Cover Page
Cover Page - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Feb. 16, 2022 | |
Cover [Abstract] | ||
Document Type | 10-K | |
Document Annual Report | true | |
Document Period End Date | Dec. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-11241 | |
Entity Registrant Name | CATERPILLAR FINANCIAL SERVICES CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 37-1105865 | |
Entity Address, Address Line One | 2120 West End Ave. | |
Entity Address, City or Town | Nashville | |
Entity Address, State or Province | TN | |
Entity Address, Postal Zip Code | 37203-0001 | |
City Area Code | 615 | |
Local Phone Number | 341-1000 | |
Title of 12(b) Security | Medium-Term Notes, Series H,3.300% Notes Due 2024 | |
Trading Symbol | CAT/24 | |
Security Exchange Name | NYSE | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Public Float | $ 0 | |
Entity Common Stock, Shares Outstanding | 1 | |
Entity Central Index Key | 0000764764 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2021 | |
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Audit Information [Abstract] | |
Auditor Name | PricewaterhouseCoopers LLP |
Auditor Location | Nashville, Tennessee |
Auditor Firm ID | 238 |
Consolidated Statements of Prof
Consolidated Statements of Profit - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Revenues: | ||||
Retail finance | $ 1,197 | $ 1,249 | $ 1,369 | |
Operating lease | 942 | 965 | 1,037 | |
Wholesale finance | 314 | 336 | 491 | |
Other, net | 109 | 0 | 69 | |
Total revenues | 2,562 | 2,550 | 2,966 | |
Expenses: | ||||
Interest | 455 | 591 | 787 | |
Depreciation on equipment leased to others | 755 | 758 | 813 | |
General, operating and administrative | 528 | 433 | 516 | |
Provision for credit losses | 70 | 266 | 162 | |
Other | 36 | 43 | 36 | |
Total expenses | 1,844 | 2,091 | 2,314 | |
Other income (expense) | (23) | (25) | (24) | |
Profit before income taxes | 695 | 434 | 628 | |
Provision for income taxes | 178 | 126 | 196 | |
Profit of consolidated companies | 517 | 308 | 432 | |
Less: Profit attributable to noncontrolling interests | 12 | 15 | 22 | |
Profit | [1] | $ 505 | $ 293 | $ 410 |
[1] | Profit attributable to Caterpillar Financial Services Corporation. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Profit of consolidated companies | $ 517 | $ 308 | $ 432 |
Other comprehensive income (loss), net of tax (Note 10): | |||
Foreign currency translation | (209) | 236 | 11 |
Derivative financial instruments | 32 | 24 | (31) |
Total Other comprehensive income (loss), net of tax | (177) | 260 | (20) |
Comprehensive income (loss) | 340 | 568 | 412 |
Less: Comprehensive income (loss) attributable to the noncontrolling interests | 14 | 25 | 19 |
Comprehensive income (loss) attributable to Caterpillar Financial Services Corporation | $ 326 | $ 543 | $ 393 |
Consolidated Statements of Fina
Consolidated Statements of Financial Position - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Assets: | ||
Cash and cash equivalents | $ 610 | $ 411 |
Finance receivables, net of Allowance for credit losses of $337 and $479 | 27,177 | 26,575 |
Notes receivable from Caterpillar | 389 | 356 |
Equipment on operating leases, net | 3,123 | 3,366 |
Other assets | 1,088 | 1,283 |
Total assets | 32,387 | 31,991 |
Liabilities and shareholder’s equity: | ||
Payable to dealers and others | 163 | 144 |
Payable to Caterpillar – borrowings and other | 95 | 1,087 |
Accrued expenses | 233 | 400 |
Short-term borrowings | 5,395 | 2,005 |
Current maturities of long-term debt | 6,307 | 7,729 |
Long-term debt | 16,287 | 16,250 |
Other liabilities | 926 | 885 |
Total liabilities | 29,406 | 28,500 |
Commitments and contingent liabilities (Note 11) | ||
Common stock - $1 par value Authorized: 2,000 shares; Issued and outstanding: one share (at paid-in amount) | 745 | 745 |
Additional paid-in capital | 2 | 2 |
Retained earnings | 2,797 | 3,142 |
Accumulated other comprehensive income (loss) | (774) | (595) |
Noncontrolling interests | 211 | 197 |
Total shareholder’s equity | 2,981 | 3,491 |
Total liabilities and shareholder’s equity | $ 32,387 | $ 31,991 |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Position (Parentheticals) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for credit losses | $ 337 | $ 479 |
Shareholder's Equity: | ||
Common stock - par value | $ 1 | $ 1 |
Common stock - authorized | 2,000 | 2,000 |
Common stock - issued | 1 | 1 |
Common stock - outstanding | 1 | 1 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholder's Equity - USD ($) $ in Millions | Total | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Noncontrolling interests | Adjustment to adopt new accounting guidance | Adjustment to adopt new accounting guidanceRetained earnings | Adjustment to adopt new accounting guidanceAccumulated other comprehensive income (loss) |
Balance at Dec. 31, 2018 | $ 2,849 | $ 745 | $ 2 | $ 2,874 | $ (925) | $ 153 | |||
Balance (Accounting Standards Update 2018-02) at Dec. 31, 2018 | $ 0 | $ (97) | $ 97 | ||||||
Increase (Decrease) in Shareholder's Equity [Roll Forward] | |||||||||
Profit of consolidated companies | 432 | 410 | 22 | ||||||
Dividend paid to Caterpillar | (25) | (25) | |||||||
Foreign currency translation, net of tax | 11 | 14 | (3) | ||||||
Derivative financial instruments, net of tax | (31) | (31) | |||||||
Balance at Dec. 31, 2019 | 3,236 | 745 | 2 | 3,162 | (845) | 172 | |||
Balance (Accounting Standards Update 2016-13) at Dec. 31, 2019 | $ (13) | $ (13) | |||||||
Increase (Decrease) in Shareholder's Equity [Roll Forward] | |||||||||
Profit of consolidated companies | 308 | 293 | 15 | ||||||
Dividend paid to Caterpillar | (300) | (300) | |||||||
Foreign currency translation, net of tax | 236 | 226 | 10 | ||||||
Derivative financial instruments, net of tax | 24 | 24 | |||||||
Balance at Dec. 31, 2020 | 3,491 | 745 | 2 | 3,142 | (595) | 197 | |||
Increase (Decrease) in Shareholder's Equity [Roll Forward] | |||||||||
Profit of consolidated companies | 517 | 505 | 12 | ||||||
Dividend paid to Caterpillar | (850) | (850) | |||||||
Foreign currency translation, net of tax | (209) | (211) | 2 | ||||||
Derivative financial instruments, net of tax | 32 | 32 | |||||||
Balance at Dec. 31, 2021 | $ 2,981 | $ 745 | $ 2 | $ 2,797 | $ (774) | $ 211 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Profit of consolidated companies | $ 517 | $ 308 | $ 432 |
Adjustments for non-cash items: | |||
Depreciation and amortization | 770 | 772 | 827 |
Accretion of Caterpillar purchased receivable revenue | (301) | (308) | (455) |
Provision for credit losses | 70 | 266 | 162 |
Other, net | 90 | 147 | 131 |
Changes in assets and liabilities: | |||
Other assets | 59 | 39 | 99 |
Payable to dealers and others | 32 | 34 | 18 |
Accrued expenses | (86) | (83) | (93) |
Other payables with Caterpillar | 8 | (13) | (9) |
Other liabilities | 30 | (14) | 93 |
Net cash provided by operating activities | 1,189 | 1,148 | 1,205 |
Cash flows from investing activities: | |||
Expenditures for equipment on operating leases | (1,202) | (1,086) | (1,514) |
Capital expenditures - excluding equipment on operating leases | (14) | (14) | (20) |
Proceeds from disposals of equipment | 1,041 | 633 | 769 |
Additions to finance receivables | (13,836) | (13,525) | (14,270) |
Collections of finance receivables | 13,342 | 14,084 | 13,531 |
Net changes in Caterpillar purchased receivables | (609) | 1,043 | 640 |
Proceeds from sales of receivables | 51 | 42 | 235 |
Net change in variable lending to Caterpillar | 13 | (12) | 69 |
Additions to other notes receivable from Caterpillar | (115) | (75) | (80) |
Collections of other notes receivable from Caterpillar | 69 | 27 | 377 |
Settlements of undesignated derivatives | (3) | (56) | (25) |
Other, net | 1 | 1 | 0 |
Net cash provided by (used for) investing activities | (1,262) | 1,062 | (288) |
Cash flows from financing activities: | |||
Net change in variable lending from Caterpillar | (1,000) | 403 | (807) |
Payments on borrowings with Caterpillar | 0 | 0 | (93) |
Proceeds from debt issued (original maturities greater than three months) | 6,495 | 8,440 | 8,362 |
Payments on debt issued (original maturities greater than three months) | (7,877) | (8,211) | (8,285) |
Short-term borrowings, net (original maturities three months or less) | 3,489 | (2,809) | (143) |
Dividend paid to Caterpillar | (850) | (300) | (25) |
Net cash provided by (used for) financing activities | 257 | (2,477) | (991) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 5 | (3) | (4) |
Increase (decrease) in cash, cash equivalents and restricted cash | 189 | (270) | (78) |
Cash, cash equivalents and restricted cash at beginning of year | 425 | 695 | 773 |
Cash, cash equivalents and restricted cash at end of year | 614 | 425 | 695 |
Cash paid for interest | 472 | 613 | 810 |
Cash paid for taxes | $ 143 | 108 | 79 |
Cash and cash equivalents policy | All short-term investments, which consist primarily of highly liquid investments with original maturities of three months or less, are considered to be cash equivalents. | ||
Restricted cash and cash equivalents | $ 4 | $ 14 | $ 5 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Nature of Operations Caterpillar Financial Services Corporation was organized in 1981 in the State of Delaware (together with its subsidiaries, “Cat Financial,” “the Company,” “we” or “our”). We are a wholly-owned finance subsidiary of Caterpillar Inc. (together with its other subsidiaries, “Caterpillar” or “Cat”). We provide retail and wholesale 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. Retail financing is primarily comprised of installment sale contracts and other equipment-related loans, working capital loans, finance leases and operating leases. Wholesale financing to Caterpillar dealers consists primarily of inventory and rental fleet financing. In addition, we purchase short-term wholesale trade receivables from Caterpillar. The various financing plans offered by Cat Financial are designed to support sales of Caterpillar products and generate financing income for Cat Financial. We conduct a significant portion of our activities in North America with additional offices and subsidiaries in Latin America, Asia/Pacific, Europe, Africa and the Middle East. B. Basis of Presentation The accompanying consolidated financial statements include the accounts of Cat Financial and consolidated variable interest entities (VIEs) in which Cat Financial is the primary beneficiary. We consolidate all VIEs where we are the primary beneficiary. For VIEs, we assess whether we are the primary beneficiary as prescribed by the accounting guidance on the consolidation of VIEs. The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity. Please refer to Note 11 for more information. We have customers and dealers 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. Credit risk was evaluated and reflected in our financial statements as part of our overall portfolio of finance receivables and related allowance for credit losses. C. Finance Receivables Finance receivables are generally classified as held for investment and recorded at amortized cost given that we have the intent and ability to hold them for the foreseeable future. Amortized cost is the principal balance outstanding plus accrued interest less write-downs, net of unamortized purchase discounts and deferred fees and costs. D. Revenue Recognition We record finance revenue over the life of the related finance receivable using the interest method, including the accretion of purchased receivables discount and related fee revenue, upfront fees and certain direct origination costs that are deferred. We recognize revenue from rental payments received on operating leases on a straight-line basis over the term of the lease. We suspend recognition of finance revenue and operating lease revenue and place the account on non-accrual status when management determines that collection of future income is not probable (generally after 120 days past due). We resume recognition of revenue and recognize previously suspended income when we consider collection of remaining amounts to be probable. We write off interest earned but uncollected prior to the receivable being placed on non-accrual status through Provision for credit losses when, in the judgment of management, we consider it to be uncollectible. We participate in certain marketing programs offered in conjunction with Caterpillar and/or Caterpillar dealers that allow us to periodically offer financing to customers at interest rates that are below market rates. Under these marketing programs, Caterpillar and/or the dealer funds an amount at the outset of the transaction, which we then recognize as finance revenue over the term of the financing. The funds we receive from Caterpillar and/or the dealer equal an amount that when combined with the customer’s contractual interest provides us with a market interest rate. Other revenue includes: (1) late charges, (2) fee revenue, primarily commitment fees and fees on committed lines of credit or letters of credit, (3) gains and losses on sales of returned or repossessed equipment, (4) impairments on returned or repossessed equipment held for sale, (5) gains and losses on loan and lease sales and (6) other miscellaneous revenues. Other revenue items are recognized in accordance with relevant authoritative pronouncements. E. Depreciation We recognize depreciation for equipment on operating leases using the straight-line method over the lease term, typically one seven F. Residual Values The residual values for operating leases are included in Equipment on operating leases, net in the Consolidated Statements of Financial Position. The residual values for finance leases are included in Finance receivables, net in the Consolidated Statements of Financial Position. During the term of our leases, we monitor residual values. For operating leases, we record adjustments to depreciation expense reflecting changes in residual value estimates prospectively on a straight-line basis. For finance leases, we recognize residual value adjustments through a reduction of finance revenue over the remaining lease term. We evaluate the carrying value of equipment on operating leases for potential impairment when we determine a triggering event has occurred. When a triggering event occurs, we perform a test for recoverability by comparing projected undiscounted future cash flows to the carrying value of the equipment on operating leases. If the test for recoverability identifies a possible impairment, we measure the fair value of the equipment on operating leases in accordance with the fair value measurement framework. We recognize an impairment charge for the amount by which the carrying value of the equipment on operating leases exceeds its estimated fair value. G. Derivative Financial Instruments Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. Our Risk Management Policy (policy) allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate and interest rate 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 and interest rate contracts. All derivatives are recorded at fair value. See Note 9 for additional information. H. Allowance for Credit Losses The allowance for credit losses is management’s estimate of expected losses over the life of our finance receivable portfolio calculated using loss forecast models that take into consideration historical credit loss experience, current economic conditions and forecasts and scenarios that capture country and industry-specific economic factors. In addition, we consider qualitative factors not able to be fully captured in our loss forecast models, including borrower-specific and company-specific factors. These qualitative factors are subjective and require a degree of management judgment. We measure the allowance for credit losses on a collective (pool) basis when similar risk characteristics exist and on an individual basis when we determine that similar risk characteristics do not exist. We identify finance receivables for individual evaluation based on past-due status and 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 our customers operate. The allowance for credit losses attributable to finance receivables that are individually evaluated is based on the present value of expected future cash flows discounted at the receivables’ effective interest rate, the fair value of the collateral for collateral-dependent receivables or the observable market price of the receivable. In determining collateral value, we estimate the current fair market value of the collateral less selling costs. We also consider credit enhancements such as additional collateral and contractual third-party guarantees. See Note 2 for a description of our portfolio segments and allowance methodologies. 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). Generally, 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. I. Income Taxes We determine the provision for income taxes using the asset and liability approach taking into account guidance related to uncertain tax positions. Tax laws require items to be included in tax filings at different times than the items are reflected in the financial statements. We recognize a current liability for the estimated taxes payable for the current year. Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. We adjust deferred taxes for enacted changes in tax rates and tax laws. We record valuation allowances to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. See Note 12 for further discussion. We join Caterpillar in the filing of a consolidated U.S. Federal income tax return and certain state income tax returns. In accordance with our tax sharing agreement with Caterpillar, we generally pay to or receive from Caterpillar our allocated share of income taxes or credits reflected in these consolidated filings. This amount is calculated on a separate return basis by taking taxable income times the applicable statutory tax rate and includes payment for certain tax attributes earned during the year. J. Foreign Currency Translation The functional currency for most of our subsidiaries is the respective local currency. We include gains and losses resulting from the remeasurement of foreign currency amounts to the functional currency in Other income (expense) in the Consolidated Statements of Profit. We include gains and losses resulting from translating assets and liabilities from the functional currency to U.S. dollars in Accumulated other comprehensive income (loss) in the Consolidated Statements of Financial Position. K. Estimates in Financial Statements The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts. Significant estimates include residual values for leased assets, allowance for credit losses and income taxes. Actual results may differ from these estimates. L. New Accounting Pronouncements Adoption of New Accounting Standards Reference rate reform (Accounting Standards Update (ASU) 2020-04) – In March 2020, the Financial Accounting Standards Board (FASB) issued accounting guidance to ease the potential burden in accounting for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance is optional and may be elected over time as reference rate reform activities occur between March 12, 2020 through December 31, 2022. In January 2021, we elected to adopt optional expedients impacting our derivative instruments. In addition, in October 2021, we elected to adopt optional expedients for contract modifications. Our adoption of the optional expedients did not have a material impact on our financial statements. We adopted the following ASUs effective January 1, 2021, none of which had a material impact on our financial statements: ASU Description 2020-08 Codification improvements – Receivables – Nonrefundable fees and other costs 2021-01 Reference rate reform – Scope Accounting Standards Issued But Not Yet Adopted We consider the applicability and impact of all ASUs. We assessed ASUs not listed above and determined that they either were not applicable or were not expected to have a material impact on our financial statements. |
Finance Receivables
Finance Receivables | 12 Months Ended |
Dec. 31, 2021 | |
Receivables [Abstract] | |
Finance Receivables | FINANCE RECEIVABLES A summary of finance receivables included in the Consolidated Statements of Financial Position as of December 31, was as follows: (Millions of dollars) 2021 2020 Retail loans, net (1) $ 14,817 $ 15,037 Retail leases, net 7,818 7,812 Caterpillar purchased receivables, net 4,462 3,646 Wholesale loans, net (1) 406 533 Wholesale leases, net 11 26 Total finance receivables 27,514 27,054 Less: Allowance for credit losses (337) (479) Total finance receivables, net $ 27,177 $ 26,575 (1) Includes failed sale leasebacks. Maturities of our finance receivables, as of December 31, 2021, reflect contractual repayments due from borrowers and were as follows: (Millions of dollars) Amounts due in Retail Retail Caterpillar Wholesale Wholesale Total 2022 $ 6,047 $ 3,187 $ 4,488 $ 213 $ 3 $ 13,938 2023 4,055 2,113 — 74 2 6,244 2024 2,651 1,135 — 37 2 3,825 2025 1,493 535 — 11 1 2,040 2026 665 227 — 3 — 895 Thereafter 198 35 — 2 — 235 Total 15,109 7,232 4,488 340 8 27,177 Guaranteed residual value (1) 16 411 — 68 2 497 Unguaranteed residual value (1) 3 750 — 2 2 757 Unearned income (311) (575) (26) (4) (1) (917) Total $ 14,817 $ 7,818 $ 4,462 $ 406 $ 11 $ 27,514 (1) For Retail loans and Wholesale loans, represents residual value on failed sale leasebacks. Our finance receivables generally may be repaid or refinanced without penalty prior to contractual maturity and we also sell finance receivables to third parties to mitigate the concentration of credit risk with certain customers. Finance leases Revenues from finance leases were $481 million, $491 million and $518 million for the years ended December 31, 2021, 2020, and 2019 respectively, and are included in retail and wholesale finance revenue in the Consolidated Statements of Profit. The residual values for finance leases are included in Finance receivables, net in the Consolidated Statements of Financial Position. Residual value adjustments are recognized through a reduction of finance revenue over the remaining lease term. Allowance for credit losses Portfolio segments A portfolio segment is the level at which we develop a systematic methodology for determining our allowance for credit losses. Our portfolio segments and related methods for estimating expected credit losses are as follows: Customer We provide 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. We also provide financing for vehicles, power generation facilities and marine vessels that, in most cases, incorporate Caterpillar products. The average original term of our customer finance receivable portfolio was approximately 50 months with an average remaining term of approximately 27 months as of December 31, 2021. We typically maintain a security interest in financed equipment and we require physical damage insurance coverage on the financed equipment, both of which provide us with certain rights and protections. If our collection efforts fail to bring a defaulted account current, we generally can repossess the financed equipment, after satisfying local legal requirements, and sell it within the Caterpillar dealer network or through third-party auctions. We estimate the allowance for credit losses related to our customer finance receivables based on loss forecast models utilizing probabilities of default and our 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 year ended December 31, 2021, our forecasts for the markets in which we operate reflected a general improvement in economic conditions, which had deteriorated due to the COVID-19 pandemic, resulting from a growing economy, improved unemployment rates and a decrease in delinquencies. We believe the economic forecasts employed represent reasonable and supportable forecasts, followed by a reversion to long-term trends. Dealer We provide financing to Caterpillar dealers in the form of wholesale financing plans. Our 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, we provide a variety of secured and unsecured loans to Caterpillar dealers. We estimate 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, our Dealer portfolio segment has not historically experienced large increases or decreases in credit losses based on changes in economic conditions due to our close working relationships with the dealers and their financial strength. Therefore, we made no adjustments to historical loss rates during the year ended December 31, 2021. Caterpillar Purchased Receivables We purchase receivables from Caterpillar, primarily related to the sale of equipment and parts to dealers. Caterpillar purchased receivables are non-interest-bearing short-term trade receivables that are purchased at a discount. We estimate the allowance for credit losses for Caterpillar purchased receivables based on historical loss rates with consideration of current economic conditions and reasonable and supportable forecasts. In general, our Caterpillar Purchased Receivables portfolio segment has not historically experienced large increases or decreases in credit losses based on changes in economic conditions due to the short-term maturities of the receivables, our close working relationships with the dealers and their financial strength. Therefore, we made no adjustments to historical loss rates during the year ended December 31, 2021. Classes of finance receivables We further evaluate our 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. Our classes, which align with management reporting for credit losses, are as follows: • North America - Finance receivables originated in the United States and Canada. • EAME - Finance receivables originated in Europe, Africa, the Middle East and the Commonwealth of Independent States. • Asia/Pacific - Finance receivables originated in Australia, New Zealand, China, Japan, Southeast Asia and India. • Mining - Finance receivables related to large mining customers worldwide. • Latin America - Finance receivables originated in Mexico and Central and South American countries. • Caterpillar Power Finance - Finance receivables originated worldwide related to marine vessels with Caterpillar engines and Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems. An analysis of the allowance for credit losses was as follows: (Millions of dollars) December 31, 2021 December 31, 2020 Allowance for Credit Losses: Customer Dealer Caterpillar Total Customer Dealer Caterpillar Total Beginning Balance $ 431 $ 44 $ 4 $ 479 $ 375 $ 45 $ 4 $ 424 Adjustment to adopt new accounting guidance (1) — — — — 12 — — 12 Write-offs (256) — — (256) (263) — — (263) Recoveries 51 — — 51 41 — — 41 Provision for credit losses 30 38 — 68 262 (1) — 261 Other (5) — — (5) 4 — — 4 Ending Balance $ 251 $ 82 $ 4 $ 337 $ 431 $ 44 $ 4 $ 479 Finance Receivables $ 20,842 $ 2,210 $ 4,462 $ 27,514 $ 19,927 $ 3,481 $ 3,646 $ 27,054 (1) On January 1, 2020, we adopted ASU 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments, which replaced the incurred loss impairment method with a method that reflects lifetime expected credit losses. We recognized the cumulative effect as a pre-tax adjustment to retained earnings as of January 1, 2020. Credit quality of finance receivables At origination, we evaluate credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit ratings, loan-to-value ratios, probabilities of default, industry trends, macroeconomic factors and other internal metrics. On an ongoing basis, we monitor credit quality based on past-due status as there is a meaningful correlation between the past-due status of customers and the risk of loss. In determining past-due status, we consider the entire finance receivable past due when any installment is over 30 days past due. Customer The tables below summarize the aging category of our amortized cost of finance receivables in the Customer portfolio segment by origination year. (Millions of dollars) December 31, 2021 2021 2020 2019 2018 2017 Prior Revolving Total North America Current $ 4,792 $ 2,596 $ 1,426 $ 630 $ 182 $ 32 $ 182 $ 9,840 31-60 days past due 27 32 20 12 4 1 5 101 61-90 days past due 7 8 5 3 1 1 5 30 91+ days past due 9 17 12 13 5 4 5 65 EAME Current 1,499 836 577 352 140 26 — 3,430 31-60 days past due 5 4 3 1 1 — — 14 61-90 days past due 3 3 3 1 — — — 10 91+ days past due 3 11 2 2 — 2 — 20 Asia/Pacific Current 1,456 943 420 119 40 3 36 3,017 31-60 days past due 10 14 10 2 — — — 36 61-90 days past due 3 7 4 1 — — — 15 91+ days past due 2 10 10 3 — — — 25 Mining Current 944 356 332 194 36 161 36 2,059 31-60 days past due 6 — — — — — — 6 61-90 days past due 1 — — — 4 — — 5 91+ days past due — 1 8 9 3 1 — 22 Latin America Current 617 299 160 70 17 18 — 1,181 31-60 days past due 4 7 3 3 1 — — 18 61-90 days past due 3 3 1 1 — — — 8 91+ days past due 4 9 9 7 7 14 — 50 Caterpillar Power Finance Current 120 152 119 70 180 104 101 846 31-60 days past due — — — — — — — — 61-90 days past due — — — — — — — — 91+ days past due — — — — — 44 — 44 Total $ 9,515 $ 5,308 $ 3,124 $ 1,493 $ 621 $ 411 $ 370 $ 20,842 (Millions of dollars) December 31, 2020 2020 2019 2018 2017 2016 Prior Revolving Total North America Current $ 3,780 $ 2,423 $ 1,344 $ 522 $ 212 $ 27 $ 89 $ 8,397 31-60 days past due 52 49 33 16 7 2 — 159 61-90 days past due 22 25 16 9 2 1 — 75 91+ days past due 14 35 31 20 9 4 2 115 EAME Current 1,605 931 501 203 60 18 — 3,318 31-60 days past due 5 15 3 2 — — — 25 61-90 days past due 1 1 2 1 — — — 5 91+ days past due 7 7 12 4 39 43 — 112 Asia/Pacific Current 1,583 933 412 115 32 6 32 3,113 31-60 days past due 13 23 13 6 — — — 55 61-90 days past due 7 11 7 1 — — — 26 91+ days past due 4 10 9 3 — — — 26 Mining Current 515 574 289 181 92 151 137 1,939 31-60 days past due 5 — 5 1 — — — 11 61-90 days past due — — — — — — — — 91+ days past due — 11 8 2 — — 1 22 Latin America Current 561 348 151 48 13 34 — 1,155 31-60 days past due 3 6 4 3 — — — 16 61-90 days past due 1 7 6 3 2 — — 19 91+ days past due 2 14 11 24 5 4 — 60 Caterpillar Power Finance Current 217 199 111 273 99 117 119 1,135 31-60 days past due — — 6 — — — — 6 61-90 days past due — — — — — 9 — 9 91+ days past due 2 — 20 3 25 79 — 129 Total $ 8,399 $ 5,622 $ 2,994 $ 1,440 $ 597 $ 495 $ 380 $ 19,927 Finance receivables in the Customer portfolio segment are substantially secured by collateral, primarily in the form of Caterpillar and other equipment. 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 equipment. Dealer As of December 31, 2021, our total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $78 million that was 91+ days past due in Latin America, all of which was originated in 2017. As of December 31, 2020, our total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $81 million that was 91+ days past due in Latin America. Of these past due receivables, $78 million were originated in 2017 and $3 million were originated prior to 2016. Caterpillar Purchased Receivables The tables below summarize the aging category of our amortized cost of finance receivables in the Caterpillar Purchased Receivables portfolio segment. (Millions of dollars) December 31, 2021 31-60 61-90 91+ Total Current Total Finance North America $ 8 $ 6 $ 5 $ 19 $ 2,499 $ 2,518 EAME 1 — 1 2 844 846 Asia/Pacific — — 1 1 620 621 Mining — — — — — — Latin America 1 1 — 2 472 474 Caterpillar Power Finance — — — — 3 3 Total $ 10 $ 7 $ 7 $ 24 $ 4,438 $ 4,462 (Millions of dollars) December 31, 2020 31-60 61-90 91+ Total Current Total Finance North America $ 14 $ 11 $ 6 $ 31 $ 1,889 $ 1,920 EAME 1 — 1 2 632 634 Asia/Pacific 2 1 1 4 581 585 Mining — — — — — — Latin America — — — — 501 501 Caterpillar Power Finance — — — — 6 6 Total $ 17 $ 12 $ 8 $ 37 $ 3,609 $ 3,646 Non-accrual finance receivables Recognition of income is suspended and the finance receivable is placed on non-accrual status when management determines that collection of future income is not probable. Contracts on non-accrual status are generally more than 120 days past due or have been restructured in a troubled debt restructuring (TDR). Recognition is resumed and previously suspended income is recognized when the collection of remaining amounts is considered probable. Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms. Interest earned but uncollected prior to the receivable being placed on non-accrual status is written off through Provision for credit losses when, in the judgment of management, it is considered uncollectible. In our 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: (Millions of dollars) December 31, 2021 December 31, 2020 Amortized Cost Amortized Cost Non-accrual Non-accrual 91+ Still Non-accrual Non-accrual 91+ Still North America $ 47 $ 9 $ 12 $ 86 $ 1 $ 34 EAME 18 1 2 113 1 1 Asia/Pacific 19 — 7 13 — 13 Mining 8 1 14 21 1 — Latin America 52 4 1 63 — 1 Caterpillar Power Finance 40 11 — 170 17 — Total $ 184 $ 26 $ 36 $ 466 $ 20 $ 49 There was $12 million, $12 million and $28 million of interest income recognized during the years ended December 31, 2021, 2020 and 2019, respectively, for customer finance receivables on non-accrual status. As of December 31, 2021 and 2020, finance receivables in our Dealer portfolio segment on non-accrual status were $78 million and $81 million, respectively, all of which was in Latin America. There were no finance receivables in our Dealer portfolio segment more than 90 days past due and still accruing income as of December 31, 2021 and 2020 and no interest income was recognized on dealer finance receivables on non-accrual status during the years ended December 31, 2021, 2020 and 2019. Troubled debt restructurings A restructuring of a finance receivable constitutes a TDR when the lender grants a concession it would not otherwise consider to a borrower experiencing financial difficulties. Concessions granted may include extended contract maturities, inclusion of interest only periods, below market interest rates, payment deferrals and reduction of principal and/or accrued interest. We individually evaluate TDR contracts and establish 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. There were no finance receivables modified as TDRs during the years ended December 31, 2021, 2020 and 2019 for the Dealer or Caterpillar Purchased Receivables portfolio segments. Finance receivables in the Customer portfolio segment modified as TDRs for the years ended December 31, were as follows: (Dollars in millions) 2021 2020 2019 Pre-TDR Post-TDR Pre-TDR Post-TDR Pre-TDR Recorded Investment Post-TDR Recorded Investment North America $ 6 $ 6 $ 13 $ 13 $ 11 $ 11 EAME 3 3 — — 17 17 Asia/Pacific 4 4 12 12 — — Mining 11 5 35 35 8 8 Latin America 12 12 45 45 5 3 Caterpillar Power Finance 26 22 115 115 168 165 Total $ 62 $ 52 $ 220 $ 220 $ 209 $ 204 TDRs 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 for the years ended December 31, : (Dollars in millions) 2021 2020 2019 Post-TDR Post-TDR Post-TDR North America $ 1 $ 8 $ 5 EAME — 10 — Asia/Pacific 6 2 — Mining — 10 — Latin America 15 1 — Caterpillar Power Finance 7 18 10 Total $ 29 $ 49 $ 15 |
Equipment on Operating Leases
Equipment on Operating Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Equipment on Operating Leases | EQUIPMENT ON OPERATING LEASES The carrying amount of Equipment on operating leases, net in the Consolidated Statements of Financial Position as of December 31, was as follows: (Millions of dollars) 2021 2020 Equipment on operating leases, at cost $ 4,589 $ 4,984 Less: Accumulated depreciation (1,466) (1,618) Equipment on operating leases, net $ 3,123 $ 3,366 Our lease agreements may include options for the lessee to purchase the underlying asset at the end of the lease term for either a stated fixed price or fair market value. We determine the residual value of leased equipment based on its estimated end-of-term market value. We estimate the residual value of leased equipment at the inception of the lease based on a number of factors, including historical wholesale market sales prices, past remarketing experience and any known significant market/product trends. We also consider the following critical factors in our residual value estimates: lease term, market size and demand, total expected hours of usage, machine configuration, application, location, model changes, quantities, third-party residual guarantees and contractual customer purchase options. The residuals for leases classified as operating leases are included in Equipment on operating leases, net in the Consolidated Statements of Financial Position. During the term of our leases, we monitor residual values. For operating leases, we record adjustments to depreciation expense reflecting changes in residual value estimates prospectively on a straight-line basis. The carrying amount of residual assets covered by residual value guarantees and subject to operating leases was $3 million and $4 million as of December 31, 2021 and 2020, respectively. At December 31, 2021, payments due for operating leases were as follows: (Millions of dollars) 2022 2023 2024 2025 2026 Thereafter Total $ 686 $ 431 $ 245 $ 129 $ 46 $ 7 $ 1,544 Revenues from operating leases were $942 million, $965 million and $1.04 billion for the years ended December 31, 2021, 2020 and 2019, respectively. We typically pay property taxes on tax leases directly to the taxing authorities and invoice the lessee for reimbursement. These property tax reimbursements are accounted for as variable lease payments and are included in Operating lease revenues in the Consolidated Statements of Profit. We individually assess our operating lease receivables for impairment. If collectability of a recorded operating lease receivable is not considered probable, we recognize a current-period adjustment against operating lease revenue. |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2021 | |
Other Assets [Abstract] | |
Other Assets | OTHER ASSETS The components of Other assets as of December 31, were as follows: (Millions of dollars) 2021 2020 Customer and other miscellaneous receivables $ 400 $ 457 Collateral held for resale, at net realizable value 168 380 Deferred and refundable income taxes 126 168 Property and equipment, net 133 134 Other (1) 261 144 Total Other assets $ 1,088 $ 1,283 (1) Includes Derivative financial instruments. See Note 9 for additional information. |
Concentration of Credit Risk
Concentration of Credit Risk | 12 Months Ended |
Dec. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | CONCENTRATION OF CREDIT RISK Financial instruments with potential credit risk consist primarily of finance receivables. Additionally, to a lesser extent, we have potential credit risk associated with counterparties to derivative contracts. As of December 31, 2021, receivables from customers in construction-related industries made up approximately 40 percent of our total portfolio of which customers in North America were approximately 60 percent. As of December 31, 2020, receivables from customers in construction-related industries made up approximately 40 percent of our total portfolio of which customers in North America were approximately 50 percent. No single customer or dealer represented a significant concentration of credit risk. We typically maintain a security interest in retail financed equipment and, in some instances, wholesale financed equipment. We also require physical damage insurance coverage on all financed equipment. See Note 15 for further information concerning business segments. For derivative contracts, collateral is generally not required of the counterparties or of us. We enter into International Swaps and Derivatives Association (ISDA) master netting agreements that permit the net settlement of amounts owed under their respective derivative contracts. Our exposure to credit loss in the event of nonperformance by the counterparties is limited to only those gains that we have recorded, but for which we have not yet received cash payment. The master netting agreements reduce the amount of loss the company would incur should the counterparties fail to meet their obligations. At December 31, 2021 and 2020, the maximum exposure to credit loss, was $208 million and $85 million, respectively, before the application of any master netting agreements. See Note 9 for further information concerning derivatives. |
Credit Commitments
Credit Commitments | 12 Months Ended |
Dec. 31, 2021 | |
Credit Commitments [Abstract] | |
Credit Commitments | CREDIT COMMITMENTS Revolving credit facilities As of December 31, 2021, we had three global credit facilities with a syndicate of banks totaling $10.50 billion (Credit Facility) available in the aggregate to both Caterpillar and us for general liquidity purposes. Based on management’s allocation decision, which can be revised from time to time, the portion of the Credit Facility available to us as of December 31, 2021 was $7.75 billion. Information on our Credit Facility is as follows: • The 364-day facility of $3.15 billion (of which $2.33 billion is available to us) expires in September 2022. • The three-year facility, as amended and restated in September 2021, of $2.73 billion (of which $2.01 billion is available to us) expires in September 2024. • The five-year facility, as amended and restated in September 2021, of $4.62 billion (of which $3.41 billion is available to us) expires in September 2026. At December 31, 2021, Caterpillar’s consolidated net worth was $16.58 billion, which was above the $9.00 billion required under the Credit Facility. The consolidated net worth is defined in the Credit Facility as the consolidated shareholders’ equity including preferred stock but excluding the pension and other postretirement benefits balance within Accumulated other comprehensive income (loss). At December 31, 2021, our covenant interest coverage ratio was 2.51 to 1. This was above the 1.15 to 1 minimum ratio, calculated as (1) profit excluding income taxes, interest expense and net gain/(loss) from interest rate derivatives to (2) interest expense, calculated at the end of each calendar quarter for the rolling four quarter period then most recently ended, required by the Credit Facility. In addition, at December 31, 2021, our six-month covenant leverage ratio was 7.25 to 1 and our year-end covenant leverage ratio was 7.91 to 1. This was below the maximum ratio of debt to net worth of 10 to 1, calculated (1) on a monthly basis as the average of the leverage ratios determined on the last day of each of the six preceding calendar months and (2) at each December 31, required by the Credit Facility. In the event that either Caterpillar or we do not meet one or more of our 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 our 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 December 31, 2021, there were no borrowings under the Credit Facility. Bank borrowings Available credit lines with banks as of December 31, 2021 totaled $3.07 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 non-U.S. subsidiaries for local funding requirements. We may guarantee subsidiary borrowings under these lines. As of December 31, 2021 and 2020, we had $559 million and $734 million, respectively, outstanding against these credit lines and were in compliance with all debt covenants under these credit lines. The remaining available credit commitments may be withdrawn any time at the lenders’ discretion. Variable denomination floating rate demand notes We obtain funding from the sale of variable denomination floating rate demand notes, which may be redeemed at any time at the option of the holder without any material restriction. We do not hold reserves to fund the payment of the demand notes. The notes are offered on a continuous basis. As of December 31, 2021 and 2020, there were $286 million and $377 million of variable denomination floating rate demand notes outstanding, respectively. The maximum amount of variable denomination floating rate demand notes that we may have outstanding at any time may not exceed $1.25 billion. Notes receivable from/payable to Caterpillar Under our variable amount and term lending agreements and other notes receivable with Caterpillar, we may borrow up to $2.40 billion from Caterpillar and Caterpillar may borrow up to $1.73 billion from us. The variable amount lending agreements are in effect for indefinite periods of time and may be changed or terminated by either party with 30 days notice. The term lending agreements have remaining maturities ranging up to ten years. We had notes payable of $22 million and notes receivable of $389 million outstanding under these agreements as of December 31, 2021, compared with notes payable of $1.02 billion and notes receivable of $356 million as of December 31, 2020. |
Short-Term Borrowings
Short-Term Borrowings | 12 Months Ended |
Dec. 31, 2021 | |
Short-term Debt [Abstract] | |
Short-Term Borrowings | SHORT-TERM BORROWINGS Short-term borrowings outstanding as of December 31, were comprised of the following: (Millions of dollars) 2021 2020 Balance Avg. Rate Balance Avg. Rate Commercial paper, net $ 4,896 0.1% $ 1,321 0.1 % Bank borrowings and other 213 4.5% 307 3.5 % Variable denomination floating rate demand notes 286 0.2% 377 0.3 % Total $ 5,395 $ 2,005 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2021 | |
Long-term Debt, Unclassified [Abstract] | |
Long-Term Debt | LONG-TERM DEBT During 2021, we issued $6.35 billion of medium-term notes, of which $4.10 billion were at fixed interest rates and $2.25 billion were at floating interest rates linked to SOFR. At December 31, 2021, the outstanding medium-term notes had remaining maturities ranging up to 6 years. Debt issuance costs are capitalized and amortized to Interest expense using the effective yield method over the term of the debt issuance. Medium-term notes, net contain fair value adjustments for debt in a fair value hedge relationship. Long-term debt outstanding as of December 31, was comprised of the following: (Millions of dollars) 2021 2020 Balance Avg. Rate Balance Avg. Rate Medium-term notes $ 22,283 1.6% $ 23,536 2.2% Unamortized discount and debt issuance costs (40) (46) Fair value adjustments 3 60 Medium-term notes, net 22,246 23,550 Bank borrowings and other 348 4.1% 429 6.0% Total $ 22,594 $ 23,979 Maturities of Long-term debt outstanding (excluding fair value adjustments) as of December 31, 2021, in each of the next five years, are as follows: ( Millions of dollars) 2022 $ 6,307 2023 5,221 2024 7,129 2025 1,629 2026 1,555 Long-term debt outstanding as of December 31, 2021 included $5 million of medium-term notes that could be called by us at some point in the future at par. Medium-term notes of $1.35 billion maturing in the first quarter of 2022 were excluded from Current maturities of long-term debt in the Consolidated Statements of Financial Position as of December 31, 2021 due to a $2.00 billion issuance of medium-term notes on January 10, 2022 of which $1.50 billion mature in 2024 and $500 million mature in 2027. The preceding maturity table reflects the reclassification of $1.35 billion from maturities in 2022 to 2024. |
Derivative Financial Instrument
Derivative Financial Instruments and Risk Management | 12 Months Ended |
Dec. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments and Risk Management | DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. Our Risk Management Policy (policy) allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate and interest rate 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 and interest rate contracts. Our derivative activities are subject to the management, direction and control of our senior financial officers. We present at least annually to our Board of Directors and the Audit Committee of the Caterpillar Inc. Board of Directors on our risk management practices, including our use of financial derivative instruments. All derivatives are recognized on the Consolidated Statements of Financial Position at their fair value. On the date the derivative contract is entered into, the derivative instrument is (1) designated as a hedge of the fair value of a recognized asset or liability (fair value hedge), (2) designated as a hedge of a forecasted transaction or the variability of cash flows (cash flow hedge) or (3) undesignated. We record in current earnings changes in the fair value of a derivative that is qualified, designated and highly effective as a fair value hedge, along with the gain or loss on the hedged recognized asset or liability that is attributable to the hedged risk. We record in Accumulated other comprehensive income (loss) (AOCI) changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge, to the extent effective, on the Consolidated Statements of Financial Position until we reclassify them to earnings in the same period or periods during which the hedged transaction affects earnings. We report changes in the fair value of undesignated derivative instruments in current earnings. We classify cash flows from designated derivative financial instruments within the same category as the item being hedged on the Consolidated Statements of Cash Flows. We include cash flows from undesignated derivative financial instruments in the investing category on the Consolidated Statements of Cash Flows. 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 Statements 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 value 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 We have balance sheet positions and expected future transactions denominated in foreign currencies, thereby creating exposure to movements in exchange rates. In managing foreign currency risk, our objective is to minimize earnings volatility resulting from conversion and the remeasurement of net foreign currency balance sheet positions and future transactions denominated in foreign currencies. Our policy allows the use of foreign currency forward, option and cross currency contracts to offset the risk of currency mismatch between our assets and liabilities and exchange rate risk associated with future transactions denominated in foreign currencies. Our foreign currency forward and option contracts are primarily undesignated. We designate fixed-to-fixed cross currency contracts as cash flow hedges to protect against movements in exchange rates on foreign currency fixed-rate assets and liabilities. Interest rate risk Interest rate movements create a degree of risk by affecting the amount of our interest payments and the value of our fixed-rate debt. Our practice is to use interest rate contracts to manage our exposure to interest rate changes. We have a match-funding policy that addresses interest rate risk by aligning the interest rate profile (fixed or floating rate and duration) of our debt portfolio with the interest rate profile of our finance receivable 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 finance receivable 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. As of December 31, 2021, the cumulative amount of fair value hedging adjustments related to our fixed-to-floating interest rate contracts included in the carrying amount of Long-term debt was $3 million. Fair value gains and losses on these interest rate contracts and the related hedged items generally offset within interest expense. We have, at certain times, liquidated fixed-to-floating and floating-to-fixed interest rate contracts. We amortize the gains or losses associated with these contracts at the time of liquidation into earnings over the original term of the previously designated hedged item. The location and fair value of derivative instruments reported in the Consolidated Statements of Financial Position as of December 31, were as follows: (Millions of dollars) Asset (Liability) Fair Value Consolidated Statements of 2021 2020 Designated derivatives Interest rate contracts Other assets $ 38 $ 59 Interest rate contracts Accrued expenses (15) (5) Cross currency contracts Other assets 142 2 Cross currency contracts Accrued expenses (32) (148) $ 133 $ (92) Undesignated derivatives Foreign exchange contracts Other assets $ 28 $ 17 Foreign exchange contracts Accrued expenses (36) (107) Cross currency contracts Other assets — 7 $ (8) $ (83) The total notional amount of our derivative instruments was $13.85 billion and $11.26 billion as of December 31, 2021 and 2020, respectively. The notional amounts of derivative financial instruments do not represent amounts exchanged by the parties. We calculate the amounts exchanged by the parties by referencing the notional amounts and by other terms of the derivatives, such as foreign currency exchange rates and interest rates. The effect of derivatives designated as hedging instruments on the Consolidated Statements of Profit was as follows: Cash Flow Hedges (Millions of dollars) Year Ended December 31, 2021 Recognized in Earnings Amount of Classification Amount of Amount of the line Interest rate contracts $ 19 Interest expense $ (28) $ 455 Cross currency contracts 190 Other income (expense) 199 (23) Interest expense (5) 455 $ 209 $ 166 Year Ended December 31, 2020 Recognized in Earnings Amount of Classification Amount of Amount of the line Interest rate contracts $ (23) Interest expense $ (52) $ 591 Cross currency contracts (130) Other income (expense) (164) (25) Interest expense 32 591 $ (153) $ (184) Year Ended December 31, 2019 Recognized in Earnings Amount of Classification Amount of Amount of the line Interest rate contracts $ (70) Interest expense $ (8) $ 787 Cross currency contracts 93 Other income (expense) 37 (24) Interest expense 33 787 $ 23 $ 62 As of December 31, 2021, $20 million of deferred net losses, net of tax, included in equity (AOCI in the Consolidated Statements of Financial Position), related to our cash flow hedges, are expected to be reclassified to earnings over the next twelve months. The actual amount recorded in earnings will vary based on interest rates and exchange rates at the time the hedged transactions impact earnings. The effect of derivatives not designated as hedging instruments on the Consolidated Statements of Profit was as follows for the years ended December 31: (Millions of dollars) Classification 2021 2020 2019 Foreign exchange contracts Other income (expense) $ 89 $ (121) $ (38) Cross currency contracts Other income (expense) — 9 1 $ 89 $ (112) $ (37) We enter into International Swaps and Derivatives Association master netting agreements that permit the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement generally permits us or the counterparty to determine the net amount payable for contracts due on the same date and in the same currency for similar types of derivative transactions. The master netting agreements generally also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event. Collateral is generally not required of the counterparties or us under the master netting agreements. As of December 31, 2021 and 2020, no cash collateral was received or pledged under the master netting agreements. The effect of net settlement provisions of the master netting agreements on our derivative balances upon an event of default or a termination event as of December 31, was as follows: (Millions of dollars) 2021 2020 Derivative Assets Gross Amount of Recognized Assets $ 208 $ 85 Gross Amounts Offset — — Net Amount of Assets (1) 208 85 Gross Amounts Not Offset (67) (57) Net Amount $ 141 $ 28 Derivative Liabilities Gross Amount of Recognized Liabilities $ (83) $ (260) Gross Amounts Offset — — Net Amount of Liabilities (1) (83) (260) Gross Amounts Not Offset 67 57 Net Amount $ (16) $ (203) (1) As presented in the Consolidated Statements of Financial Position. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) We present Comprehensive income (loss) and its components in the Consolidated Statements of Comprehensive Income. Changes in Accumulated other comprehensive income (loss) included in the Consolidated Statements of Changes in Shareholder’s Equity consisted of the following: (Millions of dollars) 2021 2020 2019 Foreign currency translation Balance at beginning of year $ (551) $ (777) $ (889) Adjustment to adopt new accounting guidance (1) — — 98 Balance at January 1 (551) (777) (791) Gains (losses) on foreign currency translation (169) 179 18 Less: Tax provision/(benefit) 42 (47) 4 Net gains (losses) on foreign currency translation (211) 226 14 Other comprehensive income (loss), net of tax (211) 226 14 Balance at end of year $ (762) $ (551) $ (777) Derivative financial instruments Balance at beginning of year $ (44) $ (68) $ (36) Adjustment to adopt new accounting guidance (1) — — (1) Balance at January 1 (44) (68) (37) Gains (losses) deferred 209 (153) 23 Less: Tax provision/(benefit) 24 (33) 6 Net gains (losses) deferred 185 (120) 17 (Gains) losses reclassified to earnings (166) 184 (62) Less: Tax (provision)/benefit (13) 40 (14) Net (gains) losses reclassified to earnings (153) 144 (48) Other comprehensive income (loss), net of tax 32 24 (31) Balance at end of year $ (12) $ (44) $ (68) Total Accumulated other comprehensive income (loss) at end of year $ (774) $ (595) $ (845) (1) Adjustment to adopt new accounting guidance related to reclassification of certain tax effects from Accumulated other comprehensive income (loss). |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | COMMITMENTS AND CONTINGENT LIABILITIES Guarantees We provide credit guarantees and residual value guarantees to third parties for financing and leasing associated with Caterpillar machinery. In addition, we provide standby letters of credit issued to third parties on behalf of our customers. These guarantees and standby letters of credit have varying terms and beneficiaries and are generally secured by customer assets. No significant loss has been experienced or is anticipated under any of these guarantees. At December 31, 2021 and 2020, the related recorded liability was less than $1 million. The maximum potential amount of future payments (undiscounted and without reduction for any amounts that may possibly be recovered under recourse or collateralized provisions) we could be required to make under the guarantees was $36 million and $40 million at December 31, 2021 and 2020, respectively. We provide guarantees to purchase certain loans of Caterpillar dealers from a special-purpose corporation (SPC) that qualifies as a VIE (see Note 1 for additional information regarding the accounting guidance on the consolidation of VIEs). 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. We receive a fee for providing this guarantee. We are the primary beneficiary of the SPC as our guarantees result in us 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 we have consolidated the financial statements of the SPC. As of December 31, 2021 and 2020, the SPC’s assets of $888 million and $1.03 billion, respectively, were primarily comprised of loans to dealers, which are included in Finance receivables, net in the Consolidated Statements of Financial Position, and the SPC’s liabilities of $888 million and $1.03 billion, respectively, were primarily comprised of commercial paper, which is included in Short-term borrowings in the Consolidated Statements of Financial Position. The assets of the SPC are not available to pay our creditors. We 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. Lending commitments We have commitments to extend credit to customers and Caterpillar dealers through lines of credit and other pre-approved credit arrangements. We apply the same credit policies and approval process for these commitments to extend credit as we do for other financing. Collateral is not required for these commitments, but if credit is extended, collateral may be required upon funding. The amount of unused commitments to extend credit to Caterpillar dealers was $10.76 billion at December 31, 2021 . We generally have the right to unconditionally cancel, alter, or amend the terms of these dealer commitments at any time. The amount of unused commitments to extend credit to customers was $641 million at December 31, 2021 . A significant portion of these commitments is not expected to be fully drawn upon; therefore, the total commitment amounts do not represent a future cash requirement. Lease commitments We lease certain property, vehicles and other equipment through operating leases. We recognize a lease liability and corresponding right-of-use asset based on the present value of lease payments. To determine the present value of lease payments for most of our leases, we use our incremental borrowing rate based on information available on the lease commencement date. We have elected not to separate payments for lease components from non-lease components. Our lease agreements may include options to extend or terminate the lease. When it is reasonably certain that we will exercise that option, we have included the option in the recognition of right-of-use assets and lease liabilities. Our variable lease costs primarily include maintenance, taxes and insurance. We have elected not to recognize right-of-use assets or lease liabilities for leases with a term of twelve months or less. The components of lease cost were as follows for the years ended December 31: (Millions of dollars) 2021 2020 Operating lease cost $ 7 $ 8 Short-term lease cost $ — $ 1 Variable lease cost $ 1 $ — Operating lease right-of-use assets are recognized in Other assets in the Consolidated Statements of Financial Position. The operating lease liabilities are recognized in Other liabilities in the Consolidated Statements of Financial Position. Supplemental information related to operating leases as of December 31, was as follows: (Millions of dollars) 2021 2020 Other assets $ 21 $ 23 Other liabilities $ 21 $ 24 Weighted average remaining lease term 5 years 5 years Weighted average discount rates 1.6 % 1.9 % At December 31, 2021, maturities of operating lease liabilities were as follows: (Millions of dollars) 2022 $ 6 2023 5 2024 4 2025 3 2026 2 Thereafter 3 Total lease payments 23 Less: imputed interest (2) Total $ 21 Supplemental cash flow information related to operating leases was as follows for the years ended December 31: (Millions of dollars) 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities $ 7 $ 8 Right-of-use assets obtained in exchange for operating lease obligations $ 5 $ 8 Litigation and claims We are involved in unresolved legal actions that arise in the normal course of business. Although it is not possible to predict with certainty the outcome of our unresolved legal actions, we believe that these unresolved legal actions will neither individually nor in the aggregate have a material adverse effect on our consolidated results of operations, financial position or liquidity. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES A reconciliation of the U.S. federal statutory rate to the effective rate for the years ended December 31, was as follows: (Millions of dollars) 2021 2020 2019 Taxes computed at U.S. statutory rates $ 146 21.0 % $ 91 21.0 % $ 132 21.0 % (Decreases) increases in taxes resulting from: State Income Tax, net of Federal Tax 3 0.4 % (1) (0.2) % 1 0.2 % Non-U.S. Subsidiaries taxed at other than the U.S. rate 22 3.2 % 26 6.0 % 34 5.4 % Prior year tax adjustments — — % 3 0.7 % 9 1.4 % Valuation allowances 5 0.7 % 10 2.3 % 21 3.4 % Other, net 2 0.3 % (3) (0.7) % (1) (0.2) % Provision for income taxes $ 178 25.6 % $ 126 29.1 % $ 196 31.2 % Included in the line item above labeled “Non-U.S. subsidiaries taxed at other than the U.S. rate” are the effects of local and U.S. taxes related to earnings of non-U.S. subsidiaries and other permanent differences between tax and U.S. GAAP results. The provision for income taxes includes a prior year net tax charge of $3 million for 2020 and $9 million for 2019 to reduce non-U.S. deferred tax assets in certain jurisdictions to balances supporting the expected reversal of temporary differences between tax and U.S. GAAP balances. The provision for income taxes for 2021, 2020 and 2019 also includes an increase in valuation allowance for non-U.S. deferred tax assets due to a decrease in consistent and/or sustainable profitability to support their recognition in certain jurisdictions, resulting in a $5 million, $10 million and $21 million non-cash expense, respectively. Distributions of profits from non-U.S. subsidiaries are not expected to cause a significant incremental U.S. tax impact in the future. However, these distributions may be subject to non-U.S. withholding taxes if profits are distributed from certain jurisdictions. We have not recorded a deferred tax liability for withholding taxes in non-U.S. jurisdictions where earnings are considered indefinitely reinvested. If management intentions or U.S. tax law changes in the future, there could be an impact on the provision for income taxes to record an incremental tax liability in the period the change occurs. The components of Profit before income taxes for the years ended December 31, were as follows: (Millions of dollars) 2021 2020 2019 U.S. $ 288 $ 99 $ 257 Non-U.S. 407 335 371 Total $ 695 $ 434 $ 628 Profit before income taxes, as shown above, is based on the location of the entity to which such earnings are attributable. Where an entity’s earnings are subject to taxation, however, may not correlate solely to where an entity is located. Thus, the income tax provision shown below as U.S. or non-U.S. may not correspond to the earnings shown above. The components of the Provision for income taxes were as follows for the years ended December 31: (Millions of dollars) 2021 2020 2019 Current income tax provision: U.S. $ 101 $ 46 $ 13 Non-U.S. 162 80 161 State (U.S.) 5 1 2 268 127 176 Deferred income tax provision: U.S. (56) (45) 32 Non-U.S. (33) 46 (11) State (U.S.) (1) (2) (1) (90) (1) 20 Total Provision for income taxes $ 178 $ 126 $ 196 Current income tax provision is the amount of income taxes reported or expected to be reported on our income tax returns. We join Caterpillar in the filing of a consolidated U.S. Federal income tax return and certain state income tax returns. In accordance with our tax sharing agreement with Caterpillar, we generally pay to or receive from Caterpillar our allocated share of income taxes or credits reflected in these consolidated filings. This amount is calculated on a separate return basis by taking taxable income times the applicable statutory tax rate and includes payment for certain tax attributes earned during the year. Income taxes payable were $279 million and $198 million as of December 31, 2021 and 2020, respectively, and are included in Other liabilities in the Consolidated Statements of Financial Position. Accounting for income taxes under generally accepted accounting principles requires individual tax-paying entities of the Company to offset deferred income tax assets and liabilities within each particular tax jurisdiction and present them as a single amount in the Consolidated Statements of Financial Position. Amounts in different tax jurisdictions cannot be offset against each other. The amounts of deferred income taxes at December 31, included in the following lines in our Consolidated Statements of Financial Position were: (Millions of dollars) 2021 2020 Assets: Other assets $ 107 $ 102 Liabilities: Other liabilities (592) (629) Deferred income taxes, net $ (485) $ (527) Our consolidated deferred income taxes consisted of the following components as of December 31: (Millions of dollars) 2021 2020 Deferred income tax assets: Allowance for credit losses $ 90 $ 100 Tax carryforwards 78 61 168 161 Deferred income tax liabilities (primarily lease basis differences) (425) (508) Valuation allowance for deferred income tax assets (39) (33) Deferred income tax on translation adjustment (189) (147) Deferred income taxes, net $ (485) $ (527) As of December 31, 2021, amounts and expiration dates of net operating loss (NOL) carryforwards in various U.S. state taxing jurisdictions were: (Millions of dollars) 2022 2023 2024 2025 2026-2041 Unlimited Total $ 5 $ 6 $ — $ — $ 77 $ 5 $ 93 The gross deferred income tax asset associated with these NOL carryforwards is $7 million as of December 31, 2021, partially offset by a valuation allowance of $1 million. In some U.S. state income tax jurisdictions, we join with other Caterpillar entities in filing combined income tax returns. In other U.S. state income tax jurisdictions, we file on a separate, stand-alone basis. At December 31, 2021, approximately $1 million of U.S. foreign tax credits from 2017 were available for carryforward. These credits expire in 2028. As of December 31, 2021, amounts and expiration dates of NOL carryforwards in various non-U.S. taxing jurisdictions were: (Millions of dollars) 2022 2023 2024 2025 2026-2032 Unlimited Total $ — $ 2 $ 3 $ 1 $ 32 $ 284 $ 322 Valuation allowances of $38 million have been recorded at certain non-U.S. subsidiaries that have not yet demonstrated consistent and/or sustainable profitability to support the recognition of net deferred income tax assets. A reconciliation of the beginning and ending amounts of gross unrecognized income tax benefits for uncertain income tax positions, including positions impacting only the timing of income tax benefits was as follows: (Millions of dollars) 2021 2020 2019 Reconciliation of unrecognized income tax benefits (1) : Balance at beginning of year $ 119 $ 119 $ 119 Additions for income tax positions related to current year 2 — — Additions for income tax positions related to prior year 10 — — Balance at end of year $ 131 $ 119 $ 119 Amount that, if recognized, would impact the effective tax rate $ 131 $ 119 $ 119 (1) Foreign currency translation amounts are included within each line as applicable. We classify interest and penalties on income taxes as a component of the provision for income taxes. During the years ended December 31, 2021, 2020 and 2019, we recognized an expense of $1 million, a benefit of less than $1 million and an expense of less than $1 million in interest and penalties, respectively. As of December 31, 2021 and 2020, the total amount of accrued interest and penalties was $1 million. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS 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. We classify fair value measurements according to the lowest level input or value-driver that is significant to the valuation. We may therefore classify a measurement within Level 3 even though there may be significant inputs that are readily observable. Fair value measurement includes the consideration of nonperformance risk. Nonperformance risk refers to the risk that an obligation (either by a counterparty or us) will not be fulfilled. For financial assets traded in an active market, the nonperformance risk is included in the market price. For certain other financial assets and liabilities, our fair value calculations have been adjusted accordingly. Derivative financial instruments The fair value of interest rate contracts is primarily based on a standard industry accepted valuation model that utilizes the appropriate market-based forward swap curves and zero-coupon interest rates to determine discounted cash flows. The fair value of foreign currency forward and cross currency contracts is based on standard industry accepted valuation models that discount cash flows resulting from the differential between the contract price and the market-based forward rate. Derivative financial instruments are measured on a recurring basis at fair value and are classified as Level 2 measurements. We had derivative financial instruments included in our Consolidated Statements of Financial Position in a net asset position of $125 million and a net liability position of $175 million as of December 31, 2021 and 2020, respectively. See Note 9 for additional information. Loans measured at fair value Certain loans are subject to measurement at fair value on a nonrecurring basis and are classified as Level 3 measurements. A loan is measured at fair value when management determines that collection of contractual amounts due is not probable and the loan is individually evaluated. In these cases, an allowance for credit losses may be established based either on the present value of expected future cash flows discounted at the receivables’ effective interest rate, the fair value of the collateral for collateral-dependent receivables or the observable market price of the receivable. In determining collateral value, we estimate the current fair market value of the collateral less selling costs. We had loans carried at fair value of $100 million and $243 million as of December 31, 2021 and 2020, respectively. B. Fair Values of Financial Instruments Cash and cash equivalents, Restricted cash and cash equivalents (included in Other Assets in the Consolidated Statements of Financial Position) and Short-term borrowings (see Note 7) are classified as Level 1 measurements and carrying amount approximates fair value. We use the following methods and assumptions to estimate the fair value of our financial instruments not carried at fair value: Finance receivables, net – we estimate fair value by discounting the future cash flows using current rates representative of receivables with similar remaining maturities. Long-term debt – we estimate fair value for fixed and floating-rate debt based on quoted market prices. Fair values of our financial instruments not carried at fair value as of December 31, were as follows: (Millions of dollars) 2021 2020 Carrying Fair Carrying Fair Fair Reference Assets Finance receivables, net (excluding finance leases (1) ) $ 19,068 $ 19,047 $ 18,599 $ 18,910 3 Note 2 Liabilities Long-term debt $ 22,594 $ 22,797 $ 23,979 $ 24,614 2 Note 8 (1) Represents finance leases and failed sale leasebacks of $8.11 billion and $7.98 billion as of December 31, 2021 and 2020, respectively. |
Transactions with Related Parti
Transactions with Related Parties | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | TRANSACTIONS WITH RELATED PARTIES We have a Support Agreement with Caterpillar, which provides that Caterpillar will (1) remain, directly or indirectly, our sole owner; (2) cause us to maintain a tangible net worth of at least $20 million and (3) ensure that we maintain a ratio of profit before income taxes and interest expense to interest expense (as defined by the Support Agreement) of not less than 1.15 to 1, calculated on an annual basis. Although this agreement can be modified or terminated by either party, any termination or any modification which would adversely affect holders of our debt requires the consent of holders of 66-2/3 percent in principal amount of outstanding debt of each series so affected. Any modification or termination which would adversely affect the lenders under the Credit Facility requires their consent. Caterpillar’s obligation under this agreement is not directly enforceable by any of our creditors and does not constitute a guarantee of any of our obligations. Cash dividends of $850 million, $300 million and $25 million were paid to Caterpillar in 2021, 2020 and 2019, respectively. We have variable amount and term lending agreements and other notes receivable with Caterpillar. Under these agreements, we may borrow up to $2.40 billion from Caterpillar, and Caterpillar may borrow up to $1.73 billion from us. The variable amount lending agreements are in effect for indefinite periods of time and may be changed or terminated by either party with 30 days notice. The term lending agreements have remaining maturities ranging up to ten years. We extended a $2 billion committed credit facility to Caterpillar, which expired in February 2019. Under this agreement, we received a fee from Caterpillar based on amounts drawn under the credit facility and a commitment fee for the undrawn amounts under the credit facility. Information concerning these agreements was as follows: (Millions of dollars) 2021 2020 2019 Payable to Caterpillar - borrowings as of December 31, $ 22 $ 1,022 $ 618 Payable to Caterpillar - other as of December 31, $ 73 $ 65 $ 75 Notes receivable from Caterpillar as of December 31, $ 389 $ 356 $ 296 Other receivables from Caterpillar as of December 31, (2) $ 70 $ 65 $ 64 Interest expense $ — $ 2 $ 32 Interest income on Notes Receivable with Caterpillar (1) $ 14 $ 14 $ 26 Fees on committed credit facility extended to Caterpillar (1) $ — $ — $ 5 (1) Included in Other revenues, net in the Consolidated Statements of Profit. (2) Included in Other assets in the Consolidated Statements of Financial Position. We have agreements with Caterpillar to purchase certain trade receivables at a discount. In addition, we receive fee revenue from Caterpillar for our centralized activities benefiting the global factoring program. In the Consolidated Statements of Cash Flows, collection of the discount is included in investing activities as the receivables are collected. Information pertaining to these purchases was as follows: (Millions of dollars) 2021 2020 2019 Purchases made $ 40,140 $ 32,937 $ 42,817 Revenue earned $ 301 $ 308 $ 455 Purchased Receivables as of December 31, $ 4,462 $ 3,646 $ 4,448 We participate in certain marketing programs offered in conjunction with Caterpillar that allow us to periodically offer financing to customers at interest rates that are below market rates. Under these marketing programs, Caterpillar funds an amount at the outset of the transaction, which we then recognize as revenue over the term of the financing. During 2021, 2020 and 2019, relative to such programs, we received $351 million, $353 million and $351 million, respectively. We have Finance receivables, net and Equipment on operating leases, net with Caterpillar of $147 million and $141 million as of December 31, 2021 and 2020, respectively. For the years ended December 31, 2021, 2020 and 2019, we recognized revenues of $25 million, $22 million and $16 million, respectively, related to these finance receivables and operating leases. For the years ended December 31, 2021, 2020 and 2019, we recognized depreciation related to these operating leases of $17 million, $15 million and $11 million, respectively. At December 31, 2021 and 2020, $568 million and $596 million, respectively, of our portfolio was subject to guarantees by Caterpillar and affiliates. Caterpillar provides defined benefit pension plans, defined contribution plans and other postretirement benefit plans to employees. We reimburse Caterpillar for these charges and other employee benefits paid by Caterpillar related to our employees. Caterpillar's U.S. defined benefit pension plans for support and management employees were frozen for certain employees on December 31, 2010 and were frozen for the remaining employees on December 31, 2019. On the respective transition dates employees moved to a retirement benefit that provided a frozen pension benefit and a 401(k) plan that includes a matching contribution and an annual employer contribution. We also participate in the Caterpillar stock incentive plans. In 2021, 2020 and 2019, Caterpillar allocated to us $8 million annually in expenses related to stock based compensation. Further information about these plans is available in Caterpillar’s 2021 Annual Report on Form 10-K filed separately with the Securities and Exchange Commission. Caterpillar provides operational and administrative support, which is integral to the conduct of our business. In 2021, 2020 and 2019, these operational and support charges for which we reimburse Caterpillar amounted to $52 million, $46 million and $46 million, respectively. In addition, we provide administrative support services to certain Caterpillar subsidiaries. Caterpillar reimburses us for these charges. During 2021, 2020 and 2019, these charges amounted to $12 million, $10 million and $13 million, respectively. |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | SEGMENT AND GEOGRAPHIC INFORMATION A. Basis for Segment Information We report information internally for operating segments based on management responsibility. Our operating segments provide financing alternatives to customers and dealers around the world for Caterpillar products and services and vehicles, power generation facilities and marine vessels that, in most cases, incorporate Caterpillar products. Financing plans include operating and finance leases, retail loans, working capital loans to Caterpillar dealers and wholesale financing plans within each of the operating segments. Certain operating segments also purchase short-term trade receivables from Caterpillar. B. Description of Segments We have six operating segments that offer financing services. Following is a brief description of our segments: • North America - Includes our operations in the United States and Canada. • EAME - Includes our operations in Europe, Africa, the Middle East and the Commonwealth of Independent States. • Asia/Pacific - Includes our operations in Australia, New Zealand, China, Japan, Southeast Asia and India. • Latin America - Includes our operations in Mexico and Central and South American countries. • Mining - Provides financing for large mining customers worldwide. • Caterpillar Power Finance - Provides financing worldwide for marine vessels with Caterpillar engines and for Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems. C. Segment Measurement and Reconciliations Cash, debt and other expenses are allocated to our segments based on their respective portfolios. The related Interest expense is calculated based on the amount of allocated debt and the rates associated with that debt. The performance of each segment is assessed based on a consistent leverage ratio. The Provision for credit losses is based on each segment’s respective finance receivable portfolio. Capital expenditures include expenditures for equipment on operating leases and other miscellaneous capital expenditures. Reconciling items are created based on accounting differences between segment reporting and consolidated external reporting. For the reconciliation of Profit before income taxes, we have grouped the reconciling items as follows: • Unallocated - This item is related to corporate requirements and strategies that are considered to be for the benefit of the entire organization. Also included are the consolidated results of the special purpose corporation (see Note 11 for additional information) and other miscellaneous items. • Timing - Timing differences in the recognition of costs between segment reporting and consolidated external reporting. • Methodology - Methodology differences between segment reporting and consolidated external reporting are as follows: ◦ Segment assets include off-balance sheet managed assets for which we maintain servicing responsibilities. ◦ The impact of differences between the actual leverage and the segment leverage ratios. ◦ Interest expense includes realized forward points on foreign currency forward contracts. ◦ The net gain or loss from interest rate derivatives is excluded from segment reporting. Supplemental segment data and reconciliations to consolidated external reporting for the years ended December 31 was as follows: (Millions of dollars) 2021 External Profit Interest Depreciation Provision Assets at December 31, 2021 Capital North America $ 1,401 $ 419 $ 250 $ 542 $ 15 $ 15,755 $ 888 EAME 274 73 21 60 30 5,192 92 Asia/Pacific 340 170 84 7 9 4,117 10 Latin America 202 24 68 8 52 2,405 12 Mining 289 98 37 136 (15) 2,672 206 Caterpillar Power Finance 52 41 13 2 (21) 957 — Total Segments 2,558 825 473 755 70 31,098 1,208 Unallocated 15 (295) 179 — — 1,458 8 Timing (11) 6 — — — 15 — Methodology — 159 (197) — — 18 — Inter-segment Eliminations (1) — — — — — (202) — Total $ 2,562 $ 695 $ 455 $ 755 $ 70 $ 32,387 $ 1,216 2020 External Profit Interest Depreciation Provision Assets at December 31, 2020 Capital North America $ 1,401 $ 312 $ 322 $ 538 $ 69 $ 14,749 $ 864 EAME 271 44 37 62 50 4,981 37 Asia/Pacific 338 145 94 9 38 4,585 7 Latin America 201 41 70 11 33 2,621 7 Mining 279 33 53 137 27 2,575 151 Caterpillar Power Finance 54 (38) 25 1 50 1,308 23 Total Segments 2,544 537 601 758 267 30,819 1,089 Unallocated 25 (287) 207 — (1) 1,576 11 Timing (19) (3) — — — 12 — Methodology — 187 (217) — — (152) — Inter-segment Eliminations (1) — — — — — (264) — Total $ 2,550 $ 434 $ 591 $ 758 $ 266 $ 31,991 $ 1,100 2019 External Profit Interest Depreciation Provision Assets at December 31, 2019 Capital North America $ 1,627 $ 492 $ 389 $ 580 $ 19 $ 15,496 $ 1,105 EAME 281 72 54 65 4 4,918 92 Asia/Pacific 363 167 106 11 16 4,540 11 Latin America 239 42 94 16 29 2,809 11 Mining 326 56 73 138 23 2,966 299 Caterpillar Power Finance 101 (41) 42 3 71 1,673 — Total Segments 2,937 788 758 813 162 32,402 1,518 Unallocated 59 (342) 256 — — 1,896 16 Timing (30) (17) — — — 16 — Methodology — 199 (227) — — (216) — Inter-segment Eliminations (1) — — — — — (405) — Total $ 2,966 $ 628 $ 787 $ 813 $ 162 $ 33,693 $ 1,534 (1) Elimination is primarily related to intercompany loans. Geographic information: (Millions of dollars) 2021 2020 2019 Revenues Inside U.S. $ 1,422 $ 1,443 $ 1,756 All other 1,140 1,107 1,210 Total $ 2,562 $ 2,550 $ 2,966 Equipment on operating leases, net and property 2021 2020 Inside U.S. $ 2,179 $ 2,482 Inside Canada 545 521 All other 532 497 Total $ 3,256 $ 3,500 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the accounts of Cat Financial and consolidated variable interest entities (VIEs) in which Cat Financial is the primary beneficiary. We consolidate all VIEs where we are the primary beneficiary. For VIEs, we assess whether we are the primary beneficiary as prescribed by the accounting guidance on the consolidation of VIEs. The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity. Please refer to Note 11 for more information. We have customers and dealers 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. Credit risk was evaluated and reflected in our financial statements as part of our overall portfolio of finance receivables and related allowance for credit losses. |
Finance Receivables | Finance ReceivablesFinance receivables are generally classified as held for investment and recorded at amortized cost given that we have the intent and ability to hold them for the foreseeable future. Amortized cost is the principal balance outstanding plus accrued interest less write-downs, net of unamortized purchase discounts and deferred fees and costs. |
Revenue Recognition | Revenue Recognition We record finance revenue over the life of the related finance receivable using the interest method, including the accretion of purchased receivables discount and related fee revenue, upfront fees and certain direct origination costs that are deferred. We recognize revenue from rental payments received on operating leases on a straight-line basis over the term of the lease. We suspend recognition of finance revenue and operating lease revenue and place the account on non-accrual status when management determines that collection of future income is not probable (generally after 120 days past due). We resume recognition of revenue and recognize previously suspended income when we consider collection of remaining amounts to be probable. We write off interest earned but uncollected prior to the receivable being placed on non-accrual status through Provision for credit losses when, in the judgment of management, we consider it to be uncollectible. We participate in certain marketing programs offered in conjunction with Caterpillar and/or Caterpillar dealers that allow us to periodically offer financing to customers at interest rates that are below market rates. Under these marketing programs, Caterpillar and/or the dealer funds an amount at the outset of the transaction, which we then recognize as finance revenue over the term of the financing. The funds we receive from Caterpillar and/or the dealer equal an amount that when combined with the customer’s contractual interest provides us with a market interest rate. Other revenue includes: (1) late charges, (2) fee revenue, primarily commitment fees and fees on committed lines of credit or letters of credit, (3) gains and losses on sales of returned or repossessed equipment, (4) impairments on returned or repossessed equipment held for sale, (5) gains and losses on loan and lease sales and (6) other miscellaneous revenues. Other revenue items are recognized in accordance with relevant authoritative pronouncements. |
Depreciation | Depreciation We recognize depreciation for equipment on operating leases using the straight-line method over the lease term, typically one seven |
Residual Values | Residual Values The residual values for operating leases are included in Equipment on operating leases, net in the Consolidated Statements of Financial Position. The residual values for finance leases are included in Finance receivables, net in the Consolidated Statements of Financial Position. During the term of our leases, we monitor residual values. For operating leases, we record adjustments to depreciation expense reflecting changes in residual value estimates prospectively on a straight-line basis. For finance leases, we recognize residual value adjustments through a reduction of finance revenue over the remaining lease term. We evaluate the carrying value of equipment on operating leases for potential impairment when we determine a triggering event has occurred. When a triggering event occurs, we perform a test for recoverability by comparing projected undiscounted future cash flows to the carrying value of the equipment on operating leases. If the test for recoverability identifies a possible impairment, we measure the fair value of the equipment on operating leases in accordance with the fair value measurement framework. We recognize an impairment charge for the amount by which the carrying value of the equipment on operating leases exceeds its estimated fair value. |
Derivative Financial Instruments | Derivative Financial Instruments Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. Our Risk Management Policy (policy) allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate and interest rate 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 and interest rate contracts. All derivatives are recorded at fair value. See Note 9 for additional information. |
Allowance for Credit Losses | Allowance for Credit Losses The allowance for credit losses is management’s estimate of expected losses over the life of our finance receivable portfolio calculated using loss forecast models that take into consideration historical credit loss experience, current economic conditions and forecasts and scenarios that capture country and industry-specific economic factors. In addition, we consider qualitative factors not able to be fully captured in our loss forecast models, including borrower-specific and company-specific factors. These qualitative factors are subjective and require a degree of management judgment. We measure the allowance for credit losses on a collective (pool) basis when similar risk characteristics exist and on an individual basis when we determine that similar risk characteristics do not exist. We identify finance receivables for individual evaluation based on past-due status and 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 our customers operate. The allowance for credit losses attributable to finance receivables that are individually evaluated is based on the present value of expected future cash flows discounted at the receivables’ effective interest rate, the fair value of the collateral for collateral-dependent receivables or the observable market price of the receivable. In determining collateral value, we estimate the current fair market value of the collateral less selling costs. We also consider credit enhancements such as additional collateral and contractual third-party guarantees. See Note 2 for a description of our portfolio segments and allowance methodologies. 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). Generally, 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. |
Income Taxes | Income Taxes We determine the provision for income taxes using the asset and liability approach taking into account guidance related to uncertain tax positions. Tax laws require items to be included in tax filings at different times than the items are reflected in the financial statements. We recognize a current liability for the estimated taxes payable for the current year. Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. We adjust deferred taxes for enacted changes in tax rates and tax laws. We record valuation allowances to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. See Note 12 for further discussion. |
Foreign Currency Translation | Foreign Currency Translation The functional currency for most of our subsidiaries is the respective local currency. We include gains and losses resulting from the remeasurement of foreign currency amounts to the functional currency in Other income (expense) in the Consolidated Statements of Profit. We include gains and losses resulting from translating assets and liabilities from the functional currency to U.S. dollars in Accumulated other comprehensive income (loss) in the Consolidated Statements of Financial Position. |
Estimates in Financial Statements | Estimates in Financial Statements The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts. Significant estimates include residual values for leased assets, allowance for credit losses and income taxes. Actual results may differ from these estimates. |
Finance Receivables (Tables)
Finance Receivables (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Receivables [Abstract] | |
Summary of finance receivables included in the Consolidated Statements of Financial Position | A summary of finance receivables included in the Consolidated Statements of Financial Position as of December 31, was as follows: (Millions of dollars) 2021 2020 Retail loans, net (1) $ 14,817 $ 15,037 Retail leases, net 7,818 7,812 Caterpillar purchased receivables, net 4,462 3,646 Wholesale loans, net (1) 406 533 Wholesale leases, net 11 26 Total finance receivables 27,514 27,054 Less: Allowance for credit losses (337) (479) Total finance receivables, net $ 27,177 $ 26,575 (1) Includes failed sale leasebacks. |
Maturities of finance receivables | Maturities of our finance receivables, as of December 31, 2021, reflect contractual repayments due from borrowers and were as follows: (Millions of dollars) Amounts due in Retail Retail Caterpillar Wholesale Wholesale Total 2022 $ 6,047 $ 3,187 $ 4,488 $ 213 $ 3 $ 13,938 2023 4,055 2,113 — 74 2 6,244 2024 2,651 1,135 — 37 2 3,825 2025 1,493 535 — 11 1 2,040 2026 665 227 — 3 — 895 Thereafter 198 35 — 2 — 235 Total 15,109 7,232 4,488 340 8 27,177 Guaranteed residual value (1) 16 411 — 68 2 497 Unguaranteed residual value (1) 3 750 — 2 2 757 Unearned income (311) (575) (26) (4) (1) (917) Total $ 14,817 $ 7,818 $ 4,462 $ 406 $ 11 $ 27,514 (1) For Retail loans and Wholesale loans, represents residual value on failed sale leasebacks. |
Allowance for credit losses and total finance receivables | An analysis of the allowance for credit losses was as follows: (Millions of dollars) December 31, 2021 December 31, 2020 Allowance for Credit Losses: Customer Dealer Caterpillar Total Customer Dealer Caterpillar Total Beginning Balance $ 431 $ 44 $ 4 $ 479 $ 375 $ 45 $ 4 $ 424 Adjustment to adopt new accounting guidance (1) — — — — 12 — — 12 Write-offs (256) — — (256) (263) — — (263) Recoveries 51 — — 51 41 — — 41 Provision for credit losses 30 38 — 68 262 (1) — 261 Other (5) — — (5) 4 — — 4 Ending Balance $ 251 $ 82 $ 4 $ 337 $ 431 $ 44 $ 4 $ 479 Finance Receivables $ 20,842 $ 2,210 $ 4,462 $ 27,514 $ 19,927 $ 3,481 $ 3,646 $ 27,054 (1) On January 1, 2020, we adopted ASU 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments, which replaced the incurred loss impairment method with a method that reflects lifetime expected credit losses. We recognized the cumulative effect as a pre-tax adjustment to retained earnings as of January 1, 2020. |
Amortized cost of finance receivables in the Customer portfolio segment by origination year | The tables below summarize the aging category of our amortized cost of finance receivables in the Customer portfolio segment by origination year. (Millions of dollars) December 31, 2021 2021 2020 2019 2018 2017 Prior Revolving Total North America Current $ 4,792 $ 2,596 $ 1,426 $ 630 $ 182 $ 32 $ 182 $ 9,840 31-60 days past due 27 32 20 12 4 1 5 101 61-90 days past due 7 8 5 3 1 1 5 30 91+ days past due 9 17 12 13 5 4 5 65 EAME Current 1,499 836 577 352 140 26 — 3,430 31-60 days past due 5 4 3 1 1 — — 14 61-90 days past due 3 3 3 1 — — — 10 91+ days past due 3 11 2 2 — 2 — 20 Asia/Pacific Current 1,456 943 420 119 40 3 36 3,017 31-60 days past due 10 14 10 2 — — — 36 61-90 days past due 3 7 4 1 — — — 15 91+ days past due 2 10 10 3 — — — 25 Mining Current 944 356 332 194 36 161 36 2,059 31-60 days past due 6 — — — — — — 6 61-90 days past due 1 — — — 4 — — 5 91+ days past due — 1 8 9 3 1 — 22 Latin America Current 617 299 160 70 17 18 — 1,181 31-60 days past due 4 7 3 3 1 — — 18 61-90 days past due 3 3 1 1 — — — 8 91+ days past due 4 9 9 7 7 14 — 50 Caterpillar Power Finance Current 120 152 119 70 180 104 101 846 31-60 days past due — — — — — — — — 61-90 days past due — — — — — — — — 91+ days past due — — — — — 44 — 44 Total $ 9,515 $ 5,308 $ 3,124 $ 1,493 $ 621 $ 411 $ 370 $ 20,842 (Millions of dollars) December 31, 2020 2020 2019 2018 2017 2016 Prior Revolving Total North America Current $ 3,780 $ 2,423 $ 1,344 $ 522 $ 212 $ 27 $ 89 $ 8,397 31-60 days past due 52 49 33 16 7 2 — 159 61-90 days past due 22 25 16 9 2 1 — 75 91+ days past due 14 35 31 20 9 4 2 115 EAME Current 1,605 931 501 203 60 18 — 3,318 31-60 days past due 5 15 3 2 — — — 25 61-90 days past due 1 1 2 1 — — — 5 91+ days past due 7 7 12 4 39 43 — 112 Asia/Pacific Current 1,583 933 412 115 32 6 32 3,113 31-60 days past due 13 23 13 6 — — — 55 61-90 days past due 7 11 7 1 — — — 26 91+ days past due 4 10 9 3 — — — 26 Mining Current 515 574 289 181 92 151 137 1,939 31-60 days past due 5 — 5 1 — — — 11 61-90 days past due — — — — — — — — 91+ days past due — 11 8 2 — — 1 22 Latin America Current 561 348 151 48 13 34 — 1,155 31-60 days past due 3 6 4 3 — — — 16 61-90 days past due 1 7 6 3 2 — — 19 91+ days past due 2 14 11 24 5 4 — 60 Caterpillar Power Finance Current 217 199 111 273 99 117 119 1,135 31-60 days past due — — 6 — — — — 6 61-90 days past due — — — — — 9 — 9 91+ days past due 2 — 20 3 25 79 — 129 Total $ 8,399 $ 5,622 $ 2,994 $ 1,440 $ 597 $ 495 $ 380 $ 19,927 |
Aging related to finance receivables | The tables below summarize the aging category of our amortized cost of finance receivables in the Caterpillar Purchased Receivables portfolio segment. (Millions of dollars) December 31, 2021 31-60 61-90 91+ Total Current Total Finance North America $ 8 $ 6 $ 5 $ 19 $ 2,499 $ 2,518 EAME 1 — 1 2 844 846 Asia/Pacific — — 1 1 620 621 Mining — — — — — — Latin America 1 1 — 2 472 474 Caterpillar Power Finance — — — — 3 3 Total $ 10 $ 7 $ 7 $ 24 $ 4,438 $ 4,462 (Millions of dollars) December 31, 2020 31-60 61-90 91+ Total Current Total Finance North America $ 14 $ 11 $ 6 $ 31 $ 1,889 $ 1,920 EAME 1 — 1 2 632 634 Asia/Pacific 2 1 1 4 581 585 Mining — — — — — — Latin America — — — — 501 501 Caterpillar Power Finance — — — — 6 6 Total $ 17 $ 12 $ 8 $ 37 $ 3,609 $ 3,646 |
Finance receivables on non-accrual status | In our 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: (Millions of dollars) December 31, 2021 December 31, 2020 Amortized Cost Amortized Cost Non-accrual Non-accrual 91+ Still Non-accrual Non-accrual 91+ Still North America $ 47 $ 9 $ 12 $ 86 $ 1 $ 34 EAME 18 1 2 113 1 1 Asia/Pacific 19 — 7 13 — 13 Mining 8 1 14 21 1 — Latin America 52 4 1 63 — 1 Caterpillar Power Finance 40 11 — 170 17 — Total $ 184 $ 26 $ 36 $ 466 $ 20 $ 49 There was $12 million, $12 million and $28 million of interest income recognized during the years ended December 31, 2021, 2020 and 2019, respectively, for customer finance receivables on non-accrual status. |
Finance receivables modified as TDRs | Finance receivables in the Customer portfolio segment modified as TDRs for the years ended December 31, were as follows: (Dollars in millions) 2021 2020 2019 Pre-TDR Post-TDR Pre-TDR Post-TDR Pre-TDR Recorded Investment Post-TDR Recorded Investment North America $ 6 $ 6 $ 13 $ 13 $ 11 $ 11 EAME 3 3 — — 17 17 Asia/Pacific 4 4 12 12 — — Mining 11 5 35 35 8 8 Latin America 12 12 45 45 5 3 Caterpillar Power Finance 26 22 115 115 168 165 Total $ 62 $ 52 $ 220 $ 220 $ 209 $ 204 TDRs 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 for the years ended December 31, : (Dollars in millions) 2021 2020 2019 Post-TDR Post-TDR Post-TDR North America $ 1 $ 8 $ 5 EAME — 10 — Asia/Pacific 6 2 — Mining — 10 — Latin America 15 1 — Caterpillar Power Finance 7 18 10 Total $ 29 $ 49 $ 15 |
Equipment on Operating Leases (
Equipment on Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Carrying amount of Equipment on operating leases, net | The carrying amount of Equipment on operating leases, net in the Consolidated Statements of Financial Position as of December 31, was as follows: (Millions of dollars) 2021 2020 Equipment on operating leases, at cost $ 4,589 $ 4,984 Less: Accumulated depreciation (1,466) (1,618) Equipment on operating leases, net $ 3,123 $ 3,366 |
Schedule of payments due for operating leases | At December 31, 2021, payments due for operating leases were as follows: (Millions of dollars) 2022 2023 2024 2025 2026 Thereafter Total $ 686 $ 431 $ 245 $ 129 $ 46 $ 7 $ 1,544 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other Assets [Abstract] | |
Schedule of Other assets | The components of Other assets as of December 31, were as follows: (Millions of dollars) 2021 2020 Customer and other miscellaneous receivables $ 400 $ 457 Collateral held for resale, at net realizable value 168 380 Deferred and refundable income taxes 126 168 Property and equipment, net 133 134 Other (1) 261 144 Total Other assets $ 1,088 $ 1,283 (1) Includes Derivative financial instruments. See Note 9 for additional information. |
Short-Term Borrowings (Tables)
Short-Term Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Short-term Debt [Abstract] | |
Short-term borrowings | Short-term borrowings outstanding as of December 31, were comprised of the following: (Millions of dollars) 2021 2020 Balance Avg. Rate Balance Avg. Rate Commercial paper, net $ 4,896 0.1% $ 1,321 0.1 % Bank borrowings and other 213 4.5% 307 3.5 % Variable denomination floating rate demand notes 286 0.2% 377 0.3 % Total $ 5,395 $ 2,005 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Long-term Debt, Unclassified [Abstract] | |
Long-term debt | Long-term debt outstanding as of December 31, was comprised of the following: (Millions of dollars) 2021 2020 Balance Avg. Rate Balance Avg. Rate Medium-term notes $ 22,283 1.6% $ 23,536 2.2% Unamortized discount and debt issuance costs (40) (46) Fair value adjustments 3 60 Medium-term notes, net 22,246 23,550 Bank borrowings and other 348 4.1% 429 6.0% Total $ 22,594 $ 23,979 |
Maturities of Long-term debt outstanding (excluding fair value adjustments) in each of the next five years | Maturities of Long-term debt outstanding (excluding fair value adjustments) as of December 31, 2021, in each of the next five years, are as follows: ( Millions of dollars) 2022 $ 6,307 2023 5,221 2024 7,129 2025 1,629 2026 1,555 |
Derivative Financial Instrume_2
Derivative Financial Instruments and Risk Management (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Location and fair value of derivative instruments reported in the Consolidated Statements of Financial Position | The location and fair value of derivative instruments reported in the Consolidated Statements of Financial Position as of December 31, were as follows: (Millions of dollars) Asset (Liability) Fair Value Consolidated Statements of 2021 2020 Designated derivatives Interest rate contracts Other assets $ 38 $ 59 Interest rate contracts Accrued expenses (15) (5) Cross currency contracts Other assets 142 2 Cross currency contracts Accrued expenses (32) (148) $ 133 $ (92) Undesignated derivatives Foreign exchange contracts Other assets $ 28 $ 17 Foreign exchange contracts Accrued expenses (36) (107) Cross currency contracts Other assets — 7 $ (8) $ (83) |
Schedule of effect of derivatives designated as cash flow hedging instruments on the Consolidated Statements of Profit | The effect of derivatives designated as hedging instruments on the Consolidated Statements of Profit was as follows: Cash Flow Hedges (Millions of dollars) Year Ended December 31, 2021 Recognized in Earnings Amount of Classification Amount of Amount of the line Interest rate contracts $ 19 Interest expense $ (28) $ 455 Cross currency contracts 190 Other income (expense) 199 (23) Interest expense (5) 455 $ 209 $ 166 Year Ended December 31, 2020 Recognized in Earnings Amount of Classification Amount of Amount of the line Interest rate contracts $ (23) Interest expense $ (52) $ 591 Cross currency contracts (130) Other income (expense) (164) (25) Interest expense 32 591 $ (153) $ (184) Year Ended December 31, 2019 Recognized in Earnings Amount of Classification Amount of Amount of the line Interest rate contracts $ (70) Interest expense $ (8) $ 787 Cross currency contracts 93 Other income (expense) 37 (24) Interest expense 33 787 $ 23 $ 62 |
Schedule of effect of derivatives not designated as hedging instruments on the Consolidated Statements of Profit | The effect of derivatives not designated as hedging instruments on the Consolidated Statements of Profit was as follows for the years ended December 31: (Millions of dollars) Classification 2021 2020 2019 Foreign exchange contracts Other income (expense) $ 89 $ (121) $ (38) Cross currency contracts Other income (expense) — 9 1 $ 89 $ (112) $ (37) |
Schedule of effect of net settlement provisions of the master netting agreements on our derivative balances | The effect of net settlement provisions of the master netting agreements on our derivative balances upon an event of default or a termination event as of December 31, was as follows: (Millions of dollars) 2021 2020 Derivative Assets Gross Amount of Recognized Assets $ 208 $ 85 Gross Amounts Offset — — Net Amount of Assets (1) 208 85 Gross Amounts Not Offset (67) (57) Net Amount $ 141 $ 28 Derivative Liabilities Gross Amount of Recognized Liabilities $ (83) $ (260) Gross Amounts Offset — — Net Amount of Liabilities (1) (83) (260) Gross Amounts Not Offset 67 57 Net Amount $ (16) $ (203) (1) As presented in the Consolidated Statements of Financial Position. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated other comprehensive income (loss) | Changes in Accumulated other comprehensive income (loss) included in the Consolidated Statements of Changes in Shareholder’s Equity consisted of the following: (Millions of dollars) 2021 2020 2019 Foreign currency translation Balance at beginning of year $ (551) $ (777) $ (889) Adjustment to adopt new accounting guidance (1) — — 98 Balance at January 1 (551) (777) (791) Gains (losses) on foreign currency translation (169) 179 18 Less: Tax provision/(benefit) 42 (47) 4 Net gains (losses) on foreign currency translation (211) 226 14 Other comprehensive income (loss), net of tax (211) 226 14 Balance at end of year $ (762) $ (551) $ (777) Derivative financial instruments Balance at beginning of year $ (44) $ (68) $ (36) Adjustment to adopt new accounting guidance (1) — — (1) Balance at January 1 (44) (68) (37) Gains (losses) deferred 209 (153) 23 Less: Tax provision/(benefit) 24 (33) 6 Net gains (losses) deferred 185 (120) 17 (Gains) losses reclassified to earnings (166) 184 (62) Less: Tax (provision)/benefit (13) 40 (14) Net (gains) losses reclassified to earnings (153) 144 (48) Other comprehensive income (loss), net of tax 32 24 (31) Balance at end of year $ (12) $ (44) $ (68) Total Accumulated other comprehensive income (loss) at end of year $ (774) $ (595) $ (845) (1) Adjustment to adopt new accounting guidance related to reclassification of certain tax effects from Accumulated other comprehensive income (loss). |
Commitments and Contingent Li_2
Commitments and Contingent Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Components of lease cost | The components of lease cost were as follows for the years ended December 31: (Millions of dollars) 2021 2020 Operating lease cost $ 7 $ 8 Short-term lease cost $ — $ 1 Variable lease cost $ 1 $ — |
Supplemental information related to operating leases | Supplemental information related to operating leases as of December 31, was as follows: (Millions of dollars) 2021 2020 Other assets $ 21 $ 23 Other liabilities $ 21 $ 24 Weighted average remaining lease term 5 years 5 years Weighted average discount rates 1.6 % 1.9 % |
Maturities of operating lease liabilities | At December 31, 2021, maturities of operating lease liabilities were as follows: (Millions of dollars) 2022 $ 6 2023 5 2024 4 2025 3 2026 2 Thereafter 3 Total lease payments 23 Less: imputed interest (2) Total $ 21 |
Supplemental cash flow information related to operating leases | Supplemental cash flow information related to operating leases was as follows for the years ended December 31: (Millions of dollars) 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities $ 7 $ 8 Right-of-use assets obtained in exchange for operating lease obligations $ 5 $ 8 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of the U.S. federal statutory rate to effective rate | A reconciliation of the U.S. federal statutory rate to the effective rate for the years ended December 31, was as follows: (Millions of dollars) 2021 2020 2019 Taxes computed at U.S. statutory rates $ 146 21.0 % $ 91 21.0 % $ 132 21.0 % (Decreases) increases in taxes resulting from: State Income Tax, net of Federal Tax 3 0.4 % (1) (0.2) % 1 0.2 % Non-U.S. Subsidiaries taxed at other than the U.S. rate 22 3.2 % 26 6.0 % 34 5.4 % Prior year tax adjustments — — % 3 0.7 % 9 1.4 % Valuation allowances 5 0.7 % 10 2.3 % 21 3.4 % Other, net 2 0.3 % (3) (0.7) % (1) (0.2) % Provision for income taxes $ 178 25.6 % $ 126 29.1 % $ 196 31.2 % |
Components of Profit before income taxes | The components of Profit before income taxes for the years ended December 31, were as follows: (Millions of dollars) 2021 2020 2019 U.S. $ 288 $ 99 $ 257 Non-U.S. 407 335 371 Total $ 695 $ 434 $ 628 |
Components of the Provision for income taxes | The components of the Provision for income taxes were as follows for the years ended December 31: (Millions of dollars) 2021 2020 2019 Current income tax provision: U.S. $ 101 $ 46 $ 13 Non-U.S. 162 80 161 State (U.S.) 5 1 2 268 127 176 Deferred income tax provision: U.S. (56) (45) 32 Non-U.S. (33) 46 (11) State (U.S.) (1) (2) (1) (90) (1) 20 Total Provision for income taxes $ 178 $ 126 $ 196 |
Deferred income tax assets and liabilities | The amounts of deferred income taxes at December 31, included in the following lines in our Consolidated Statements of Financial Position were: (Millions of dollars) 2021 2020 Assets: Other assets $ 107 $ 102 Liabilities: Other liabilities (592) (629) Deferred income taxes, net $ (485) $ (527) Our consolidated deferred income taxes consisted of the following components as of December 31: (Millions of dollars) 2021 2020 Deferred income tax assets: Allowance for credit losses $ 90 $ 100 Tax carryforwards 78 61 168 161 Deferred income tax liabilities (primarily lease basis differences) (425) (508) Valuation allowance for deferred income tax assets (39) (33) Deferred income tax on translation adjustment (189) (147) Deferred income taxes, net $ (485) $ (527) |
Summary of net operating loss carryforwards | As of December 31, 2021, amounts and expiration dates of net operating loss (NOL) carryforwards in various U.S. state taxing jurisdictions were: (Millions of dollars) 2022 2023 2024 2025 2026-2041 Unlimited Total $ 5 $ 6 $ — $ — $ 77 $ 5 $ 93 The gross deferred income tax asset associated with these NOL carryforwards is $7 million as of December 31, 2021, partially offset by a valuation allowance of $1 million. In some U.S. state income tax jurisdictions, we join with other Caterpillar entities in filing combined income tax returns. In other U.S. state income tax jurisdictions, we file on a separate, stand-alone basis. At December 31, 2021, approximately $1 million of U.S. foreign tax credits from 2017 were available for carryforward. These credits expire in 2028. As of December 31, 2021, amounts and expiration dates of NOL carryforwards in various non-U.S. taxing jurisdictions were: (Millions of dollars) 2022 2023 2024 2025 2026-2032 Unlimited Total $ — $ 2 $ 3 $ 1 $ 32 $ 284 $ 322 Valuation allowances of $38 million have been recorded at certain non-U.S. subsidiaries that have not yet demonstrated consistent and/or sustainable profitability to support the recognition of net deferred income tax assets. |
Schedule of unrecognized tax benefits | A reconciliation of the beginning and ending amounts of gross unrecognized income tax benefits for uncertain income tax positions, including positions impacting only the timing of income tax benefits was as follows: (Millions of dollars) 2021 2020 2019 Reconciliation of unrecognized income tax benefits (1) : Balance at beginning of year $ 119 $ 119 $ 119 Additions for income tax positions related to current year 2 — — Additions for income tax positions related to prior year 10 — — Balance at end of year $ 131 $ 119 $ 119 Amount that, if recognized, would impact the effective tax rate $ 131 $ 119 $ 119 (1) Foreign currency translation amounts are included within each line as applicable. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair values of financial instruments | Fair values of our financial instruments not carried at fair value as of December 31, were as follows: (Millions of dollars) 2021 2020 Carrying Fair Carrying Fair Fair Reference Assets Finance receivables, net (excluding finance leases (1) ) $ 19,068 $ 19,047 $ 18,599 $ 18,910 3 Note 2 Liabilities Long-term debt $ 22,594 $ 22,797 $ 23,979 $ 24,614 2 Note 8 (1) Represents finance leases and failed sale leasebacks of $8.11 billion and $7.98 billion as of December 31, 2021 and 2020, respectively. |
Transactions with Related Par_2
Transactions with Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | We have variable amount and term lending agreements and other notes receivable with Caterpillar. Under these agreements, we may borrow up to $2.40 billion from Caterpillar, and Caterpillar may borrow up to $1.73 billion from us. The variable amount lending agreements are in effect for indefinite periods of time and may be changed or terminated by either party with 30 days notice. The term lending agreements have remaining maturities ranging up to ten years. We extended a $2 billion committed credit facility to Caterpillar, which expired in February 2019. Under this agreement, we received a fee from Caterpillar based on amounts drawn under the credit facility and a commitment fee for the undrawn amounts under the credit facility. Information concerning these agreements was as follows: (Millions of dollars) 2021 2020 2019 Payable to Caterpillar - borrowings as of December 31, $ 22 $ 1,022 $ 618 Payable to Caterpillar - other as of December 31, $ 73 $ 65 $ 75 Notes receivable from Caterpillar as of December 31, $ 389 $ 356 $ 296 Other receivables from Caterpillar as of December 31, (2) $ 70 $ 65 $ 64 Interest expense $ — $ 2 $ 32 Interest income on Notes Receivable with Caterpillar (1) $ 14 $ 14 $ 26 Fees on committed credit facility extended to Caterpillar (1) $ — $ — $ 5 (1) Included in Other revenues, net in the Consolidated Statements of Profit. (2) Included in Other assets in the Consolidated Statements of Financial Position. We have agreements with Caterpillar to purchase certain trade receivables at a discount. In addition, we receive fee revenue from Caterpillar for our centralized activities benefiting the global factoring program. In the Consolidated Statements of Cash Flows, collection of the discount is included in investing activities as the receivables are collected. Information pertaining to these purchases was as follows: (Millions of dollars) 2021 2020 2019 Purchases made $ 40,140 $ 32,937 $ 42,817 Revenue earned $ 301 $ 308 $ 455 Purchased Receivables as of December 31, $ 4,462 $ 3,646 $ 4,448 |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Supplemental segment data and reconciliations to consolidated external reporting for the years ended December 31 was as follows: (Millions of dollars) 2021 External Profit Interest Depreciation Provision Assets at December 31, 2021 Capital North America $ 1,401 $ 419 $ 250 $ 542 $ 15 $ 15,755 $ 888 EAME 274 73 21 60 30 5,192 92 Asia/Pacific 340 170 84 7 9 4,117 10 Latin America 202 24 68 8 52 2,405 12 Mining 289 98 37 136 (15) 2,672 206 Caterpillar Power Finance 52 41 13 2 (21) 957 — Total Segments 2,558 825 473 755 70 31,098 1,208 Unallocated 15 (295) 179 — — 1,458 8 Timing (11) 6 — — — 15 — Methodology — 159 (197) — — 18 — Inter-segment Eliminations (1) — — — — — (202) — Total $ 2,562 $ 695 $ 455 $ 755 $ 70 $ 32,387 $ 1,216 2020 External Profit Interest Depreciation Provision Assets at December 31, 2020 Capital North America $ 1,401 $ 312 $ 322 $ 538 $ 69 $ 14,749 $ 864 EAME 271 44 37 62 50 4,981 37 Asia/Pacific 338 145 94 9 38 4,585 7 Latin America 201 41 70 11 33 2,621 7 Mining 279 33 53 137 27 2,575 151 Caterpillar Power Finance 54 (38) 25 1 50 1,308 23 Total Segments 2,544 537 601 758 267 30,819 1,089 Unallocated 25 (287) 207 — (1) 1,576 11 Timing (19) (3) — — — 12 — Methodology — 187 (217) — — (152) — Inter-segment Eliminations (1) — — — — — (264) — Total $ 2,550 $ 434 $ 591 $ 758 $ 266 $ 31,991 $ 1,100 2019 External Profit Interest Depreciation Provision Assets at December 31, 2019 Capital North America $ 1,627 $ 492 $ 389 $ 580 $ 19 $ 15,496 $ 1,105 EAME 281 72 54 65 4 4,918 92 Asia/Pacific 363 167 106 11 16 4,540 11 Latin America 239 42 94 16 29 2,809 11 Mining 326 56 73 138 23 2,966 299 Caterpillar Power Finance 101 (41) 42 3 71 1,673 — Total Segments 2,937 788 758 813 162 32,402 1,518 Unallocated 59 (342) 256 — — 1,896 16 Timing (30) (17) — — — 16 — Methodology — 199 (227) — — (216) — Inter-segment Eliminations (1) — — — — — (405) — Total $ 2,966 $ 628 $ 787 $ 813 $ 162 $ 33,693 $ 1,534 (1) Elimination is primarily related to intercompany loans. |
Geographic information | Geographic information: (Millions of dollars) 2021 2020 2019 Revenues Inside U.S. $ 1,422 $ 1,443 $ 1,756 All other 1,140 1,107 1,210 Total $ 2,562 $ 2,550 $ 2,966 Equipment on operating leases, net and property 2021 2020 Inside U.S. $ 2,179 $ 2,482 Inside Canada 545 521 All other 532 497 Total $ 3,256 $ 3,500 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Period after which collection of future income is considered as not probable | 120 days |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details 2) | Dec. 31, 2021 |
Minimum | |
Property, Plant and Equipment | |
Lease term used to calculate depreciation | 1 year |
Maximum | |
Property, Plant and Equipment | |
Lease term used to calculate depreciation | 7 years |
Finance Receivables (Details)
Finance Receivables (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable | |||
Total finance receivables | $ 27,514 | $ 27,054 | |
Less: Allowance for credit losses | (337) | (479) | $ (424) |
Total finance receivables, net | 27,177 | 26,575 | |
Retail loans | |||
Accounts, Notes, Loans and Financing Receivable | |||
Total finance receivables | 14,817 | 15,037 | |
Retail leases | |||
Accounts, Notes, Loans and Financing Receivable | |||
Total finance receivables | 7,818 | 7,812 | |
Caterpillar purchased receivables | |||
Accounts, Notes, Loans and Financing Receivable | |||
Total finance receivables | 4,462 | 3,646 | $ 4,448 |
Wholesale loans | |||
Accounts, Notes, Loans and Financing Receivable | |||
Total finance receivables | 406 | 533 | |
Wholesale leases | |||
Accounts, Notes, Loans and Financing Receivable | |||
Total finance receivables | $ 11 | $ 26 |
Finance Receivables (Details 2)
Finance Receivables (Details 2) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accounts, Notes, Loans and Financing Receivable | |||
2022 | $ 13,938 | ||
2023 | 6,244 | ||
2024 | 3,825 | ||
2025 | 2,040 | ||
2026 | 895 | ||
Thereafter | 235 | ||
Total | 27,177 | ||
Guaranteed residual value | 497 | ||
Unguaranteed residual value | 757 | ||
Unearned income | (917) | ||
Total Finance Receivables | 27,514 | $ 27,054 | |
Finance lease revenue (included in retail and wholesale finance revenue) | 481 | 491 | $ 518 |
Retail loans | |||
Accounts, Notes, Loans and Financing Receivable | |||
2022 | 6,047 | ||
2023 | 4,055 | ||
2024 | 2,651 | ||
2025 | 1,493 | ||
2026 | 665 | ||
Thereafter | 198 | ||
Total | 15,109 | ||
Guaranteed residual value | 16 | ||
Unguaranteed residual value | 3 | ||
Unearned income | (311) | ||
Total Finance Receivables | 14,817 | 15,037 | |
Retail leases | |||
Accounts, Notes, Loans and Financing Receivable | |||
2022 | 3,187 | ||
2023 | 2,113 | ||
2024 | 1,135 | ||
2025 | 535 | ||
2026 | 227 | ||
Thereafter | 35 | ||
Total | 7,232 | ||
Guaranteed residual value | 411 | ||
Unguaranteed residual value | 750 | ||
Unearned income | (575) | ||
Total Finance Receivables | 7,818 | 7,812 | |
Caterpillar Purchased Receivables | |||
Accounts, Notes, Loans and Financing Receivable | |||
2022 | 4,488 | ||
2023 | 0 | ||
2024 | 0 | ||
2025 | 0 | ||
2026 | 0 | ||
Thereafter | 0 | ||
Total | 4,488 | ||
Guaranteed residual value | 0 | ||
Unguaranteed residual value | 0 | ||
Unearned income | (26) | ||
Total Finance Receivables | 4,462 | 3,646 | $ 4,448 |
Wholesale loans | |||
Accounts, Notes, Loans and Financing Receivable | |||
2022 | 213 | ||
2023 | 74 | ||
2024 | 37 | ||
2025 | 11 | ||
2026 | 3 | ||
Thereafter | 2 | ||
Total | 340 | ||
Guaranteed residual value | 68 | ||
Unguaranteed residual value | 2 | ||
Unearned income | (4) | ||
Total Finance Receivables | 406 | 533 | |
Wholesale leases | |||
Accounts, Notes, Loans and Financing Receivable | |||
2022 | 3 | ||
2023 | 2 | ||
2024 | 2 | ||
2025 | 1 | ||
2026 | 0 | ||
Thereafter | 0 | ||
Total | 8 | ||
Guaranteed residual value | 2 | ||
Unguaranteed residual value | 2 | ||
Unearned income | (1) | ||
Total Finance Receivables | $ 11 | $ 26 |
Finance Receivables (Details 3)
Finance Receivables (Details 3) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Financing Receivable, Allowance for Credit Losses | ||
Beginning Balance | $ 479 | $ 424 |
Write-offs | (256) | (263) |
Recoveries | 51 | 41 |
Provision for credit losses | 68 | 261 |
Other | (5) | 4 |
Ending Balance | 337 | 479 |
Finance Receivables | 27,514 | 27,054 |
Adjustment to adopt new accounting guidance | Accounting Standards Update 2016-13 | ||
Financing Receivable, Allowance for Credit Losses | ||
Beginning Balance | 0 | 12 |
Ending Balance | 0 | |
Customer | ||
Financing Receivable, Allowance for Credit Losses | ||
Beginning Balance | 431 | 375 |
Write-offs | (256) | (263) |
Recoveries | 51 | 41 |
Provision for credit losses | 30 | 262 |
Other | (5) | 4 |
Ending Balance | 251 | 431 |
Finance Receivables | 20,842 | 19,927 |
Customer | Adjustment to adopt new accounting guidance | Accounting Standards Update 2016-13 | ||
Financing Receivable, Allowance for Credit Losses | ||
Beginning Balance | 0 | 12 |
Ending Balance | 0 | |
Dealer | ||
Financing Receivable, Allowance for Credit Losses | ||
Beginning Balance | 44 | 45 |
Write-offs | 0 | 0 |
Recoveries | 0 | 0 |
Provision for credit losses | 38 | (1) |
Other | 0 | 0 |
Ending Balance | 82 | 44 |
Finance Receivables | 2,210 | 3,481 |
Dealer | Adjustment to adopt new accounting guidance | Accounting Standards Update 2016-13 | ||
Financing Receivable, Allowance for Credit Losses | ||
Beginning Balance | 0 | 0 |
Ending Balance | 0 | |
Caterpillar Purchased Receivables | ||
Financing Receivable, Allowance for Credit Losses | ||
Beginning Balance | 4 | 4 |
Write-offs | 0 | 0 |
Recoveries | 0 | 0 |
Provision for credit losses | 0 | 0 |
Other | 0 | 0 |
Ending Balance | 4 | 4 |
Finance Receivables | 4,462 | 3,646 |
Caterpillar Purchased Receivables | Adjustment to adopt new accounting guidance | Accounting Standards Update 2016-13 | ||
Financing Receivable, Allowance for Credit Losses | ||
Beginning Balance | $ 0 | 0 |
Ending Balance | $ 0 |
Finance Receivables (Details 4)
Finance Receivables (Details 4) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Financing Receivable, Credit Quality Indicator | ||
Total Finance Receivables | $ 27,514 | $ 27,054 |
Customer | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 9,515 | 8,399 |
2020 and 2019, respectively | 5,308 | 5,622 |
2019 and 2018, respectively | 3,124 | 2,994 |
2018 and 2017, respectively | 1,493 | 1,440 |
2017 and 2016, respectively | 621 | 597 |
Prior | 411 | 495 |
Revolving Finance Receivables | 370 | 380 |
Total Finance Receivables | 20,842 | 19,927 |
Customer | North America | Current | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 4,792 | 3,780 |
2020 and 2019, respectively | 2,596 | 2,423 |
2019 and 2018, respectively | 1,426 | 1,344 |
2018 and 2017, respectively | 630 | 522 |
2017 and 2016, respectively | 182 | 212 |
Prior | 32 | 27 |
Revolving Finance Receivables | 182 | 89 |
Total Finance Receivables | 9,840 | 8,397 |
Customer | North America | 31-60 days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 27 | 52 |
2020 and 2019, respectively | 32 | 49 |
2019 and 2018, respectively | 20 | 33 |
2018 and 2017, respectively | 12 | 16 |
2017 and 2016, respectively | 4 | 7 |
Prior | 1 | 2 |
Revolving Finance Receivables | 5 | 0 |
Total Finance Receivables | 101 | 159 |
Customer | North America | 61-90 days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 7 | 22 |
2020 and 2019, respectively | 8 | 25 |
2019 and 2018, respectively | 5 | 16 |
2018 and 2017, respectively | 3 | 9 |
2017 and 2016, respectively | 1 | 2 |
Prior | 1 | 1 |
Revolving Finance Receivables | 5 | 0 |
Total Finance Receivables | 30 | 75 |
Customer | North America | 91+ days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 9 | 14 |
2020 and 2019, respectively | 17 | 35 |
2019 and 2018, respectively | 12 | 31 |
2018 and 2017, respectively | 13 | 20 |
2017 and 2016, respectively | 5 | 9 |
Prior | 4 | 4 |
Revolving Finance Receivables | 5 | 2 |
Total Finance Receivables | 65 | 115 |
Customer | EAME | Current | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 1,499 | 1,605 |
2020 and 2019, respectively | 836 | 931 |
2019 and 2018, respectively | 577 | 501 |
2018 and 2017, respectively | 352 | 203 |
2017 and 2016, respectively | 140 | 60 |
Prior | 26 | 18 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 3,430 | 3,318 |
Customer | EAME | 31-60 days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 5 | 5 |
2020 and 2019, respectively | 4 | 15 |
2019 and 2018, respectively | 3 | 3 |
2018 and 2017, respectively | 1 | 2 |
2017 and 2016, respectively | 1 | 0 |
Prior | 0 | 0 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 14 | 25 |
Customer | EAME | 61-90 days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 3 | 1 |
2020 and 2019, respectively | 3 | 1 |
2019 and 2018, respectively | 3 | 2 |
2018 and 2017, respectively | 1 | 1 |
2017 and 2016, respectively | 0 | 0 |
Prior | 0 | 0 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 10 | 5 |
Customer | EAME | 91+ days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 3 | 7 |
2020 and 2019, respectively | 11 | 7 |
2019 and 2018, respectively | 2 | 12 |
2018 and 2017, respectively | 2 | 4 |
2017 and 2016, respectively | 0 | 39 |
Prior | 2 | 43 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 20 | 112 |
Customer | Asia/Pacific | Current | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 1,456 | 1,583 |
2020 and 2019, respectively | 943 | 933 |
2019 and 2018, respectively | 420 | 412 |
2018 and 2017, respectively | 119 | 115 |
2017 and 2016, respectively | 40 | 32 |
Prior | 3 | 6 |
Revolving Finance Receivables | 36 | 32 |
Total Finance Receivables | 3,017 | 3,113 |
Customer | Asia/Pacific | 31-60 days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 10 | 13 |
2020 and 2019, respectively | 14 | 23 |
2019 and 2018, respectively | 10 | 13 |
2018 and 2017, respectively | 2 | 6 |
2017 and 2016, respectively | 0 | 0 |
Prior | 0 | 0 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 36 | 55 |
Customer | Asia/Pacific | 61-90 days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 3 | 7 |
2020 and 2019, respectively | 7 | 11 |
2019 and 2018, respectively | 4 | 7 |
2018 and 2017, respectively | 1 | 1 |
2017 and 2016, respectively | 0 | 0 |
Prior | 0 | 0 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 15 | 26 |
Customer | Asia/Pacific | 91+ days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 2 | 4 |
2020 and 2019, respectively | 10 | 10 |
2019 and 2018, respectively | 10 | 9 |
2018 and 2017, respectively | 3 | 3 |
2017 and 2016, respectively | 0 | 0 |
Prior | 0 | 0 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 25 | 26 |
Customer | Mining | Current | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 944 | 515 |
2020 and 2019, respectively | 356 | 574 |
2019 and 2018, respectively | 332 | 289 |
2018 and 2017, respectively | 194 | 181 |
2017 and 2016, respectively | 36 | 92 |
Prior | 161 | 151 |
Revolving Finance Receivables | 36 | 137 |
Total Finance Receivables | 2,059 | 1,939 |
Customer | Mining | 31-60 days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 6 | 5 |
2020 and 2019, respectively | 0 | 0 |
2019 and 2018, respectively | 0 | 5 |
2018 and 2017, respectively | 0 | 1 |
2017 and 2016, respectively | 0 | 0 |
Prior | 0 | 0 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 6 | 11 |
Customer | Mining | 61-90 days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 1 | 0 |
2020 and 2019, respectively | 0 | 0 |
2019 and 2018, respectively | 0 | 0 |
2018 and 2017, respectively | 0 | 0 |
2017 and 2016, respectively | 4 | 0 |
Prior | 0 | 0 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 5 | 0 |
Customer | Mining | 91+ days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 0 | 0 |
2020 and 2019, respectively | 1 | 11 |
2019 and 2018, respectively | 8 | 8 |
2018 and 2017, respectively | 9 | 2 |
2017 and 2016, respectively | 3 | 0 |
Prior | 1 | 0 |
Revolving Finance Receivables | 0 | 1 |
Total Finance Receivables | 22 | 22 |
Customer | Latin America | Current | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 617 | 561 |
2020 and 2019, respectively | 299 | 348 |
2019 and 2018, respectively | 160 | 151 |
2018 and 2017, respectively | 70 | 48 |
2017 and 2016, respectively | 17 | 13 |
Prior | 18 | 34 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 1,181 | 1,155 |
Customer | Latin America | 31-60 days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 4 | 3 |
2020 and 2019, respectively | 7 | 6 |
2019 and 2018, respectively | 3 | 4 |
2018 and 2017, respectively | 3 | 3 |
2017 and 2016, respectively | 1 | 0 |
Prior | 0 | 0 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 18 | 16 |
Customer | Latin America | 61-90 days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 3 | 1 |
2020 and 2019, respectively | 3 | 7 |
2019 and 2018, respectively | 1 | 6 |
2018 and 2017, respectively | 1 | 3 |
2017 and 2016, respectively | 0 | 2 |
Prior | 0 | 0 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 8 | 19 |
Customer | Latin America | 91+ days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 4 | 2 |
2020 and 2019, respectively | 9 | 14 |
2019 and 2018, respectively | 9 | 11 |
2018 and 2017, respectively | 7 | 24 |
2017 and 2016, respectively | 7 | 5 |
Prior | 14 | 4 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 50 | 60 |
Customer | Caterpillar Power Finance | Current | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 120 | 217 |
2020 and 2019, respectively | 152 | 199 |
2019 and 2018, respectively | 119 | 111 |
2018 and 2017, respectively | 70 | 273 |
2017 and 2016, respectively | 180 | 99 |
Prior | 104 | 117 |
Revolving Finance Receivables | 101 | 119 |
Total Finance Receivables | 846 | 1,135 |
Customer | Caterpillar Power Finance | 31-60 days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 0 | 0 |
2020 and 2019, respectively | 0 | 0 |
2019 and 2018, respectively | 0 | 6 |
2018 and 2017, respectively | 0 | 0 |
2017 and 2016, respectively | 0 | 0 |
Prior | 0 | 0 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 0 | 6 |
Customer | Caterpillar Power Finance | 61-90 days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 0 | 0 |
2020 and 2019, respectively | 0 | 0 |
2019 and 2018, respectively | 0 | 0 |
2018 and 2017, respectively | 0 | 0 |
2017 and 2016, respectively | 0 | 0 |
Prior | 0 | 9 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 0 | 9 |
Customer | Caterpillar Power Finance | 91+ days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2021 and 2020, respectively | 0 | 2 |
2020 and 2019, respectively | 0 | 0 |
2019 and 2018, respectively | 0 | 20 |
2018 and 2017, respectively | 0 | 3 |
2017 and 2016, respectively | 0 | 25 |
Prior | 44 | 79 |
Revolving Finance Receivables | 0 | 0 |
Total Finance Receivables | 44 | 129 |
Dealer | ||
Financing Receivable, Credit Quality Indicator | ||
Total Finance Receivables | 2,210 | 3,481 |
Dealer | Latin America | 91+ days past due | ||
Financing Receivable, Credit Quality Indicator | ||
2018 and 2017, respectively | 78 | |
Prior | 3 | |
Total Finance Receivables | $ 78 | $ 81 |
Finance Receivables (Details 5)
Finance Receivables (Details 5) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Receivables [Abstract] | ||
Period after which unpaid installments are considered as past due | 30 days | |
Period after which collection of future income is considered as not probable | 120 days | |
Financing Receivable, Past Due | ||
Total finance receivables | $ 27,514 | $ 27,054 |
Caterpillar Purchased Receivables | ||
Financing Receivable, Past Due | ||
Total finance receivables | 4,462 | 3,646 |
Caterpillar Purchased Receivables | 31-60 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 10 | 17 |
Caterpillar Purchased Receivables | 61-90 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 7 | 12 |
Caterpillar Purchased Receivables | 91+ days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 7 | 8 |
Caterpillar Purchased Receivables | Total Past Due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 24 | 37 |
Caterpillar Purchased Receivables | Current | ||
Financing Receivable, Past Due | ||
Total finance receivables | 4,438 | 3,609 |
Caterpillar Purchased Receivables | North America | ||
Financing Receivable, Past Due | ||
Total finance receivables | 2,518 | 1,920 |
Caterpillar Purchased Receivables | North America | 31-60 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 8 | 14 |
Caterpillar Purchased Receivables | North America | 61-90 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 6 | 11 |
Caterpillar Purchased Receivables | North America | 91+ days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 5 | 6 |
Caterpillar Purchased Receivables | North America | Total Past Due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 19 | 31 |
Caterpillar Purchased Receivables | North America | Current | ||
Financing Receivable, Past Due | ||
Total finance receivables | 2,499 | 1,889 |
Caterpillar Purchased Receivables | EAME | ||
Financing Receivable, Past Due | ||
Total finance receivables | 846 | 634 |
Caterpillar Purchased Receivables | EAME | 31-60 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 1 | 1 |
Caterpillar Purchased Receivables | EAME | 61-90 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 0 |
Caterpillar Purchased Receivables | EAME | 91+ days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 1 | 1 |
Caterpillar Purchased Receivables | EAME | Total Past Due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 2 | 2 |
Caterpillar Purchased Receivables | EAME | Current | ||
Financing Receivable, Past Due | ||
Total finance receivables | 844 | 632 |
Caterpillar Purchased Receivables | Asia/Pacific | ||
Financing Receivable, Past Due | ||
Total finance receivables | 621 | 585 |
Caterpillar Purchased Receivables | Asia/Pacific | 31-60 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 2 |
Caterpillar Purchased Receivables | Asia/Pacific | 61-90 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 1 |
Caterpillar Purchased Receivables | Asia/Pacific | 91+ days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 1 | 1 |
Caterpillar Purchased Receivables | Asia/Pacific | Total Past Due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 1 | 4 |
Caterpillar Purchased Receivables | Asia/Pacific | Current | ||
Financing Receivable, Past Due | ||
Total finance receivables | 620 | 581 |
Caterpillar Purchased Receivables | Mining | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 0 |
Caterpillar Purchased Receivables | Mining | 31-60 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 0 |
Caterpillar Purchased Receivables | Mining | 61-90 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 0 |
Caterpillar Purchased Receivables | Mining | 91+ days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 0 |
Caterpillar Purchased Receivables | Mining | Total Past Due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 0 |
Caterpillar Purchased Receivables | Mining | Current | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 0 |
Caterpillar Purchased Receivables | Latin America | ||
Financing Receivable, Past Due | ||
Total finance receivables | 474 | 501 |
Caterpillar Purchased Receivables | Latin America | 31-60 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 1 | 0 |
Caterpillar Purchased Receivables | Latin America | 61-90 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 1 | 0 |
Caterpillar Purchased Receivables | Latin America | 91+ days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 0 |
Caterpillar Purchased Receivables | Latin America | Total Past Due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 2 | 0 |
Caterpillar Purchased Receivables | Latin America | Current | ||
Financing Receivable, Past Due | ||
Total finance receivables | 472 | 501 |
Caterpillar Purchased Receivables | Caterpillar Power Finance | ||
Financing Receivable, Past Due | ||
Total finance receivables | 3 | 6 |
Caterpillar Purchased Receivables | Caterpillar Power Finance | 31-60 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 0 |
Caterpillar Purchased Receivables | Caterpillar Power Finance | 61-90 days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 0 |
Caterpillar Purchased Receivables | Caterpillar Power Finance | 91+ days past due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 0 |
Caterpillar Purchased Receivables | Caterpillar Power Finance | Total Past Due | ||
Financing Receivable, Past Due | ||
Total finance receivables | 0 | 0 |
Caterpillar Purchased Receivables | Caterpillar Power Finance | Current | ||
Financing Receivable, Past Due | ||
Total finance receivables | $ 3 | $ 6 |
Finance Receivables (Details 6)
Finance Receivables (Details 6) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Customer | |||
Financing Receivable, Past Due | |||
Amortized Cost, Non-accrual With an Allowance | $ 184 | $ 466 | |
Amortized Cost, Non-accrual Without an Allowance | 26 | 20 | |
Amortized Cost, 91+ Still Accruing | 36 | 49 | |
Interest income recognized for finance receivables on non-accrual status | 12 | 12 | $ 28 |
Customer | North America | |||
Financing Receivable, Past Due | |||
Amortized Cost, Non-accrual With an Allowance | 47 | 86 | |
Amortized Cost, Non-accrual Without an Allowance | 9 | 1 | |
Amortized Cost, 91+ Still Accruing | 12 | 34 | |
Customer | EAME | |||
Financing Receivable, Past Due | |||
Amortized Cost, Non-accrual With an Allowance | 18 | 113 | |
Amortized Cost, Non-accrual Without an Allowance | 1 | 1 | |
Amortized Cost, 91+ Still Accruing | 2 | 1 | |
Customer | Asia/Pacific | |||
Financing Receivable, Past Due | |||
Amortized Cost, Non-accrual With an Allowance | 19 | 13 | |
Amortized Cost, Non-accrual Without an Allowance | 0 | 0 | |
Amortized Cost, 91+ Still Accruing | 7 | 13 | |
Customer | Mining | |||
Financing Receivable, Past Due | |||
Amortized Cost, Non-accrual With an Allowance | 8 | 21 | |
Amortized Cost, Non-accrual Without an Allowance | 1 | 1 | |
Amortized Cost, 91+ Still Accruing | 14 | 0 | |
Customer | Latin America | |||
Financing Receivable, Past Due | |||
Amortized Cost, Non-accrual With an Allowance | 52 | 63 | |
Amortized Cost, Non-accrual Without an Allowance | 4 | 0 | |
Amortized Cost, 91+ Still Accruing | 1 | 1 | |
Customer | Caterpillar Power Finance | |||
Financing Receivable, Past Due | |||
Amortized Cost, Non-accrual With an Allowance | 40 | 170 | |
Amortized Cost, Non-accrual Without an Allowance | 11 | 17 | |
Amortized Cost, 91+ Still Accruing | 0 | 0 | |
Dealer | |||
Financing Receivable, Past Due | |||
Amortized Cost, 91+ Still Accruing | 0 | 0 | |
Interest income recognized for finance receivables on non-accrual status | 0 | 0 | $ 0 |
Dealer | Latin America | |||
Financing Receivable, Past Due | |||
Amortized Cost, Non-accrual With an Allowance | $ 78 | $ 81 |
Finance Receivables (Details 7)
Finance Receivables (Details 7) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021USD ($)contracts | Dec. 31, 2020USD ($)contracts | Dec. 31, 2019USD ($)contracts | |
Caterpillar Purchased Receivables | |||
Finance receivables modified as TDRs | |||
Number of Contracts | contracts | 0 | 0 | 0 |
Dealer | |||
Finance receivables modified as TDRs | |||
Number of Contracts | contracts | 0 | 0 | 0 |
Customer | |||
Finance receivables modified as TDRs | |||
Pre-TDR Amortized Cost | $ 62 | $ 220 | $ 209 |
Post-TDR Amortized Cost | 52 | 220 | 204 |
TDRs with a payment default which had been modified within twelve months prior to the default date | |||
Post-TDR Amortized Cost | 29 | 49 | 15 |
Customer | North America | |||
Finance receivables modified as TDRs | |||
Pre-TDR Amortized Cost | 6 | 13 | 11 |
Post-TDR Amortized Cost | 6 | 13 | 11 |
TDRs with a payment default which had been modified within twelve months prior to the default date | |||
Post-TDR Amortized Cost | 1 | 8 | 5 |
Customer | EAME | |||
Finance receivables modified as TDRs | |||
Pre-TDR Amortized Cost | 3 | 0 | 17 |
Post-TDR Amortized Cost | 3 | 0 | 17 |
TDRs with a payment default which had been modified within twelve months prior to the default date | |||
Post-TDR Amortized Cost | 0 | 10 | 0 |
Customer | Asia/Pacific | |||
Finance receivables modified as TDRs | |||
Pre-TDR Amortized Cost | 4 | 12 | 0 |
Post-TDR Amortized Cost | 4 | 12 | 0 |
TDRs with a payment default which had been modified within twelve months prior to the default date | |||
Post-TDR Amortized Cost | 6 | 2 | 0 |
Customer | Mining | |||
Finance receivables modified as TDRs | |||
Pre-TDR Amortized Cost | 11 | 35 | 8 |
Post-TDR Amortized Cost | 5 | 35 | 8 |
TDRs with a payment default which had been modified within twelve months prior to the default date | |||
Post-TDR Amortized Cost | 0 | 10 | 0 |
Customer | Latin America | |||
Finance receivables modified as TDRs | |||
Pre-TDR Amortized Cost | 12 | 45 | 5 |
Post-TDR Amortized Cost | 12 | 45 | 3 |
TDRs with a payment default which had been modified within twelve months prior to the default date | |||
Post-TDR Amortized Cost | 15 | 1 | 0 |
Customer | Caterpillar Power Finance | |||
Finance receivables modified as TDRs | |||
Pre-TDR Amortized Cost | 26 | 115 | 168 |
Post-TDR Amortized Cost | 22 | 115 | 165 |
TDRs with a payment default which had been modified within twelve months prior to the default date | |||
Post-TDR Amortized Cost | $ 7 | $ 18 | $ 10 |
Equipment on Operating Leases_2
Equipment on Operating Leases (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment | |||
Equipment on operating leases, at cost | $ 4,589 | $ 4,984 | |
Less: Accumulated depreciation | (1,466) | (1,618) | |
Equipment on operating leases, net | 3,123 | 3,366 | |
Carrying amount of residual assets covered by residual value guarantees and subject to operating leases | 3 | 4 | |
Payments due for operating leases | |||
2022 | 686 | ||
2023 | 431 | ||
2024 | 245 | ||
2025 | 129 | ||
2026 | 46 | ||
Thereafter | 7 | ||
Total | 1,544 | ||
Operating lease revenue | $ 942 | $ 965 | $ 1,037 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Other Assets [Abstract] | ||
Customer and other miscellaneous receivables | $ 400 | $ 457 |
Collateral held for resale, at net realizable value | 168 | 380 |
Deferred and refundable income taxes | 126 | 168 |
Property and equipment, net | 133 | 134 |
Other | 261 | 144 |
Total Other assets | $ 1,088 | $ 1,283 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Concentration Risk | ||
Derivatives, Maximum exposure to credit loss | $ 208 | $ 85 |
Construction related industries | ||
Concentration Risk | ||
Concentration, percent of total portfolio | 40.00% | 40.00% |
North America | ||
Concentration Risk | ||
Concentration, percent of total portfolio | 60.00% | 50.00% |
Credit Commitments (Details)
Credit Commitments (Details) $ in Millions | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2021USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Line of Credit Facility | ||||
Number of global credit facilities | 3 | 3 | ||
Caterpillar's consolidated net worth | $ 16,580 | $ 16,580 | ||
Minimum net worth required under the Credit Facility | $ 9,000 | $ 9,000 | ||
Covenant interest coverage ratio, Numerator | 2.51 | |||
Covenant interest coverage ratio, Denominator | 1 | |||
Minimum interest coverage ratio, required by the Credit Facility, Numerator | 1.15 | |||
Minimum interest coverage ratio, required by the Credit Facility, Denominator | 1 | |||
Leverage Ratio, Numerator | 7.25 | 7.91 | ||
Leverage Ratio, Denominator | 1 | 1 | ||
Maximum Leverage Ratio, Permissible Under Credit Facility, Numerator | 10 | |||
Maximum Leverage Ratio, Permissible Under Credit Facility, Denominator | 1 | |||
Amount available | $ 10,500 | $ 10,500 | ||
Short-term borrowings, Balance | 5,395 | 5,395 | $ 2,005 | |
Maximum borrowing capacity from Caterpillar, Variable lending agreements | 2,400 | 2,400 | ||
Maximum lending capacity to Caterpillar, Variable lending agreements | 1,730 | $ 1,730 | ||
Term lending agreements, maximum remaining maturity | 10 years | |||
Notes receivable from Caterpillar | 389 | $ 389 | 356 | $ 296 |
Notes payable to Caterpillar | 22 | 22 | 1,022 | $ 618 |
Revolving credit facilities | ||||
Line of Credit Facility | ||||
Amount outstanding | 0 | 0 | ||
Revolving credit facilities | Cat Financial | ||||
Line of Credit Facility | ||||
Amount available | 7,750 | 7,750 | ||
364-day facility | ||||
Line of Credit Facility | ||||
Amount available | 3,150 | 3,150 | ||
364-day facility | Cat Financial | ||||
Line of Credit Facility | ||||
Amount available | 2,330 | 2,330 | ||
Three-year facility | ||||
Line of Credit Facility | ||||
Amount available | 2,730 | 2,730 | ||
Three-year facility | Cat Financial | ||||
Line of Credit Facility | ||||
Amount available | 2,010 | 2,010 | ||
Five-year facility | ||||
Line of Credit Facility | ||||
Amount available | 4,620 | 4,620 | ||
Five-year facility | Cat Financial | ||||
Line of Credit Facility | ||||
Amount available | 3,410 | 3,410 | ||
Credit lines with banks | ||||
Line of Credit Facility | ||||
Amount available | 3,070 | 3,070 | ||
Amount outstanding | 559 | 559 | 734 | |
Variable denomination floating rate demand notes | ||||
Line of Credit Facility | ||||
Short-term borrowings, Balance | 286 | 286 | $ 377 | |
Maximum amount of variable denomination floating rate demand notes outstanding | $ 1,250 | $ 1,250 |
Short-Term Borrowings (Details)
Short-Term Borrowings (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Short-term Debt | ||
Short-term borrowings, Balance | $ 5,395 | $ 2,005 |
Commercial paper, net | ||
Short-term Debt | ||
Short-term borrowings, Balance | $ 4,896 | $ 1,321 |
Short-term borrowings, Avg. Rate | 0.10% | 0.10% |
Bank borrowings and other | ||
Short-term Debt | ||
Short-term borrowings, Balance | $ 213 | $ 307 |
Short-term borrowings, Avg. Rate | 4.50% | 3.50% |
Variable denomination floating rate demand notes | ||
Short-term Debt | ||
Short-term borrowings, Balance | $ 286 | $ 377 |
Short-term borrowings, Avg. Rate | 0.20% | 0.30% |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Jan. 10, 2022 | Dec. 31, 2020 | |
Debt Instrument | |||
Medium-term notes, maximum remaining maturity | 6 years | ||
Fair value adjustments | $ 3 | ||
Long-term debt | 22,594 | $ 23,979 | |
Long-term debt outstanding maturity: | |||
2022 | 6,307 | ||
2023 | 5,221 | ||
2024 | 7,129 | ||
2025 | 1,629 | ||
2026 | 1,555 | ||
Medium-term notes, callable | 5 | ||
Face amount of medium-term notes excluded from current maturities | 1,350 | ||
Medium-term notes | |||
Debt Instrument | |||
Long-term debt issued | 6,350 | ||
Long-term debt issued at fixed interest rates | 4,100 | ||
Long-term debt issued at floating interest rates | 2,250 | ||
Long term debt, gross | 22,283 | 23,536 | |
Unamortized discount and debt issuance costs | (40) | (46) | |
Fair value adjustments | 3 | 60 | |
Long-term debt | $ 22,246 | $ 23,550 | |
Long-term debt, Avg. Rate | 1.60% | 2.20% | |
Medium-term notes | Subsequent Event | |||
Debt Instrument | |||
Long term debt, gross | $ 2,000 | ||
Medium-term notes | Subsequent Event | 2024 | |||
Debt Instrument | |||
Long term debt, gross | 1,500 | ||
Medium-term notes | Subsequent Event | 2027 | |||
Debt Instrument | |||
Long term debt, gross | $ 500 | ||
Bank borrowings and other | |||
Debt Instrument | |||
Long-term debt | $ 348 | $ 429 | |
Long-term debt, Avg. Rate | 4.10% | 6.00% |
Derivative Financial Instrume_3
Derivative Financial Instruments and Risk Management (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Derivative | |
Cumulative amount of fair value hedging adjustments related to our fixed-to-floating interest rate contracts included in the carrying amount of Long-term debt | $ 3 |
Deferred net losses, net of tax, included in equity, related to cash flow hedges, expected to be reclassified to earnings over the next twelve months | $ 20 |
Derivative Financial Instrume_4
Derivative Financial Instruments and Risk Management (Details 2) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Derivatives, Fair Value | ||
Asset Fair Value | $ 208 | $ 85 |
Liability Fair Value | (83) | (260) |
Designated derivatives | ||
Derivatives, Fair Value | ||
Asset (Liability) Fair Value | 133 | (92) |
Designated derivatives | Interest rate contracts | Other assets | ||
Derivatives, Fair Value | ||
Asset Fair Value | 38 | 59 |
Designated derivatives | Interest rate contracts | Accrued expenses | ||
Derivatives, Fair Value | ||
Liability Fair Value | (15) | (5) |
Designated derivatives | Cross currency contracts | Other assets | ||
Derivatives, Fair Value | ||
Asset Fair Value | 142 | 2 |
Designated derivatives | Cross currency contracts | Accrued expenses | ||
Derivatives, Fair Value | ||
Liability Fair Value | (32) | (148) |
Undesignated derivatives | ||
Derivatives, Fair Value | ||
Asset (Liability) Fair Value | (8) | (83) |
Undesignated derivatives | Foreign exchange contracts | Other assets | ||
Derivatives, Fair Value | ||
Asset Fair Value | 28 | 17 |
Undesignated derivatives | Foreign exchange contracts | Accrued expenses | ||
Derivatives, Fair Value | ||
Liability Fair Value | (36) | (107) |
Undesignated derivatives | Cross currency contracts | Other assets | ||
Derivatives, Fair Value | ||
Asset Fair Value | $ 0 | $ 7 |
Derivative Financial Instrume_5
Derivative Financial Instruments and Risk Management (Details 3) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Derivative | ||
Derivative instruments, notional amount | $ 13,850 | $ 11,260 |
Derivative Financial Instrume_6
Derivative Financial Instruments and Risk Management (Details 4) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Derivative Instruments, Gain (Loss) | |||
Amount of Gains (Losses) Recognized in AOCI | $ 209 | $ (153) | $ 23 |
Amount of Gains (Losses) Reclassified from AOCI | (166) | 184 | (62) |
Interest Expense | 455 | 591 | 787 |
Other income (expense) | (23) | (25) | (24) |
Designated derivatives | Cash flow hedges | |||
Derivative Instruments, Gain (Loss) | |||
Amount of Gains (Losses) Recognized in AOCI | 209 | (153) | 23 |
Amount of Gains (Losses) Reclassified from AOCI | 166 | (184) | 62 |
Designated derivatives | Cash flow hedges | Interest rate contracts | Interest expense | |||
Derivative Instruments, Gain (Loss) | |||
Amount of Gains (Losses) Recognized in AOCI | 19 | (23) | (70) |
Amount of Gains (Losses) Reclassified from AOCI | (28) | (52) | (8) |
Interest Expense | 455 | 591 | 787 |
Designated derivatives | Cash flow hedges | Cross currency contracts | Interest expense | |||
Derivative Instruments, Gain (Loss) | |||
Amount of Gains (Losses) Reclassified from AOCI | (5) | 32 | 33 |
Interest Expense | 455 | 591 | 787 |
Designated derivatives | Cash flow hedges | Cross currency contracts | Other income (expense) | |||
Derivative Instruments, Gain (Loss) | |||
Amount of Gains (Losses) Recognized in AOCI | 190 | (130) | 93 |
Amount of Gains (Losses) Reclassified from AOCI | 199 | (164) | 37 |
Other income (expense) | (23) | (25) | (24) |
Undesignated derivatives | |||
Derivative Instruments, Gain (Loss) | |||
Gains (Losses) on Derivatives Not Designated as Hedging Instruments | 89 | (112) | (37) |
Undesignated derivatives | Foreign exchange contracts | Other income (expense) | |||
Derivative Instruments, Gain (Loss) | |||
Gains (Losses) on Derivatives Not Designated as Hedging Instruments | 89 | (121) | (38) |
Undesignated derivatives | Cross currency contracts | Other income (expense) | |||
Derivative Instruments, Gain (Loss) | |||
Gains (Losses) on Derivatives Not Designated as Hedging Instruments | $ 0 | $ 9 | $ 1 |
Derivative Financial Instrume_7
Derivative Financial Instruments and Risk Management (Details 5) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross Amount of Recognized Assets | $ 208 | $ 85 |
Gross Amounts Offset | 0 | 0 |
Net Amount of Assets | 208 | 85 |
Gross Amounts Not Offset | (67) | (57) |
Net Amount | 141 | 28 |
Gross Amount of Recognized Liabilities | (83) | (260) |
Gross Amounts Offset | 0 | 0 |
Net Amount of Liabilities | (83) | (260) |
Gross Amounts Not Offset | 67 | 57 |
Net Amount | $ (16) | $ (203) |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at beginning of year | $ (551) | $ (777) | $ (889) |
Gains (losses) on foreign currency translation | (169) | 179 | 18 |
Less: Tax provision/(benefit) | 42 | (47) | 4 |
Net gains (losses) on foreign currency translation | (211) | 226 | 14 |
Other comprehensive income (loss), net of tax | (211) | 226 | 14 |
Balance at end of year | (762) | (551) | (777) |
Balance at beginning of year | (44) | (68) | (36) |
Gains (losses) deferred | 209 | (153) | 23 |
Less: Tax provision/(benefit) | 24 | (33) | 6 |
Net gains (losses) deferred | 185 | (120) | 17 |
(Gains) losses reclassified to earnings | (166) | 184 | (62) |
Less: Tax (provision)/benefit | (13) | 40 | (14) |
Net (gains) losses reclassified to earnings | (153) | 144 | (48) |
Other comprehensive income (loss), net of tax | 32 | 24 | (31) |
Balance at end of year | (12) | (44) | (68) |
Total Accumulated other comprehensive income (loss) at end of year | (774) | (595) | (845) |
Adjustment to adopt new accounting guidance | Accounting Standards Update 2018-02 | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at beginning of year | 0 | 0 | 98 |
Balance at end of year | 0 | 0 | |
Balance at beginning of year | 0 | 0 | (1) |
Balance at end of year | 0 | 0 | |
Cumulative effect, period of adoption, adjusted balance | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at beginning of year | (551) | (777) | (791) |
Balance at end of year | (551) | (777) | |
Balance at beginning of year | $ (44) | (68) | (37) |
Balance at end of year | $ (44) | $ (68) |
Commitments and Contingent Li_3
Commitments and Contingent Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Guarantor Obligations | |||
Guarantees, maximum potential amount of future payments | $ 36 | $ 40 | |
Assets | 32,387 | 31,991 | $ 33,693 |
Liabilities | 29,406 | 28,500 | |
Unused commitments to extend credit to Caterpillar dealers | 10,760 | ||
Unused commitments to extend credit to customers | 641 | ||
Variable Interest Entity, Primary Beneficiary | |||
Guarantor Obligations | |||
Assets | 888 | 1,030 | |
Liabilities | 888 | 1,030 | |
Maximum | |||
Guarantor Obligations | |||
Related recorded liability | $ 1 | $ 1 |
Commitments and Contingent Li_4
Commitments and Contingent Liabilities (Details 2) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | ||
Operating lease cost | $ 7 | $ 8 |
Short-term lease cost | 0 | 1 |
Variable lease cost | $ 1 | $ 0 |
Commitments and Contingent Li_5
Commitments and Contingent Liabilities (Details 3) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Lease assets and liabilities | ||
Weighted average remaining lease term | 5 years | 5 years |
Weighted average discount rates | 1.60% | 1.90% |
Other assets | ||
Lease assets and liabilities | ||
Right-of-use assets | $ 21 | $ 23 |
Other liabilities | ||
Lease assets and liabilities | ||
Lease liabilities | $ 21 | $ 24 |
Commitments and Contingent Li_6
Commitments and Contingent Liabilities (Details 4) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Maturities of operating lease liabilities | ||
2022 | $ 6 | |
2023 | 5 | |
2024 | 4 | |
2025 | 3 | |
2026 | 2 | |
Thereafter | 3 | |
Total lease payments | 23 | |
Less: imputed interest | (2) | |
Other liabilities | ||
Lease assets and liabilities | ||
Total | $ 21 | $ 24 |
Commitments and Contingent Li_7
Commitments and Contingent Liabilities (Details 5) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | ||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 7 | $ 8 |
Right-of-use assets obtained in exchange for operating lease obligations | $ 5 | $ 8 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of statutory rate to effective income tax rate | |||
Taxes computed at U.S. statutory rates | $ 146 | $ 91 | $ 132 |
U.S. statutory tax rate (as a percent) | 21.00% | 21.00% | 21.00% |
(Decreases) increases in taxes resulting from: | |||
State Income Tax, net of Federal Tax | $ 3 | $ (1) | $ 1 |
State Income Tax, net of Federal Tax (as a percent) | 0.40% | (0.20%) | 0.20% |
Non-U.S. Subsidiaries taxed at other than the U.S. rate | $ 22 | $ 26 | $ 34 |
Non-U.S. Subsidiaries taxed at other than the U.S. rate (as a percent) | 3.20% | 6.00% | 5.40% |
Prior year tax adjustments | $ 0 | $ 3 | $ 9 |
Prior year tax adjustments (as a percent) | 0.00% | 0.70% | 1.40% |
Valuation allowances | $ 5 | $ 10 | $ 21 |
Valuation allowances (as a percent) | 0.70% | 2.30% | 3.40% |
Other, net | $ 2 | $ (3) | $ (1) |
Other, net (as a percent) | 0.30% | (0.70%) | (0.20%) |
Provision for income taxes | $ 178 | $ 126 | $ 196 |
Provision for income taxes, Effective Income Tax Rate (as a percent) | 25.60% | 29.10% | 31.20% |
Prior year tax adjustments | $ 0 | $ 3 | $ 9 |
Valuation allowances | $ 5 | $ 10 | $ 21 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Components of Profit before income taxes | |||
U.S. | $ 288 | $ 99 | $ 257 |
Non-U.S. | 407 | 335 | 371 |
Profit before income taxes | 695 | 434 | 628 |
Current income tax provision: | |||
U.S. | 101 | 46 | 13 |
Non-U.S. | 162 | 80 | 161 |
State (U.S.) | 5 | 1 | 2 |
Current income tax provision | 268 | 127 | 176 |
Deferred income tax provision: | |||
U.S. | (56) | (45) | 32 |
Non-U.S. | (33) | 46 | (11) |
State (U.S.) | (1) | (2) | (1) |
Deferred income tax provision | (90) | (1) | 20 |
Total Provision for income taxes | 178 | 126 | $ 196 |
Income taxes payable | $ 279 | $ 198 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets | ||
Other assets | $ 107 | $ 102 |
Deferred tax liabilities | ||
Other liabilities | (592) | (629) |
Deferred income taxes, net | $ (485) | $ (527) |
Income Taxes (Details 4)
Income Taxes (Details 4) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred income tax assets: | ||
Allowance for credit losses | $ 90 | $ 100 |
Tax carryforwards | 78 | 61 |
Deferred tax assets, gross | 168 | 161 |
Deferred income tax liabilities (primarily lease basis differences) | (425) | (508) |
Valuation allowance for deferred income tax assets | (39) | (33) |
Deferred income tax on translation adjustment | (189) | (147) |
Deferred income taxes, net | $ (485) | $ (527) |
Income Taxes (Details 5)
Income Taxes (Details 5) $ in Millions | Dec. 31, 2021USD ($) |
Expiration Date 2028 | |
Net operating loss (NOL) carryforwards | |
U.S. foreign tax credits available for carryforward | $ 1 |
U.S. state taxing jurisdictions | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 93 |
Gross deferred income tax asset associated with NOL carryforwards | 7 |
NOL carryforwards, Valuation allowance | 1 |
U.S. state taxing jurisdictions | 2022 | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 5 |
U.S. state taxing jurisdictions | 2023 | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 6 |
U.S. state taxing jurisdictions | 2024 | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 0 |
U.S. state taxing jurisdictions | 2025 | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 0 |
U.S. state taxing jurisdictions | 2026-2041 | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 77 |
U.S. state taxing jurisdictions | Unlimited | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 5 |
Non-U.S. taxing jurisdictions | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 322 |
NOL carryforwards, Valuation allowance | 38 |
Non-U.S. taxing jurisdictions | 2022 | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 0 |
Non-U.S. taxing jurisdictions | 2023 | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 2 |
Non-U.S. taxing jurisdictions | 2024 | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 3 |
Non-U.S. taxing jurisdictions | 2025 | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 1 |
Non-U.S. taxing jurisdictions | 2026-2032 | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | 32 |
Non-U.S. taxing jurisdictions | Unlimited | |
Net operating loss (NOL) carryforwards | |
NOL carryforwards | $ 284 |
Income Taxes (Details 6)
Income Taxes (Details 6) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of unrecognized income tax benefits | |||
Unrecognized tax benefits, beginning of year | $ 119 | $ 119 | $ 119 |
Additions for income tax positions related to current year | 2 | 0 | 0 |
Additions for income tax positions related to prior year | 10 | 0 | 0 |
Unrecognized tax benefits, end of year | 131 | 119 | 119 |
Unrecognized tax benefits that, if recognized, would impact the effective tax rate | 131 | 119 | 119 |
Recognized interest and penalties | 1 | ||
Accrued interest and penalties | $ 1 | 1 | |
Maximum | |||
Reconciliation of unrecognized income tax benefits | |||
Recognized interest and penalties | $ (1) | $ 1 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Recurring basis | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Derivative financial instruments, net asset (liability) position | $ 125 | $ (175) |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 2) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Loans carried at fair value | $ 100 | $ 243 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details 3) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Fair Value, Level 2 | ||
Financial Instruments, Financial Liabilities, Balance Sheet Groupings | ||
Long-term debt | $ 22,797 | $ 24,614 |
Fair Value, Level 3 | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings | ||
Finance receivables, net (excluding finance leases) | 19,047 | 18,910 |
Carrying Amount | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings | ||
Finance receivables, net (excluding finance leases) | 19,068 | 18,599 |
Financial Instruments, Financial Liabilities, Balance Sheet Groupings | ||
Long-term debt | 22,594 | 23,979 |
Carrying amount of assets excluded from measurement at fair value | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings | ||
Finance leases and failed sale leasebacks, Carrying Value | $ 8,110 | $ 7,980 |
Transactions with Related Par_3
Transactions with Related Parties (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transaction | |||
Dividend paid to Caterpillar | $ 850 | $ 300 | $ 25 |
Maximum borrowing capacity from Caterpillar, Variable lending agreements | 2,400 | ||
Maximum lending capacity to Caterpillar, Variable lending agreements | 1,730 | ||
Payable to Caterpillar - borrowings | 22 | 1,022 | 618 |
Payable to Caterpillar - other | 73 | 65 | 75 |
Notes receivable from Caterpillar | 389 | 356 | 296 |
Other receivables from Caterpillar | 400 | 457 | |
Revenue earned on purchased receivables | 301 | 308 | 455 |
Total finance receivables | 27,514 | 27,054 | |
Revenues | 2,562 | 2,550 | 2,966 |
Depreciation on equipment leased to others | 755 | 758 | 813 |
Caterpillar | |||
Related Party Transaction | |||
Dividend paid to Caterpillar | 850 | 300 | 25 |
Maximum borrowing capacity from Caterpillar, Variable lending agreements | 2,400 | ||
Maximum lending capacity to Caterpillar, Variable lending agreements | 1,730 | ||
Amount available, Committed credit facility extended to Caterpillar | 2,000 | ||
Other receivables from Caterpillar | 70 | 65 | 64 |
Interest expense, Caterpillar | 0 | 2 | 32 |
Interest income on Notes Receivable with Caterpillar | 14 | 14 | 26 |
Fees on committed credit facility extended to Caterpillar | 0 | 0 | 5 |
Purchases of receivables from Caterpillar | 40,140 | 32,937 | 42,817 |
Revenue earned on purchased receivables | 301 | 308 | 455 |
Marketing program payments received | 351 | 353 | 351 |
Total portfolio, which includes Finance receivables, net and Equipment on operating lease, net | 147 | 141 | |
Revenues | 25 | 22 | 16 |
Depreciation on equipment leased to others | 17 | 15 | 11 |
Amount of our portfolio that is subject to guarantees by Caterpillar | 568 | 596 | |
Stock based compensation expense | 8 | 8 | 8 |
Operational and administrative support charges reimbursed to Caterpillar | 52 | 46 | 46 |
Administrative support services to certain Caterpillar subsidiaries reimbursed by Caterpillar | 12 | 10 | 13 |
Caterpillar Purchased Receivables | |||
Related Party Transaction | |||
Total finance receivables | $ 4,462 | $ 3,646 | $ 4,448 |
Segment and Geographic Inform_3
Segment and Geographic Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Reporting Information | |||
External Revenues | $ 2,562 | $ 2,550 | $ 2,966 |
Profit before income taxes | 695 | 434 | 628 |
Interest Expense | 455 | 591 | 787 |
Depreciation on equipment leased to others | 755 | 758 | 813 |
Provision for credit losses | 70 | 266 | 162 |
Assets | 32,387 | 31,991 | 33,693 |
Capital expenditures | 1,216 | 1,100 | 1,534 |
Operating Segments | |||
Segment Reporting Information | |||
External Revenues | 2,558 | 2,544 | 2,937 |
Profit before income taxes | 825 | 537 | 788 |
Interest Expense | 473 | 601 | 758 |
Depreciation on equipment leased to others | 755 | 758 | 813 |
Provision for credit losses | 70 | 267 | 162 |
Assets | 31,098 | 30,819 | 32,402 |
Capital expenditures | 1,208 | 1,089 | 1,518 |
Unallocated | |||
Segment Reporting Information | |||
External Revenues | 15 | 25 | 59 |
Profit before income taxes | (295) | (287) | (342) |
Interest Expense | 179 | 207 | 256 |
Depreciation on equipment leased to others | 0 | 0 | 0 |
Provision for credit losses | 0 | (1) | 0 |
Assets | 1,458 | 1,576 | 1,896 |
Capital expenditures | 8 | 11 | 16 |
Segment Reconciling Items | Timing | |||
Segment Reporting Information | |||
External Revenues | (11) | (19) | (30) |
Profit before income taxes | 6 | (3) | (17) |
Interest Expense | 0 | 0 | 0 |
Depreciation on equipment leased to others | 0 | 0 | 0 |
Provision for credit losses | 0 | 0 | 0 |
Assets | 15 | 12 | 16 |
Capital expenditures | 0 | 0 | 0 |
Segment Reconciling Items | Methodology | |||
Segment Reporting Information | |||
External Revenues | 0 | 0 | 0 |
Profit before income taxes | 159 | 187 | 199 |
Interest Expense | (197) | (217) | (227) |
Depreciation on equipment leased to others | 0 | 0 | 0 |
Provision for credit losses | 0 | 0 | 0 |
Assets | 18 | (152) | (216) |
Capital expenditures | 0 | 0 | 0 |
Inter-segment Eliminations | |||
Segment Reporting Information | |||
External Revenues | 0 | 0 | 0 |
Profit before income taxes | 0 | 0 | 0 |
Interest Expense | 0 | 0 | 0 |
Depreciation on equipment leased to others | 0 | 0 | 0 |
Provision for credit losses | 0 | 0 | 0 |
Assets | (202) | (264) | (405) |
Capital expenditures | 0 | 0 | 0 |
North America | Operating Segments | |||
Segment Reporting Information | |||
External Revenues | 1,401 | 1,401 | 1,627 |
Profit before income taxes | 419 | 312 | 492 |
Interest Expense | 250 | 322 | 389 |
Depreciation on equipment leased to others | 542 | 538 | 580 |
Provision for credit losses | 15 | 69 | 19 |
Assets | 15,755 | 14,749 | 15,496 |
Capital expenditures | 888 | 864 | 1,105 |
EAME | Operating Segments | |||
Segment Reporting Information | |||
External Revenues | 274 | 271 | 281 |
Profit before income taxes | 73 | 44 | 72 |
Interest Expense | 21 | 37 | 54 |
Depreciation on equipment leased to others | 60 | 62 | 65 |
Provision for credit losses | 30 | 50 | 4 |
Assets | 5,192 | 4,981 | 4,918 |
Capital expenditures | 92 | 37 | 92 |
Asia/Pacific | Operating Segments | |||
Segment Reporting Information | |||
External Revenues | 340 | 338 | 363 |
Profit before income taxes | 170 | 145 | 167 |
Interest Expense | 84 | 94 | 106 |
Depreciation on equipment leased to others | 7 | 9 | 11 |
Provision for credit losses | 9 | 38 | 16 |
Assets | 4,117 | 4,585 | 4,540 |
Capital expenditures | 10 | 7 | 11 |
Latin America | Operating Segments | |||
Segment Reporting Information | |||
External Revenues | 202 | 201 | 239 |
Profit before income taxes | 24 | 41 | 42 |
Interest Expense | 68 | 70 | 94 |
Depreciation on equipment leased to others | 8 | 11 | 16 |
Provision for credit losses | 52 | 33 | 29 |
Assets | 2,405 | 2,621 | 2,809 |
Capital expenditures | 12 | 7 | 11 |
Mining | Operating Segments | |||
Segment Reporting Information | |||
External Revenues | 289 | 279 | 326 |
Profit before income taxes | 98 | 33 | 56 |
Interest Expense | 37 | 53 | 73 |
Depreciation on equipment leased to others | 136 | 137 | 138 |
Provision for credit losses | (15) | 27 | 23 |
Assets | 2,672 | 2,575 | 2,966 |
Capital expenditures | 206 | 151 | 299 |
Caterpillar Power Finance | Operating Segments | |||
Segment Reporting Information | |||
External Revenues | 52 | 54 | 101 |
Profit before income taxes | 41 | (38) | (41) |
Interest Expense | 13 | 25 | 42 |
Depreciation on equipment leased to others | 2 | 1 | 3 |
Provision for credit losses | (21) | 50 | 71 |
Assets | 957 | 1,308 | 1,673 |
Capital expenditures | $ 0 | $ 23 | $ 0 |
Segment and Geographic Inform_4
Segment and Geographic Information (Details 2) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues from External Customers and Long-Lived Assets | |||
External Revenues | $ 2,562 | $ 2,550 | $ 2,966 |
Equipment on operating leases, net and property and equipment, net (included in Other assets) | 3,256 | 3,500 | |
Inside U.S. | |||
Revenues from External Customers and Long-Lived Assets | |||
External Revenues | 1,422 | 1,443 | 1,756 |
Equipment on operating leases, net and property and equipment, net (included in Other assets) | 2,179 | 2,482 | |
Inside Canada | |||
Revenues from External Customers and Long-Lived Assets | |||
Equipment on operating leases, net and property and equipment, net (included in Other assets) | 545 | 521 | |
All other | |||
Revenues from External Customers and Long-Lived Assets | |||
External Revenues | 1,140 | 1,107 | $ 1,210 |
Equipment on operating leases, net and property and equipment, net (included in Other assets) | $ 532 | $ 497 |