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Item 8. Financial Statements and Supplementary Data

2025-02-14 compared with 2024-02-16 · 242 added, 249 removed, 2035 unchanged (19% of the section changed)

112 unchanged sentences

Derivative financial instruments:

Available-for-sale securities:

( 113 ) 39 31

Available-for-sale securities:

Total other comprehensive income (loss), net of tax ( 651 ) 637 ( 904 )

23 unchanged sentences

Short-term borrowings:

Machinery, Energy & Transportation $ — $ 3

Financial Products $ 4,393 $ 4,643

46 unchanged sentences

Available-for-sale securities, net of tax — — — ( 138 ) — ( 138 )

Change in ownership from noncontrolling interests — — — — ( 14 ) ( 14 )

Dividends declared — — ( 2,473 ) — — ( 2,473 )

15 unchanged sentences

Dividends declared — — ( 2,599 ) — — ( 2,599 )

Distribution to noncontrolling interests — — — — ( 10 ) ( 10 )

Common shares issued from treasury stock for stock-based compensation:

3 unchanged sentences

— ( 4,675 ) — — — ( 4,675 )

Outstanding authorized accelerated share repurchase ( 300 ) — — — — ( 300 )

Other 47 ( 40 ) — — ( 3 ) 4

14 unchanged sentences

Available-for-sale securities, net of tax — — — 2 — 2

Change in ownership from noncontrolling interests — — — — ( 7 ) ( 7 )

Dividends declared 1

5 unchanged sentences

— ( 7,997 ) — — — ( 7,997 )

Outstanding authorized accelerated share repurchase ( 300 ) — — — — ( 300 )

Settlement of outstanding authorized accelerated share repurchase 300 — — — — 300

Other 73 ( 73 ) — — ( 2 ) ( 2 )

9 unchanged sentences

Profit of consolidated and affiliated companies $ 10,788 $ 10,332 $ 6,704

Adjustments for non-cash items:

Adjustments to reconcile profit to net cash provided by operating activities:

Depreciation and amortization 2,153 2,144 2,219

1 unchanged sentence

Provision (benefit) for deferred income taxes ( 621 ) ( 592 ) ( 377 )

Loss on divestiture 572 — —

(Gain) loss on divestiture 164 572 —

Goodwill impairment charge — — 925

29 unchanged sentences

Common stock issued, including treasury shares reissued 20 12 51

Common shares repurchased ( 4,975 ) ( 4,230 ) ( 2,668 )

Payments to purchase common stock ( 7,697 ) ( 4,975 ) ( 4,230 )

Excise tax paid on purchases of common stock ( 40 ) — —

Proceeds from debt issued (original maturities greater than three months):

- Machinery, Energy & Transportation — — 494

- Financial Products 10,283 8,257 6,674

50 unchanged sentences

We include shipping and handling costs in Cost of goods sold in Statement 1.

Other operating (income) expenses primarily include Cat Financial’s depreciation on equipment leased to others, (gains) losses on divestitures, Insurance Services’ underwriting expenses, employee separation charges, (gains) losses on disposal of long-lived assets and long-lived asset impairment charges.

Other operating (income) expenses primarily include Cat Financial’s depreciation on equipment leased to others, Insurance Services’ underwriting expenses, (gains) losses on divestitures, employee separation charges, (gains) losses on disposal of long-lived assets and long-lived asset impairment charges.

Prepaid expenses and other current assets in Statement 3 primarily include investments in debt and equity securities, prepaid and refundable income taxes, right of return assets, prepaid insurance, contract assets, assets held for sale, core to be returned for remanufacturing, and restricted cash and other short-term investments.

2 unchanged sentences

We principally determine cost using the last-in, first-out (LIFO) method.

The value of inventories on the LIFO basis represented about 65 percent of total inventories at both December 31, 2023 and 2022, respectively.

The value of inventories on the LIFO basis represented about 65 percent of total inventories at both December 31, 2024 and 2023.

If the FIFO (first-in, first-out) method had been in use, inventories would have been $ 3,864 million and $ 3,423 million higher than reported at December 31, 2024 and 2023, respectively.

13 unchanged sentences

Derivative financial instruments

Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates, interest rates and commodity prices.

Our Risk Management Policy (policy) allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate, interest rate and commodity price exposures.

Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates, interest rates, commodity prices and certain deferred compensation plan liabilities.

Our Risk Management Policy (policy) allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate, interest rate, commodity price and certain deferred compensation plan liability exposures.

Our policy specifies that derivatives are not to be used for speculative purposes.

Derivatives that we use are primarily foreign currency forward, option and cross currency contracts, interest rate contracts and commodity forward and option contracts.

Derivatives that we use are primarily foreign currency forward, option and cross currency contracts, interest rate contracts, commodity forward and option contracts and total return swap contracts.

All derivatives are recorded at fair value.

23 unchanged sentences

The more significant estimates include:

residual values for leased assets;

fair values for goodwill impairment tests;

warranty liability and reserves for product liability and insurance losses, postretirement benefits, post-sale discounts, credit losses and income taxes.

residual values for leased assets, fair values for goodwill impairment tests, warranty liability and reserves for product liability and insurance losses, postretirement benefits, post-sale discounts, credit losses and income taxes.

New accounting guidance

Adoption of new accounting standards

Supplier finance programs (ASU 2022-04) — In September 2022, the Financial Accounting Standards Board (FASB) issued guidance to enhance the transparency of supplier finance programs.

The new standard requires annual disclosure of the key terms of the program, a description of where in the financial statements amounts outstanding under the program are presented, a rollforward of such amounts, and interim disclosure of amounts outstanding as of the end of each period.

The guidance does not affect recognition, measurement, or financial statement presentation of supplier finance programs.

The ASU was effective on January 1, 2023, except for the rollforward, which is effective on January 1, 2024.

Our adoption of this guidance results in the following disclosures relating to our supplier finance programs and related obligations.

We facilitate voluntary supplier finance programs (the “Programs”) through participating financial institutions.

The Programs are available to a wide range of suppliers and allow them the option to manage their cash flow.

We are not a party to the agreements between the participating financial institutions and the suppliers in connection with the Programs.

The range of payment terms, typically 60 - 90 days, we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the Programs.

The amount of obligations outstanding that are confirmed as valid to the participating financial institutions for suppliers who voluntarily participate in the Programs, included in Accounts payable in Statement 3, were $ 803 million and $ 862 million at December 31, 2023 and 2022, respectively.

Segment reporting (ASU 2023-07) — In November 2023, the Financial Accounting Standards Board (FASB) issued accounting guidance that requires incremental disclosures related to reportable segments which includes significant segment expense categories and amounts for each reportable segment.

The expanded annual disclosures were effective for our year ending December 31, 2024, and the expanded interim disclosures are effective in 2025 and will be applied retrospectively to all prior periods presented.

We consider the applicability and impact of all ASUs.

1 unchanged sentence

ASU Description

2021-08 Business combinations

2022-02 Financial instruments - Credit losses

2022-06 Reference rate reform

2022-03 Fair value measurement – Equity securities subject to contractual sale restrictions

2023-01 Leases – Common control arrangements

2023-02 Accounting for investments in tax credit structures using the proportional amortization method

Accounting standards issued but not yet adopted

Segment reporting (ASU 2023-07) — In November 2023, the FASB issued accounting guidance that requires incremental disclosures related to reportable segments which includes significant segment expense categories and amounts for each reportable segment.

The guidance is effective January 1, 2024, and will be adopted retrospectively.

The adoption will result in incremental disclosures related to reportable segments in the 2024 year-end financial statements and interim periods beginning in 2025.

We are in the process of evaluating the effect of this new guidance on the related disclosures.

Income tax reporting (ASU 2023-09) — In December 2023, the FASB issued accounting guidance to expand the annual disclosure requirements for income taxes, primarily related to the rate reconciliation and income taxes paid.

This guidance is effective January 1, 2025, with early adoption permitted.

This guidance can be applied prospectively or retrospectively.

The expanded disclosures are effective for our year ending December 31, 2025 and can be applied prospectively or retrospectively.

We are in the process of evaluating the effect of this new guidance on the related disclosures.

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.

Disaggregation of income statement expenses (ASU 2024-03) — In November 2024, the FASB issued accounting guidance to enhance transparency into the nature and function of income statement expenses.

The amendments require that, on an annual and interim basis, entities disclose disaggregated operating expense information about specific categories, including purchases of inventory, employee compensation, depreciation and amortization.

annual disclosures are effective for our year ending December 31, 2027, and the expanded interim disclosures are effective in 2028, with early adoption permitted.

We are in the process of evaluating the effect of this new guidance on the related disclosures.

All other ASUs issued but not yet adopted were assessed and determined that they either were not applicable or were not expected to have a material impact on our financial statements.

Sales and revenue recognition

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We estimate replacement part returns based on historical experience and recognize a parts return asset in Prepaid expenses and other current assets in Statement 3, which represents our right to recover replacement parts we expect will be returned.

We also recognize a refund liability in Other current liabilities in Statement 3 for the refund we expect to pay for returned parts.

We also recognize a refund liability in Accrued expenses in Statement 3 for the refund we expect to pay for returned parts.

If actual replacement part returns differ from those estimated, we recognize the difference in the estimated replacement part return asset and refund liability in Cost of goods sold and Sales, respectively.

7 unchanged sentences

Payments from dealers are due shortly after the time of sale.

When we make a sale to a dealer, the dealer is responsible for payment even if the product is not sold to an end user.

When we make a sale to a

dealer, the dealer is responsible for payment even if the product is not sold to an end user.

Dealers and end users must make payment within the established invoice terms to avoid potential interest costs.

Interest at or above prevailing market rates may be charged on any past due balance, and generally our practice is to not forgive this interest.

Regular credit evaluations of our dealers and end users are performed.

Collateral generally is not required, and the majority of our trade receivables are unsecured.

Various devices, such as security agreements and letters of credit, are used to protect our interests, when deemed necessary.

No single dealer or end user represents a significant concentration of credit risk.

Our allowance for credit losses is not significant for ME&T receivables.

77 unchanged sentences

3.92 %- 5.03 %

1.03 %- 2.00 %

Weighted-average expected lives 7 years 7 years 8 years

We credit RSU and PRSU awards with dividend equivalent units on each date that we pay a cash dividend to holders of common stock.

We determine the fair value of the RSU and PRSU awards granted in 2023, 2022 and 2021 as the closing stock price on the date of the grant.

We determine the fair value of the RSU awards granted in 2024, 2023 and 2022 as the closing stock price on the date of the grant.

The PRSUs granted in 2024 contain a market condition, and a Monte Carlo simulation was utilized to estimate the fair value of the awards.

The following table provides the assumptions used in determining the fair value of the PRSUs granted in 2024.

Expected volatility of the Company's stock 29.8 %

Risk-free interest rate 4.38 %

We determine the fair value of the PRSU awards granted in 2023 and 2022 as the closing stock price on the date of the grant.

Please refer to Tables I and II below for additional information on our stock-based compensation awards.

TABLE I — Financial Information Related to Stock-based Compensation

Stock options RSUs PRSUs

Stock options

Shares Weighted-

Price Shares Weighted-

Grant Date Fair Value Shares Weighted-

Grant Date Fair Value

Price Weighted-Average Remaining Contractual Life (Years) Aggregate Intrinsic Value 1

Outstanding at January 1, 2024

2 unchanged sentences

Exercised ( 1,679,281 ) $ 141.77

Vested — $ — ( 529,200 ) $ 173.87 ( 270,150 ) $ 219.76

Forfeited / expired ( 25,515 ) $ 202.08

3 unchanged sentences

2,608,265 $ 167.72 5.08 $ 509

Stock options outstanding and exercisable as of December 31, 2023:

Outstanding Exercisable

Exercise Prices Shares Outstanding at 12/31/2023 Weighted-

Contractual Life (Years) Weighted-

Exercise Price Aggregate

Intrinsic Value 1

Shares Outstanding at 12/31/2023 Weighted-

Contractual Life (Years) Weighted-

Exercise Price Aggregate

Intrinsic Value 1

$ 74.77 -$ 83.00

629,402 1.66 $ 79.18 $ 136 629,402 1.66 $ 79.18 $ 136

$ 95.66 -$ 96.31

462,978 2.92 $ 95.72 93 462,473 2.92 $ 95.72 92

642,416 6.25 $ 127.60 108 642,416 6.25 $ 127.60 108

$ 138.35 -$ 151.12

756,964 4.78 $ 144.22 115 756,964 4.78 $ 144.22 115

$ 196.70 -$ 219.76

1,885,071 7.78 $ 208.14 165 875,459 7.60 $ 212.23 73

$ 253.98 764,532 9.31 $ 253.98 32 — 0.00 $ — —

5,141,363 $ 169.57 $ 649 3,366,714 $ 139.91 $ 524

1 The difference between a stock award’s exercise price and the underlying stock’s closing market price at December 31, 2024, for awards with market price greater than the exercise price.

Amounts are in millions of dollars.

Shares Weighted-

Grant Date Fair Value Shares Weighted-

Grant Date Fair Value

Outstanding at January 1, 2024

829,386 $ 226.44 480,759 $ 223.09

Granted to officers and key employees 391,784 $ 338.65 178,236 $ 408.64

Vested ( 427,095 ) $ 221.56 ( 259,136 ) $ 196.70

Forfeited / expired ( 17,438 ) $ 282.89 ( 9,846 ) $ 269.79

Outstanding at December 31, 2024

776,637 $ 284.36 390,013 $ 321.58

The computations of weighted-average exercise prices and aggregate intrinsic values are not applicable to RSUs or PRSUs since these awards represent an agreement to issue shares of stock at the time of vesting.

29 unchanged sentences

Derivative financial instruments and risk management

Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates, interest rates and commodity prices.

Our Risk Management Policy (policy) allows for the use of derivative financial instruments to prudently manage foreign currency exchange rate, interest rate and commodity price exposures.

Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates, interest rates, commodity prices and certain deferred compensation plan liabilities.

Our policy specifies that derivatives are not to be used for speculative purposes.

Derivatives that we use are primarily foreign currency forward, option and cross currency contracts, interest rate contracts and commodity forward and option contracts.

Derivatives that we use are primarily foreign currency forward, option and cross currency contracts, interest rate contracts, commodity forward and option contracts and total return swap contracts.

Our derivative activities are subject to the management, direction and control of our senior financial officers.

3 unchanged sentences

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.

For foreign exchange contracts designated as fair value hedges, the interim settlements are excluded from the effectiveness assessment and are recognized under a systematic and rational method over the life of the hedging instrument within Interest expense.

We record in 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, in Statement 3 until we reclassify them to earnings in the same period or periods during which the hedged transaction affects earnings.

25 unchanged sentences

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.

We designate float-to-float cross currency contracts as fair value hedges to protect against movements in exchange rates on floating-rate assets and liabilities.

Interest rate risk

22 unchanged sentences

All such commodity forward and option contracts are undesignated.

Deferred compensation plan liability risk

We are also exposed to variability in compensation expense related to certain non-qualified deferred compensation obligations to employees.

We utilize total return swaps to economically hedge this exposure to offset the related compensation expense.

All such total return swap contracts are undesignated.

The location and fair value of derivative instruments reported in Statement 3 were as follows:

10 unchanged sentences

Commodity contracts 4 ( 6 ) 18 ( 9 )

Total return swap contracts — ( 33 ) — —

Total $ 95 $ ( 95 ) $ 73 $ ( 91 )

1 Assets are classified in Statement 3 as Receivables - trade and other or Long-term receivables - trade and other.

2 Liabilities are classified in Statement 3 as Accrued expenses or Other liabilities.

1 Assets are classified as Receivables - trade and other or Long-term receivables - trade and other.

2 Liabilities are classified as Accrued expenses or Other liabilities.

The total notional amounts of the derivative instruments as of December 31, 2024 and 2023 were $ 27.0 billion and $ 25.6 billion, respectively.

The notional amounts of the derivative financial instruments do not represent amounts exchanged by the parties.

We calculate the amounts exchanged by the parties by referencing the notional amounts and by other terms of the derivatives, such as foreign currency exchange rates, interest rates or commodity prices.

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

7 unchanged sentences

Commodity contracts ( 10 ) 10 51 — — — — — —

Total return swap contracts 40 — — — — — — — —

Total $ 53 $ ( 113 ) $ ( 12 ) $ 64 $ 48 $ 375 $ 207 $ ( 3 ) $ 340

1 Foreign exchange contract and Commodity contract gains (losses) are included in Other income (expense) in Statement 1.

Interest rate contract gains (losses) are included in Interest expense of Financial Products and Interest expense excluding Financial Products in Statement 1.

2 Foreign exchange contract gains (losses) are primarily included in Other income (expense) in Statement 1.

Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products in Statement 1.

1 Foreign exchange contract, Commodity contract and Total return swap contract gains (losses) are included in Other income (expense).

Interest rate contract gains (losses) are included in Interest expense of Financial Products and Interest expense excluding Financial Products.

2 Foreign exchange contract gains (losses) are primarily included in Other income (expense).

Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products.

The following amounts were recorded in Statement 3 related to cumulative basis adjustments for fair value hedges:

8 unchanged sentences

The master netting agreements may also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event.

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.

Collateral is typically not required of the counterparties or of our company under the master netting agreements.

31 unchanged sentences

tax incentives ( 245 ) ( 1.8 ) % ( 170 ) ( 1.3 ) % ( 166 ) ( 1.9 ) %

Tax law change related to currency translation ( 224 ) ( 1.7 ) % — — % — — %

Nondeductible goodwill — — % — — % 159 1.8 %

1 unchanged sentence

Provision (benefit) for income taxes $ 2,629 19.7 % $ 2,781 21.3 % $ 2,067 23.6 %

1 Excludes amount included in nondeductible goodwill line item.

1 Excludes amount included in nondeductible goodwill and tax law change related to currency translation line items.

The provision for income taxes for 2024 included a non-cash tax benefit of $ 224 million due to the reversal of a deferred tax liability from a U.S.

tax law change related to currency translation.

The negative impact on the 2022 effective rate from the portion of the goodwill impairment not deductible for tax purposes is reported in the effective tax rate reconciliation line item above labeled “Nondeductible goodwill.” Included in the line item above labeled “Non-U.S.

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Deferred income tax assets:

Tax carryforwards $ 1,389 $ 1,349

Research expenditures $ 1,735 $ 1,350

Tax carryforwards 1,346 1,389

Postemployment benefits 560 656

2 unchanged sentences

Post sale discounts 260 253

Lease obligations 144 144

Inventory valuation 183 138

Allowance for credit losses 109 113

Lease obligations 151 144

Other—net 288 205

1 unchanged sentence

Capital and intangible assets, including lease basis differences ( 1,270 ) ( 1,312 )

Undistributed profits, including translation adjustments ( 401 ) ( 344 )

Other outside basis differences ( 253 ) ( 267 )

Bond discount ( 101 ) ( 107 )

Undistributed profits, including translation adjustments ( 201 ) ( 401 )

( 1,724 ) ( 1,980 )

2 unchanged sentences

At December 31, 2024, deferred tax assets for U.S.

state losses and credit carryforwards of $ 86 million expire on or before 2043 while the remaining $ 42 million may be carried carryforward indefinitely.

state losses and credit carryforwards of $ 75 million expire on or before the end of 2044 while the remaining $ 16 million may be carried over indefinitely.

Of these U.S.

1 unchanged sentence

The deferred tax assets for U.S.

federal losses and credit carryforwards of $ 157 million expire on or before 2034 and were subject to a full valuation allowance.

Deferred tax assets for losses and credit carryforwards of non-U.S.

entities of $ 266 million expires on or before 2044 while the remaining $ 838 million may be carried over indefinitely.

federal losses and credit carryforwards of $ 196 million primarily expire on or before the end of 2034.

Of these U.S.

federal deferred tax assets, $ 192 million were reduced by valuation allowances.

Deferred tax assets for l osses and credit carryforwards of non-U.S.

entities of $ 278 million expire on or before the end of 2044 while the remaining $ 781 million may be carried over indefinitely.

entities that have not demonstrated consistent and/or sustainable profitability to support the realization of net deferred tax assets, including certain entities in Luxembourg, have recorded valuation allowances of $ 627 million against tax carryforwards and other deferred tax assets.

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

During the year ended December 31, 2023, Cat Financial's forecasts reflected a continuation of the trend of relatively low unemployment rates and delinquencies within their portfolio.

During the year ended December 31, 2024, Cat Financial's forecasts reflected a continuation of the trend of historically low unemployment rates as well as low delinquencies within their portfolio.

However, industry delinquencies show an increasing trend as the central bank actions aimed at reducing inflation have weakened global economic growth.

The company believes the economic forecasts employed represent reasonable and supportable forecasts, followed by a reversion to long-term trends.

Cat Financial provides financing to Caterpillar dealers in the form of wholesale financing plans.

Cat Financial provides financing to Caterpillar dealers in the form of wholesale financing plans and short-term working capital loans.

Cat Financial's wholesale financing plans provide assistance to dealers by financing their mostly new Caterpillar equipment inventory and rental fleets on a secured and unsecured basis.

34 unchanged sentences

Asia/Pacific 1 4 5 4 1 1 — 16

Mining 8 3 3 — — — — 14

Latin America — 3 6 5 3 8 — 25

Total $ 12 $ 33 $ 32 $ 19 $ 9 $ 11 $ 9 $ 125

Year Ended December 31, 2023

2023 2022 2021 2020 2019 Prior Revolving Finance Receivables Total

North America $ 2 $ 11 $ 11 $ 5 $ 3 $ 2 $ 12 $ 46

EAME 1 5 6 4 1 — — 17

Asia/Pacific 2 5 8 5 1 — — 21

Latin America — 8 5 6 1 10 — 30

Power — — — — — 1 — 1

Total $ 5 $ 29 $ 30 $ 20 $ 6 $ 13 $ 12 $ 115

All $ 47 million of gross write-offs in the Dealer portfolio segment for the year ended December 31, 2024 were in Latin America and originated prior to 2019.

Credit quality of finance receivables

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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.

As of December 31, 2023 and 2022, Cat Financial's total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $ 44 million and $ 58 million, respectively, that was 91+ days past due in Latin America, all of which was originated prior to 2018.

As of December 31, 2024, Cat Financial's total amortized cost of finance receivables within the Dealer portfolio segment was current.

As of December 31, 2023, Cat Financial's total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $ 44 million that was 91+ days past due in Latin America, all of which originated prior to 2019.

Non-accrual finance receivables

3 unchanged sentences

(Millions of dollars)

Allowance Non-accrual

Allowance 91+ Still

Accruing Non-accrual

Allowance Non-accrual

Allowance 91+ Still

Non-accrual With an Allowance 91+ Still

Accruing Non-accrual With an Allowance 91+ Still

North America $ 83 $ 20 $ 52 $ 20

5 unchanged sentences

Total $ 176 $ 30 $ 152 $ 44

There were $ 44 million and $ 58 million, respectively, in finance receivables in Cat Financial's Dealer portfolio segment on non-accrual status for the year ended December 31, 2023 and 2022, all of which was in Latin America.

There were no finance receivables in Cat Financial's Dealer portfolio segment on non-accrual status as of December 31, 2024.

There were $ 44 million in finance receivables in Cat Financial's Dealer portfolio segment on non-accrual status as of December 31, 2023, all of which was in Latin America.

Modifications

4 unchanged sentences

Modifications for borrowers Cat Financial does consider to be experiencing financial difficulty typically result in payment deferrals and/or reduced payments for a period of four months or longer, term extension of six months or longer or a combination of both.

During the year ended December 31, 2023, there were no finance receivable modifications granted to borrowers experiencing financial difficulty in Cat Financial's Dealer portfolio segment.

The amortized cost basis of finance receivables modified for borrowers experiencing financial difficulty in the Customer portfolio segment during the year ended December 31, 2023, was $ 47 million, or 0.21 percent of Cat Financial's finance receivable portfolio.

For the year ended December 31, 2023 , the financial effects of term extensions for borrowers experiencing financial difficulty added a weighted average of 15 months to the terms of modified contracts.

For the year ended December 31, 2023 , the financial effects of payment delays for borrowers experiencing financial difficulty resulted in weighted average paymen t deferrals and/or interest only payment periods of 7 months.

During the years ended December 31, 2024 and 2023, there were no finance receivable modifications granted to borrowers experiencing financial difficulty in Cat Financial's Dealer portfolio segment.

The amortized cost basis of finance receivables modified for borrowers experiencing financial difficulty in Cat Financial's Customer portfolio segment during the years ended December 31, 2024 and 2023, was $ 33 million and $ 47 million, respectively.

Total modifications with borrowers experiencing financial difficulty represented 0.15 percent and 0.21 percent of Cat Financial's Customer portfolio for the same periods, respectively.

The financial effects of term extensions and payment delays for borrowers experiencing financial difficulty for the years ended December 31, were as follows:

(In months) 2024 2023

Weighted average extension to term of modified contracts 8 15

Weighted average payment deferral and/or interest only periods 6 7

After Cat Financial modifies a finance receivable, they continue to track its performance under its most recent modified terms.

As of December 31, 2023, all of the finance receivables modified with borrowers experiencing financial difficulty are current except for in EAME where there was $ 2 million that was 31-60 days past due, $ 1 million that was 61-90 days past due, and $ 1 million that was 91+ days past due.

As of December 31, 2024 and 2023, defaults of loans modified in the prior twelve months were not significant .

The effect of most modifications made to finance receivables for borrowers experiencing financial difficulty is already included in the allowance for credit losses based on the methodologies used to estimate the allowance;

1 unchanged sentence

On rare occasions when principal forgiveness is provided, the amount forgiven is written off against the allowance for credit losses.

Concentration of Credit Risk

Finance receivables and wholesale inventory receivables primarily represent receivables under installment sales contracts, receivables arising from leasing transactions and notes receivable.

No single customer or dealer represented a significant concentration of credit risk.

Inventories (principally using the LIFO method) are comprised of the following:

22 unchanged sentences

December 31, 2024

(Millions of dollars) Weighted

Life (Years) Gross

Amortization 1

(Millions of dollars) Gross Carrying Amount Accumulated

Amortization Net

Customer relationships $ 2,220 $ ( 1,950 ) $ 270

3 unchanged sentences

December 31, 2023

Life (Years) Gross

Amount Accumulated

Gross Carrying Amount Accumulated

Amortization Net

3 unchanged sentences

Total finite-lived intangible assets $ 2,833 $ ( 2,269 ) $ 564

1 For the year ended December 31, 2023, $ 1.0 billion of intangible assets were fully amortized and have been removed.

Finite-lived intangible assets are amortized over their estimated useful lives and tested for impairment if events or changes in circumstances indicate that the asset may be impaired.

14 unchanged sentences

The changes in carrying amount of goodwill by reportable segment for the years ended December 31, 2024 and 2023 were as follows:

(Millions of dollars) December 31, 2022 Acquisitions Impairment Loss Other Adjustments 1

(Millions of dollars) December 31, 2023 Other Adjustments 1

December 31, 2024

16 unchanged sentences

Net goodwill $ 5,308 $ ( 67 ) $ 5,241

December 31, 2021 Acquisitions Impairment Loss Other Adjustments 1

December 31, 2022 Other Adjustments 1

December 31, 2023

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1 Other adjustments are comprised primarily of foreign currency translation.

2 Includes All Other operating segment (See Note 23).

2 Includes All Other Segment (See Note 23).

Investments in debt and equity securities

We have investments in certain debt and equity securities, which we record at fair value and primarily include in Other assets in Statement 3.

Short-term and long-term investments are held with high quality institutions and, by policy, the amount of credit exposure to any one institution is limited.

We classify debt securities primarily as available-for-sale.

34 unchanged sentences

governmental agency 126 3 273 30 399 33

Residential — — — — — —

Commercial 13 — 113 6 126 6

11 unchanged sentences

governmental agency 33 — 287 25 320 25

Residential 2 — 1 1 3 1

Commercial 2 — 121 9 123 9

24 unchanged sentences

We did not have any investments classified as held-to-maturity debt securities as of December 31, 2024.

All these investments mature within one year and we include them in Prepaid expenses and other current assets in Statement 3.

These investments matured within one year and were included in Prepaid expenses and other current assets in Statement 3.

We record held-to-maturity debt securities at amortized cost, which approximates fair value.

59 unchanged sentences

2 The Liability for postemployment benefits reported in Statement 3 includes liabilities for other postemployment benefits and non-qualified deferred compensation plans.

For 2023, these liabilities were $ 56 million and $ 565 million, respectively.

For 2022, these liabilities were $ 58 million and $ 475 million, respectively.

For 2023, Actuarial loss (gain) impacting the benefit obligation was primarily due to lower discount rates at the end of 2023 compared to the end of 2022.

For 2024 and 2023, these liabilities were $ 697 million and $ 621 million, respectively.

For 2024, Actuarial loss (gain) impacting the benefit obligation was primarily due to higher discount rates at the end of 2024 compared to the end of 2023.

For 2023, Actuarial loss (gain) impacting the benefit obligation was primarily due to lower discount rates at the end of 2023 compared to the end of 2022.

Pension Benefits Non-U.S.

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Expected benefit payments:

2024 2025 2026 2027 2028 2029-

2025 2026 2027 2028 2029 2030-2034 Total

Pension Benefits $ 1,000 $ 995 $ 985 $ 980 $ 970 $ 4,640 $ 9,570

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In general, our strategy for both the U.S.

pensions includes ongoing alignment of our investments to our liabilities, while reducing risk in our portfolio.

pensions is designed to decrease funded status volatility through ongoing alignment of the interest rate sensitivity of our investments to our obligations, while reducing risk from return seeking assets in our portfolio.

The current U.S.

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government bonds — 132 — — 132

Real estate — — 3 — 3

Cash, short-term instruments and other 48 12 — 300 360

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Global equities 1

26 10 — 17 53

Fixed income securities:

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Real estate — 210 — 9 219

Insurance contracts — — 675 — 675

Cash, short-term instruments and other 2

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equities 23 — — 2 25

Fixed income securities:

corporate bonds — — — 30 30

Cash, short-term instruments and other 1 — — 18 19

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pension assets measured at fair value using Level 3 inputs for the years ended December 31, 2024 and 2023 was insignificant.

During 2023, activity in our non-U.S.

pension Level 3 assets involved insurance contracts, including purchases of $ 633 million, settlements of $ 9 million and unrealized gains of $ 51 million.

The activity in our non-U.S.

pension Level 3 assets involved insurance contracts.

During 2024, activity was settlements of $ 59 million and unrealized losses of $ 15 million.

During 2023, activity was purchases of $ 633 million, settlements of $ 9 million and unrealized gains of $ 51 million.

We valued these instruments using pricing models that, in management’s judgment, reflect the assumptions a market participant would use.

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Our primary U.S.

401(k) plan allows eligible employees to contribute a portion of their cash compensation to the plan on a tax-deferred basis.

401(k) plan allows eligible employees to contribute a portion of their cash compensation to the plan.

Employees are eligible for matching contributions equal to 100 percent of employee contributions to the plan up to 6 percent of cash compensation and an annual employer contribution that ranges from 3 to 5 percent of cash compensation (depending on years of service and age).

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(Millions of dollars) 2024 2023 2022

plans $ 567 $ 392 $ 440

$ 610 $ 567 $ 392

plans 131 114 114

$ 741 $ 681 $ 506

1 Includes costs related to our non-qualified deferred compensation plans.

We utilize total return swaps to economically hedge this exposure to offset the related costs.

See Note 4 for additional information.

plans, changes in annual defined contribution costs are primarily due to fair value adjustments related to our non-qualified deferred compensation plans.

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Financial Products:

Notes payable to banks 330 234

Commercial paper 3,946 4,069

Notes payable to banks 165 330

Demand notes 282 244

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The weighted-average interest rates on short-term borrowings outstanding were:

Notes payable to banks 10.0 % 11.3 %

Commercial paper 4.5 % 5.2 %

Notes payable to banks 10.8 % 10.0 %

Demand notes 4.2 % 5.2 %

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Debentures—$ 193 million of 6.625 % due 2028 2

6.68 % 193 193

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$ 6,665 $ 8,529 $ 7,758 $ 214 $ 2,596

Medium-term notes of $ 500 million maturing in the first quarter of 2024 were excluded from the current maturities of long-term debt in Statement 3 as of December 31, 2023 due to a $ 500 million issuance of medium-term notes on January 8, 2024 which mature in 2027.

The preceding maturity table reflects the reclassification of $ 500 million from maturities in 2024 to 2027.

Medium-term notes of $ 1.25 billion maturing in the first quarter of 2025 were excluded from the current maturities of long-term debt in Statement 3 as of December 31, 2024 due to a $ 1.25 billion issuance of medium-term notes on January 8, 2025 of which $ 800 million and $ 450 million mature in 2027 and 2030, respectively.

The preceding maturity table reflects the reclassification of $ 1.25 billion from maturities in 2025 to $ 800 million in 2027 and $ 450 million in 2030.

Interest paid on short-term and long-term borrowings for 2024, 2023 and 2022 was $ 1,738 million, $ 1,435 million and $ 959 million, respectively.

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Available credit $ 9,929 $ 3,360 $ 6,569

We have three global credit facilities with a syndicate of banks totaling $ 10.50 billion (Credit Facility) available in the aggregate to both Caterpillar and Cat Financial for general liquidity purposes.

As of December 31, 2024, we had three global credit facilities with a syndicate of banks totaling $ 10.50 billion (Credit Facility) available in the aggregate to both Caterpillar and Cat Financial for general liquidity purposes.

Based on management's allocation decision, which can be revised from time to time, the portion of the Credit Facility available to ME&T as of December 31, 2024 was $ 2.75 billion.

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Caterpillar or Cat Financial may guarantee subsidiary borrowings under these lines.

At December 31, 2023, Caterpillar’s consolidated net worth was $ 19.55 billion, which was above the $ 9.00 billion required under the Credit Facility.

The consolidated net worth is defined as the consolidated shareholders’ equity including preferred stock but excluding the pension and other postretirement benefits balance within AOCI.

At December 31, 2023, Cat Financial’s covenant interest coverage ratio was 1.73 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 fiscal quarter for the prior four consecutive fiscal quarter period, required by the Credit Facility.

In addition, at December 31, 2023, Cat Financial’s six-month covenant leverage ratio was 6.88 to 1 and year-end covenant leverage ratio was 6.95 to 1 .

This was below the maximum ratio of debt to net worth of 10 to 1 , calculated (1) on a monthly basis as the average of the leverage ratios determined on the last day of each of the six preceding calendar months and (2) at each December 31, required by the Credit Facility.

In the event Caterpillar or Cat Financial does not meet one or more of their respective financial covenants under the Credit Facility in the future (and are unable to obtain a consent or waiver), the syndicate of banks may terminate the commitments allocated to the party that does not meet its covenants.

Additionally, in such event, certain of Cat Financial’s other lenders under other loan agreements where similar financial covenants or cross default provisions are applicable may, at their election, choose to pursue remedies under those loan agreements, including accelerating the repayment of outstanding borrowings.

At December 31, 2023, there were no borrowings under the Credit Facility.

At December 31, 2024, there were no borrowings under the Credit Facility, and Caterpillar and Cat Financial were in compliance with their respective financial covenants under the Credit Facility.

Profit per share

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Utilization of the 2022 Authorization for all share repurchases commenced on August 1, 2022, leaving $ 70 million unutilized under the 2018 Authorization.

As of December 31, 2023, approximately $ 7.8 billion remained available under the 2022 Authorization.

In June 2024, the Board approved an additional share repurchase authorization (the 2024 Authorization) of up to $ 20.0 billion of Caterpillar common stock, effective June 12, 2024, with no expiration.

As of December 31, 2024, approximately $ 20.1 billion remained available under the 2024 and 2022 Authorizations.

During 2024, 2023 and 2022, we repurchased 23.4 million, 19.5 million and 21.9 million shares of Caterpillar common stock, respectively, at an aggregate cost of $ 8.0 billion, $ 4.7 billion and $ 4.2 billion, respectively.

We made these purchases through a combination of accelerated stock repurchase agreements with third-party financial institutions and open market transactions.

We made these purchases through a combination of accelerated share repurchase (ASR) agreements with third-party financial institutions and open market transactions.

In the first quarter of 2024, we entered into ASR agreements to repurchase an aggregate of $ 3.50 billion of common stock.

We advanced $ 3.50 billion and received approximately 7.6 million shares of Caterpillar common stock with a value of $ 2.45 billion.

In the second quarter of 2024, we entered into ASR agreements to repurchase an aggregate of $ 1.00 billion of common stock.

We advanced $ 1.00 billion and received approximately 2.2 million shares of Caterpillar common stock with a value of $ 750 million.

In the fourth quarter of 2024, upon final settlement of the ASRs, we received approximately 3.6 million additional shares.

Accumulated other comprehensive income (loss)

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The fair value of foreign currency and commodity forward, option and cross currency contracts is based on standard industry accepted valuation models that discount cash flows resulting from the differential between the contract price and the market-based forward rate.

The fair value of total return swap contracts is primarily based on valuing the underlying securities or funds using pricing by industry providers and the average Secured Overnight Financing Rate (SOFR) plus a spread.

See Note 4 for additional information.

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Foreign currency contracts - net — 117 — — 117

Commodity contracts - net — 9 — — 9

Total assets $ 312 $ 4,149 $ — $ 167 $ 4,628

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Interest rate contracts - net $ — $ 191 $ — $ — $ 191

Commodity contracts - net — 2 — — 2

Total return swap contracts - net — 33 — — 33

Total liabilities $ — $ 226 $ — $ — $ 226

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We include restricted cash and short-term investments in Prepaid expenses and other current assets in Statement 3.

We classify these instruments as Level 1 except for time deposits which are Level 2, and certain corporate debt securities which are Level 3.

We classify these instruments as Level 1 except for time deposits which are Level 2.

See Note 11 for additional information.

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

The fair value of guarantees is based upon our estimate of the premium a market participant would require to issue the same guarantee in a stand-alone arms-length transaction with an unrelated party.

If quoted or observable market prices are not available, fair value is based upon internally developed models that utilize current market-based assumptions.

We classify guarantees as Level 3.

See Note 21 for additional information.

Our financial instruments not carried at fair value were as follows:

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Finance receivables–net (excluding finance leases 1 )

$ 15,386 $ 15,017 $ 13,965 $ 13,377 3 Notes 7 & 19

$ 16,180 $ 15,788 $ 15,386 $ 15,017 3 Note 7

Wholesale inventory receivables–net (excluding finance leases 1 )

1,415 1,368 827 778 3 Notes 7 & 19

1,568 1,527 1,415 1,368 3 Note 7

Liabilities at December 31,

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1 Represents finance leases and failed sale leasebacks of $ 6,769 million and $ 6,953 million at December 31, 2024 and 2023, respectively.

Concentration of credit risk

Financial instruments with potential credit risk consist primarily of trade and finance receivables and short-term and long-term investments.

Additionally, to a lesser extent, we have a potential credit risk associated with counterparties to derivative contracts.

Trade receivables are primarily short-term receivables from independently owned and operated dealers and customers which arise in the normal course of business.

We perform regular credit evaluations of our dealers and customers.

Collateral generally is not required, and the majority of our trade receivables are unsecured.

We do, however, when deemed necessary, make use of various devices such as security agreements and letters of credit to protect our interests.

No single dealer or customer represents a significant concentration of credit risk.

Finance receivables and wholesale inventory receivables primarily represent receivables under installment sales contracts, receivables arising from leasing transactions and notes receivable.

We typically maintain a security interest in retail financed equipment and, in some instances, wholesale financed equipment.

We also generally require physical damage insurance coverage on financed equipment.

No single customer or dealer represented a significant concentration of credit risk.

Short-term and long-term investments are held with high quality institutions and, by policy, the amount of credit exposure to any one institution is limited.

Long-term investments, primarily included in Other assets in Statement 3, are comprised primarily of available-for-sale debt securities and equity securities.

For derivative contracts, collateral is generally not required of the counterparties or of our company.

The company generally enters into International Swaps and Derivatives Association (ISDA) master netting agreements within ME&T and Financial Products that permit the net settlement of amounts owed under their respective derivative contracts.

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, 2023 and 2022, the maximum exposure to credit loss was $ 520 million and $ 644 million, respectively, before the application of any master netting agreements.

Refer to Note 18 for fair value information.

Supplier finance programs

We facilitate voluntary supplier finance programs (the “Programs”) through participating financial institutions.

The Programs are available to a wide range of suppliers and allow them the option to manage their cash flow.

We are not a party to the agreements between the participating financial institutions and the suppliers in connection with the Programs.

The range of payment terms, typically 60 - 90 days, we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the Programs.

The amount of obligations outstanding that are confirmed as valid to the participating financial institutions for suppliers who voluntarily participate in the Programs, included in Accounts payable in Statement 3, were $ 830 million and $ 803 million at December 31, 2024 and 2023, respectively.

The rollforward of our outstanding obligations confirmed as valid under the Programs for the year ended December 31, 2024 was as follows:

(Millions of dollars) 2024

Confirmed obligations outstanding, beginning of period $ 803

Invoices confirmed during the period 5,140

Confirmed invoices paid during the period ( 5,113 )

Confirmed obligations outstanding, end of period $ 830

Lessee arrangements

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Guarantees and product warranty

Dealer performance guarantees mainly consists of an indemnity to a third-party insurance company for potential losses related to performance bonds issued on behalf of Caterpillar dealers.

The bonds have varying terms and are issued to insure governmental agencies against nonperformance by certain dealers.

The guarantees began to expire during the third quarter of 2023.

No payments were made under the guarantees.

We have provided various guarantees that have varying terms and limit potential payment.

Under the guarantees, non-performance by the third parties could require Caterpillar to satisfy the contractual obligation by providing goods, services or financial compensation.

The maximum potential amount of future payments (undiscounted and without reduction for any amounts possibly recoverable) that we could be required to make under the guarantees was $ 368 million and $ 353 million at December 31, 2024 and 2023, respectively.

We have dealer performance guarantees and third-party performance guarantees that do not limit potential payment to end users related to indemnities and other commercial contractual obligations.

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No significant loss has been experienced or is anticipated under any of these guarantees.

At December 31, 2023 and 2022, the related recorded liability was $ 3 million and $ 2 million, respectively.

The maximum potential amount of future payments that we can estimate (undiscounted and without reduction for any amounts that may possibly be recovered under recourse or collateralized provisions) and we could be required to make under the guarantees at December 31 was as follows:

(Millions of dollars) 2023 2022

Caterpillar dealer performance guarantees $ 42 $ 188

Other guarantees 311 323

Total guarantees $ 353 $ 511

Cat Financial provides guarantees to purchase certain loans of Caterpillar dealers from a special-purpose corporation (SPC) that qualifies as a variable interest entity.

Cat Financial receives a fee for providing this guarantee.

The purpose of the SPC is to provide short-term working capital loans to Caterpillar dealers.

This SPC issues commercial paper and uses the proceeds to fund its loan program.

Cat Financial receives a fee for providing this guarantee.

Cat Financial is the primary beneficiary of the SPC as its guarantees result in Cat Financial having both the power to direct the activities that most significantly impact the SPC’s economic performance and the obligation to absorb losses, and therefore Cat Financial has consolidated the financial statements of the SPC.

As of December 31, 2023 and 2022, the SPC’s assets of $ 1.35 billion and $ 971 million, respectively, were primarily comprised of loans to dealers, and the SPC’s liabilities of $ 1.35 billion and $ 970 million, respectively, were primarily comprised of commercial paper.

As of December 31, 2024 and 2023, the SPC’s assets of $ 1.14 billion and $ 1.35 billion, respectively, were primarily comprised of loans to dealers, and the SPC’s liabilities of $ 1.14 billion and $ 1.35 billion, respectively, were primarily comprised of commercial paper.

The assets of the SPC are not available to pay Cat Financial’s creditors.

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We believe there is no more than a remote chance that a material amount for remedial activities at any individual site, or at all the sites in the aggregate, will be required.

On January 27, 2020, the Brazilian Federal Environmental Agency (“IBAMA”) issued Caterpillar Brasil Ltda a notice of violation regarding allegations around the requirements for use of imported oils at the Piracicaba, Brazil facility.

We have instituted processes to address the allegations.

While we are still discussing resolution of these allegations with IBAMA, the initial notice from IBAMA included a proposed fine of approximately $ 300,000 .

We do not expect this fine or our response to address the allegations to have a material adverse effect on the Company's consolidated results of operations, financial position or liquidity.

On January 7, 2015, the U.S.

Attorney’s Office for the Central District of Illinois issued a grand jury subpoena to the Company and thereafter issued additional subpoenas;

these subpoenas sought information regarding, among other things, movements of cash among U.S.

Caterpillar subsidiaries, the purchase and resale of replacement parts by Caterpillar Inc.

Caterpillar subsidiaries, and Caterpillar SARL (CSARL) and related structures.

On March 2-3, 2017, federal agents executed search and seizure warrants, which concerned both tax and export activities, at three facilities of the Company in the Peoria, Illinois area, including its former corporate headquarters.

The Tax Division of the U.S.

Department of Justice conducted a review of the grand jury investigation and informed the Company on November 28, 2022 that it does not have a pending criminal tax matter involving the Company.

In January 2023, the government began returning to the Company the documents and information seized under the search warrants, which, as noted, related to both tax and export issues, as well as the documents and information the Company produced under the grand jury subpoenas.

Our operations in Brazil are subject to highly complex labor, tax, customs and other laws.

While we believe that we are in compliance with such laws, we are periodically engaged in litigation regarding the application of these laws, including certain tax and customs disputes with federal, state and municipal authorities in Brazil relating to export activities associated with Caterpillar Brasil Ltda.

The Company is unable to predict the outcome or reasonably estimate any potential losses;

however, we currently believe that any matters raised will not have a material adverse effect on the Company's consolidated results of operations, financial position or liquidity.

In addition, we are involved in other unresolved legal actions that arise in the normal course of business.

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The CEO allocates resources and manages performance at the COO/Group President/CFO level.

As such, the CEO serves as our Chief Operating Decision Maker, and operating segments are primarily based on the COO/Group President/CFO reporting structure.

As such, the CEO serves as our Chief Operating Decision Maker (CODM), and operating segments are primarily based on the COO/Group President/CFO reporting structure.

Three of our operating segments, Construction Industries, Resource Industries and Energy & Transportation are led by Group Presidents.

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it does not meet the definition of an operating segment.

One Group President leads one smaller operating segment that is included in the All Other operating segment.

One Group President leads one smaller operating segment that is included in the All Other Segment.

The Law, Security and Public Policy Division and the Human Resources Organization are cost centers and do not meet the definition of an operating segment.

Segment information for 2021 has been recast due to a methodology change related to how we assign intersegment sales and segment profit from our technology products and services to Construction Industries, Resource Industries and Energy & Transportation.

This methodology change did not have a material impact on our segment results.

Description of segments

We have five operating segments, of which four are reportable segments.

Following is a brief description of our reportable segments and the business activities included in the All Other operating segment:

Following is a brief description of our reportable segments and the business activities included in the All Other Segment:

Construction Industries :

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soil compactors;

wide-body trucks;

select work tools;

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In addition to equipment, Resource Industries also develops and sells technology products and services to provide customers fleet management, equipment management analytics, autonomous machine capabilities, safety services and mining performance solutions.

Resource Industries also manages areas that provide services to other parts of the company, including strategic procurement, lean center of excellence, integrated manufacturing, research and development for hydraulic systems, automation, electronics and software for Cat machines and engines.

Inter-segment sales are a source of revenue for this segment.

Energy & Transportation :

A segment primarily responsible for supporting customers using reciprocating engines, turbines, diesel-electric locomotives and related services across industries serving Oil and Gas, Power Generation, Industrial and Transportation applications, including marine- and rail-related businesses.

Responsibilities include business strategy, product design, product management, development and testing, manufacturing, marketing and sales and product support.

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electrified powertrain and zero-emission power sources and service solutions development;

diesel-electric locomotives and components and other rail-related products and services, including remanufacturing and leasing.

and diesel-electric locomotives and components and other rail-related products and services, including remanufacturing and leasing.

Responsibilities also include the remanufacturing of Caterpillar reciprocating engines and components and remanufacturing services for other companies.

and product support of on-highway vocational trucks for North America.

Inter-segment sales are a source of revenue for this segment.

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Financial Products’ segment profit is determined on a pretax basis and includes other income (expense) items.

All Other operating segment :

All Other Segment :

Primarily includes activities such as:

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product management and development;

manufacturing and sourcing of filters and fluids, undercarriage, ground-engaging tools, fluid transfer products, precision seals, rubber sealing and connecting components primarily for Cat® products;

manufacturing and sourcing of wear and maintenance components primarily for Cat® products;

parts distribution;

integrated logistics solutions;

distribution services responsible for dealer development and administration, including one wholly owned dealer in Japan;

distribution services responsible for dealer development and administration, including a wholly owned dealer in Japan;

dealer portfolio management and ensuring the most efficient and effective distribution of machines, engines and parts;

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and digital investments for new customer and dealer solutions that integrate data analytics with state-of-the-art digital technologies while transforming the buying experience.

Results for the All Other operating segment are included as a reconciling item between reportable segments and consolidated external reporting.

Results for the All Other Segment are included as a reconciling item between reportable segments and consolidated external reporting.

Segment measurement and reconciliations

We determine the segment profit of Construction Industries, Resource Industries, Energy & Transportation and our All Other Segment on a pretax basis and exclude most interest expense and certain other income (expense) items.

We determine Financial Products Segment profit on a pretax basis and include other income (expense) items.

Our CODM evaluates the operating performance of the segments using segment profit as it provides insight into the financial health of each segment.

The CODM reviews this metric regularly to compare the profitability of segments, identify trends, and evaluate which segments require additional resources or strategic adjustments.

The CODM uses segment profit to support the allocation of resources predominantly in the annual budget and forecasting process.

Additionally, the CODM monitors forecast-to-actual variances, focusing on areas where performance deviates from expectations, when evaluating the performance of each segment and making decisions about allocating capital and other resources to each segment.

There are several methodology differences between our segment reporting and our external reporting.

The following is a list of the more significant methodology differences:

• ME&T segment net assets generally include inventories, receivables, property, plant and equipment, goodwill, intangibles, accounts payable and customer advances.

• For Construction Industries, Resource Industries, Energy & Transportation and our All Other Segment, net assets generally include inventories, receivables, property, plant and equipment, goodwill, intangibles, accounts payable and customer advances.

We generally manage at the corporate level liabilities other than accounts payable and customer advances, and we do not include these in segment operations.

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In addition, we have allocated to segments only a portion of goodwill for certain acquisitions made in 2011 or later.

• We generally manage currency exposures for ME&T at the corporate level and do not include in segment profit the effects of changes in exchange rates on results of operations within the year.

• We generally manage currency exposures for operating segments, other than Financial Products, at the corporate level and do not include in segment profit the effects of changes in exchange rates on results of operations within the year.

We report the net difference created in the translation of revenues and costs between exchange rates used for U.S.

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segments are generally responsible for service costs, with the remaining elements of net periodic benefit cost included as a methodology difference.

• We determine ME&T segment profit on a pretax basis and exclude interest expense and most other income/expense items.

We determine Financial Products Segment profit on a pretax basis and include other income/expense items.

Reconciling items are created based on accounting differences between segment reporting and our consolidated external reporting.

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These costs are related to corporate requirements primarily for compliance and legal functions for the benefit of the entire organization.

• Restructuring costs:

May include costs for employee separation, long-lived asset impairments and contract terminations.

• Restructuring income/costs:

May include costs for employee separation, long-lived asset impairments, contract terminations and (gains)/losses on divestitures.

These costs are included in Other operating (income) expenses except for defined-benefit plan curtailment losses and special termination benefits, which are included in Other income (expense).

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Total sales and revenues from reportable segments 34,844 6,795 12,411 11,453 65,503 5,248 70,751

All Other operating segment 65 ( 1 ) 18 49 131 318 449

All Other Segment 56 — 12 50 118 307 425

Corporate Items and Eliminations ( 503 ) ( 87 ) ( 107 ) ( 115 ) ( 812 ) ( 5,555 ) ( 6,367 )

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Total sales and revenues from reportable segments 35,021 6,746 13,743 12,168 67,678 5,109 72,787

All Other operating segment 64 2 ( 66 ) 145 145 305 450

All Other Segment 65 ( 1 ) 18 49 131 318 449

Corporate Items and Eliminations ( 480 ) ( 80 ) ( 88 ) ( 101 ) ( 749 ) ( 5,427 ) ( 6,176 )

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Total sales and revenues from reportable segments 28,151 6,815 12,932 11,832 59,730 4,858 64,588

All Other operating segment 56 2 18 69 145 366 511

All Other Segment 64 2 ( 66 ) 145 145 305 450

Corporate Items and Eliminations ( 234 ) ( 79 ) ( 52 ) ( 83 ) ( 448 ) ( 5,163 ) ( 5,611 )

Total Sales and Revenues $ 27,981 $ 6,738 $ 12,814 $ 11,894 $ 59,427 $ — $ 59,427

1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other operating segment of $ 690 million, $ 478 million and $ 351 million in the years ended December 31, 2023, 2022 and 2021, respectively.

1 Includes revenues from Construction Industries, Resource Industries, Energy & Transportation and All Other Segment of $ 711 million, $ 690 million and $ 478 million in the years ended December 31, 2024, 2023 and 2022, respectively.

For the years ended December 31, 2024, 2023 and 2022, Energy & Transportation segment sales by end user application were as follows:

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Energy & Transportation External Sales $ 24,088 $ 23,355 $ 19,337

Profit from Reportable Segments

(Millions of dollars)

Construction Industries Resource Industries Energy & Transportation Financial Products Segment Total from Reportable Segments

Sales and revenues $ 25,455 $ 12,389 $ 28,854 $ 4,053 $ 70,751

Cost of goods sold 17,326 8,387 19,796 — 45,509

1,931 1,451 3,241 771 7,394

Other segment items 3

33 18 81 2,350 2,482

Segment Profit $ 6,165 $ 2,533 $ 5,736 $ 932 $ 15,366

Sales and revenues $ 27,418 $ 13,583 $ 28,001 $ 3,785 $ 72,787

Cost of goods sold 18,658 9,367 19,875 — 47,900

1,844 1,389 3,084 691 7,008

Other segment items 3

( 59 ) ( 7 ) 106 2,185 2,225

Segment Profit $ 6,975 $ 2,834 $ 4,936 $ 909 $ 15,654

Sales and revenues $ 25,269 $ 12,314 $ 23,752 $ 3,253 $ 64,588

Cost of goods sold 18,924 9,249 17,931 — 46,104

1,629 1,308 2,655 660 6,252

Other segment items 3

( 27 ) ( 70 ) ( 143 ) 1,729 1,489

Segment Profit $ 4,743 $ 1,827 $ 3,309 $ 864 $ 10,743

1 The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

Inter-segment income/expenses are included within the amounts shown.

2 Includes selling, general and administrative (SG&A) and research and development (R&D) expenses.

The combined presentation aligns with the segment-level information that is regularly provided to the CODM.

3 Other segment items for each reportable segment primarily includes:

Construction Industries – other operating (income) expenses, currency impacts defined as a methodology difference between exchange rates used in U.S.

GAAP and segment reporting, and equity in (profit) loss of unconsolidated affiliated companies.

Resource Industries – other operating (income) expenses, currency impacts defined as a methodology difference between exchange rates used in U.S.

GAAP and segment reporting, and equity in (profit) loss of unconsolidated affiliated companies.

Energy & Transportation – other operating (income) expenses, currency impacts defined as a methodology difference between exchange rates used in U.S.

GAAP and segment reporting, and equity in (profit) loss of unconsolidated affiliated companies.

Financial Products Segment – interest expense, Cat Financial’s depreciation on equipment leased to others, Insurance Services’ underwriting expenses and investment and interest income, and foreign exchange (gains) losses.

Reconciliation of Consolidated profit before taxes:

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2024 2023 2022

Profit from reportable segments:

Construction Industries $ 6,975 $ 4,743 $ 3,732

Resource Industries 2,834 1,827 1,229

Energy & Transportation 4,936 3,309 2,804

Financial Products Segment 909 864 908

Total profit from reportable segments 15,366 15,654 10,743

Profit from All Other operating segment 18 ( 11 ) ( 14 )

Profit from All Other Segment 48 18 ( 11 )

Cost centers ( 1 ) ( 7 ) ( 13 )

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Total assets from reportable segments 59,791 57,366

Assets from All Other operating segment 1,890 1,828

Assets from All Other Segment 1,937 1,890

Items not included in segment assets:

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Items not included in segment depreciation and amortization:

All Other operating segment 236 229 243

All Other Segment 254 236 229

Cost centers 95 91 84

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Items not included in segment capital expenditures:

All Other operating segment 260 219 182

All Other Segment 245 260 219

Cost centers 193 102 76

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Revenues from services provided are based on where service is rendered.

SPM Oil & Gas

On February 1, 2021, Caterpillar completed the acquisition of varying equity interests and assets of the Weir Group PLC, collectively known as SPM Oil & Gas (SPM).

Headquartered near Fort Worth, Texas, SPM Oil & Gas produces a full line of pumps, flow iron, consumable parts, wellhead and pressure control products that are offered via an extensive global network of service centers.

This acquisition, included in the Energy & Transportation segment, is consistent with our strategy of providing our customers expanded offerings and services which will now be one of the broadest in the well service industry.

The purchase price, net of $ 22 million of acquired cash, was approximately $ 359 million.

We financed the transaction with available cash.

Tangible assets as of the acquisition date were $ 520 million, recorded at their fair values, and primarily included cash of $ 22 million, receivables of $ 106 million, inventories of $ 159 million, leased assets of $ 105 million, and property, plant, and equipment of $ 117 million.

Finite-lived intangible assets acquired of $ 23 million included developed technology and trade names and will be amortized on a straight-line basis over a weighted-average amortization period of approximately 8 years.

Liabilities assumed as of the acquisition date were $ 192 million, recorded at their fair values, and primarily included lease liabilities of $ 105 million and accounts payable of $ 33 million.

Goodwill of $ 30 million represented the excess of the consideration transferred over the net assets acquired.

Assuming this transaction had been made at the beginning of any period presented, the consolidated pro forma results would not be materially different from reported results.

Restructuring costs

Restructuring income/costs

Our accounting for employee separations is dependent upon how the particular program is designed.

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$ 64 $ 74 $ 77

Longwall divestiture 1

Divestitures 1

Contract terminations 1

Long-lived asset impairments 1

Total restructuring costs $ 780 $ 299 $ 90

Total restructuring (income) costs $ 359 $ 780 $ 299

1 Recognized in Other operating (income) expenses.

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

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

The restructuring costs in 2024 were related to restructuring actions across the company including the divestitures of certain non-U.S.

The restructuring costs in 2023 were primarily related to the divestiture of the company's Longwall business within Resource Industries.

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The inventory write-downs were included in "Other" in the table above.

The restructuring costs in 2021 were primarily related to actions across the company including strategic actions to address a small number of products, which were partially offset by a gain on the sale of a manufacturing facility that had been closed.

The gain in 2021 was included in Long-lived asset impairments in the table above.

In 2024, 2023 and 2022, all restructuring costs were excluded from segment profit.

The following table summarizes the 2023 and 2022 employee separation activity:

(Millions of dollars) 2023 2022

Liability balance, beginning of period $ 39 $ 61

Increase in liability (separation charges) 74 77

Reduction in liability (payments) ( 73 ) ( 99 )

Liability balance, end of period $ 40 $ 39

Most of the remaining liability balance as of December 31, 2023 is expected to be paid in 2024.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data