies, Belgium. For the full yearthird quarter of 2017, we anticipate2021. Profit per share for both quarters included restructuring costs. Profit for the third quarter of 2022 was $2.041 billion, an increase of $615 million, or 43%, compared with $1.426 billion for the third quarter of 2021. The increase was primarily due to favorable price realization and higher sales volume, partially offset by unfavorable manufacturing costs and higher selling, general and administrative (SG&A) and research and development (R&D) expenses. Unfavorable manufacturing costs largely reflected higher material costs, freight and the impact of about $1.3 billion.manufacturing inefficiencies. SG&A/R&D expenses increased primarily due to investments aligned with the company's strategy for profitable growth and higher short-term incentive compensation expense.

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Global Business Conditions:


We continue to monitor a variety of external factors around the world, such as supply chain disruptions, inflationary 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. 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 throughout the year. We address these external factors throughout the discussion in the Consolidated Results of Operations section below.
Notes:
•Glossary of terms is included on pages 73-75;58 - 60; first occurrence of terms shown in bold italics.
•Information on non-GAAP financial measures is included on page 83.65.

•Certain amounts may not add due to rounding.
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Consolidated Results of Operations
 
THREE MONTHS ENDED SEPTEMBER 30, 20172022 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 20162021


CONSOLIDATED SALES AND REVENUES
cons-salesandrev2017q3a02.jpgcat-20220930_g2.jpg
The chart above graphically illustrates reasons for the change in Consolidated Salesconsolidated sales and Revenuesrevenues between the third quarter of 20162021 (at left) and the third quarter of 20172022 (at right). Items favorably impacting sales and revenues appear as upward stair steps with the corresponding dollar amounts above each bar, while items negatively impacting sales and revenues appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Caterpillar management utilizes these charts internally to visually communicate with the company's boardcompany’s Board of directorsDirectors and employees.

Sales and Revenues
Total sales and revenues for the third quarter of 2022 were $11.413$14.994 billion, an increase of $2.597 billion, or 21 percent, compared with $12.397 billion in the third quarter of 2017, an2021. The increase was due to favorable price realization and higher sales volume, partially offset by unfavorable currency impacts primarily related to the euro, Japanese yen and Australian dollar. The increase in sales volume was driven by the impact from changes in dealer inventories, higher sales of $2.253 billion, or 25 percent, compared with $9.160 billion inequipment to end users and higher services. Dealers increased inventories by $700 million during the third quarter of 2016. The increase was primarily due to2022, compared with a decrease of $300 million during the third quarter of 2021.
Sales were higher across the three primary segments.
North America sales volume, with about half of the increase due to improved end-user demand and about half of the increaseincreased 33 percent due to favorable price realization, the impact from changes in dealer inventories. The improvement in end-user demand was across all regionsinventories, services and mosthigher sales of equipment to end markets. The favorable change in dealer inventories was primarily due to a decrease in dealerusers. Dealers increased inventories during the third quarter of 2016. By segment,2022, compared with a decrease during the largest sales volume increase wasthird quarter of 2021.
Sales increased 36 percent in Construction Industries mostlyLatin America due to favorable price realization, higher sales of equipment to end users and the impact from changes in dealer inventories. Dealers increased inventories during the third quarter of 2022, compared with remaining about flat during the third quarter of 2021.
EAME sales increased 8 percent as unfavorable currency impacts, primarily related to the euro and British pound, were more than offset by favorable price realization, the impact offrom changes in dealer inventories and higher end-user demand for construction equipment. Sales volume for Resource Industriessales of equipment to end users. Dealers increased due to the favorable impact of changes in dealer inventories and higher end-user demand for aftermarket parts. Energy & Transportation’s sales volume increased due to higher demand across all applications. Favorable price realization, primarily in Construction Industries, also contributed to the sales improvement. Financial Products’ revenues were about flat.
Sales increased across all regions with the largest increase in North America. Sales improved 27 percent in North America primarily due to higher end-user demand for both equipment and aftermarket parts, as well as favorable changes in dealer inventories. Dealer inventories decreased during the third quarter of 2016 and were2022, compared with remaining about flat induring the third quarter of 2017. 2021.
Asia/Pacific sales increased 319 percent primarily due to higher end-user demand for construction equipment. About half ofdriven by favorable price realization and the sales improvement in Asia/Pacific was in China resultingimpact from increased building construction and infrastructure investment. EAME sales increased 22 percent primarily due to the favorable impact of changes in dealer inventories, as dealers decreasedpartially offset by unfavorable currency impacts, related to the Japanese yen and Australian dollar. Dealers increased inventories induring the third quarter of 2016 and increased dealer inventories in2022, compared with a decrease during the third quarter of 2017. Sales2021.
Dealers increased 24 percent in Latin America due to stabilizing economic conditions in several countries in the region that resulted in improved end-user demand from low levels.
Dealer machine and engine inventories increased about $200 million in the three months ended September 30, 2017, compared to a decrease ofby $700 million during the three months ended September 30, 2016.third quarter of 2022, compared with a decrease of $300 million during the third quarter of 2021. Most of the increase related to timing differences between when we ship product to dealers and when the dealers, in turn, are able to deliver completed orders to customers. Dealers are independent, and there could be manythe 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 ratesrentals and other

factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers. At year end, we expect dealer inventory levels to be similar to the third quarter of 2022.
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Compared to the fourth quarter of 2021, we expect higher sales to users and price realization to support the sales growth in the fourth quarter of 2022. We believeanticipate the levelfourth quarter will reflect our highest quarterly sales for the year, which is in line with typical seasonality.
Sales and Revenues by Segment
(Millions of dollars)Third Quarter 2021Sales
Volume		Price
Realization		CurrencyInter-Segment / OtherThird Quarter 2022$
Change		%
Change
Construction Industries$5,255 $423 $781 $(229)$46 $6,276 $1,021 19 %
Resource Industries2,366 338 443 (59)(1)3,087 721 30 %
Energy & Transportation5,077 618 409 (171)253 6,186 1,109 22 %
All Other Segment119 2 — (2)(16)103 (16)(13 %)
Corporate Items and Eliminations(1,110)16 2 — (282)(1,374)(264) 
Machinery, Energy & Transportation Sales
11,707 1,397 1,635 (461)— 14,278 2,571 22 %
Financial Products Segment762 — — — 57 819 57 7 %
Corporate Items and Eliminations(72)— — — (31)(103)(31) 
Financial Products Revenues
690 — — — 26 716 26 4 %
Consolidated Sales and Revenues$12,397 $1,397 $1,635 $(461)$26 $14,994 $2,597 21 %

Sales and Revenues by Geographic Region
North AmericaLatin AmericaEAMEAsia/PacificExternal Sales and RevenuesInter-SegmentTotal Sales and Revenues
(Millions of dollars)$% Chg$% Chg$% Chg$% Chg$% Chg$% Chg$% Chg
Third Quarter 2022          
Construction Industries$3,106 29 %$799 51 %$1,247 1 %$1,084 1 %$6,236 19 %$40 (767 %)$6,276 19 %
Resource Industries1,122 66 %472 13 %526 15 %893 20 %3,013 32 %74 (1 %)3,087 30 %
Energy & Transportation2,422 26 %468 42 %1,280 12 %827 11 %4,997 21 %1,189 27 %6,186 22 %
All Other Segment16 (11 %)— — %4 33 %15 7 %35 — %68 (19 %)103 (13 %)
Corporate Items and Eliminations1 — — (4)(3)(1,371)(1,374)
Machinery, Energy & Transportation Sales6,667 33 %1,739 36 %3,057 8 %2,815 9 %14,278 22 %— — 14,278 22 %
Financial Products Segment522 9 %90 32 %100 (5 %)107 (4 %)819 17 %— — 819 7 %
Corporate Items and Eliminations(54)(20)(12)(17)(103)— (103)
Financial Products Revenues468 6 %70 27 %88 (8 %)90 (8 %)716 4 %— — 716 4 %
Consolidated Sales and Revenues$7,135 31 %$1,809 36 %$3,145 7 %$2,905 9 %$14,994 21 %$— — $14,994 21 %
Third Quarter 2021              
Construction Industries$2,417 $528 $1,240 $1,076  $5,261 $(6) $5,255 
Resource Industries674 417 456 744  2,291 75  2,366 
Energy & Transportation1,924 329 1,144 744  4,141 936  5,077 
All Other Segment18 — 3 14  35 84  119 
Corporate Items and Eliminations(19)— — (2)(21)(1,089)(1,110)
Machinery, Energy & Transportation Sales5,014  1,274  2,843  2,576  11,707  —  11,707  
Financial Products Segment478 68 105 111  762 1—  762 
Corporate Items and Eliminations(37)(13)(9)(13) (72)—  (72)
Financial Products Revenues441  55  96  98  690  —  690  
Consolidated Sales and Revenues$5,455  $1,329  $2,939  $2,674  $12,397  $—  $12,397  

1 Includes revenues from Machinery, Energy & Transportation of dealer inventories at$124 million and $87 million in the endthird quarter of 2017 will depend on dealer expectations for business in 2018.2022 and 2021, respectively.

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CONSOLIDATED OPERATING PROFIT
cons-opprofit2017q3a02.jpgcat-20220930_g3.jpg
The chart above graphically illustrates reasons for the change in Consolidated Operating Profitconsolidated operating profit between the third quarter of 20162021 (at left) and the third quarter of 20172022 (at right). Items favorably impacting operating profitappear as upward stair steps with the corresponding dollar amounts above each bar, while items negatively impacting operating profit appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Caterpillar management utilizes these charts internally to visually communicate with the company's boardcompany’s Board of directorsDirectors and employees. The bar entitledtitled Other includes consolidating adjustments and Machinery, Energy & TransportationTransportation's other operating (income) expenses.

Operating profit for the third quarter of 20172022 was $1.577$2.425 billion, an increase of $761 million, or 46 percent, compared with $481$1.664 billion in the third quarter of 2021. The increase was primarily due to favorable price realization and higher sales volume, partially offset by higher manufacturing costs and higher SG&A/R&D expenses. Unfavorable manufacturing costs largely reflected higher material costs, freight and the impact of manufacturing inefficiencies, due to ongoing disruptions to the supply chain. SG&A/R&D expenses increased primarily due to investments aligned with the company's strategy for profitable growth, which included services growth and technology, such as digital, electrification and autonomy, as well as higher short-term incentive compensation expense.
Short-term incentive compensation expense was about $400 million in the third quarter of 2016. The increase of $1.096 billion was primarily due2022, compared to higher sales volume. Favorable price realization, lower restructuring costs and variable manufacturing costs were partially offset by higher period costs. Price realization was favorable, primarily in Construction Industries.
Variable manufacturing costs were lower primarily due to the favorable impact from cost absorption as inventory increased in the third quarter of 2017 due to higher production volumes and was about flat in the third quarter of 2016. Material costs were slightly unfavorable due to increases in steel prices. Period costs were higher primarily due to higher short-term incentive compensation expense. Despite a significant increase in sales volume, period costs excluding short-term incentive compensation expense were about flat.
Restructuring costs were $90$350 million in the third quarter of 2017 were primarily related to restructuring programs in Resources Industries and Energy & Transportation,2021.
Operating profit margin was 16.2 percent for the third quarter of 2022, compared with $32413.4 percent for the third quarter of 2021.
We expect higher sales volume and continued favorable price realization in the fourth quarter of 2022, compared with the fourth quarter of 2021. We anticipate the impact of favorable price realization to more than offset manufacturing cost increases, including manufacturing inefficiencies.
Profit by Segment
(Millions of dollars)Third Quarter 2022Third Quarter 2021$
Change
%
 Change
Construction Industries$1,209 $866 $343 40 %
Resource Industries506 280 226 81 %
Energy & Transportation935 706 229 32 %
All Other Segment8 5 3 60 %
Corporate Items and Eliminations(373)(286)(87) 
Machinery, Energy & Transportation2,285 1,571 714 45 %
Financial Products Segment220 173 47 27 %
Corporate Items and Eliminations30 (7)37  
Financial Products250 166 84 51 %
Consolidating Adjustments(110)(73)(37) 
Consolidated Operating Profit$2,425 $1,664 $761 46 %
Corporate Items and Eliminations included 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 (the company values segment inventories and cost of sales using a current cost methodology), certain restructuring costs and inter-segment eliminations.
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Other Profit/Loss and Tax Items
▪Interest expense excluding Financial Products in the third quarter of 2022 was $109 million, compared with $114 million in the third quarter of 2016.
Short-term incentive compensation expense for the three months ended September 30, 2017,2021. The decrease was about $400 million and no short-term incentive compensation expense was recognizeddue to lower average debt outstanding during the third quarter of 2016.2022, compared with the third quarter of 2021.
▪Other Profit/Loss Itemsincome (expense) in the third quarter of 2022 was income of $242 million, compared with income of $225 million in the third quarter of 2021. The change was primarily driven by favorable impacts from foreign currency exchange and higher investment and interest income, partially offset by lower gains on marketable securities and lower pension and other postemployment benefit (OPEB) plan income.
▪
Other income/expense in the third quarter of 2017 was income of $64 million, compared with income of $28 million in the third quarter of 2016. The favorable change was primarily a result of gains on the sale of securities.
▪
The provision for income taxes in the third quarter reflects an estimated annual tax rate of 32 percent, which excludes the discrete item discussed in the following paragraph, compared with 25 percent for the third quarter of 2016. The increase is primarily due to higher non-U.S. restructuring costs in 2017 that are taxed at relatively lower non-U.S. tax rates, along with other changes in the geographic mix of profits from a tax perspective. Under the terms of a manufacturing service agreement, Caterpillar SARL (CSARL) will bear substantially all of the restructuring costs related to the closure of our Gosselies, Belgium, facility, reducing CSARL's profits taxable in Switzerland.

▪The provision for income taxes for the third quarter of 2022 reflected an estimated annual tax rate of 23 percent, compared with 25 percent for the third quarter of 2021, excluding the discrete items discussed below. The comparative tax rate for full-year 2021 was approximately 23 percent.
In addition,the third quarter of 2022, the company reached a settlement with the U.S. Internal Revenue Service (IRS) that resolves all issues for tax years 2007 through 2016, without any penalties. The company’s settlement includes, among other issues, the resolution of disputed tax treatment of profits earned by Caterpillar SARL (CSARL) from certain parts transactions. We vigorously contested the IRS’s application of the “substance-over-form” or “assignment-of-income” judicial doctrines and its proposed increases to tax and imposition of accuracy related penalties. The settlement does not include any increases to tax in the United States based on those judicial doctrines and does not include any penalties. The final tax assessed by the IRS for all issues under the settlement was $490 million for the ten-year period. This amount was primarily paid in the third quarter of 2022, and the associated estimated interest of $250 million is expected to be paid by the end of 2022. The settlement was within the total amount of gross unrecognized tax benefits for uncertain tax positions and enables us to avoid the costs and burdens of further disputes with the IRS. As a result of the settlement, we recorded a discrete tax benefit of $18$41 million was recordedto reflect changes in estimates of prior years’ taxes and related interest, net of tax. We are subject to the continuous examination of our income tax returns by the IRS, and tax years subsequent to 2016 are not yet under examination.
The provision for the settlement of stock-based compensation awards with associated tax deductionsincome taxes in excess of cumulative U.S. GAAP compensation expense.
Excluding restructuring costs, gain on the sale of Caterpillar’s equity investment in IronPlanet in the secondthird quarter of 2017, and discrete items,2022 also included a $20 million benefit due to a decrease in the 2017 estimated annual tax rate, is expectedcompared to be 29 percent.
Segment Information
Sales and Revenues by Geographic Region
(Millions of dollars)Total 
%
 Change
 
North
 America
 
%
 Change
 
Latin
 America
 
%
 Change
 EAME 
%
 Change
 
Asia/
 Pacific
 
%
 Change
Third Quarter 2017 
  
  
  
  
  
  
  
  
  
Construction Industries 1
$4,854
 37% $2,165
 31% $390
 36 % $1,008
 28% $1,291
 57 %
Resource Industries 2
1,870
 36% 581
 28% 329
 30 % 488
 61% 472
 29 %
Energy & Transportation 3
3,961
 12% 1,928
 22% 300
 7 % 1,166
 7% 567
 (2)%
All Other Segments 4
56
 100% 30
 400% 1
 — % 13
 160% 12
 (29)%
Corporate Items and Eliminations(28) —
 (25)   (1)   (2)   —
  
Machinery, Energy & Transportation Sales10,713
 27% 4,679
 27% 1,019
 24 % 2,673
 22% 2,342
 31 %
                    
Financial Products Segment774
 3% 510
 9% 64
 (24)% 110
 9% 90
 (8)%
Corporate Items and Eliminations(74)   (51)   (5)   (4)   (14)  
Financial Products Revenues700
 —% 459
 5% 59
 (20)% 106
 9% 76
 (14)%
                    
Consolidated Sales and Revenues$11,413
 25% $5,138
 25% $1,078
 20 % $2,779
 22% $2,418
 29 %
                    
Third Quarter 2016 
  
  
  
  
  
  
  
  
  
Construction Industries 1
$3,554
   $1,655
   $287
   $789
   $823
  
Resource Industries 2
1,377
   454
   254
   303
   366
  
Energy & Transportation 3
3,534
   1,583
   280
   1,094
   577
  
All Other Segments 4
28
   6
   —
   5
   17
  
Corporate Items and Eliminations(30)   (26)   —
   (3)   (1)  
Machinery, Energy & Transportation Sales8,463
  
 3,672
  
 821
  
 2,188
  
 1,782
  
                    
Financial Products Segment749
   466
   84
   101
   98
  
Corporate Items and Eliminations(52)   (28)   (10)   (4)   (10)  
Financial Products Revenues697
  
 438
  
 74
  
 97
  
 88
  
                    
Consolidated Sales and Revenues$9,160
  
 $4,110
  
 $895
  
 $2,285
  
 $1,870
  
1
Does not include inter-segment sales of $32 million and $27 million in third quarter 2017 and 2016, respectively.
2
Does not include inter-segment sales of $86 million and $69 million in third quarter 2017 and 2016, respectively.
3
Does not include inter-segment sales of $877 million and $629 million in third quarter 2017 and 2016, respectively.
4
Does not include inter-segment sales of $89 million and $95 million in third quarter 2017 and 2016, respectively.



Sales and Revenues by Segment              
(Millions of dollars)Third Quarter 2016 
Sales
Volume
 
Price
Realization
 Currency Other Third Quarter 2017 
$
Change
 
%
Change
                
Construction Industries$3,554
 $1,002
 $291
 $7
 $—
 $4,854
 $1,300
 37%
Resource Industries1,377
 410
 73
 10
 —
 1,870
 493
 36%
Energy & Transportation3,534
 419
 (21) 29
 —
 3,961
 427
 12%
All Other Segments28
 28
 —
 —
 —
 56
 28
 100%
Corporate Items and Eliminations(30) 2
 —
 —
 —
 (28) 2
  
Machinery, Energy & Transportation Sales8,463
 1,861
 343
 46
 —
 10,713
 2,250
 27%
                
Financial Products Segment749
 —
 —
 —
 25
 774
 25
 3%
Corporate Items and Eliminations(52) —
 —
 —
 (22) (74) (22)  
Financial Products Revenues697
 —
 —
 —
 3
 700
 3
 —%
                
Consolidated Sales and Revenues$9,160
 $1,861
 $343
 $46
 $3
 $11,413
 $2,253
 25%
                
Operating Profit / (Loss) by Segment       
(Millions of dollars)Third Quarter 2017 Third Quarter 2016 
$
Change
 
%
 Change
Construction Industries$884
 $326
 $558
 171 %
Resource Industries226
 (77) 303
  n/a
Energy & Transportation750
 572
 178
 31 %
All Other Segments6
 (22) 28
  n/a
Corporate Items and Eliminations(359) (433) 74
  
Machinery, Energy & Transportation1,507
 366
 1,141
 312 %
        
Financial Products Segment185
 183
 2
 1 %
Corporate Items and Eliminations(37) (12) (25)  
Financial Products148
 171
 (23) (13)%
Consolidating Adjustments(78) (56) (22)  
Consolidated Operating Profit / (Loss)$1,577
 $481
 $1,096
 228 %
        

$39 million in the third quarter of 2021. The company also recorded a discrete tax benefit of $36 million to reflect changes in estimates related to the prior year’s U.S. taxes in the third quarter of 2021.
Construction Industries
Construction Industries’ total sales were $4.854$6.276 billion in the third quarter of 2017,2022, an increase of $1.021 billion, or 19 percent, compared with $3.554$5.255 billion in the third quarter of 2016.2021. The increase was due to favorable price realization and higher sales volume, partially offset by unfavorable currency impacts primarily related to the euro, Japanese yen and Australian dollar. The increase in sales volume was driven by the impact from changes in dealer inventories. Dealer inventory increased during the third quarter of 2022, compared with a decrease during the third quarter of 2021.
▪In North America, sales increased due to favorable price realization and higher sales volume. Higher sales volume was driven by the impact from changes in dealer inventories. Dealer inventory decreased during the third quarter of 2021, compared with an increase during the third quarter of 2022. Dealer inventories in North America remained at relatively low levels.
▪Sales increased in Latin America primarily due to higher sales volume and favorable price realization. Higher sales volume was driven by higher sales of equipment to end users and the impact from changes in dealer inventories. Dealer inventory increased more during the third quarter of 2022 than during the third quarter of 2021.
▪About half of the sales volume increase was due to the impact of favorable changes in dealer inventories as inventories decreased significantly in the third quarter of 2016 and increased in the third quarter of 2017. In addition, sales volume improved due to higher end-user demand for construction equipment.
▪Although market conditions remain competitive, price realization was favorable due to a particularly weak pricing environment in the third quarter of 2016 and previously implemented price increases.
▪In EAME, sales were about flat. Unfavorable currency impacts, primarily related to the euro, were offset by favorable price realization.
▪Sales increased across all regions withwere about flat in Asia/Pacific. Favorable price realization was offset by unfavorable currency impacts, primarily related to the largest increases in North AmericaJapanese yen and Asia/Pacific.Australian dollar.
▪In North America, the sales increase was primarily due to a favorable impact of changes in dealer inventories, which decreased in the third quarter of 2016 and were about flat in the third quarter of 2017. Favorable price realization also contributed to increased sales. In addition, end-user demand for construction equipment increased primarily due to improved oil and gas, residential and nonresidential construction activities.
▪Sales in Asia/Pacific were higher as a result of an increase in end-user demand across the region, but, primarily in China, stemming from increased building construction and infrastructure investment. Favorable price realization also contributed to increased sales.
▪Sales increased in EAME primarily due to the favorable impact of changes in dealer inventories, which decreased in the third quarter of 2016 and increased in the third quarter of 2017. Favorable price realization also contributed to increased sales.

▪Although construction activity remained weak in Latin America, sales were higher as end-user demand increased from low levels due to stabilizing economic conditions in several countries in the region.
Construction Industries’ profit was $884$1.209 billion in the third quarter of 2022, an increase of $343 million, or 40 percent, compared with $866 million in the third quarter of 2017,2021. The increase was mainly due to favorable price realization and higher sales volume, partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses. Unfavorable manufacturing costs largely reflected higher material costs, freight and the impact of manufacturing inefficiencies. The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives and higher short-term incentive compensation expense.
Construction Industries’ profit as a percent of total sales was 19.3 percent in the third quarter of 2022, compared with $32616.5 percent in the third quarter of 2021.
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Construction Industries’ segment profit as a percent of total sales is expected to improve in the fourth quarter of 2022, compared to the fourth quarter of 2021. We expect North America residential construction to moderate due to tightening financial conditions but remain at relatively high levels. We expect non-residential construction to strengthen due to investments related to government infrastructure initiatives. In Asia Pacific, excluding China, we expect moderate growth due to higher infrastructure spending and commodity prices. We expect continued weakness in China in the above 10-ton excavator industry. In EAME, business activity is expected to be flat to slightly down versus last year based on uncertain economic conditions in Europe. Construction activity in Latin America is expected to grow due to supportive commodity prices. We also expect favorable price realization in the fourth quarter of 2022, compared to the fourth quarter of 2021. The favorable impact of price realization is expected to more than offset manufacturing cost increases in the fourth quarter of 2022.
Resource Industries
Resource Industries’ total sales were $3.087 billion in the third quarter of 2022, an increase of $721 million, or 30 percent, compared with $2.366 billion in the third quarter of 2021. The increase was primarily due to favorable price realization and higher sales volume. The increase in sales volume was due to the impact of changes in dealer inventories, higher sales of aftermarket parts and higher sales of equipment to end users. Dealer inventory decreased during the third quarter of 2021, compared with an increase during the third quarter of 2022.
Resource Industries’ profit was $506 million in the third quarter of 2016.2022, an increase of $226 million, or 81 percent, compared with $280 million in the third quarter of 2021. The increase was mainly due to favorable price realization and higher sales volume, partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses. Unfavorable manufacturing costs largely reflected higher material costs, freight and the impact of manufacturing inefficiencies. The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives.
Resource Industries’ profit as a percent of total sales was 16.4 percent in the third quarter of 2022, compared with 11.8 percent in the third quarter of 2021.
Resource Industries’ segment profit as a percent of total sales is expected to improve in the fourth quarter of 2022, compared to the fourth quarter of 2021. Commodity prices remain supportive of continued investment. We expect production and utilization levels will remain elevated, and our autonomous solutions continue to gain momentum. We expect the continuation of high equipment utilization and a low level of parked trucks, which both support future demand for our equipment and services. In Heavy Construction and Quarry and Aggregates, we anticipate continued growth in the fourth quarter. We also expect price realization to be favorable in the fourth quarter of 2022, compared to the fourth quarter of 2021. The favorable impact from price realization is expected to more than offset manufacturing cost increases in the fourth quarter of 2022.
Energy & Transportation
Sales by Application
(Millions of dollars)Third Quarter 2022Third Quarter 2021$
Change
%
 Change
Oil and Gas$1,323 $1,088 $235 22 %
Power Generation1,320 1,010 310 31 %
Industrial1,158 948 210 22 %
Transportation1,196 1,095 101 9 %
External Sales4,997 4,141 856 21 %
Inter-segment1,189 936 253 27 %
Total Sales$6,186 $5,077 $1,109 22 %
Energy & Transportation’s total sales were $6.186 billion in the third quarter of 2022, an increase of $1.109 billion, or 22 percent, compared with $5.077 billion in the third quarter of 2021. Sales increased across all applications and inter-segment sales. The increase in sales was primarily due to higher sales volume and favorable price realization, partially offset by unfavorable period costs.currency impacts.
•Oil and Gas – Sales increased due to higher sales of reciprocating engine aftermarket parts and engines used in gas compression and well servicing applications. Turbines and turbine-related services were about flat.
•Power Generation – Sales increased in large reciprocating engines, primarily data center applications, and small reciprocating engines. Turbines and turbine-related services increased as well.
•Industrial – Sales were up across all regions.
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•Transportation – Sales increased in reciprocating engine aftermarket parts and marine applications. International locomotive deliveries were also higher.
Energy & Transportation’s profit was $935 million in the third quarter of 2022, an increase of $229 million, or 32 percent, compared with $706 million in the third quarter of 2021. The increase was driven by favorable price realization and higher sales volume, partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses. Unfavorable manufacturing costs largely reflected higher material costs, freight and the impact of manufacturing inefficiencies. The increase in periodSG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives, including electrification and services growth, higher labor-related costs was due toand higher short-term incentive compensation expense.
Resource Industries
Resource Industries’Energy & Transportation’s profit as a percent of total sales were $1.870 billionwas 15.1 percent in the third quarter of 2017, an increase of $493 million from the third quarter of 2016. The increase was primarily due to the favorable impact of changes in dealer inventories, an increase in end-user demand for aftermarket parts and favorable price realization. Dealer inventories were about flat2022, compared with 13.9 percent in the third quarter of 2017, compared with2021.
Energy & Transportation's segment profit as a decreasepercent of total sales is expected to improve in the thirdfourth quarter of 2016. Dealer deliveries2022, compared to the fourth quarter of 2021. In Oil & Gas, we are encouraged by continued strength in reciprocating engine orders, especially for newlarge engine repowers as asset utilization increases. New equipment increased slightly. Increasesorders for turbine and turbine–related services strengthened significantly, particularly in certain commodity prices over the past year, alongOil & Gas. Power Generation orders remain healthy due to positive industry dynamics and continued data center strength. Industrial remains healthy with continued commodity consumption, have resultedmomentum in increased mining activityconstruction, agriculture and maintenance and rebuild activities, whichelectric power. We also anticipate growth in high-speed marine as customers continue to upgrade aging fleets. We also expect favorable price realization in the fourth quarter of 2022, compared to the fourth quarter of 2021. The favorable impact from price realization is a positive for aftermarket parts sales. Although commodity prices remain volatile, they have improved and are generally above investment threshold prices, which is a positive for end-user demand.expected to more than offset manufacturing cost increases in the fourth quarter of 2022.
Resource Industries’ profit was $226Financial Products Segment
Financial Products’ segment revenues were $819 million in the third quarter of 2017,2022, an increase of $57 million, or 7 percent, compared with a loss of $77$762 million in the third quarter of 2016. The improvement was due to higher sales volume, favorable price realization and lower variable manufacturing costs primarily due to cost absorption. Cost absorption was favorable as inventory increased in the third quarter of 2017 to support higher production volumes and was about flat in the third quarter of 2016. Period costs were about flat as an increase in short-term incentive compensation expense was offset by the favorable impact of restructuring and cost reduction actions.
Energy & Transportation
Energy & Transportation’s sales were $3.961 billion in the third quarter of 2017, compared with $3.534 billion in the third quarter of 2016. The increase was primarily due to higher sales volume across all applications.
▪
Industrial - Sales were higher in all regions, reflecting increased demand for equipment across end-user applications and aftermarket parts.
▪
Oil and Gas - Sales increased in North America due to higher demand for aftermarket parts supporting rebuild activity and for reciprocating engines used in well servicing applications. This was partially offset by a decrease in equipment sold in EAME due to the absence of several large gas compression projects that occurred during the third quarter of 2016.
▪
Power Generation - Sales increased in North America and EAME due to the timing of projects. Asia/Pacific and Latin America were about flat.
▪
Transportation - Sales were higher in North America for rail services as rail traffic has increased.
Energy & Transportation’s profit was $750 million in the third quarter of 2017, compared with $572 million in the third quarter of 2016. The increase was primarily due to higher sales volume and lower variable manufacturing costs, partially offset by higher period costs. Variable manufacturing costs were favorable primarily due to cost absorption as inventory increased in the third quarter of 2017 to support higher production volumes and was about flat in the third quarter of 2016. The increase in period costs was primarily due to higher short-term incentive compensation expense.
Financial Products Segment
Financial Products’ segment revenues were $774 million in the third quarter of 2017, an increase of $25 million, or 3 percent, from the third quarter of 2016.2021. The increase was primarily due to higher average financing rates in North America and a favorable impact from intercompany lending activity in NorthLatin America. These favorable impacts were partially offset by lower average earning assets in North America and lower average financing rates in Asia/Pacific.
Financial Products’ segment profit was $185$220 million in the third quarter of 2017,2022, an increase of $47 million, or 27 percent, compared with $183$173 million in the third quarter of 2016.2021. The increase was primarilymainly due to higher gains on sales of securities at Insurance Services, increased intercompany lending activity and an increase in net yield on average earning assets. Thesea favorable impacts were mostly offset by an increase in theimpact from a lower provision for credit losses at Cat Financial, and an increase in selling, general and administrative (SG&A) expenses due to higher short-term incentive compensation expense.partially offset by mark-to-market adjustments on derivative contracts.
At the end of the third quarter of 2017,2022, past dues at Cat Financial were 2.732.00 percent, compared with 2.772.41 percent at the end of the third quarter of 2016.2021. Past dues decreased across all our portfolio segments, with the exception of an increase in Latin America. Write-offs, net of recoveries, were $47$13 million for the third quarter of 2017,2022, compared with $29$76 million for the third quarter of 2016. The increase in write-offs, net of recoveries, was primarily due to the Latin America and marine portfolios.

2021. As of September 30, 2017,2022, Cat Financial’sFinancial's allowance for credit losses totaled $343$339 million, or 1.271.30 percent of finance receivables, compared with $346$376 million, or 1.281.41 percent of finance receivables, as of Septemberat June 30, 2016.2022. The allowance for credit losses at year-end 20162021 was $343$337 million, or 1.291.22 percent of finance receivables.
Corporate Items and Eliminations
Expense for corporate items and eliminations was $396$343 million in the third quarter of 2017, a decrease2022, an increase of $49$50 million from the third quarter of 2016. Corporate items and eliminations include: restructuring costs; corporate-level expenses;2021, primarily driven by increased expenses due to timing differences, as some expenses are reported in segment profit on a cash basis; retirement benefit costs other than service cost; currency differences for ME&T, as segment profit is reported using annual fixed exchange rates; cost of sales methodology differences, as segments use a current cost methodology; and inter-segment eliminations.
The decrease in expense from the third quarter of 2016 was primarily due to lower restructuring costs, partially offset by favorable impacts of segment reporting methodology differences and higher short-term incentive compensation expense.lower corporate costs.

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NINE MONTHS ENDED SEPTEMBER 30, 20172022 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 20162021

CONSOLIDATED SALES AND REVENUES
cons-salesandrev2017q3ytd.jpgcat-20220930_g4.jpg
The chart above graphically illustrates reasons for the change in Consolidated Salesconsolidated sales and Revenuesrevenues between the nine months ended September 30, 20162021 (at left) and the nine months ended September 30, 20172022 (at right). Items favorably impacting sales and revenues appear as upward stair steps with the corresponding dollar amounts above each bar, while items negatively impacting sales and revenues appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Caterpillar management utilizes these charts internally to visually communicate with the company's boardcompany’s Board of directorsDirectors and employees.

Total sales and revenues were $32.566$42.830 billion infor the nine months ended September 30, 2017,2022, an increase of $3.603$5.657 billion, or 1215 percent, compared with $28.963$37.173 billion infor the nine months ended September 30, 2016.2021. The increase was primarily due to favorable price realization and higher sales volume, withpartially offset by unfavorable currency impacts related to the largesteuro, Australian dollar and Japanese yen. The increase in Construction Industries mostly due to higher end-user demand for construction equipment. Resource Industries sales volume increased due towas driven by the favorable impact offrom changes in dealer inventories, services and improved end-user demand for aftermarket parts. Energy & Transportation’s sales volume was higher mostly due to increased demand for aftermarket parts for reciprocating engines. Favorable price realization in Construction Industries also contributed to the sales improvement while price realization in Resource Industries and Energy & Transportation was about flat. Financial Products’ revenues were about flat.
Sales increased in all regions. In North America, sales increased 11 percent primarily due to higher demand in Energy & Transportation for oil and gas applications, favorable price realization in Construction Industries, and increased sales of aftermarket parts in Resource Industries. Asia/Pacific sales increased 23 percent primarily dueequipment to an increase in construction equipment sales, mostly in China resulting from increased building construction and infrastructure investment. EAME sales increased 9 percent mostly due to the favorable change in dealer inventories as dealersend users. Dealers increased inventories in the nine months ended September 30, 2017, compared to a decrease in the nine months ended September 30, 2016. Sales increased 19 percent in Latin America primarily due to stabilizing economic conditions in several countries in the region that resulted in improved end-user demand for aftermarket parts and the favorable impact of changes in dealer inventories as inventories were about flat in the nine months ended September 30, 2017, compared to a decrease in the nine months ended September 30, 2016.
Dealer machine and engine inventories increased about $100 million in the nine months ended September 30, 2017, compared to a decrease of $800 million$1.6 billion during the nine months ended September 30, 2016.2022, compared with remaining about flat during the nine months ended September 30, 2021.
Sales were higher in the three primary segments.
North America sales increased 26 percent driven by favorable price realization, the impact from changes in dealer inventories, services and higher sales of equipment to end users. Dealers decreased inventories during the nine months ended September 30, 2021, compared with an increase during the nine months ended September 30, 2022.
Sales increased 30 percent in Latin America due to favorable price realization, higher sales of equipment to end users and the impact from changes in dealer inventories. Dealers increased inventories more during the nine months ended September 30, 2022, than during the nine months ended September 30, 2021.
EAME sales increased 6 percent due to favorable price realization, higher sales of equipment to end users and the impact from changes in dealer inventories, partially offset by unfavorable currency impacts related to the euro and British pound. Dealers increased inventories more during the nine months ended September 30, 2022, than during the nine months ended September 30, 2021.
Asia/Pacific sales increased 3 percent driven by favorable price realization, services and the impact from changes in dealer inventories, partially offset by lower sales of equipment to end users and unfavorable currency impacts related to the Australian dollar and Japanese yen. Dealers increased inventories during the nine months ended September 30, 2022, compared with a decrease during the nine months ended September 30, 2021.
Dealers increased inventories about $1.6 billion during the nine months ended September 30, 2022, compared with remaining about flat during the nine months ended September 30, 2021. Dealers are independent, and there could be manythe reasons for changes in their inventory levels vary, including their expectations of future demand and product delivery times. Dealers’ demand expectations take into account seasonal changes, macroeconomic conditions, machine rental ratesrentals and other factors. Delivery times can vary based on availability of product from Caterpillar factories and product distribution centers. We believe
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Sales and Revenues by Segment
(Millions of dollars)Nine Months Ended September 30, 2021Sales
Volume		Price
Realization		CurrencyInter-Segment / OtherNine Months Ended September 30, 2022$
Change		%
Change
Construction Industries$16,370 $723 $1,737 $(452)$46 $18,424 $2,054 13 %
Resource Industries7,091 1,005 929 (126)(21)8,878 1,787 25 %
Energy & Transportation14,559 1,314 784 (348)620 16,929 2,370 16 %
All Other Segment377 8 1 (4)(43)339 (38)(10 %)
Corporate Items and Eliminations(3,306)48 (7)— (602)(3,867)(561) 
Machinery, Energy & Transportation Sales35,091 3,098 3,444 (930)— 40,703 5,612 16 %
Financial Products Segment2,297 — — — 103 2,400 103 4 %
Corporate Items and Eliminations(215)— — — (58)(273)(58) 
Financial Products Revenues2,082 — — — 45 2,127 45 2 %
Consolidated Sales and Revenues$37,173 $3,098 $3,444 $(930)$45 $42,830 $5,657 15 %
Sales and Revenues by Geographic Region
North AmericaLatin AmericaEAMEAsia/PacificExternal Sales and RevenuesInter-SegmentTotal Sales and Revenues
(Millions of dollars)$% Chg$% Chg$% Chg$% Chg$% Chg$% Chg$% Chg
Nine Months Ended September 30, 2022          
Construction Industries$8,832 25 %$2,061 53 %$3,726 3 %$3,694 (14 %)$18,313 12 %$111 71 %$18,424 13 %
Resource Industries3,167 49 %1,337 2 %1,609 11 %2,554 30 %8,667 26 %211 (9 %)8,878 25 %
Energy & Transportation6,637 16 %1,160 39 %3,679 7 %2,193 12 %13,669 15 %3,260 23 %16,929 16 %
All Other Segment52 24 %— (100 %)14 40 %46 (15 %)112 5 %227 (16 %)339 (10 %)
Corporate Items and Eliminations(43)(1)(2)(12)(58)(3,809)(3,867)
Machinery, Energy & Transportation Sales18,645 26 %4,557 30 %9,026 6 %8,475 3 %40,703 16 %— — %40,703 16 %
Financial Products Segment1,530 6 %250 28 %293 (3 %)327 (9 %)2,400 14 %— — %2,400 4 %
Corporate Items and Eliminations(132)(58)(31)(52)(273)— (273)
Financial Products Revenues1,398 4 %192 20 %262 (5 %)275 (10 %)2,127 2 %— — %2,127 2 %
Consolidated Sales and Revenues$20,043 24 %$4,749 30 %$9,288 6 %$8,750 2 %$42,830 15 %$— — %$42,830 15 %
Nine Months Ended September 30, 2021              
Construction Industries$7,041 $1,350 $3,612 $4,302  $16,305 $65  $16,370 
Resource Industries2,130 1,309 1,455 1,965  6,859 232  7,091 
Energy & Transportation5,698 835 3,433 1,953  11,919 2,640  14,559 
All Other Segment42 1 10 54  107 270  377 
Corporate Items and Eliminations(89)(1)(1)(8)(99)(3,207)(3,306)
Machinery, Energy & Transportation Sales14,822  3,494  8,509  8,266  35,091  —  35,091  
Financial Products Segment1,442 195 301 359  2,297 1—  2,297 
Corporate Items and Eliminations(99)(35)(26)(55) (215)—  (215)
Financial Products Revenues1,343  160  275  304  2,082  —  2,082  
Consolidated Sales and Revenues$16,165  $3,654  $8,784  $8,570  $37,173  $—  $37,173  

1 Includes revenues from Machinery, Energy & Transportation of $332 million and $263 million in the levelnine months ended September 30, 2022 and 2021, respectively.
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Table of dealer inventories at the end of 2017 will depend on dealer expectations for business in 2018.Contents


CONSOLIDATED OPERATING PROFIT
cons-opprofit2017q3ytda01.jpgcat-20220930_g5.jpg
The chart above graphically illustrates reasons for the change in Consolidated Operating Profitconsolidated operating profit between the nine months ended September 30, 20162021 (at left) and the nine months ended September 30, 20172022 (at right). Items favorably impacting operating profitappear as upward stair steps with the corresponding dollar amounts above each bar, while items negatively impacting operating profit appear as downward stair steps with dollar amounts reflected in parentheses above each bar. Caterpillar management utilizes these charts internally to visually communicate with the company's boardcompany’s Board of directorsDirectors and employees. The bar entitledtitled Other includes consolidating adjustments and Machinery, Energy & TransportationTransportation’s other operating (income) expenses.

Operating profit for the nine months ended September 30, 2017,2022, was $3.245$6.224 billion, an increase of $957 million, or 18 percent, compared with $1.760$5.267 billion for the nine months ended September 30, 2016.2021. The increase of $1.485 billion was primarily due to favorable price realization and higher sales volume, including a favorable mixpartially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses.
Unfavorable manufacturing costs largely reflected higher material costs, freight and the impact of products. Improvedmanufacturing inefficiencies. For 2022, price realization is expected to more than offset manufacturing cost increases. The increase in SG&A/R&D expenses was driven by investments aligned with the company's strategy for profitable growth, which included services growth and lower variable manufacturing costs were mostly offset by higher period coststechnology, such as digital, electrification and restructuring costs. Price realization was favorable in Construction Industries and about flat in Resource Industries and Energy & Transportation.
Variable manufacturing costs were lower primarily due to the favorable impact from cost absorption. Cost absorption was favorableautonomy, as inventory increased during the nine months ended September 30, 2017, and was about flat during the nine months ended September 30, 2016. We expect material costs to be higher during the remainder of 2017 and into 2018, primarily due to anticipated increases in costs for steel.
Period costs increased primarily due towell as higher short-term incentive compensation expense, partially offset by the favorable impact of restructuring and cost reduction actions over the past year. These actions primarily impacted depreciation expense and research and development (R&D) expenses. During the remainder of 2017, we anticipate higher period costs due to making targeted investments in initiatives that are important to our future competitiveness, including enhanced digital capabilities and accelerating technology updates to our products.
Restructuring costs of $1.011 billion for the nine months ended September 30, 2017, were primarily related to the closure of the facility in Gosselies, Belgium and restructuring actions in Resource Industries, compared to $624 million for the nine months ended September 30, 2016.expense.
Short-term incentive compensation expense is directly related to financial and operational performance, measured against targets set annually. Expense for the nine months ended September 30, 2017,2022, was about $1.050$1.2 billion, compared with about $1.1 billion for the nine months ended September 30, 2021. For 2022, short-term incentive compensation expense is expected to be about $200$1.6 billion, compared with $1.3 billion in 2021.
Operating profit margin was 14.5 percent for the nine months ended September 30, 2022, compared with 14.2 percent for the nine months ended September 30, 2021.
Profit (Loss) by Segment
(Millions of dollars)Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021$
Change
%
 Change
Construction Industries$3,255 $2,937 $318 11 %
Resource Industries1,222 941 281 30 %
Energy & Transportation2,132 2,119 13 1 %
All Other Segment42 (2)44 n/a
Corporate Items and Eliminations(847)(1,107)260  
Machinery, Energy & Transportation5,804 4,888 916 19 %
Financial Products Segment675 660 15 2 %
Corporate Items and Eliminations30 (55)85  
Financial Products705 605 100 17 %
Consolidating Adjustments(285)(226)(59) 
Consolidated Operating Profit$6,224 $5,267 $957 18 %
Corporate Items and Eliminations included 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 (the company values segment inventories and cost of sales using a current cost methodology), certain restructuring costs and inter-segment eliminations.


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Other Profit/Loss and Tax Items
▪Interest expense excluding Financial Products for the nine months ended September 30, 2022, was $326 million, compared with $376 million for the nine months ended September 30, 2016. We expect that short-term incentive compensation expense will be significantly higher in 2017 than in 2016 and above targeted levels.
Other Profit/Loss Items
▪
Other income/expense for the nine months ended September 30, 2017, was income of $88 million, compared with income of $112 million for the nine months ended September 30, 2016. The unfavorable change was primarily a result of currency translation and hedging net losses during the nine months ended September 30, 2017, which were mostly due to the euro and Brazilian real. The impact from currency translation and hedging was about flat during the nine months ended September 30, 2016. The unfavorable change was partially offset by a pretax gain of $85 million on the

sale of Caterpillar’s equity investment in IronPlanet and gains on the sale of securities2021. The decrease was due to lower average debt outstanding during the nine months ended September 30, 2017.
▪
The provision for income taxes for2022, compared with the first nine months of 2017 reflects an estimated annual tax rate of 32 percent, which excludes the discrete items discussed in the following paragraph, compared with 25 percent for the first nine months of 2016. The increase is primarily due to higher non-U.S. restructuring costs in 2017 that are taxed at relatively lower non-U.S. tax rates along with other changes in the geographic mix of profits from a tax perspective. Under the terms of a manufacturing service agreement, Caterpillar SARL (CSARL) will bear substantially all of the restructuring costs related to the closure of our Gosselies, Belgium, facility, reducing CSARL's profits taxable in Switzerland.
In addition, during the first nine months ended September 30, 2021.
▪Other income (expense) for the nine months ended September 30, 2022, was income of 2017,$755 million, about flat compared with income of $751 million for the nine months September 30, 2021. Favorable impacts from foreign currency exchange were offset by unrealized losses on marketable securities and lower pension and OPEB income.
▪The provision for income taxes for the nine months ended September 30, 2022, reflected an estimated annual tax rate of 23 percent, compared with 25 percent for the nine months ended September 30, 2021, excluding the discrete items discussed below. The comparative tax rate for full-year 2021 was approximately 23 percent.
On September 8, 2022, the company reached a settlement with the U.S. Internal Revenue Service (IRS) that resolves all issues for tax years 2007 through 2016, without any penalties. The company’s settlement includes, among other issues, the resolution of disputed tax treatment of profits earned by Caterpillar SARL (CSARL) from certain parts transactions. We vigorously contested the IRS’s application of the “substance-over-form” or “assignment-of-income” judicial doctrines and its proposed increases to tax and imposition of accuracy related penalties. The settlement does not include any increases to tax in the United States based on those judicial doctrines and does not include any penalties. The final tax assessed by the IRS for all issues under the settlement was $490 million for the ten-year period. This amount was primarily paid in the nine months ending September 30, 2022, and the associated estimated interest of $250 million is expected to be paid by the end of 2022. The settlement was within the total amount of gross unrecognized tax benefits for uncertain tax positions and enables us to avoid the costs and burdens of further disputes with the IRS. As a result of the settlement, we recorded a discrete tax benefit of $45$41 million wasto reflect changes in estimates of prior years’ taxes and related interest, net of tax. We are subject to the continuous examination of our income tax returns by the IRS, and tax years subsequent to 2016 are not yet under examination.
In the nine months ended September 30, 2022, the company also recorded discrete tax benefits of $49 million to reflect other changes in estimates related to prior years’ U.S. taxes, compared to $36 million in the nine months ended September 30, 2021. In addition, the company recorded a discrete tax benefit of $18 million for the settlement of stock-based compensation awards with associated tax deductions in excess of cumulative U.S. GAAP compensation expense. Thisexpense, compared with a $61 million benefit was partially offset by a $15 million increase to prior year taxes related to the Gosselies, Belgium, facility, restructuring costs.
Excluding restructuring costs, gain on the sale of Caterpillar's equity investment and discrete items, the 2017 estimated annual tax rate is expected to be 29 percent.
Segment Information
Sales and Revenues by Geographic Region
(Millions of dollars)Total 
%
 Change
 
North
 America
 
%
 Change
 
Latin
 America
 
%
 Change
 EAME 
%
 Change
 
Asia/
 Pacific
 
%
 Change
Nine Months Ended September 30, 2017  
  
  
  
  
  
  
  
  
Construction Industries 1
$13,875
 15% $6,396
 7% $1,004
 26 % $2,784
 5% $3,691
 41 %
Resource Industries 2
5,299
 24% 1,791
 12% 897
 15 % 1,300
 47% 1,311
 28 %
Energy & Transportation 3
11,258
 7% 5,632
 14% 887
 17 % 3,145
 —% 1,594
 (7)%
All Other Segments 4
126
 18% 48
 37% 2
 (33)% 40
 74% 36
 (22)%
Corporate Items and Eliminations(76)   (70)   (1)   (6)   1
  
Machinery, Energy & Transportation Sales30,482
 13% 13,797
 11% 2,789
 19 % 7,263
 9% 6,633
 23 %
                    
Financial Products Segment2,310
 3% 1,501
 7% 226
 (11)% 311
 3% 272
 (9)%
Corporate Items and Eliminations(226)   (140)   (34)   (13)   (39)  
Financial Products Revenues2,084
 —% 1,361
 5% 192
 (12)% 298
 3% 233
 (13)%
                    
Consolidated Sales and Revenues$32,566
 12% $15,158
 10% $2,981
 17 % $7,561
 8% $6,866
 21 %
                    
Nine Months Ended September 30, 2016  
  
  
  
  
  
  
  
  
Construction Industries 1
$12,023
   $5,960
   $795
   $2,646
   $2,622
  
Resource Industries 2
4,283
   1,597
   780
   882
   1,024
  
Energy & Transportation 3
10,562
   4,958
   757
   3,138
   1,709
  
All Other Segments 4
107
   35
   3
   23
   46
  
Corporate Items and Eliminations(87)   (75)   (1)   (7)   (4)  
Machinery, Energy & Transportation Sales26,888
  
 12,475
  
 2,334
  
 6,682
  
 5,397
  
                    
Financial Products Segment2,251
   1,398
   253
   302
   298
  
Corporate Items and Eliminations(176)   (96)   (36)   (13)   (31)  
Financial Products Revenues2,075
  
 1,302
  
 217
  
 289
  
 267
  
                    
Consolidated Sales and Revenues$28,963
  
 $13,777
  
 $2,551
  
 $6,971
  
 $5,664
  
1
Does not include inter-segment sales of $70 million and $47 million for the nine months ended September 30, 2017 and 2016, respectively.
2
Does not include inter-segment sales of $254 million and $197 million for the nine months ended September 30, 2017 and 2016, respectively.
3
Does not include inter-segment sales of $2,484 million and $1,919 million for the nine months ended September 30, 2017 and 2016, respectively.
4
Does not include inter-segment sales of $289 million and $288 million for the nine months ended September 30, 2017 and 2016, respectively.


Sales and Revenues by Segment              
(Millions of dollars)Nine Months Ended September 30, 2016 
Sales
Volume
 
Price
Realization
 Currency Other Nine Months Ended September 30, 2017 
$
Change
 
%
 Change
                
Construction Industries$12,023
 $1,308
 $605
 $(61) $—
 $13,875
 $1,852
 15%
Resource Industries4,283
 969
 34
 13
 —
 5,299
 1,016
 24%
Energy & Transportation10,562
 748
 (25) (27) —
 11,258
 696
 7%
All Other Segments107
 19
 —
 —
 —
 126
 19
 18%
Corporate Items and Eliminations(87) 11
 —
 —
 —
 (76) 11
  
Machinery, Energy & Transportation Sales26,888
 3,055
 614
 (75) —
 30,482
 3,594
 13%
                
Financial Products Segment2,251
 —
 —
 —
 59
 2,310
 59
 3%
Corporate Items and Eliminations(176) —
 —
 —
 (50) (226) (50)  
Financial Products Revenues2,075
 —
 —
 —
 9
 2,084
 9
 —%
                
Consolidated Sales and Revenues$28,963
 $3,055
 $614
 $(75) $9
 $32,566
 $3,603
 12%
                
Operating Profit / (Loss) by Segment       
(Millions of dollars)Nine Months Ended
September 30, 2017		 Nine Months Ended
September 30, 2016		 
$
Change
 
%
 Change
Construction Industries$2,420
 $1,316
 $1,104
 84 %
Resource Industries481
 (336) 817
 n/a
Energy & Transportation2,002
 1,584
 418
 26 %
All Other Segments(27) (43) 16
 (37)%
Corporate Items and Eliminations(1,915) (1,087) (828)  
Machinery, Energy & Transportation2,961
 1,434
 1,527
 106 %
        
Financial Products Segment559
 553
 6
 1 %
Corporate Items and Eliminations(39) (44) 5
  
Financial Products520
 509
 11
 2 %
Consolidating Adjustments(236) (183) (53)  
Consolidated Operating Profit / (Loss)$3,245
 $1,760
 $1,485
 84 %
        
Construction Industries
Construction Industries’ sales were $13.875 billion in the nine months ended September 30, 2017, compared with $12.0232021.
Construction Industries
Construction Industries’ total sales were $18.424 billion infor the nine months ended September 30, 2016.2022, an increase of $2.054 billion, or 13 percent, compared with $16.370 billion for the nine months ended September 30, 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 Australian dollar. The increase in sales volume was driven by the impact from changes in dealer inventories and higher sales of aftermarket parts, partially offset by lower sales of equipment to end users. Dealers increased inventories more during the nine months ended September 30, 2022, than during the nine months ended September 30, 2021.
•In North America, sales increased due to favorable price realization, the impact from changes in dealer inventories, higher sales of aftermarket parts and higher sales of equipment to end users. Dealers decreased inventories during the nine months ended September 30, 2021, compared with an increase during the nine months ended September 30, 2022.
•Sales increased in Latin America primarily due to higher sales of equipment to end users and favorable price realization.
•In EAME, sales increased as unfavorable currency impacts related to the euro were more than offset by favorable price realization and the impact from changes in dealer inventories. Dealers increased inventories more during the nine months ended September 30, 2022, than during the nine months ended September 30, 2021.
•Sales decreased in Asia/Pacific due to lower sales of equipment to end users and unfavorable currency impacts related to the Japanese yen and Australian dollar, partially offset by favorable price realization and the impact from changes in dealer inventories. Dealers increased inventories during the nine months ended September 30, 2022, compared with a decrease during the nine months ended September 30, 2021.
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Construction Industries’ profit was $3.255 billion for the nine months ended September 30, 2022, an increase of $318 million, or 11 percent, compared with $2.937 billion for the nine months ended September 30, 2021. The increase was mainly due to favorable price realization and higher sales volume, partially offset by unfavorable manufacturing costs and higher SG&A/R&D expenses. Unfavorable manufacturing costs largely reflected higher material costs, freight and the impact of manufacturing inefficiencies. The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives and higher short-term incentive compensation expense.
Construction Industries’ profit as a percent of total sales was 17.7 percent for the nine months ended September 30, 2022, compared with 17.9 percent for the nine months ended September 30, 2021.
Resource Industries
Resource Industries’ total sales were $8.878 billion for the nine months ended September 30, 2022, an increase of $1.787 billion, or 25 percent, compared with $7.091 billion for the nine months ended September 30, 2021. The increase was due to higher sales volume and favorable price realization.
Sales The increase in sales volume was driven by higher sales of aftermarket parts, the impact from changes in dealer inventories and higher sales of equipment to end users. Dealer inventory increased due to higher end-user demand, primarily for equipment in Asia/Pacific.
Although market conditions remain competitive, price realization was favorable due to a particularly weak pricing environment induring the nine months ended September 30, 2016, and previously implemented price increases impacting2022, compared with a decrease during the nine months ended September 30, 2017.2021.
Sales increased across all regions with the largest increases in Asia/Pacific and North America.
Sales in Asia/Pacific were higher as a result of an increase in end-user demand, primarily in China, stemming from increased building construction and infrastructure investment, which we expect to continue through the end of 2017. We believe that some demand may have been pulled forward into 2017 in advance of upcoming regulatory actions in China, which would have a negative impact for end-user demand in 2018.
In North America, sales increased primarily due to favorable price realization and higher end-user demand for construction equipment, mostly due to improved oil and gas, residential and nonresidential construction activities.
Although construction activity remained weak in Latin America, sales were higher as end-user demand increased from low levels due to stabilizing economic conditions in several countries in the region.

Sales in EAME increased slightly as lower end-user demand was about offset by favorable price realization. The decline in end-user demand was primarily in Africa/Middle East due to volatile financial and economic conditions, as well as continued tight construction spending in oil producing countries.
ConstructionResource Industries’ profit was $2.420$1.222 billion infor the nine months ended September 30, 2017,2022, an increase of $281 million, or 30 percent, compared with $1.316 billion in$941 million for the nine months ended September 30, 2016. The increase in profit was primarily due to2021. Unfavorable manufacturing costs and higher SG&A/R&D expenses were more than offset by favorable price realization and higher sales volume, including a favorable mix of products. Periodvolume. Unfavorable manufacturing costs were unfavorable aslargely reflected higher short-term incentive compensation expense was partially offset bymaterial costs, freight and the impact of restructuring and cost reduction actions.
Resource Industriesmanufacturing inefficiencies. The increase in SG&A/R&D expenses was primarily driven by investments aligned with strategic initiatives.
Resource Industries’ profit as a percent of total sales were $5.299 billion inwas 13.8 percent for the nine months ended September 30, 2017, an increase of $1.016 billion, or 242022, compared with 13.3 percent fromfor the nine months ended September 30, 2016. Sales increased due to the favorable impact of changes in dealer inventories and higher end-user demand2021.
Energy & Transportation
Sales by Application
(Millions of dollars)Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021$
Change		%
 Change
Oil and Gas$3,503 $3,140 $363 12 %
Power Generation3,518 3,025 493 16 %
Industrial3,295 2,660 635 24 %
Transportation3,353 3,094 259 8 %
External Sales13,669 11,919 1,750 15 %
Inter-Segment3,260 2,640 620 23 %
Total Sales$16,929 $14,559 $2,370 16 %
Energy & Transportation’s total sales were $16.929 billion for aftermarket parts. Dealer inventories were about flat in the nine months ended September 30, 2017,2022, an increase of $2.370 billion, or 16 percent, compared with a decrease in$14.559 billion for the nine months ended September 30, 2016. We believe that mining companies are beginning to increase capital spending from low levels2021. Sales increased across all applications and this is expected to favorably impact sales for new equipment during the remainder of the year. Increases in certain commodity prices over the past year, along with continued commodity consumption, have resulted in increased mining activity and maintenance and rebuild activities, which is a positive for aftermarket partsinter-segment sales. We believe a decrease in idle mining trucks on customer sites is also having a positive impact on end-user demand.
Resource Industries’ profit was $481 million in the nine months ended September 30, 2017, compared with a loss of $336 million in the nine months ended September 30, 2016. The favorable change was due to higher sales volume and lower period costs and variable manufacturing costs. Period costs were lower primarily due to the favorable impact of restructuring and cost reduction actions, partially offset by an increase in short-term incentive compensation expense. Variable manufacturing costs were lower primarily due to a favorable impact from cost absorption and efficiencies. Cost absorption was favorable as inventory increased in the nine months ended September 30, 2017, to support higher production volumes and decreased in the nine months ended September 30, 2016.
Energy & Transportation
Energy & Transportation’s sales were $11.258 billion in the nine months ended September 30, 2017, compared with $10.562 billion in the nine months ended September 30, 2016. The increase was primarily due to higher sales of aftermarket parts for reciprocating engines.
Oil and Gas - Sales increased in North America due to higher sales of aftermarket parts as a result of strong rebuild activity in well servicing and gas compression applications and due to higher demand for reciprocating engines used in gas compression as natural gas infrastructure build-out continues and new wells come online that have higher concentration of natural gas than previous wells. This was partially offset by a decrease in sales of equipment in EAME due to the absence of several large gas compression projects, and a decrease in equipment sales in Asia/Pacific primarily for production applications. Sales for equipment used in gas compression applications in North America are expected to be higher during the remainder of 2017.
Industrial - Sales were higher in all regions, reflecting increased sales for equipment across end-user applications and aftermarket parts. Sales for equipment used in industrial compression applications is expected to be higher during the remainder of 2017 as many industrial end-markets are experiencing improved conditions.
Power Generation - Sales were about flat as an increase in North America was about offset by a decrease in EAME.
Transportation - Sales were about flat as an increase in sales for rail services in North America due to higher rail traffic was partially offset by a decline in sales for marine applications attributable primarily to lower demand for work boats and offshore vessels. We believe higher rail traffic will result in increased demand for rail services during the remainder of 2017.
Energy & Transportation’s profit was $2.002 billion in the nine months ended September 30, 2017, compared with $1.584 billion in the nine months ended September 30, 2016. The increase was primarily due to higher sales volume and lower variable manufacturing costs,favorable price realization, partially offset by higher period costs. Variable manufacturing costs were lower primarilyunfavorable currency impacts.
•Oil and Gas – Sales increased due to a favorable impact from cost absorption. Cost absorptionhigher sales of reciprocating engine aftermarket parts and engines used in well servicing and gas compression applications, primarily in North America, partially offset by lower sales for turbines and turbine-related services.
•Power Generation – Sales increased in small reciprocating engine applications, reciprocating engine aftermarket parts and turbines and turbine-related services.
•Industrial – Sales were up across all regions.
•Transportation – Sales increased primarily in reciprocating engine aftermarket parts and marine applications. Rail services and international locomotives deliveries were also higher.
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Energy & Transportation’s profit was favorable as inventory increased in$2.132 billion for the nine months ended September 30, 2017, and was2022, about flat incompared with $2.119 billion for the nine months ended September 30, 2016.2021. Unfavorable manufacturing costs and higher SG&A/R&D expenses were offset by favorable price realization and higher sales volume. Unfavorable manufacturing costs largely reflected higher material costs, freight and the impact of manufacturing inefficiencies. The increase in period costsSG&A/R&D expenses was primarily due todriven by investments aligned with strategic initiatives and higher short-term incentive compensation expense.
Energy & Transportation’s profit as a percent of total sales was 12.6 percent for the nine months ended September 30, 2022, compared with 14.6 percent for the nine months ended September 30, 2021.
Financial Products Segment
Financial Products’ segment revenues were $2.310$2.400 billion for the nine months ended September 30, 2017,2022, an increase of $59$103 million, or 34 percent, fromcompared with $2.297 billion for the nine months ended September 30, 2016.2021. The increase was primarily due to a favorable impact from returned or repossessed equipment in North America and higher average financing rates in North America and a favorable impact from intercompany lending activity in NorthLatin America. These favorable impacts

were partially offset by lower average earning assets in North America, Latin America and Asia/Pacific and lower average financing rates in Asia/Pacific.
Financial Products’ segment profit was $559$675 million for the nine months ended September 30, 2017,2022, an increase of $15 million, or 2 percent, compared with $553$660 million for the nine months ended September 30, 2016.2021. The increase was primarilymainly due to increased intercompany lending activity, an increase in net yield on average earning assetsa favorable impact from returned or repossessed equipment and a decrease in thelower provision for credit losses at Cat Financial. These favorable impacts were mostlyFinancial, partially offset by an unfavorable impact from equity securities in Insurance Services and an increase in SG&A expenses due to higher short-term incentive compensation expense and an unfavorable impact from lower average earning assets.expenses.
Corporate Items and Eliminations
Expense for corporate items and eliminations was $1.954 billion in$817 million for the nine months ended September 30, 2017, an increase2022, a decrease of $823$345 million from the nine months ended September 30, 2016. Corporate items2021, primarily driven by favorable impacts of segment reporting methodology, a favorable change in fair value adjustments related to deferred compensation plans and eliminations include: restructuring costs; corporate-level expenses;lower expenses due to timing differences, as some expenses are reported in segment profit on a cash basis; retirement benefit costs other than service cost; currency differences for ME&T, as segment profit is reported using annual fixed exchange rates; cost of sales methodology differences, as segments use a current cost methodology; and inter-segment eliminations.partially offset by higher corporate costs.
The increase in expense from the nine months ended September 30, 2016, was primarily due to a $387 million increase in restructuring costs and unfavorable changes for timing and methodology differences.

RESTRUCTURING COSTS


Restructuring costs for the three and nine months ended September 30, 2017 and 2016 were as follows:

      
(Millions of dollars) Three Months Ended September 30 
  2017 2016 
Employee separations 1
 $8
 $99
 
Contract terminations 1
 6
 9
 
Long-lived asset impairments 1
 31
 158
 
Other 2
 45
 58
 
Total restructuring costs $90
 $324
 
      
      
  Nine Months Ended September 30 
  2017 2016 
Employee separations 1
 $514
 $175
 
Contract terminations 1
 32
 55
 
Long-lived asset impairments 1
 306
 254
 
Defined benefit plan curtailments and termination benefits 1
 29
 —
 
Other 2
 130
 140
 
Total restructuring costs $1,011
 $624
 
      
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 costs and also LIFO inventory decrement benefits from inventory liquidations at closed facilities (all of which are
   primarily included in Cost of goods sold).
      

In March 2017, Caterpillar informed Belgian authorities of the decision2022, we expect to proceed to a collective dismissal, which will lead to the closure of the Gosselies site, impactingincur about 2,000 employees. Production of Caterpillar products at the Gosselies site ended during the second quarter of 2017. The other operations and functions at the Gosselies site are expected to be gradually phased out by the end of the second quarter of 2018. We estimate restructuring costs incurred under this program to be about $700 million. For the first nine months of 2017, we recognized $649 million of restructuring costs which included $443 million of employee separation costs, $201 million for long-lived asset impairments and $67 million of other costs partially offset by a $62 million

LIFO inventory decrement benefit. The majority of the remaining costs are expected to be recognized in 2017. The remaining restructuring costs for the first nine months of 2017 were primarily related to restructuring actions in Resources Industries.

The restructuring costs for the first nine months of 2016 were primarily related to actions in Resource Industries in response to continued weakness in the mining industry. In addition, costs resulted from our decision to discontinue production of on-highway vocational trucks, as discussed below, and other restructuring actions across the company.

Restructuring costs are a reconciling item between Segment profit and Consolidated profit before taxes.

The following table summarizes the 2016 and 2017 employee separation activity:

   
(Millions of dollars)  
Liability balance at December 31, 2015$483
Increase in liability (separation charges)297
Reduction in liability (payments)(633)
Liability balance at December 31, 2016$147
Increase in liability (separation charges)514
Reduction in liability (payments)(339)
Liability balance at September 30, 2017$322
  

Most of the liability balance at September 30, 2017 is expected to be paid in 2017 and 2018 and primarily includes employee separation payments related to closure of the Gosselies facility.
Restructuring costs for the year ended December 31, 2016 were $1,019 million. Throughout 2016, we initiated the following restructuring plans:
In February 2016, we made the decision to discontinue production of on-highway vocational trucks. Based on the business climate in the truck industry and a thorough evaluation of the business, the company decided it would withdraw from this market. We recognized $104$800 million of restructuring costs primarily related to long-lived asset impairments and sales discounts which is substantially all the costs expected under this program.
In the second halfstrategic actions to address a small number of 2016, we took additional restructuring actions in Resource Industries, including ending the production of track drills; pursuing strategic alternatives related to room and pillar products; consolidation of two product development divisions; and additional actions in response to ongoing weakness in the mining industry. For the year ended December 31, 2016, we incurred $369products. Approximately $600 million of restructuring costs for these plans primarily related to long-lived asset impairments, employee separation costs and inventory write-downs.
In September 2015, we announcedthe total is a large scale restructuring plan (the Plan) including a voluntary retirement enhancement program for qualifying U.S. employees, several voluntary separation programs outside of the U.S., additional involuntary programs throughout the company and manufacturing facility consolidations and closures expected to occur through 2018. The largest action among those included in the Plan was related to our European manufacturing footprint, which led to the Gosselies facility closure as discussed above. In the first nine months of 2017, we incurred $772 million of restructuring costsnon-cash charge related to the Plan, and we incurred $281 million and $569 million in 2016 and 2015, respectively, for a totalrelease of $1,622 million through September 30, 2017. We expect to recognize approximately $70 million of additional restructuring costs related to the Plan in 2017.

We expect 2017 restructuring costsaccumulated foreign currency translation losses that will be approximately $1.3 billion, slightly higher thanrecognized upon the previous estimatesale of about $1.2 billion. a business containing some of these products, which may not occur until 2023.We expect that prior restructuring actions will result in aan incremental benefit to operating costs, primarily SG&A expenses and Cost of goods sold and SG&A expenses of about $450$75 million in 20172022 compared with 2016.2021.

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.
1.
Adjusted Profit Per Share - Profit per share excluding restructuring costs for 2017 and 2016. For 2017, adjusted profit per share also excludes a gain on the sale of an equity investment in IronPlanet recognized in the second quarter.
2.
All Other Segments - Primarily includes activities such as: business strategy,
2.Adjusted Profit Per Share – Profit per share excluding 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 development, and manufacturing of filters and fluids, undercarriage, tires and rims, ground engaging tools, fluid transfer products, precision seals, and rubber sealing and connecting components primarily for Cat® products; parts distribution; 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.
3.
Consolidating Adjustments - Elimination of transactions between Machinery, Energy & Transportation and Financial Products.
4.
Construction Industries - A segment primarily responsible for supporting customers using machinery in infrastructure, forestry 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 backhoe loaders, small wheel loaders, small track-type tractors, skid steer loaders, compact track loaders, multi-terrain loaders, mini excavators, compact wheel loaders, telehandlers, select work tools, small, medium and large track excavators, wheel excavators, medium wheel loaders, medium track-type tractors, track-type loaders, motor graders, pipelayers, forestry and paving products and related parts.
5.
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 of business excluding restructuring costs; 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).
6.
Debt-to-Capital Ratio - A key measure of Machinery, Energy & Transportation’s financial strength used by management. The metric is defined as Machinery, Energy & Transportation’s short-term borrowings, long-term debt due within one year and long-term debt due after one year (debt) divided by the sum of Machinery, Energy & Transportation’s debt and shareholders’ equity. Debt also includes Machinery, Energy & Transportation’s long-term borrowings from Financial Products.
7.
EAME - A geographic region including Europe, Africa, the Middle East and the Commonwealth of Independent States (CIS).
8.
Earning Assets - Assets consisting primarily of total finance receivables net of unearned income, plus equipment on operating leases, less accumulated depreciation at Cat Financial.
9.
Energy & Transportation - A segment primarily responsible for supporting customers using reciprocating engines, turbines, diesel-electric locomotives and related parts across industries serving power generation, industrial, oil and gas and transportation applications, including marine and rail-related businesses. Responsibilities include business strategy, product design, product management and development, manufacturing, marketing and sales and product support of turbines and turbine-related services, reciprocating engine-powered generator sets, integrated systems used in the electric power generation industry, reciprocating engines and integrated systems and solutions for the marine and oil and gas industries; reciprocating engines supplied to the industrial industry as well as Cat machinery; the remanufacturing of Cat engines and components and remanufacturing services for other companies; the business strategy, product design, product management and development, manufacturing, remanufacturing, leasing and service of diesel-electric locomotives and components and other rail-related products and services and product support of on-highway vocational trucks for North America.
10.
Financial Products Segment -Provides financing alternatives to customers and dealers around the world for Caterpillar products, as well as financing for vehicles, power generation facilities and marine vessels that, in most cases, incorporate Caterpillar products. Financing plans include operating and finance leases, installment sale contracts, 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 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 our equipment. Financial Products segment profit is determined on a pretax basis and includes other income/expense items.
11.
Latin America - A geographic region including Central and South American countries and Mexico.
12.
LIFO Inventory Decrement Benefits - A significant portion of Caterpillar's inventory is valued using the last-in, first-out (LIFO) method. With this method, the cost of inventory is comprised of "layers" at cost levels for years when inventory increases occurred. A LIFO decrement occurs when inventory decreases, depleting layers added in earlier, generally lower cost years. A LIFO decrement benefit represents the impact on operating profit of charging cost of goods sold with prior-year cost levels rather than current period costs.

13.
Machinery, Energy & Transportation (ME&T) - Represents the aggregate total of Construction Industries, Resource Industries, Energy & Transportation and All Other Segments and related corporate items and eliminations.
14.
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. Restructuring costs classified as other operating expenses on the Results of Operations are presented separately on the Operating Profit Comparison.
15.
Period Costs - Includes period manufacturing costs, ME&T selling, general and administrative (SG&A) and research and development (R&D) expenses excluding the impact of currency and exit-related costs that are included in restructuring costs (see definition below). 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. SG&A and R&D costs are not linked to the production of goods or services and include marketing, legal and finance services and the development of new and significant improvements in products or processes.
16.
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.
17.
Resource Industries - A segment primarily responsible for supporting customers using machinery in mining, quarry, waste and material handling applications. 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, track and rotary drills, highwall miners, large wheel loaders, off-highway trucks, articulated trucks, wheel tractor scrapers, wheel dozers, landfill compactors, soil compactors, material handlers, continuous miners, scoops and haulers, hardrock continuous mining systems, 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 and autonomous machine capabilities. Resource Industries also manages areas that provide services to other parts of the company, including integrated manufacturing and research and development.
18.
Restructuring Costs - Primarily costs for employee separation, long-lived asset impairments and contract terminations. These costs are included in Other Operating (Income) Expenses. Restructuring costs also include other exit-related costs primarily for accelerated depreciation, inventory write-downs, equipment relocation and project management costs and also LIFO inventory decrement benefits from inventory liquidations at closed facilities (all of which are primarily included in Cost of goods sold).
19.
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 revenue 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.
20.
Variable Manufacturing Costs -Represents volume-adjusted costs excluding the impact of currency and restructuring costs (see definition above). 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.

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; forestry machines; material handlers; motor graders; pipelayers; road reclaimers; skid steer loaders; telehandlers; small and medium track-type tractors; track-type loaders; wheel excavators; compact, small and medium wheel loaders; and related parts and work tools.
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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.
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 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.
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 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; electrified powertrain and zero-emission power sources and service solutions development; 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.
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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.
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 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.
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 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.

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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'Products’ operations are funded primarily from commercial paper, term debt issuances and collections from its existing portfolio. DuringOn a consolidated basis, we had positive operating cash flow in the first nine months of 2017, we experienced favorable liquidity conditions globally in both our ME&T2022 and Financial Products' operations. On a consolidated basis, we ended the first nine months of 2017third quarter with $9.59$6.35 billion of cash, an increase of $2.42cash, a decrease of $2.91 billion from year-end 2016.2021. In addition, ME&T has invested in available-for-sale debt securities 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 $982 million at the end of September 30, 2022. We intend to maintain a strong cash and liquidity position.

Our cash balances are held in numerous locations throughout the world with approximately $8.8 billion held by our non-U.S. subsidiaries. If non-U.S. earnings were repatriated in excess of the amount previously taxed in the United States, U.S. tax would generally be payable net of any available foreign tax credits.
Consolidated operating cash flow for the first nine months of 20172022 was $5.16$5.03 billion, up from $3.98 billion fordown $759 million compared to the same period last year.a year ago. The increasedecrease was primarily due to payments for short-term incentive compensation in the first quarter of 2022 as well as higher cash taxes paid which includes payments related to settlements with the U.S. Internal Revenue Service. Partially offsetting these items was higher profit adjusted for non-cash expenses, including restructuring costs and short-term incentive compensation expense, in the first nine months of 2017, compared with the first nine months of 2016. In the first nine months of 2017 restructuring costs were primarily for severance costs that have not yet been paid and for non-cash charges. In addition, there were lower severance and short-term incentive compensation payments in the first nine months of 2017 versus the first nine months of 2016. Partially offsetting these items was an unfavorable impact from working capital, primarily due to a decrease in working capital during the first nine months of 2016. See further discussion of operating cash flow under ME&T and Financial Products.2022 compared to the same period last year.
Total debt as of September 30, 20172022 was $35.92$36.53 billion, a decrease of $859 million$1.26 billion from year-end 2016. Debt related to Financial Products decreased $543 million.2021. Debt related to ME&T decreased $316$192 million in the first nine months of 2017. This decrease was due2022 while debt related to the maturityFinancial Products decreased $1.07 billion.
As of a long-term debt issuance and lower commercial paper borrowings compared to year-end 2016 partially offset by a financing transaction in Japan in 2017. On October 10, 2017,September 30, 2022, we called for redemption of all $900 million in aggregate principal amount of our outstanding 7.90% senior notes due in December 2018, payable in cash. The redemption date will be November 10, 2017.
We havehad 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'smanagement’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, 20172022 was $2.75 billion. Information on our Credit Facility is as follows:
•In September 2017,2022, we entered into a new 364-day facility. The 364-day facility of $3.15 billion (of which $0.82 billion$825 million is available to ME&T) expires in September 2018.August 2023.
•In September 2017,2022, we amended and extendedrestated the three-year facility.facility (as amended and restated, the "three-year facility"). The three-year facility of $2.73 billion (of which $0.72 billion$715 million is available to ME&T) expires in September 2020.August 2025.
•In September 2017,2022, we amended and extendedrestated the five-year facility.facility (as amended and restated, the "five-year facility"). The five-year facility of $4.62 billion (of which $1.21 billion is available to ME&T) expires in September 2022.2027.
At September 30, 2017, Caterpillar's2022, Caterpillar’s consolidated net worth was $15.69 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'shareholders’ equity including preferred stock but excluding the pension and other postretirement benefits balance within Accumulated other comprehensive income (loss).
At September 30, 2017,2022, Cat Financial'sFinancial’s covenant interest coverage ratio was 1.882.59 to 1. This iswas above the 1.15 to 1 minimum ratio calculated as (1) profit excluding income taxes, interest expense and net gain/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, 2017,2022, Cat Financial'sFinancial’s six-month covenant leverage ratio was 7.207.03 to 1. This iswas 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'sFinancial’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, 2017,2022, there were no borrowings under the Credit Facility.

Our total credit commitments and available credit as of September 30, 20172022 were:
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September 30, 2017 September 30, 2022
(Millions of dollars)Consolidated 
Machinery,
Energy &
Transportation
 
Financial
Products
(Millions of dollars)ConsolidatedMachinery,
Energy &
Transportation		Financial
Products
Credit lines available: 
  
  
Credit lines available:   
Global credit facilities$10,500
 $2,750
 $7,750
Global credit facilities$10,500 $2,750 $7,750 
Other external4,597
 11
 4,586
Other external3,352 172 3,180 
Total credit lines available15,097
 2,761
 12,336
Total credit lines available13,852 2,922 10,930 
Less: Commercial paper outstanding(4,227) —
 (4,227)Less: Commercial paper outstanding(3,723)— (3,723)
Less: Utilized credit(1,567) (11) (1,556)Less: Utilized credit(684)(3)(681)
Available credit$9,303
 $2,750
 $6,553
Available credit$9,445 $2,919 $6,526 
 
The other external consolidated credit lines with banks as of September 30, 20172022 totaled $4.60$3.35 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.
We receive debt ratings from the major credit rating agencies. In December 2016, Moody's Investors Service downgraded our long-term ratings to A3 from A2,Moody’s, Fitch and short-term ratings to Prime-2 from Prime-1. The Moody's downgrade did not haveS&P maintain a material impact on our borrowing costs or our overall financial health.“mid-A” debt rating. A further downgrade of our credit ratings by Moody's or oneany of the other major credit rating agencies would result in increased borrowing costs and could make access to certain credit markets more difficult. However, our long-term ratings with Fitch and S&P continue to be "mid-A". In the event economic conditions deteriorate such that access to debt markets becomes unavailable, ME&T's&T’s operations would rely on cash flow from operations, use of existing cash balances, borrowings from Cat Financial and access to our Credit Facility.committed credit facilities. Our Financial Products'Products’ operations would rely on cash flow from its existing portfolio, existing cash balances, access to our Credit Facilitycommitted 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.

We facilitate voluntary supply chain finance programs (the “Programs”) through participating financial institutions. The Programs are available to a wide range of suppliers and allow 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 payable in the Consolidated Statement of Financial Position were $894 million and $822 million at September 30, 2022 and December 31, 2021, respectively. The amounts settled through the Programs and paid to participating financial institutions were $4.0 billion and $2.9 billion during the first nine months of 2022 and 2021, respectively. We account for payments made under the Programs, the same as our other 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 by operatingoperating activities was $4.16$3.19 billion in the first nine months of 2017,2022, compared with $1.80net cash provided of $4.90 billion for the same period in 2016.2021. The increasedecrease was primarily due to higher profit adjustedpayments for non-cash expenses, including restructuring costs and short-term incentive compensation expense, in the first nine monthsquarter of 2017, compared2022, higher payments for taxes which includes payments related to settlements with the first nine months of 2016. In the first nine months of 2017, restructuring costs were primarily for severance costs that have not yet been paidU.S. Internal Revenue Service and for non-cash charges. In addition, there were lower severance and short-term incentive compensation payments in the first nine months of 2017 versus the first nine months of 2016. Partially offsetting these items was an unfavorable impact fromincreased working capital primarily due to a decrease in working capitalrequirements during the first nine months of 2016.2022 compared to the same period last year. Within working capital, changes in inventory, accounts payable and accrued expenses unfavorably impacted cash flow but were partially offset by favorable changes in customer advances and accounts receivable. Partially offsetting these unfavorable items was higher profit adjusted for non-cash items during the first nine months of 2022 compared to the same period a year ago.
NetNet cash used forby investing activities in the first nine months of 20172022 was $333$881 million, compared with net cash used of $1.54 billion$487 million in the firstfirst nine months of 2016.2021. The change was primarily due to the absence of ME&Tdecreased activity related to intercompany lending activity with Financial Products that occurredand was partially offset by decreases in the first nine months of 2016.net investment activity.
Net cash used for financing activities during the first nine months of 20172022 was $361 million,$5.29 billion, compared with $676 millionnet cash used of $4.67 billion in the same period of 2016. Higher2021. The change was primarily due to higher share repurchases in the first nine months of 2022 and the absence of proceeds received from common stock issued from stock options exercised and proceeds received related to a financing transactiondebt issuances which occurred in Japan in 2017the first nine months of 2021. These items were partially offset by lower commercial paper borrowings in 2017 as compared to 2016.repayments of maturing debt during the first nine months of 2022.
Although
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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 remains unchanged: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 provide capital to support growth, appropriately fund employee benefit plans, pay dividendsagencies.
Operational excellence and repurchase common stock.

Strong financial positioncommitments – A key measure of ME&T's financial strength used by managementis ME&T's debt-to-capital ratio. Debt-to-capital is defined as short-term borrowings, long-term debt due within one year and long-term debt due after one year (debt) divided by the sum of debt and shareholders' equity. Debt also includes ME&T's long-term borrowings from Financial Products. The debt-to-capital ratio for ME&T was 36.1 percent at September 30, 2017, within our target range of 30 to 45 percent. ME&T's debt-to-capital ratio was 41.0 percent at December 31, 2016. The decrease in the debt-to-capital ratio was driven by an increase in equity, which was primarily due to higher profit employed in the business and favorable foreign currency translation adjustments, and a decrease in debt.

Capital to support growth – Capital expenditures were $574$880 million during the first nine months of 2017,2022, compared to $858$693 million for the same period in 2016.2021. We expect ME&T's&T’s capital expenditures in 20172022 to be about the same as 2016.
Appropriately funded employee benefit plans – $1.4 billion. We made $324 million and $522$299 million of contributions to our pension and other postretirement benefit plans during the three andfirst nine months ended September 30, 2017.of 2022. We currently anticipate full-year 20172022 contributions of approximately $610$357 million. WeIn comparison, we made $71 million and $270$229 million of contributions to our pension and other postretirement benefit plans during the three andfirst nine months endedof 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.
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 less capital expenditures, excluding discretionary pension and other postretirement benefit plan contributions and cash payments related to settlements with the U.S. Internal Revenue Service. A goal of our capital allocation strategy is to return substantially all ME&T free cash flow to shareholders over time in the form of dividends and share repurchases, while maintaining our mid-A rating.

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 approved a repurchase authorization (the 2018 Authorization) of up to $10.0 billion of Caterpillar common stock effective January 1, 2019, with no expiration. In May 2022, the Board approved a new share repurchase authorization (the 2022 Authorization) of up to $15.0 billion of Caterpillar common stock effective August 1, 2022, with no expiration. Utilization of the 2022 Authorization for all share repurchases commenced on August 1, 2022, leaving $70 million unutilized under the 2018 Authorization as of September 30, 2016.
Paying dividends – Dividends totaled $1.37 billion in2022. In the first nine months of 2017, representing 77 cents per share paid in2022, we repurchased $3.31 billion of Caterpillar common stock, with $13.7 billion remaining under the first and second quarters and 78 cents per share paid in the third quarter. 2022 Authorization as of September 30, 2022. Our basic shares outstanding as of September 30, 2022 were approximately 520 million.
Each quarter, our Board of Directors reviews the company'scompany’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'scompany’s liquidity needs, and the health and stability of global credit markets to determine whether to maintain or change the quarterly dividend.
Common stock repurchases – In January 2014,October 2022, the Board of Directors approved an authorizationmaintaining our quarterly dividend representing $1.20 per share, and we continue to repurchase upexpect our strong financial position to $10support the dividend. Dividends paid totaled $1.82 billion of Caterpillar common stock (the 2014 Authorization), which will expire on December 31, 2018. We did not purchase any Caterpillar common stock in the first nine months of 2017. As of September 30, 2017, $5.47 billion remained available under the 2014 Authorization. Caterpillar's basic shares outstanding as of September 30, 2017 were approximately 595 million.2022.


Financial Products
Financial Products operating cash flow was $1.02$1.25 billion in the first nine months of 2017,2022, compared with $1.26$1.10 billion for the same period a year ago. Net cash used for investing activities was $994$228 million for the first nine months of 2017,2022, compared with $872net cash used of $468 million for the same period in 2016.2021. The change was primarily due to the impact of intercompany purchased receivables, partially offset by higher proceeds from disposal of equipment and lower capital expenditures for equipment on operating leases.portfolio related activity. Net cash used for financing activities was $872 million for the first nine months of 2017 was $1.11 billion,2022 compared with $302net cash used of $289 million for the same period in 2016.2021. The change was primarily due to lower portfolio funding requirements.
Financial Products ended the impactthird quarter of borrowings2022 with ME&T.$943 million of cash, including $142 million in Russia which is currently subject to local government restrictions that substantially limit transfer outside of the country.


RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements, see Part I, Item 1. Note 2 - “New accounting guidance”.
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CRITICAL ACCOUNTING POLICIESESTIMATES
 
For a discussion of the Company'scompany’s critical accounting policies,estimates, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 20162021 Annual Report on Form 10-K. Critical accounting policies thatThere have been revisedno significant changes to our critical accounting estimates since our 20162021 Annual Report on Form 10-K are as follows.10-K.


Fair values for goodwill impairment tests - We test goodwill for impairment annually, at the reporting unit level, and whenever events or circumstances make it likely that an impairment may have occurred, such as a significant adverse change in the business climate or a decision to sell all or a portion of a reporting unit. We perform our annual goodwill impairment test as of October 1 and monitor for interim triggering events on an ongoing basis.

Goodwill is reviewed for impairment utilizing either a qualitative assessment or a quantitative goodwill impairment test. If we choose to perform a qualitative assessment and determine the fair value more likely than not exceeds the carrying value, no further evaluation is necessary. For reporting units where we perform the quantitative goodwill impairment test, we compare the fair value of each reporting unit, which we primarily determine using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. Beginning in 2017, if the carrying value is higher than the fair value, the difference is recognized as an impairment loss. Prior to 2017, a two-step process was used. For reporting units where we performed the two-step process, the first step required us to compare the fair value of each reporting unit, which we primarily determined using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeded its carrying value, the goodwill was not considered impaired. If the carrying value was higher than the fair value, there was an indication that an impairment may have existed and the second step was required. In step two, the implied fair value of goodwill was calculated as the excess of the fair value of a reporting unit over the fair values assigned to its assets and liabilities. If the implied fair value of goodwill was less than the carrying value of the reporting unit's goodwill, the difference was recognized as an impairment loss.

The impairment test process requires valuation of the respective reporting unit, which we primarily determine using an income approach based on a discounted five year forecasted cash flow with a year-five residual value. The residual value is computed using the constant growth method, which values the forecasted cash flows in perpetuity. The income approach is supported by a reconciliation of our calculated fair value for Caterpillar to the company's market capitalization. The assumptions about future cash flows and growth rates are based on each reporting unit's long-term forecast and are subject to review and approval by senior management. A reporting unit’s discount rate is a risk-adjusted weighted average cost of capital, which we believe approximates

the rate from a market participant's perspective. The estimated fair value could be impacted by changes in market conditions, interest rates, growth rates, tax rates, costs, pricing and capital expenditures. The fair value determination is categorized as Level 3 in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs.

An unfavorable change in our expectations for the financial performance of our reporting units, particularly long-term growth and profitability, would reduce the fair value of our reporting units. The demand for our equipment and related parts is highly cyclical and significantly impacted by commodity prices, although the impact may vary by reporting unit. The energy and mining industries are major users of our products, including the coal, iron ore, gold, copper, oil and natural gas industries. Decisions to purchase our products are dependent upon the performance of those industries, which in turn are dependent in part on commodity prices. Lower commodity prices or industry specific circumstances that have a negative impact to the valuation assumptions may reduce the fair value of our reporting units. Should such events occur and it becomes more likely than not that a reporting unit's fair value has fallen below its carrying value, we will perform an interim goodwill impairment test(s), in addition to the annual impairment test.  Future impairment tests may result in a goodwill impairment, depending on the outcome of the quantitative impairment test. A goodwill impairment would be reported as a non-cash charge to earnings.

Stock-based compensation - We use a lattice-based option-pricing model to calculate the fair value of our stock options and SARs. The calculation of the fair value of the awards using the lattice-based option-pricing model is affected by our stock price on the date of grant as well as assumptions regarding the following:

Volatility is a measure of the amount by which the stock price is expected to fluctuate each year during the expected term of the award and is based on historical Caterpillar stock price movement and current implied volatilities from traded options on Caterpillar stock. The implied volatilities from traded options are impacted by changes in market conditions. An increase in the volatility would result in an increase in our expense.
The expected term represents the period of time that awards granted are expected to be outstanding and is an output of the lattice-based option-pricing model. In determining the expected term of the award, future exercise and forfeiture patterns are estimated from Caterpillar employee historical exercise behavior. These patterns are also affected by the vesting conditions of the award. Changes in the future exercise behavior of employees or in the vesting period of the award could result in a change in the expected term. An increase in the expected term would result in an increase to our expense.
The weighted-average dividend yield is based on Caterpillar's historical dividend yields. As holders of stock options and SARs do not receive dividend payments, this could result in employees retaining the award for a longer period of time if dividend yields decrease or exercising the award sooner if dividend yields increase. A decrease in the dividend yield would result in an increase in our expense.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at time of grant. As the risk-free interest rate increases, the expected term increases, resulting in an increase in our expense.

The fair value of our RSUs and PRSUs is determined by reducing the stock price on the date of grant by the present value of the estimated dividends to be paid during the vesting period. The estimated dividends are based on Caterpillar's quarterly dividend per share at the time of grant. A decrease in the dividend per share would result in an increase in our expense.

Stock-based compensation expense is recognized based on the grant date fair value. Forfeitures are accounted for in the period they occur as a reduction to expense. Stock-based compensation expense for PRSUs is based on the probable number of shares expected to vest. Changes in the expected probability of achieving performance targets in future periods may result in an increase or decrease in our expense.

Income taxes – We are subject to the income tax laws of the many jurisdictions in which we operate. These tax laws are complex, and the manner in which they apply to our facts is sometimes open to interpretation. In establishing the provision for income taxes, we must make judgments about the application of these inherently complex tax laws.

Despite our belief that our tax return positions are consistent with applicable tax laws, we believe that taxing authorities could challenge certain positions. Settlement of any challenge can result in no change, a complete disallowance, or some partial adjustment reached through negotiations or litigation. We record tax benefits for uncertain tax positions based upon management’s evaluation of the information available at the reporting date. To be recognized in the financial statements, a tax benefit must be at least more likely than not of being sustained based on technical merits. The benefit for positions meeting the recognition threshold is measured as the largest benefit more likely than not of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Significant judgment is required in making these determinations and adjustments to unrecognized tax benefits may be necessary to reflect actual taxes payable upon settlement. Adjustments related to positions impacting the effective

tax rate affect the provision for income taxes. Adjustments related to positions impacting the timing of deductions impact deferred tax assets and liabilities.

Our income tax positions and analysis are based on currently enacted tax law. Future changes in tax law could significantly impact the provision for income taxes, the amount of taxes payable, and the deferred tax asset and liability balances. Deferred tax assets generally represent tax benefits for tax deductions or credits available in future tax returns. Certain estimates and assumptions are required to determine whether it is more likely than not that all or some portion of the benefit of a deferred tax asset will not be realized. In making this assessment, management analyzes the trend of U.S. GAAP earnings and estimates the impact of future taxable income, reversing temporary differences and available prudent and feasible tax planning strategies. Should a change in facts or circumstances lead to a change in judgment about the ultimate realizability of a deferred tax asset, we record or adjust the related valuation allowance in the period that the change in facts and circumstances occurs, along with a corresponding increase or decrease in the provision for income taxes. The provision for income taxes for 2016 included an increase in the valuation allowance for U.S. state deferred tax assets resulting in a $141 million non-cash charge, net of federal deferred tax adjustment at 35 percent. The primary driver of the increase was recent U.S. GAAP losses expected to recur in 2017 in certain state jurisdictions and the weight given this negative objective evidence under income tax accounting guidance. Reversal of the valuation allowance in the future is dependent on U.S. GAAP profitability in these state jurisdictions giving less weight in the analysis to mark-to-market adjustments to remeasure our pension and OPEB plans as we do not consider these adjustments indicative of ongoing earnings trends. Due to better than previously forecasted 2017 U.S. GAAP results in certain U.S. state jurisdictions, it is reasonably possible the valuation allowance for U.S. state deferred tax assets will decrease in the next twelve months.

A provision for U.S. income taxes has not been recorded on undistributed profits of our non-U.S. subsidiaries that we have determined to be indefinitely reinvested outside the U.S. If management intentions or U.S. tax law changes in the future, there could be a significant negative impact on the provision for income taxes to record an incremental tax liability in the period the change occurs. A deferred tax asset is recognized only if we have definite plans to generate a U.S. tax benefit by repatriating earnings in the foreseeable future.

Income taxes are based on the statutory tax rate of the jurisdiction in which earnings are subject to taxation. That statutory rate may differ from the statutory tax rate of the jurisdiction in which that entity is incorporated. Taxes are paid in the jurisdictions where earnings are subject to taxation. The effective tax rate differs from the U.S. statutory rate in part due to indefinitely reinvested profits of non-U.S. subsidiaries being subject to statutory tax rates which are generally lower than the U.S. rate of 35 percent. The indefinitely reinvested profits of Caterpillar SARL (CSARL), primarily taxable in Switzerland, contribute the most significant amount of this difference. For tax years 2007 to 2012 including the impact of a loss carryback to 2005, the IRS has proposed to tax in the United States profits earned from certain parts transactions by CSARL based on the IRS examination team’s application of “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 billion. We believe that the relevant transactions complied with applicable tax laws and did not violate judicial doctrines. The purchase of parts by CSARL from unrelated parties and the subsequent sale of those parts to unrelated dealers outside the United States have substantial legal, commercial, and economic consequences for the parties involved. Therefore, we have concluded that the largest amount of benefit that is more likely than not to be sustained related to this position is the entire benefit. As a result, no amount related to these IRS adjustments is reflected in unrecognized tax benefits. We have filed U.S. income tax returns on this same basis for years after 2012. 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.

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.”


The Company is regulated by federal, state and international environmental laws governing our 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, the investigation, remediation, and operating and maintenance costs are accrued against our earnings. Costs are accrued 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. 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 requests 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 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 three facilities of the Company in the Peoria, Illinois area, including its 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 Caterpillar SARL, 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.

On March 20, 2014, Brazil’s Administrative Council for Economic Defense (CADE) published a Technical Opinion which named 18 companies and over 100 individuals as defendants, including two subsidiaries of Caterpillar Inc., MGE - Equipamentos e Serviços Ferroviários Ltda. (MGE) and Caterpillar Brasil Ltda. The publication of the Technical Opinion opened CADE's official administrative investigation into allegations that the defendants participated in anticompetitive bid activity for the construction and maintenance of metro and train networks in Brazil. While companies cannot be held criminally liable for anticompetitive conduct in Brazil, criminal charges have been brought against two current employees of MGE and one former employee of MGE involving the same conduct alleged by CADE. The Company has responded to all requests for information from the authorities. The Company is unable to predict the outcome or reasonably estimate the 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.

On October 24, 2013, Progress Rail received a grand jury subpoena from the U.S. District Court for the Central District of California. The subpoena requests documents and information from Progress Rail, United Industries Corporation, a wholly-owned subsidiary of Progress Rail, and Caterpillar Inc. relating to allegations that Progress Rail conducted improper or unnecessary railcar inspections and repairs and improperly disposed of parts, equipment, tools and other items. In connection with this subpoena, Progress Rail was informed by the U.S. Attorney for the Central District of California that it is a target of a criminal investigation into potential violations of environmental laws and alleged improper business practices. The Company is cooperating with the authorities and is currently in discussions regarding a potential resolution of the matter. Although the Company believes a loss is probable, 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 and welding fumes exposure), contracts, employment issues, environmental matters, intellectual property rights, 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.
Retirement Benefits
Based on market conditionsWe 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 September 30, 2017, we would be required to recognize an increase in our underfunded status of approximately $650 million atthe measurement date, December 31, 2017. This would result in an increase in our Liability for postemployment benefits and the recognition in earnings of net mark-to-market losses of approximately $650 million pre-tax, $440 million net of tax or $0.75 per share. The increase in our underfunded status and the net mark-to-market losses are primarily due to lower discount rates at September 30, 2017 (approximately 3.67 percent for our U.S. pension plans) as compared to the discount rates

used at December 31, 2016 (approximately 3.97 percent for our U.S. pension plans) and anticipated changes in our U.S. mortality assumption. These losses are partially offset by the difference between the actual return on plan assets compared to the expected return on plan assets.2022. It is difficult to predict the December 31, 2022 adjustment amount, as it iswill be dependent primarily on several factors including thechanges in discount rate,rates during 2022, and actual returns on plan assets and other actuarial assumptions. Final determination will only be known as of the measurement date, which is December 31, 2017.differing from our expected returns for 2022.


Order Backlog
At the end of the third quarter of 2017,2022, the dollar amount of backlog believed to be firm was approximately $15.4$30.0 billion, an increase of about $600 million from the end of$1.6 billion higher than the second quarter of 2017. Construction Industries'2022. The order backlog increased about $500 million, Resource Industries' increased about $300 million andincrease was primarily driven by Energy & Transportation's decreased about $200 million. Compared with the third quarter of 2016, the order backlog increased about $3.8 billion. The increase was across all segments, most significantly inTransportation and Construction Industries and Resource Industries. Of the total backlog at September 30, 2017,2022, approximately $2.6$5.7 billion was not expected to be filled in the following twelve months.

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NON-GAAP FINANCIAL MEASURES
 
TheWe provide the following definitions are provided 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 for 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 special itemsone significant item in order for the company'sour results to be meaningful to our readers. These items consistThis item consists of restructuring costs, which arewere incurred in the current year to generate longer-term benefits, and a gain on sale of an equity investment.benefits. We do not consider these itemsthis item indicative of earnings from ongoing business activities and believe the non-GAAP measure will provideprovides investors with useful perspective on underlying business results and trends and a means to assess the company'saids with assessing our period-over-period results. ReconciliationIn 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 profit per shareresults to the most directly comparable GAAP measures are as follows:

(Dollars in millions except per share data)Operating ProfitOperating Profit MarginProfit Before TaxesProvision (Benefit) for Income TaxesEffective Tax RateProfitProfit per Share
Three Months Ended September 30, 2022 - U.S. GAAP$2,425 16.2 %$2,558 $527 20.6 %$2,041 $3.87 
Restructuring costs49 0.3 %49 9 18.4 %40 $0.08 
Three Months Ended September 30, 2022 - Adjusted$2,474 16.5 %$2,607 $536 20.6 %$2,081 $3.95 
Three Months Ended September 30, 2021 - U.S. GAAP$1,664 13.4 %$1,775 $368 20.7 %$1,426 $2.60 
Restructuring costs35 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 
Nine Months Ended September 30, 2022- U.S. GAAP$6,224 14.5 %$6,653 $1,423 21.4 %$5,251 $9.85 
Restructuring costs90 0.2 %90 13 14.0 %77 $0.14 
Nine Months Ended September 30, 2022 - Adjusted$6,314 14.7 %$6,743 $1,436 21.3 %$5,328 $9.99 
Nine Months Ended September 30, 2021 - U.S. GAAP$5,267 14.2 %$5,642 $1,313 23.3 %$4,369 $7.94 
Restructuring costs124 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 

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

(Millions of dollars)Nine Months Ended September 30
20222021
ME&T net cash provided by operating activities 1
$3,191 $4,899 
ME&T capital expenditures(880)(693)
Cash payments related to settlements with the U.S. Internal Revenue Service467 — 
ME&T free cash flow$2,778 $4,206 
1 See reconciliation of ME&T net cash provided by operating activities to consolidated net cash provided by operating activities on pages 73 - 74.

65
  Three Months Ended September 30 Nine Months Ended September 30
  2017 2016 2017 2016
Profit per share - diluted $1.77
 $0.48
 $3.44
 $1.88
Per share restructuring costs 1 
 0.18
 0.37
 1.37
 0.70
Per share gain on sale of equity investment2
 $—
 $—
 $(0.09) $—
Adjusted profit per share $1.95
 $0.85
 $4.72
 $2.58
1 At estimated annual tax rate based on full-year outlook for per share restructuring costs at statutory tax rates. Three and nine months ended September 30, 2017 at estimated annual tax rate of 20 percent. Nine months ended September 30, 2017 also includes $15 million increase to prior year taxes related to non-U.S. restructuring costs recognized in the first quarter of 2017. Third-quarter 2017 includes an unfavorable interim adjustment of $0.06 per share and nine months ended September 30, 2017 includes a favorable interim adjustment of $0.01 per share resulting from the difference in the estimated annual tax rate for consolidated reporting of 32 percent and the estimated annual tax rate for profit per share excluding restructuring costs, gain on sale of equity investment and discrete items of 29 percent.
2 At U.S. statutory tax rate of 35 percent.
    
Table of Contents
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 – Caterpillar defines Machinery, Energy & Transportation We define ME&T as it is presented in the supplemental data as Caterpillar Inc. and its subsidiaries, withexcluding Financial Products accounted for on the equity basis. Machinery, Energy & TransportationProducts. ME&T’s information relates to the design, manufacturing and marketing of our products.
Financial Products'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 thesethe 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 also believe this presentation will assist readers in understanding our business.

Financial Products – Our finance and insurance subsidiaries, primarily Cat Financial and Insurance Services.
Consolidating Adjustments – Eliminations of transactions between Machinery, Energy & TransportationPages 67 to 74 reconcile ME&T and Financial Products.
Pages 84 to 91 reconcile Machinery, Energy & Transportation with Financial Products on the equity basis 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, 20172022
(Unaudited)
(Millions of dollars)
  Supplemental Consolidating Data   Supplemental Consolidating Data
Consolidated 
Machinery,
Energy &
Transportation 1
 
Financial
Products
 
Consolidating
Adjustments
  ConsolidatedMachinery,
Energy &
Transportation		Financial
Products		Consolidating
Adjustments
Sales and revenues: 
  
  
  
 Sales and revenues:    
Sales of Machinery, Energy & Transportation$10,713
 $10,713
 $—
 $—
 Sales of Machinery, Energy & Transportation$14,278 $14,278 $— $— 
Revenues of Financial Products700
 —
 793
 (93)
2 

Revenues of Financial Products716 — 852 (136)1
Total sales and revenues11,413
 10,713
 793
 (93) Total sales and revenues14,994 14,278 852 (136)
        
Operating costs: 
  
  
  
 Operating costs:    
Cost of goods sold7,633
 7,633
 —
 —
 Cost of goods sold10,202 10,203 — (1)2
Selling, general and administrative expenses1,237
 1,067
 173
 (3)
3 

Selling, general and administrative expenses1,401 1,271 136 (6)2
Research and development expenses455
 455
 —
 —
 Research and development expenses476 476 — — 
Interest expense of Financial Products163
 —
 169
 (6)
4 

Interest expense of Financial Products151 — 151 — 
Other operating (income) expenses348
 51
 303
 (6)
3 

Other operating (income) expenses339 43 315 (19)2
Total operating costs9,836
 9,206
 645
 (15) Total operating costs12,569 11,993 602 (26)
        
Operating profit1,577
 1,507
 148
 (78) Operating profit2,425 2,285 250 (110)
        
Interest expense excluding Financial Products118
 143
 —
 (25)
4 

Interest expense excluding Financial Products109 110 — (1)3
Other income (expense)64
 (22) 33
 53
5 

Other income (expense)242 160 (27)109 4
        
Consolidated profit before taxes1,523
 1,342
 181
 —
 Consolidated profit before taxes2,558 2,335 223 — 
        
Provision (benefit) for income taxes470
 413
 57
 —
 Provision (benefit) for income taxes527 464 63 — 
Profit of consolidated companies1,053
 929
 124
 —
 Profit of consolidated companies2,031 1,871 160 — 
        
Equity in profit (loss) of unconsolidated affiliated companies8
 8
 —
 —
 Equity in profit (loss) of unconsolidated affiliated companies9 11 — (2)5
Equity in profit of Financial Products’ subsidiaries—
 122
 —
 (122)
6 

        
Profit of consolidated and affiliated companies1,061
 1,059
 124
 (122) Profit of consolidated and affiliated companies2,040 1,882 160 (2)
        
Less: Profit (loss) attributable to noncontrolling interests2
 —
 2
 —
 Less: Profit (loss) attributable to noncontrolling interests(1)(1)2 (2)6
        
Profit 7
$1,059
 $1,059
 $122
 $(122) 
Profit 7
$2,041 $1,883 $158 $— 
 
1Elimination of Financial Products’ revenues earned from ME&T.
2Elimination of net expenses recorded by ME&T paid to Financial Products.
3Elimination of interest expense recorded between Financial Products and ME&T.
4Elimination 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.
5Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.
6Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T subsidiaries.
7Profit attributable to common shareholders.
1
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.
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2
Elimination of Financial Products’ revenues earned from Machinery, Energy & Transportation.
3
Elimination of net expenses recorded by Machinery, Energy & Transportation paid to Financial Products.
4
Elimination of interest expense recorded between Financial Products and Machinery, Energy & Transportation.
5
Elimination of discount recorded by Machinery, Energy & Transportation on receivables sold to Financial Products and of interest earned between Machinery, Energy & Transportation and Financial Products.
6
Elimination of Financial Products’ profit due to equity method of accounting.
7
Profit attributable to common shareholders.

Caterpillar Inc.
Supplemental Data for Results of Operations
For the Nine Months Ended September 30, 20172022
(Unaudited)
(Millions of dollars)
 
  Supplemental Consolidating Data   Supplemental Consolidating Data
Consolidated 
Machinery,
Energy &
Transportation 1
 
Financial
Products
 
Consolidating
Adjustments
  ConsolidatedMachinery, Energy & TransportationFinancial
Products		Consolidating
Adjustments
Sales and revenues: 
  
  
  
 Sales and revenues:    
Sales of Machinery, Energy & Transportation$30,482
 $30,482
 $—
 $—
 Sales of Machinery, Energy & Transportation$40,703 $40,703 $— $— 
Revenues of Financial Products2,084
 —
 2,363
 (279)
2 

Revenues of Financial Products2,127 — 2,493 (366)1
Total sales and revenues32,566
 30,482
 2,363
 (279) Total sales and revenues42,830 40,703 2,493 (366)
        
Operating costs: 
  
  
  
 Operating costs:    
Cost of goods sold22,160
 22,160
 —
 —
 Cost of goods sold29,736 29,741 — (5)2
Selling, general and administrative expenses3,571
 3,145
 438
 (12)
3 

Selling, general and administrative expenses4,172 3,714 475 (17)2
Research and development expenses1,326
 1,326
 —
 —
 Research and development expenses1,413 1,413 — — 
Interest expense of Financial Products484
 —
 499
 (15)
4 

Interest expense of Financial Products377 — 377 — 

Other operating (income) expenses1,780
 890
 906
 (16)
3 

Other operating (income) expenses908 31 936 (59)2
Total operating costs29,321
 27,521
 1,843
 (43) Total operating costs36,606 34,899 1,788 (81)
        
Operating profit3,245
 2,961
 520
 (236) Operating profit6,224 5,804 705 (285)
        
Interest expense excluding Financial Products362
 433
 —
 (71)
4 

Interest expense excluding Financial Products326 327 — (1)3
Other income (expense)88
 (110) 33
 165
5 

Other income (expense)755 497 (26)284 4
        
Consolidated profit before taxes2,971
 2,418
 553
 —
 Consolidated profit before taxes6,653 5,974 679 — 
        
Provision (benefit) for income taxes921
 750
 171
 —
 Provision (benefit) for income taxes1,423 1,250 173 — 
Profit of consolidated companies2,050
 1,668
 382
 —
 Profit of consolidated companies5,230 4,724 506 — 
        
Equity in profit (loss) of unconsolidated affiliated companies8
 8
 —
 —
 Equity in profit (loss) of unconsolidated affiliated companies20 26 — (6)5
Equity in profit of Financial Products’ subsidiaries—
 377
 —
 (377)
6 

        
Profit of consolidated and affiliated companies2,058
 2,053
 382
 (377) Profit of consolidated and affiliated companies5,250 4,750 506 (6)
        
Less: Profit (loss) attributable to noncontrolling interests5
 —
 5
 —
 Less: Profit (loss) attributable to noncontrolling interests(1)(1)6 (6)6
        
Profit 7
$2,053
 $2,053
 $377
 $(377) 
Profit 7
$5,251 $4,751 $500 $— 
 
1Elimination of Financial Products’ revenues earned from ME&T.
2Elimination of net expenses recorded by ME&T paid to Financial Products.
3Elimination of interest expense recorded between Financial Products and ME&T.
4Elimination 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.
5Elimination of equity profit (loss) earned from Financial Products’ subsidiaries partially owned by ME&T subsidiaries.
6Elimination of noncontrolling interest profit (loss) recorded by Financial Products for subsidiaries partially owned by ME&T subsidiaries.
7Profit attributable to common shareholders.
1
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.
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2
Elimination of Financial Products’ revenues earned from Machinery, Energy & Transportation.
3
Elimination of net expenses recorded by Machinery, Energy & Transportation paid to Financial Products.
4
Elimination of interest expense recorded between Financial Products and Machinery, Energy & Transportation.
5
Elimination of discount recorded by Machinery, Energy & Transportation on receivables sold to Financial Products and of interest earned between Machinery, Energy & Transportation and Financial Products.
6
Elimination of Financial Products’ profit due to equity method of accounting.
7
Profit attributable to common shareholders.

Caterpillar Inc.
Supplemental Data for Results of Operations
For the Three Months Ended September 30, 20162021
(Unaudited)
(Millions of dollars)
  Supplemental Consolidating Data   Supplemental Consolidating Data
Consolidated 
Machinery,
Energy &
Transportation 1
 
Financial
Products
 
Consolidating
Adjustments
  ConsolidatedMachinery,
Energy &
Transportation		Financial
Products		Consolidating
Adjustments
Sales and revenues: 
  
  
  
 Sales and revenues:    
Sales of Machinery, Energy & Transportation$8,463
 $8,463
 $—
 $—
 Sales of Machinery, Energy & Transportation$11,707 $11,707 $— $— 
Revenues of Financial Products697
 —
 768
 (71)
2 

Revenues of Financial Products690 — 787 (97)1
Total sales and revenues9,160
 8,463
 768
 (71) Total sales and revenues12,397 11,707 787 (97)
        
Operating costs: 
  
  
  
 Operating costs:    
Cost of goods sold6,527
 6,528
 —
 (1)
3 

Cost of goods sold8,617 8,618 — (1)2
Selling, general and administrative expenses992
 858
 138
 (4)
3 

Selling, general and administrative expenses1,340 1,147 200 (7)2
Research and development expenses453
 453
 —
 —
 Research and development expenses427 427 — — 
Interest expense of Financial Products147
 —
 151
 (4)
4 

Interest expense of Financial Products111 — 111 — 

Other operating (income) expenses560
 258
 308
 (6)
3 

Other operating (income) expenses238 (56)310 (16)2
Total operating costs8,679
 8,097
 597
 (15) Total operating costs10,733 10,136 621 (24)
        
Operating profit481
 366
 171
 (56) Operating profit1,664 1,571 166 (73)
        
Interest expense excluding Financial Products126
 139
 —
 (13)
4 

Interest expense excluding Financial Products114 114 — — 
Other income (expense)28
 (25) 10
 43
5 

Other income (expense)225 143 9 73 3
        
Consolidated profit before taxes383
 202
 181
 —
 Consolidated profit before taxes1,775 1,600 175 — 
        
Provision (benefit) for income taxes96
 36
 60
 —
 Provision (benefit) for income taxes368 331 37 — 
Profit of consolidated companies287
 166
 121
 —
 Profit of consolidated companies1,407 1,269 138 — 
        
Equity in profit (loss) of unconsolidated affiliated companies(4) (4) —
 —
 Equity in profit (loss) of unconsolidated affiliated companies21 23 — (2)4
Equity in profit of Financial Products’ subsidiaries—
 120
 —
 (120)
6 

        
Profit of consolidated and affiliated companies283
 282
 121
 (120) Profit of consolidated and affiliated companies1,428 1,292 138 (2)
        
Less: Profit (loss) attributable to noncontrolling interests—
 (1) 1
 —
 Less: Profit (loss) attributable to noncontrolling interests2 1 3 (2)5
        
Profit 7
$283
 $283
 $120
 $(120) 
Profit 6
Profit 6
$1,426 $1,291 $135 $— 
 
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.
1
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.
69
Table of Contents
2
Elimination of Financial Products’ revenues earned from Machinery, Energy & Transportation.
3
Elimination of net expenses recorded by Machinery, Energy & Transportation paid to Financial Products.
4
Elimination of interest expense recorded between Financial Products and Machinery, Energy & Transportation.
5
Elimination of discount recorded by Machinery, Energy & Transportation on receivables sold to Financial Products and of interest earned between Machinery, Energy & Transportation and Financial Products.
6
Elimination of Financial Products’ profit due to equity method of accounting.
7
Profit attributable to common shareholders.

Caterpillar Inc.
Supplemental Data for Results of Operations
For the Nine Months Ended September 30, 20162021
(Unaudited)
(Millions of dollars)
 
  Supplemental Consolidating Data   Supplemental Consolidating Data
Consolidated 
Machinery,
Energy &
Transportation 1
 
Financial
Products
 
Consolidating
Adjustments
  ConsolidatedMachinery,
Energy &
Transportation		Financial
Products		Consolidating
Adjustments
Sales and revenues: 
  
  
  
 Sales and revenues:    
Sales of Machinery, Energy & Transportation$26,888
 $26,888
 $—
 $—
 Sales of Machinery, Energy & Transportation$35,091 $35,091 $— $— 
Revenues of Financial Products2,075
 —
 2,305
 (230)
2 

Revenues of Financial Products2,082 — 2,371 (289)1
Total sales and revenues28,963
 26,888
 2,305
 (230) Total sales and revenues37,173 35,091 2,371 (289)
        
Operating costs: 
  
  
  
 Operating costs:    
Cost of goods sold20,768
 20,769
 —
 (1)
3 
Cost of goods sold25,510 25,515 — (5)2
Selling, general and administrative expenses3,203
 2,794
 424
 (15)
3 

Selling, general and administrative expenses3,943 3,471 483 (11)2
Research and development expenses1,429
 1,429
 —
 —
 Research and development expenses1,247 1,247 — — 
Interest expense of Financial Products447
 —
 458
 (11)
4 

Interest expense of Financial Products352 — 352 — 
Other operating (income) expenses1,356
 462
 914
 (20)
3 

Other operating (income) expenses854 (30)931 (47)2
Total operating costs27,203
 25,454
 1,796
 (47) Total operating costs31,906 30,203 1,766 (63)
        
Operating profit1,760
 1,434
 509
 (183) Operating profit5,267 4,888 605 (226)
        
Interest expense excluding Financial Products385
 422
 —
 (37)
4 

Interest expense excluding Financial Products376 376 — — 
Other income (expense)112
 (72) 38
 146
5 

Other income (expense)751 819 56 (124)3
        
Consolidated profit before taxes1,487
 940
 547
 —
 Consolidated profit before taxes5,642 5,331 661 (350)
        
Provision (benefit) for income taxes372
 198
 174
 —
 Provision (benefit) for income taxes1,313 1,158 155 — 
Profit of consolidated companies1,115
 742
 373
 —
 Profit of consolidated companies4,329 4,173 506 (350)
        
Equity in profit (loss) of unconsolidated affiliated companies(7) (7) —
 —
 Equity in profit (loss) of unconsolidated affiliated companies44 52 — (8)4
Equity in profit of Financial Products’ subsidiaries—
 369
 —
 (369)
6 

        
Profit of consolidated and affiliated companies1,108
 1,104
 373
 (369) Profit of consolidated and affiliated companies4,373 4,225 506 (358)
        
Less: Profit (loss) attributable to noncontrolling interests4
 —
 4
 —
 Less: Profit (loss) attributable to noncontrolling interests4 3 9 (8)5
        
Profit 7
$1,104
 $1,104
 $369
 $(369) 
Profit 6
Profit 6
$4,369 $4,222 $497 $(350)
 
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.
1
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.
70
Table of Contents
2
Elimination of Financial Products’ revenues earned from Machinery, Energy & Transportation.
3
Elimination of net expenses recorded by Machinery, Energy & Transportation paid to Financial Products.
4
Elimination of interest expense recorded between Financial Products and Machinery, Energy & Transportation.
5
Elimination of discount recorded by Machinery, Energy & Transportation on receivables sold to Financial Products and of interest earned between Machinery, Energy & Transportation and Financial Products.
6
Elimination of Financial Products’ profit due to equity method of accounting.
7
Profit attributable to common shareholders.

Caterpillar Inc.
Supplemental Data for Financial Position
At September 30, 20172022
(Unaudited)
(Millions of dollars)
  Supplemental Consolidating Data   Supplemental Consolidating Data
Consolidated 
Machinery,
Energy &
Transportation 1
 
Financial
Products
 
Consolidating
Adjustments
  ConsolidatedMachinery,
Energy &
Transportation		Financial
Products		Consolidating
Adjustments
Assets        Assets    
Current assets:        Current assets:    
Cash and short-term investments$9,591
 $8,736
 $855
 $—
 
Cash and cash equivalentsCash and cash equivalents$6,346 $5,403 $943 $— 
Receivables – trade and other6,691
 4,123
 1,326
 1,242
2,3 
Receivables – trade and other8,158 3,134 652 4,372 1,2
Receivables – finance8,984
 —
 12,796
 (3,812)
3 
Receivables – finance8,918 — 13,446 (4,528)2
Prepaid expenses and other current assets1,707
 940
 779
 (12)
4 
Prepaid expenses and other current assets2,295 2,013 316 (34)3
Inventories10,212
 10,212
 —
 —
 Inventories16,860 16,860 — — 
Total current assets37,185
 24,011
 15,756
 (2,582) Total current assets42,577 27,410 15,357 (190)
        
Property, plant and equipment – net14,187
 9,851
 4,336
 —
 Property, plant and equipment – net11,643 7,810 3,833 — 
Long-term receivables – trade and other969
 208
 153
 608
2,3 
Long-term receivables – trade and other1,278 319 512 447 1,2
Long-term receivables – finance13,192
 —
 13,830
 (638)
3 
Long-term receivables – finance11,859 — 12,338 (479)2
Investments in Financial Products subsidiaries—
 4,435
 —
 (4,435)
5 
Noncurrent deferred and refundable income taxes2,845
 3,595
 105
 (855)
6 
Noncurrent deferred and refundable income taxes2,218 2,745 106 (633)4
Intangible assets2,175
 2,170
 5
 —
 Intangible assets806 806 — — 
Goodwill6,196
 6,179
 17
 —
 Goodwill6,092 6,092 — — 
Other assets1,811
 627
 1,184
 —
 Other assets4,434 3,663 1,946 (1,175)5
Total assets$78,560
 $51,076
 $35,386
 $(7,902) Total assets$80,907 $48,845 $34,092 $(2,030)
        
Liabilities 
  
  
  
 Liabilities    
Current liabilities: 
  
  
  
 Current liabilities:    
Short-term borrowings$5,470
 $11
 $5,459
 $—
 Short-term borrowings$4,202 $3 $4,199 $— 
Short-term borrowings with consolidated companies—
 1,000
 1,481
 (2,481)
7 
Accounts payable6,113
 6,009
 193
 (89)
8 
Accounts payable8,260 8,149 267 (156)6
Accrued expenses3,114
 2,808
 306
 —
 Accrued expenses4,013 3,622 391 — 
Accrued wages, salaries and employee benefits2,333
 2,286
 47
 —
 Accrued wages, salaries and employee benefits2,204 2,160 44 — 
Customer advances1,510
 1,510
 —
 —
 Customer advances1,831 1,831 — — 
Dividends payable—
 —
 —
 —
 
Other current liabilities1,744
 1,240
 516
 (12)
6,9 
Other current liabilities2,878 2,126 807 (55)4,7
Long-term debt due within one year5,619
 5
 5,614
 —
 Long-term debt due within one year6,814 120 6,694 — 
Total current liabilities25,903
 14,869
 13,616
 (2,582) Total current liabilities30,202 18,011 12,402 (211)
        
Long-term debt due after one year24,835
 8,850
 16,015
 (30)
7 
Long-term debt due after one year25,509 9,511 16,030 (32)8
Liability for postemployment benefits8,973
 8,973
 —
 —
 Liability for postemployment benefits5,038 5,038 — — 
Other liabilities3,152
 2,687
 1,320
 (855)
6 
Other liabilities4,536 3,659 1,565 (688)4
Total liabilities62,863
 35,379
 30,951
 (3,467) Total liabilities65,285 36,219 29,997 (931)
Commitments and contingencies 
  
  
  
 Commitments and contingencies    
Shareholders’ equity 
  
  
  
 Shareholders’ equity    
Common stock5,460
 5,460
 918
 (918)
5 
Common stock6,523 6,523 905 (905)9
Treasury stock(17,130) (17,130) —
 —
 Treasury stock(30,883)(30,883)— — 
Profit employed in the business28,530
 28,530
 3,962
 (3,962)
5 
Profit employed in the business43,304 38,898 4,395 11 9
Accumulated other comprehensive income (loss)(1,233) (1,233) (581) 581
5 
Accumulated other comprehensive income (loss)(3,353)(1,946)(1,407)— 
Noncontrolling interests70
 70
 136
 (136)
5 
Noncontrolling interests31 34 202 (205)9
Total shareholders’ equity15,697
 15,697
 4,435
 (4,435) Total shareholders’ equity15,622 12,626 4,095 (1,099)
Total liabilities and shareholders’ equity$78,560
 $51,076
 $35,386
 $(7,902) Total liabilities and shareholders’ equity$80,907 $48,845 $34,092 $(2,030)
 
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.
1
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.
71
Table of Contents
2
Elimination of receivables between Machinery, Energy & Transportation and Financial Products.
3
Reclassification of Machinery, Energy & Transportation's trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables.
4
Elimination of Machinery, Energy & Transportation's insurance premiums that are prepaid to Financial Products.
5
Elimination of Financial Products’ equity which is accounted for by Machinery, Energy & Transportation on the equity basis.
6
Reclassification reflecting required netting of deferred tax assets / liabilities by taxing jurisdiction.
7
Elimination of debt between Machinery, Energy & Transportation and Financial Products.
8
Elimination of payables between Machinery, Energy & Transportation and Financial Products.
9
Elimination of prepaid insurance in Financial Products’ other liabilities.

Caterpillar Inc.
Supplemental Data for Financial Position
At December 31, 20162021
(Unaudited)
(Millions of dollars)
  Supplemental Consolidating Data   Supplemental Consolidating Data
Consolidated 
Machinery,
Energy &
Transportation 1
 
Financial
Products
 
Consolidating
Adjustments
  ConsolidatedMachinery,
Energy &
Transportation		Financial
Products		Consolidating
Adjustments
Assets        Assets    
Current assets:        Current assets:    
Cash and short-term investments$7,168
 $5,257
 $1,911
 $—
 
Cash and cash equivalentsCash and cash equivalents$9,254 $8,428 $826 $— 
Receivables – trade and other5,981
 3,910
 377
 1,694
2,3 
Receivables – trade and other8,477 3,279 435 4,763 1,2
Receivables – finance8,522
 —
 11,934
 (3,412)
3 
Receivables – finance8,898 — 13,828 (4,930)2
Prepaid expenses and other current assets1,682
 764
 926
 (8)
4 
Prepaid expenses and other current assets2,788 2,567 358 (137)3
Inventories8,614
 8,614
 —
 —
 Inventories14,038 14,038 — — 
Total current assets31,967
 18,545
 15,148
 (1,726) Total current assets43,455 28,312 15,447 (304)
        
Property, plant and equipment – net15,322
 10,899
 4,423
 —
 Property, plant and equipment – net12,090 8,172 3,918 — 
Long-term receivables – trade and other1,029
 177
 138
 714
2,3 
Long-term receivables – trade and other1,204 375 204 625 1,2
Long-term receivables – finance13,556
 —
 14,300
 (744)
3 
Long-term receivables – finance12,707 — 13,358 (651)2
Investments in Financial Products subsidiaries—
 3,638
 —
 (3,638)
5 
Noncurrent deferred and refundable income taxes2,790
 3,648
 89
 (947)
6 
Noncurrent deferred and refundable income taxes1,840 2,396 105 (661)4
Intangible assets2,349
 2,344
 5
 —
 Intangible assets1,042 1,042 — — 
Goodwill6,020
 6,003
 17
 —
 Goodwill6,324 6,324 — — 
Other assets1,671
 609
 1,075
 (13)
4 
Other assets4,131 3,388 1,952 (1,209)5
Total assets$74,704
 $45,863
 $35,195
 $(6,354) Total assets$82,793 $50,009 $34,984 $(2,200)
        
Liabilities 
  
  
  
 Liabilities    
Current liabilities: 
  
  
  
 Current liabilities:    
Short-term borrowings$7,303
 $209
 $7,094
 $—
 Short-term borrowings$5,404 $9 $5,395 $— 
Short-term borrowings with consolidated companies—
 —
 1,637
 (1,637)
7 
Accounts payable4,614
 4,506
 189
 (81)
8 
Accounts payable8,154 8,079 242 (167)6
Accrued expenses3,003
 2,744
 259
 —
 Accrued expenses3,757 3,385 372 — 

Accrued wages, salaries and employee benefits1,296
 1,268
 28
 —
 Accrued wages, salaries and employee benefits2,242 2,186 56 — 
Customer advances1,167
 1,167
 —
 —
 Customer advances1,087 1,086 1 — 
Dividends payable452
 452
 —
 —
 Dividends payable595 595 — — 
Other current liabilities1,635
 1,245
 399
 (9)
6,9 
Other current liabilities2,256 1,773 642 (159)4,7
Long-term debt due within one year6,662
 507
 6,155
 —
 Long-term debt due within one year6,352 45 6,307 — 
Total current liabilities26,132
 12,098
 15,761
 (1,727) Total current liabilities29,847 17,158 13,015 (326)
        
Long-term debt due after one year22,818
 8,466
 14,382
 (30)
7 
Long-term debt due after one year26,033 9,772 16,287 (26)8
Liability for postemployment benefits9,357
 9,357
 —
 —
 Liability for postemployment benefits5,592 5,592 — — 
Other liabilities3,184
 2,729
 1,414
 (959)
6,9 
Other liabilities4,805 4,106 1,425 (726)4
Total liabilities61,491
 32,650
 31,557
 (2,716) Total liabilities66,277 36,628 30,727 (1,078)
Commitments and contingencies 
  
  
  
 Commitments and contingencies    
Shareholders’ equity 
  
  
  
 Shareholders’ equity    
Common stock5,277
 5,277
 918
 (918)
5 
Common stock6,398 6,398 919 (919)9
Treasury stock(17,478) (17,478) —
 —
 Treasury stock(27,643)(27,643)— — 
Profit employed in the business27,377
 27,377
 3,585
 (3,585)
5 
Profit employed in the business39,282 35,390 3,881 11 9
Accumulated other comprehensive income (loss)(2,039) (2,039) (990) 990
5 
Accumulated other comprehensive income (loss)(1,553)(799)(754)— 
Noncontrolling interests76
 76
 125
 (125)
5 
Noncontrolling interests32 35 211 (214)9
Total shareholders’ equity13,213
 13,213
 3,638
 (3,638) Total shareholders’ equity16,516 13,381 4,257 (1,122)
Total liabilities and shareholders’ equity$74,704
 $45,863
 $35,195
 $(6,354) 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 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.
1
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.
72
Table of Contents
2
Elimination of receivables between Machinery, Energy & Transportation and Financial Products.
3
Reclassification of Machinery, Energy & Transportation's trade receivables purchased by Financial Products and Financial Products’ wholesale inventory receivables.
4
Elimination of Machinery, Energy & Transportation's insurance premiums that are prepaid to Financial Products.
5
Elimination of Financial Products’ equity which is accounted for by Machinery, Energy & Transportation on the equity basis.
6
Reclassification reflecting required netting of deferred tax assets / liabilities by taxing jurisdiction.
7
Elimination of debt between Machinery, Energy & Transportation and Financial Products.
8
Elimination of payables between Machinery, Energy & Transportation and Financial Products.
9
Elimination of prepaid insurance in Financial Products’ other liabilities.

Caterpillar Inc.
Supplemental Data for Cash Flow
For the Nine Months Ended September 30, 20172022
(Unaudited)
(Millions of dollars)
  Supplemental Consolidating Data   Supplemental Consolidating Data
Consolidated 
Machinery,
Energy &
Transportation 1
 
Financial
Products
 
Consolidating
Adjustments
  ConsolidatedMachinery,
Energy &
Transportation		Financial
Products		Consolidating
Adjustments
Cash flow from operating activities:        Cash flow from operating activities:    
Profit of consolidated and affiliated companies$2,058
 $2,053
 $382
 $(377)
2 
Profit of consolidated and affiliated companies$5,250 $4,750 $506 $(6)1
Adjustments for non-cash items: 
  
  
  
 Adjustments for non-cash items:    
Depreciation and amortization2,153
 1,507
 646
 —
 Depreciation and amortization1,661 1,072 589 — 
Undistributed profit of Financial Products—
 (377) —
 377
3 
Provision (benefit) for deferred income taxesProvision (benefit) for deferred income taxes(349)(294)(55)— 
Other592
 524
 (111) 179
4 
Other132 (83)(123)338 2
Changes in assets and liabilities, net of acquisitions and divestitures:
       Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables - trade and other(455) (324) 62
 (193)
4, 5 
Receivables – trade and otherReceivables – trade and other365 97 21 247 2,3
Inventories(1,489) (1,487) —
 (2)
4 
Inventories(3,088)(3,074)— (14)2
Accounts payable1,371
 1,412
 (33) (8)
4 
Accounts payable786 701 74 11 2
Accrued expenses121
 118
 3
 —
 Accrued expenses70 28 42 — 
Accrued wages, salaries and employee benefits962
 943
 19
 —
 Accrued wages, salaries and employee benefits15 27 (12)— 
Customer advances310
 310
 —
 —
 Customer advances751 752 (1)— 
Other assets – net(137) 18
 (54) (101)
4 
Other assets – net57 128 (28)(43)2
Other liabilities – net(325) (533) 107
 101
4 
Other liabilities – net(623)(913)239 51 2
Net cash provided by (used for) operating activities5,161
 4,164
 1,021
 (24) Net cash provided by (used for) operating activities5,027 3,191 1,252 584 
        
Cash flow from investing activities: 
  
  
  
 Cash flow from investing activities:    
Capital expenditures - excluding equipment leased to others(566) (561) (6) 1
4 
Capital expenditures – excluding equipment leased to othersCapital expenditures – excluding equipment leased to others(868)(860)(10)2 2
Expenditures for equipment leased to others(1,071) (13) (1,074) 16
4 
Expenditures for equipment leased to others(1,023)(20)(1,024)21 2
Proceeds from disposals of leased assets and property, plant and equipment864
 142
 733
 (11)
4 
Proceeds from disposals of leased assets and property, plant and equipment666 63 612 (9)2
Additions to finance receivables(8,246) —
 (9,765) 1,519
5 
Additions to finance receivables(9,914)— (10,584)670 3
Collections of finance receivables8,532
 —
 10,194
 (1,662)
5 
Collections of finance receivables9,738 — 10,328 (590)3
Net intercompany purchased receivables—
 —
 (161) 161
5 
Net intercompany purchased receivables— — 678 (678)3
Proceeds from sale of finance receivables98
 —
 98
 —
 Proceeds from sale of finance receivables50 — 50 — 
Net intercompany borrowings—
 165
 (1,000) 835
6 
Net intercompany borrowings— — 5 (5)4
Investments and acquisitions (net of cash acquired)(47) (47) —
 —
 Investments and acquisitions (net of cash acquired)(44)(44)— — 
Proceeds from sale of businesses and investments (net of cash sold)93
 93
 —
 —
 Proceeds from sale of businesses and investments (net of cash sold)1 1 — — 
Proceeds from sale of securities431
 36
 395
 —
 Proceeds from sale of securities2,080 1,820 260 — 
Investments in securities(594) (165) (429) —
 Investments in securities(2,399)(1,925)(474)— 
Other – net38
 17
 21
 —
 Other – net15 84 (69)— 
Net cash provided by (used for) investing activities(468) (333) (994) 859
 Net cash provided by (used for) investing activities(1,698)(881)(228)(589)
        
Cash flow from financing activities: 
  
  
  
 Cash flow from financing activities:    
Dividends paid(1,367) (1,367) —
 —
 Dividends paid(1,820)(1,820)— — 
Distribution to noncontrolling interests(7) (7) —
 —
 
Common stock issued, including treasury shares reissued353
 353
 —
 —
 Common stock issued, including treasury shares reissued2 2 — — 
Common shares repurchasedCommon shares repurchased(3,309)(3,309)— — 
Net intercompany borrowings—
 1,000
 (165) (835)
6 
Net intercompany borrowings— (5)— 5 4
Proceeds from debt issued (original maturities greater than three months)7,334
 362
 6,972
 —
 Proceeds from debt issued (original maturities greater than three months)5,570 — 5,570 — 
Payments on debt (original maturities greater than three months)(6,220) (506) (5,714) —
 Payments on debt (original maturities greater than three months)(5,289)(20)(5,269)— 
Short-term borrowings – net (original maturities three months or less)(2,403) (196) (2,207) —
 Short-term borrowings – net (original maturities three months or less)(1,311)(138)(1,173)— 
Other – netOther – net(1)(1)— — 
Net cash provided by (used for) financing activities(2,310) (361) (1,114) (835) Net cash provided by (used for) financing activities(6,158)(5,291)(872)5 
Effect of exchange rate changes on cash40
 9
 31
 —
 Effect of exchange rate changes on cash(79)(42)(37)— 
Increase (decrease) in cash and short-term investments2,423
 3,479
 (1,056) —
 
Cash and short-term investments at beginning of period7,168
 5,257
 1,911
 —
 
Cash and short-term investments at end of period$9,591
 $8,736
 $855
 $—
 
Increase (decrease) in cash, cash equivalents and restricted cashIncrease (decrease) in cash, cash equivalents and restricted cash(2,908)(3,023)115 — 
Cash, cash equivalents and restricted cash at beginning of periodCash, cash equivalents and restricted cash at beginning of period9,263 8,433 830 — 
Cash, cash equivalents and restricted cash at end of periodCash, cash equivalents and restricted cash at end of period$6,355 $5,410 $945 $— 
 
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.

1
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.
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2
Elimination of Financial Products’ profit after tax due to equity method of accounting.
3
Elimination of non-cash adjustment for the undistributed earnings from Financial Products.
4
Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.
5
Reclassification of Financial Products' cash flow activity from investing to operating for receivables that arose from the sale of inventory.
6
Elimination of net proceeds and payments to/from Machinery, Energy & Transportation and Financial Products.

Caterpillar Inc.
Supplemental Data for Cash Flow
For the Nine Months Ended September 30, 20162021
(Unaudited)
(Millions of dollars)
  Supplemental Consolidating Data
 ConsolidatedMachinery,
Energy &
Transportation		Financial
Products		Consolidating
Adjustments
Cash flow from operating activities:    
Profit of consolidated and affiliated companies$4,373 $4,225 $506 $(358)1,5
Adjustments for non-cash items:    
Depreciation and amortization1,766 1,162 604 — 
Provision (benefit) for deferred income taxes(321)(255)(66)— 
Other102 104 (135)133 2
Changes in assets and liabilities, net of acquisitions and divestitures:
Receivables – trade and other(326)(338)40 (28)2,3
Inventories(2,195)(2,194)— (1)2
Accounts payable1,232 1,194 28 10 2
Accrued expenses46 117 (71)— 
Accrued wages, salaries and employee benefits934 905 29 — 
Customer advances39 39 — — 
Other assets – net138 133 24 (19)2
Other liabilities – net(2)(193)144 47 2
Net cash provided by (used for) operating activities5,786 4,899 1,103 (216)
Cash flow from investing activities:    
Capital expenditures – excluding equipment leased to others(673)(670)(11)8 2
Expenditures for equipment leased to others(1,014)(23)(997)6 2
Proceeds from disposals of leased assets and property, plant and equipment877 71 818 (12)2
Additions to finance receivables(9,603)— (10,292)689 3
Collections of finance receivables9,221 — 9,946 (725)3
Net intercompany purchased receivables— — 100 (100)3
Proceeds from sale of finance receivables44 — 44 — 
Net intercompany borrowings— 1,000 3 (1,003)4
Investments and acquisitions (net of cash acquired)(449)(449)— — 
Proceeds from sale of businesses and investments (net of cash sold)23 23 — — 
Proceeds from sale of securities424 44 380 — 
Investments in securities(934)(542)(392)— 
Other – net(8)59 (67)— 
Net cash provided by (used for) investing activities(2,092)(487)(468)(1,137)
Cash flow from financing activities:    
Dividends paid(1,733)(1,733)(350)350 5
Common stock issued, including treasury shares reissued122 122 — — 
Common shares repurchased(1,622)(1,622)— — 
Net intercompany borrowings— (3)(1,000)1,003 4
Proceeds from debt issued (original maturities greater than three months)6,931 494 6,437 — 
Payments on debt (original maturities greater than three months)(8,620)(1,910)(6,710)— 
Short-term borrowings – net (original maturities three months or less)1,324 (10)1,334 — 
Other – net(4)(4)— — 
Net cash provided by (used for) financing activities(3,602)(4,666)(289)1,353 
Effect of exchange rate changes on cash(9)(14)5 — 
Increase (decrease) in cash, cash equivalents and restricted cash83 (268)351 — 
Cash, cash equivalents and restricted cash at beginning of period9,366 8,822 544 — 
Cash, cash equivalents and restricted cash at end of period$9,449 $8,554 $895 $— 

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.
   Supplemental Consolidating Data 
 Consolidated 
Machinery,
Energy &
Transportation 1
 
Financial
Products
 
Consolidating
Adjustments
 
Cash flow from operating activities:        
Profit of consolidated and affiliated companies$1,108
 $1,104
 $373
 $(369)
2 
Adjustments for non-cash items: 
  
  
  
 
Depreciation and amortization2,255
 1,591
 664
 —
 
Undistributed profit of Financial Products—
 (362) —
 362
3 
Other640
 503
 (11) 148
4 
Changes in assets and liabilities, net of acquisitions and divestitures:

       
Receivables - trade and other1,128
 252
 42
 834
4, 5 
Inventories331
 335
 —
 (4)
4 
Accounts payable(163) (130) 16
 (49)
4 
Accrued expenses(153) (93) (60) —
 
Accrued wages, salaries and employee benefits(727) (713) (14) —
 
Customer advances(24) (24) —
 —
 
Other assets – net(141) (278) 102
 35
4 
Other liabilities – net(279) (390) 146
 (35)
4 
Net cash provided by (used for) operating activities3,975
 1,795
 1,258
 922
 
         
Cash flow from investing activities: 
  
  
  
 
Capital expenditures - excluding equipment leased to others(807) (802) (6) 1
4 
Expenditures for equipment leased to others(1,393) (56) (1,377) 40
4 
Proceeds from disposals of leased assets and property, plant and equipment572
 89
 510
 (27)
4 
Additions to finance receivables(6,911) —
 (8,888) 1,977
5 
Collections of finance receivables6,968
 —
 9,308
 (2,340)
5 
Net intercompany purchased receivables—
 —
 580
 (580)
5 
Proceeds from sale of finance receivables55
 —
 55
 —
 
Net intercompany borrowings—
 (716) (999) 1,715
6 
Investments and acquisitions (net of cash acquired)(72) (72) —
 —
 
Proceeds from sale of securities304
 25
 279
 —
 
Investments in securities(339) (22) (317) —
 
Other – net5
 15
 (17) 7
8 
Net cash provided by (used for) investing activities(1,618) (1,539) (872) 793
 
         
Cash flow from financing activities: 
  
  
  
 
Dividends paid(1,348) (1,348) (7) 7
7 
Distribution to noncontrolling interests(8) (8) —
 —
 
Common stock issued, including treasury shares reissued(54) (54) 7
 (7)
8 
Net intercompany borrowings—
 999
 716
 (1,715)
6 
Proceeds from debt issued (original maturities greater than three months)4,430
 6
 4,424
 —
 
Payments on debt (original maturities greater than three months)(5,602) (525) (5,077) —
 
Short-term borrowings – net (original maturities three months or less)(111) 254
 (365) —
 
Net cash provided by (used for) financing activities(2,693) (676) (302) (1,715) 
Effect of exchange rate changes on cash(11) (26) 15
 —
 
Increase (decrease) in cash and short-term investments(347) (446) 99
 —
 
Cash and short-term investments at beginning of period6,460
 5,340
 1,120
 —
 
Cash and short-term investments at end of period$6,113
 $4,894
 $1,219
 $—
 

1
Represents Caterpillar Inc. and its subsidiaries with Financial Products accounted for on the equity basis.
2
Elimination of Financial Products' profit after tax due to equity method of accounting.
3
Elimination of non-cash adjustment for the undistributed earnings from Financial Products.
4
Elimination of non-cash adjustments and changes in assets and liabilities related to consolidated reporting.
5
Reclassification of Financial Products' cash flow activity from investing to operating for receivables that arose from the sale of inventory.
6
Elimination of net proceeds and payments to/from Machinery, Energy & Transportation and Financial Products.
7
Elimination of dividend from Financial Products to Machinery, Energy & Transportation.
8
Elimination of change in investment and common stock related to Financial Products.

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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; (vi)(vii) the impact of the highly competitive environment in which we operate on our sales and pricing; (vii)(viii) information technology security threats and computer crime; (viii) additional restructuring costs or a failure to realize anticipated savings or benefits from past or future cost reduction actions; (ix) failure to realize all of the anticipated benefits from initiatives to increase our productivity, efficiency and cash flow and to reduce costs; (x) inventory management decisions and sourcing practices of our dealers and our OEM customers; (xi)(x) a failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xii)(xi) union disputes or other employee relations issues; (xiii)(xii) adverse effects of unexpected events including natural disasters; (xiv)events; (xiii) disruptions or volatility in global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xv)(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; (xvi)(xv) our Financial Products segment’s risks associated with the financial services industry; (xvii)(xvi) changes in interest rates or market liquidity conditions; (xviii)(xvii) an increase in delinquencies, repossessions or net losses of Cat Financial’s customers; (xix)(xviii) currency fluctuations; (xx)(xix) our or Cat Financial’s compliance with financial and other restrictive covenants in debt agreements; (xxi)(xx) increased pension plan funding obligations; (xxii)(xxi) alleged or actual violations of trade or anti-corruption laws and regulations; (xxiii) international trade policies and their impact on demand for our products and our competitive position; (xxiv)(xxii) additional tax expense or exposure; (xxv)exposure, including the impact of U.S. tax reform; (xxiii) significant legal proceedings, claims, lawsuits or government investigations; (xxvi)(xxiv) new regulations or changes in financial services regulations; (xxvii)(xxv) compliance with environmental laws and regulations; (xxvi) the duration and (xxviii)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, 2021, as such factors may be updated from time to time in Caterpillar’s Forms 10-Q, 10-K and otherCaterpillar'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 45 – “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 arewere effective as of the end of the period covered by this quarterly report.


Changes in internal control over financial reporting
 
During the third quarter of 2017,2022, there has been no change in the company'scompany’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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Table of Contents
PART II.  OTHER INFORMATION
 
Item 1.  Legal Proceedings
 
The information required by this Item is incorporated by reference from Note 1314 – "Environmental“Environmental and legal matters"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, 2021.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
 
Issuer Purchases of Equity Securities
No shares were repurchased during the third quarter of 2017.

Other Purchases of Equity Securities
Period 
Total Number
of Shares
Purchased 1
 
Average Price 
Paid per Share
 
Total Number
of Shares Purchased
Under the Program
 
Approximate Dollar
Value of Shares that
may yet be Purchased
under the Program
July 1-31, 2017 414
 $114.18
 N/A N/A
August 1-31, 2017 —
 $—
 N/A N/A
September 1-30, 2017 9,129
 $118.48
 N/A N/A
Total 9,543
 $118.29
    
1 Represents shares delivered back to issuer for the payment of taxes resulting from the vesting of restricted stock units for employees and Directors.

Period
Total Number
of Shares
Purchased2
Average Price
Paid per Share2
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, 2022591,861 $177.08 591,861 $0.070 
August 1-31, 20223,015,701 $192.33 3,015,701 $14.420 
September 1-30, 20223,967,760 $176.42 3,967,760 $13.720 
Total7,575,322 $182.80 7,575,322 
1 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. In May 2022, the Board approved a new share repurchase authorization (the 2022 Authorization) of up to $15.0 billion of Caterpillar common stock effective August 1, 2022, with no expiration. Utilization of the 2022 Authorization for all share repurchases commenced on August 1, 2022, leaving approximately $70 million unutilized under the 2018 Authorization as of September 30, 2022. As of September 30, 2022, $13.7 billion remained available under the 2022 Authorization.
2 In July, August and September of 2022, we repurchased 0.6 million, 3.0 million and 4.0 million shares respectively, for an aggregate of $1.4 billion in open market transactions at an average price per share of $177.08, $192.33 and $176.42, respectively.
Non-U.S. Employee Stock Purchase Plans
 
As of September 30, 2017,2022, we had 2728 employee stock purchase plans (the "EIP Plans"“EIP Plans”) that are administered outside the United States for our non-U.S. employees, which had approximately 12,00013,000 active participants in the aggregate. During the third quarter of 2017,2022, approximately 112,00081,000 shares of Caterpillar common stock were purchased by the EIP Plans pursuant to the terms of such plans.





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Table of Contents

Item 6. Exhibits
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.210.10
10.310.11
10.12
10.410.13
10.510.14
10.610.15
1110.16
31.1
31.2
32
101.INS
101.INSInline 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.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover 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.


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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 2, 2022/s/ D. James Umpleby IIIChairman of the Board and Chief Executive Officer
D. James Umpleby III
November 2, 2022CATERPILLAR INC.
November 1, 2017/s/ D. James Umpleby IIIAndrew R.J. BonfieldChief Executive Officer
(D. James Umpleby III)
November 1, 2017/s/ Bradley M. HalversonGroup President and Chief Financial Officer
(Bradley M. Halverson)Andrew R.J. Bonfield
November 1, 20172, 2022/s/ Suzette M. LongChief Legal Officer and General Counsel & Corporate Secretary
(Suzette M. Long)Long
November 1, 20172, 2022/s/ Jananne A. CopelandWilliam E. SchauppVice President and Chief Accounting Officer
(Jananne A. Copeland)William E. Schaupp



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