What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-13 compared with 2025-02-14 · 219 added, 221 removed, 2056 unchanged (18% of the section changed)

14 unchanged sentences

Their report appears on pages 56-57.

James Umpleby III

/s/ Joseph E.

Chief Executive Officer

53 unchanged sentences

Sales and revenues:

Sales of Machinery, Energy & Transportation $ 61,363 $ 63,869 $ 56,574

Sales of Machinery, Power & Energy $ 63,980 $ 61,363 $ 63,869

Revenues of Financial Products 3,609 3,446 3,191

5 unchanged sentences

Interest expense of Financial Products 1,359 1,286 1,030

Goodwill impairment charge — — 925

Other operating (income) expenses 1,194 1,478 1,818

65 unchanged sentences

Long-term debt due within one year:

Machinery, Energy & Transportation 46 1,044

Machinery, Power & Energy 35 46

Financial Products 7,085 6,619

1 unchanged sentence

Long-term debt due after one year:

Machinery, Energy & Transportation 8,564 8,579

Machinery, Power & Energy 10,678 8,564

Financial Products 20,018 18,787

33 unchanged sentences

Available-for-sale securities, net of tax — — — 62 — 62

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

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

5 unchanged sentences

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

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

Dividends declared — — ( 2,690 ) — — ( 2,690 )

4 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 )

21 unchanged sentences

— ( 5,190 ) — — — ( 5,190 )

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

Other 45 ( 49 ) — — ( 1 ) ( 5 )

14 unchanged sentences

(Gain) loss on divestiture 30 164 572

Goodwill impairment charge — — 925

Other 742 564 375

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Dividends paid ( 2,749 ) ( 2,646 ) ( 2,563 )

Common stock issued, including treasury shares reissued 20 12 51

Common stock issued, and other stock compensation transactions, net ( 16 ) 20 12

Payments to purchase common stock ( 5,190 ) ( 7,697 ) ( 4,975 )

1 unchanged sentence

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

- Machinery, Power & Energy 1,976 — —

- Financial Products 9,129 10,283 8,257

Payments on debt (original maturities greater than three months):

- Machinery, Energy & Transportation ( 1,032 ) ( 106 ) ( 25 )

- Machinery, Power & Energy ( 51 ) ( 1,032 ) ( 106 )

- Financial Products ( 8,030 ) ( 8,284 ) ( 6,212 )

13 unchanged sentences

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

Machinery, Energy & Transportation (ME&T) – We define ME&T as Caterpillar Inc.

Machinery, Power & Energy (MP&E) – We define MP&E as Caterpillar Inc.

and its subsidiaries, excluding Financial Products.

ME&T's information relates to the design, manufacturing and marketing of our products.

MP&E's information relates to the design, manufacturing and marketing of our products.

Financial Products – We define Financial Products as our finance and insurance subsidiaries, primarily Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc.

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We sell our products primarily under the brands “Caterpillar,” “CAT,” design versions of “CAT” and “Caterpillar,” “EMD,” “FG Wilson,” “MWM,” “Perkins,” “Progress Rail,” “SEM” and “Solar Turbines.”

We conduct operations in our ME&T line of business under highly competitive conditions, including intense price competition.

We conduct operations in our MP&E line of business under highly competitive conditions, including intense price competition.

We place great emphasis on the high quality and performance of our products and our dealers’ service support.

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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, 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.

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

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, contract assets, prepaid insurance, assets held for sale, core to be returned for remanufacturing, and restricted cash and other short-term investments.

Long-term receivables - trade and other in Statement 3 includes $ 377 million at December 31, 2025, for recoveries from over-payments made during the importation process.

At December 31, 2024, the amount was inconsequential.

Certain amounts for prior years have been reclassified to conform with the current-year financial statement presentation.

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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, 2024 and 2023.

The value of inventories on the LIFO basis represented about 70 percent and 65 percent of total inventories at December 31, 2025 and 2024, respectively.

If the FIFO (first-in, first-out) method had been in use, inventories would have been $ 4,305 million and $ 3,864 million higher than reported at December 31, 2025 and 2024, respectively.

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Foreign currency translation

The functional currency for most of our ME&T consolidated subsidiaries is the U.S.

The functional currency for most of our MP&E consolidated subsidiaries is the U.S.

The functional currency for most of our Financial Products consolidated subsidiaries is the respective local currency.

4 unchanged sentences

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 Risk Management 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.

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Adoption of new accounting standards

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.

We adopted the following ASUs effective January 1, 2024, none of which had a material impact on our financial statements:

ASU Description

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

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

The expanded disclosures were effective for the year ending December 31, 2025, and are being applied prospectively.

See Note 6, Income taxes, for additional information.

All other ASUs effective January 1, 2025, were assessed and determined that they either were not applicable or did not have a material impact on our financial statements.

Accounting standards issued but not yet adopted

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.

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.

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.

The expanded 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.

Internal-use software costs (ASU 2025-06) — In September 2025, the FASB issued accounting guidance to modernize the accounting for internal-use software costs.

Under this guidance, capitalization for internal-use software costs begins when management has authorized and committed to funding the project and it is probable the project will be completed, and the software will be used to perform the intended function.

This guidance is effective January 1, 2028, with early adoption permitted, and can be applied on a prospective basis, a modified basis for in-process projects, or a retrospective basis.

We are in the process of evaluating the effect of this new guidance on our financial statements.

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

Sales of Machinery, Energy & Transportation

We recognize sales of ME&T when all the following criteria are satisfied:

Sales of Machinery, Power & Energy

We recognize sales of MP&E when all the following criteria are satisfied:

(i) a contract with an independently owned and operated dealer or an end user exists which has commercial substance;

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The rebuilt engine or component (the core plus any new content) is then sold as a remanufactured product to dealers and end users.

We recognize revenue pursuant to the same transfer of control criteria as ME&T sales noted above.

We recognize revenue pursuant to the same transfer of control criteria as MP&E sales noted above.

At the time of sale, we recognize the deposit in Other current liabilities in Statement 3, and we recognize the core to be returned as an asset in Prepaid expenses and other current assets in Statement 3 at the estimated replacement cost (based on historical experience with usable cores).

8 unchanged sentences

We accrue a corresponding post-sale discount reserve in Statement 3, which represents discounts we expect to pay on units sold.

If discounts paid differ from those estimated, we report the difference as a change in the transaction price.

If discounts paid differ from those estimated, we report the difference as a change in the transaction price in the subsequent period when the final discount is paid.

As a result of differences between actual and estimated payments and changes in estimates, we recognized a decrease in revenue of $ 497 million during 2025, related to prior period sales.

Products sold to dealers in a prior period that remained in dealer inventory during 2025 were subject to merchandising program actions taken in 2025 which resulted in higher discounts paid in the current year.

The change in revenue during 2024 related to prior periods sales was inconsequential.

Except for replacement parts, no right of return exists on the sale of our products.

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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.

4 unchanged sentences

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.

Our allowance for credit losses is not significant for MP&E receivables.

For certain contracts, we invoice for payment when contractual milestones are achieved.

11 unchanged sentences

As of December 31, 2025, we have entered into contracts with dealers and end users for which sales have not been recognized as we have not satisfied our performance obligations and transferred control of the products.

The dollar amount of unsatisfied performance obligations for contracts with an original duration greater than one year is $ 15.2 billion, with about one-half of the amount expected to be completed and revenue recognized in the twelve months following December 31, 2024.

The dollar amount of unsatisfied performance obligations for contracts with an original duration greater than one year is $ 30.1 billion, with about one-third of the amount expected to be completed and revenue recognized in the twelve months following December 31, 2025.

We have elected the practical expedient to not disclose unsatisfied performance obligations with an original contract duration of one year or less.

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Operating lease revenue is recorded 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 suspend recognition of finance revenue and operating lease revenue and place an 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.

Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms.

Payments received while a finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms.

We write off interest earned but uncollected prior to the receivables being placed on non-accrual status through Provision for credit losses when, in the judgment of management, we consider it to be uncollectible.

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

The dividend equivalent units are forfeitable if the associated award is forfeited.

Therefore, the RSU and PSRUs, as well as dividend equivalent units are not treated as participating securities for earnings per share.

We determine the fair value of the RSU awards granted in 2025, 2024 and 2023 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.

The PRSUs granted in 2025 and 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 2025 and 2024, respectively:

Expected volatility of the Company's stock 29.5 % 29.8 %

Risk-free interest rate 3.90 % 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.

We determine the fair value of the PRSU awards granted in 2023 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.

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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.

At December 31, 2024, there were 776,637 outstanding RSUs with a weighted average remaining contractual life of 1.5 years and 390,013 outstanding PRSUs with a weighted-average remaining contractual life of 1.4 years.

At December 31, 2025, there were 878,830 outstanding RSUs with a weighted average remaining vesting period of 1.7 years and 364,284 outstanding PRSUs with a weighted-average remaining vesting period of 1.5 years.

TABLE II— Additional Stock-based Award Information

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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.

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Additionally, we have balance sheet positions denominated in foreign currencies, thereby creating exposure to movements in exchange rates.

Our ME&T operations purchase, manufacture and sell products in many locations around the world.

Our MP&E operations purchase, manufacture and sell products in many locations around the world.

As we have a diversified revenue and cost base, we manage our future foreign currency cash flow exposure on a net basis.

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We perform designation on a specific exposure basis to support hedge accounting.

The remainder of ME&T foreign currency contracts are undesignated.

The remainder of MP&E foreign currency contracts are undesignated.

In managing foreign currency risk for our Financial Products operations, our objective is to minimize earnings volatility resulting from conversion and the remeasurement of net foreign currency balance sheet positions and future transactions denominated in foreign currencies.

6 unchanged sentences

Our practice is to use interest rate contracts to manage our exposure to interest rate changes.

Our ME&T operations generally use fixed-rate debt as a source of funding.

Our MP&E operations generally use fixed-rate debt as a source of funding.

Our objective is to minimize the cost of borrowed funds.

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We designate most floating-to-fixed interest rate contracts as cash flow hedges to protect against the variability of cash flows due to changes in the benchmark interest rate.

We have, at certain times, liquidated fixed-to-floating and floating-to-fixed interest rate contracts at both ME&T and Financial Products.

We amortize the gains or losses associated with these contracts at the time of liquidation into earnings over the original term of the previously designated hedged item.

If we liquidate fixed-to-floating or floating-to-fixed interest rate contracts at MP&E or Financial Products, we amortize any deferred gains or losses into earnings over the remaining term of the previously hedged item.

Commodity price risk

1 unchanged sentence

Our policy is to use commodity forward and option contracts to manage the commodity risk and reduce the cost of purchased materials.

Our ME&T operations purchase base and precious metals embedded in the components we purchase from suppliers.

Our MP&E operations purchase base and precious metals embedded in the components we purchase from suppliers.

Our suppliers pass on to us price changes in the commodity portion of the component cost.

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(Millions of dollars) Years ended December 31,

Fair Value / Undesignated Hedges Cash Flow Hedges

Gains (Losses) Recognized in Statement 1 1

1 unchanged sentence

2025 2024 2023 2025 2024 2023 2025 2024 2023

Cash Flow Hedges

Foreign exchange contracts $ — $ — $ — $ 156 $ 53 $ 39 $ 55 $ 168 $ ( 58 )

Interest rate contracts — — — 16 11 9 6 39 55

Fair Value Hedges

Foreign exchange contracts — — — ( 9 ) — — ( 8 ) — —

Interest rate contracts ( 69 ) ( 139 ) ( 135 ) — — — — — —

Undesignated Hedges

Foreign exchange contracts ( 65 ) 162 12 — — — — — —

Commodity contracts 26 ( 10 ) 10 — — — — — —

12 unchanged sentences

Total $ 6,115 $ 5,810 $ ( 34 ) $ ( 186 )

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

We enter into International Swaps and Derivatives Association (ISDA) master netting agreements within MP&E and Financial Products that permit the net settlement of amounts owed under their respective derivative contracts.

Under these master netting agreements, net settlement generally permits the company or the counterparty to determine the net amount payable for contracts due on the same date and in the same currency for similar types of derivative transactions.

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See Note 4 for further details.

As described in Note 1J, New accounting guidance, we have elected to prospectively adopt the guidance in ASU 2023-09.

The following table is a reconciliation of the U.S.

federal statutory tax rate of 21 percent to our effective tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09.

Reconciliation of the U.S.

federal statutory rate to effective rate:

federal statutory tax rate to effective tax rate:

Year ended December 31,

(Millions of dollars) 2025

Taxes at U.S.

statutory tax rate $ 2,424 21.0 %

(Decreases)/increases resulting from:

Federal statutory tax rate difference ( 310 ) ( 2.7 ) %

State and local income taxes, net of federal 160 1.4 %

Other ( 27 ) ( 0.2 ) %

Other Non-U.S.

jurisdictions 342 3.0 %

Other 179 1.5 %

Provision (benefit) for income taxes $ 2,768 24.0 %

The following table is a reconciliation of the U.S.

federal statutory tax rate of 21 percent to our effective tax rate for the years ended December 31, 2024 and December 31, 2023 prior to the adoption of the guidance in ASU 2023-09.

Reconciliation of the U.S.

federal statutory tax rate to effective tax rate:

Years ended December 31,

5 unchanged sentences

rate 186 1.4 % 129 1.0 %

State and local taxes, net of federal 1

121 0.9 % 93 0.7 % 91 1.0 %

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

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

Nondeductible goodwill — — % — — % 159 1.8 %

Other—net 103 0.8 % 82 0.6 %

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

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.

Included in the line item above labeled “Non-U.S.

subsidiaries taxed at other than the U.S.

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GAAP results.

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.

Undistributed profits of non-U.S.

subsidiaries of approximately $ 15 billion are considered indefinitely reinvested.

Determination of the amount of unrecognized deferred tax liability related to indefinitely reinvested profits is not feasible primarily due to our legal entity structure and the complexity of U.S.

and local tax laws.

The components of profit (loss) before taxes were:

4 unchanged sentences

$ 11,541 $ 13,373 $ 13,050

Profit before 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.

may not correspond to the earnings shown above.

The components of the provision (benefit) for income taxes were:

4 unchanged sentences

1,390 1,531 1,592

State (U.S.) 135 154 134

State and local 109 135 154

2,303 3,250 3,373

2 unchanged sentences

56 ( 69 ) ( 164 )

State (U.S.) 1 ( 37 ) ( 23 )

State and local 16 1 ( 37 )

465 ( 621 ) ( 592 )

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We paid net income tax and related interest of $ 2,206 million, $ 3,126 million and $ 2,949 million in 2025, 2024 and 2023, respectively.

In accordance with the guidance in ASU 2023-09, net income tax and related interest paid in 2025 to the following jurisdictions were:

Income tax and related interest paid (net of refunds received) to:

(Millions of dollars) 2025

Federal $ 605

State and local 138

Switzerland 500

Net income tax and related interest paid $ 2,206

1 Includes federal, state and local jurisdictions within each country.

Accounting for income taxes under U.S.

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Tax carryforwards 1,298 1,346

Postemployment benefits 560 656

Employee compensation and benefits 607 531

Warranty reserves 303 325

Postemployment benefits 425 560

Post sale discounts 303 260

Inventory valuation 183 138

Lease obligations 151 144

Warranty reserves 287 303

Other—net 579 622

1 unchanged sentence

Capital and intangible assets, including lease basis differences ( 1,366 ) ( 1,270 )

Other outside basis differences ( 253 ) ( 267 )

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

Outside basis differences ( 429 ) ( 454 )

( 1,795 ) ( 1,724 )

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At December 31, 2025, deferred tax assets for U.S.

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.

state and local losses and credit carryforwards of $ 72 million expire on or before the end of 2045 while the remaining $ 14 million may be carried over indefinitely.

Of these U.S.

state deferred tax assets, $ 55 million were reduced by valuation allowances.

state and local deferred tax assets, $ 52 million were reduced by valuation allowances.

The deferred tax assets for U.S.

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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 $ 617 million against tax carryforwards and other deferred tax assets.

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.

Determination of the amount of unrecognized deferred tax liability related to indefinitely reinvested profits is not feasible primarily due to our legal entity structure and the complexity of U.S.

and local tax laws.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, follows.

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The total amount of interest and penalties accrued was $ 268 million and $ 190 million as of December 31, 2025 and 2024, respectively.

On September 8, 2022, the company reached a settlement with the U.S.

Internal Revenue Service (IRS) that resolves all issues for tax years 2007 through 2016, without any penalties.

The company's settlement includes, among other issues, the resolution of disputed tax treatment of profits earned by Caterpillar SARL (CSARL) from certain parts transactions.

We vigorously contested the IRS's application of the "substance-over-form" or "assignment-of-income" judicial doctrines and its proposed increases to tax and imposition of accuracy related penalties.

The settlement does not include any increases to tax in the United States based on those judicial doctrines and does not include any penalties.

The final tax assessed by the IRS for all issues under the settlement was $ 490 million for the ten-year period.

This amount was primarily paid in 2022 along with associated interest of $ 250 million.

The settlement was within the total amount of gross unrecognized tax benefits for uncertain tax positions and enables us to avoid the costs and burdens of further disputes with the IRS.

As a result of the settlement, we recorded a tax benefit of $ 41 million in 2022 to reflect changes in estimates of prior years' taxes and related interest, net of tax.

We are subject to the continuous examination of our U.S.

federal income tax returns by the IRS, and tax years 2017 to 2019 are currently under examination.

federal income tax returns by the Internal Revenue Service, and tax years 2017 to 2019 are currently under examination.

In our major non-U.S.

jurisdictions including Australia, Brazil, China, Germany, India, Japan, Mexico, Switzerland, Singapore and the U.K., tax years are typically subject to examination for three to ten years.

Due to the uncertainty related to the timing and potential outcome of audits, we cannot estimate the range of reasonably possible change in unrecognized tax benefits in the next 12 months.

jurisdictions, tax years are typically subject to examination for three to ten years.

Cat Financial financing activities

9 unchanged sentences

2028 256 15 271

2029 91 9 100

Thereafter 17 1 18

31 unchanged sentences

Cat Financial provides loans and finance leases to end-user customers primarily for the purpose of financing new and used Caterpillar machinery, engines and equipment for commercial use.

Cat Financial also provides financing for power generation facilities that, in most cases, incorporate Caterpillar products.

The average original term of Cat Financial's customer finance receivable portfolio was approximately 51 months with an average remaining term of approximately 27 months as of December 31, 2024.

Cat Financial also provides financing for power generation facilities that incorporate Caterpillar products.

The average original term of Cat Financial's customer finance receivables portfolio was approximately 51 months with an average remaining term of approximately 28 months as of December 31, 2025.

Cat Financial typically maintains a security interest in financed equipment and generally requires physical damage insurance coverage on the financed equipment, both of which provide Cat Financial with certain rights and protections.

1 unchanged sentence

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, 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 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.

In addition, Cat Financial provides a variety of secured and unsecured loans to Caterpillar dealers.

During the year ended December 31, 2025, Cat Financial's forecasts reflected a continuation of global market uncertainty and actions by global central banks aimed at balancing economic growth and managing inflation.

Cat Financial 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 on a secured and unsecured basis in the form of wholesale financing plans and retail loans.

Cat Financial's wholesale financing plans provide financing to dealers for their new Caterpillar equipment inventory and rental fleets.

The retail loans to dealers are primarily for working capital.

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

7 unchanged sentences

• 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.

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

• Mining — Finance receivables originated worldwide related to large mining customers worldwide.

• Power — Finance receivables originated worldwide related to large power customers of Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems.

Receivable balances, including accrued interest, are written off against the allowance for credit losses when, in the judgment of management, they are considered uncollectible (generally upon repossession of the collateral).

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 of the receivable.

The amount of the write-off is primarily determined by comparing the fair value of the collateral, less estimated selling costs, to the amortized cost of the receivable.

Subsequent recoveries, if any, are credited to the allowance for credit losses when received.

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Asia/Pacific 2 6 3 2 1 — — 14

Mining 8 3 3 — — — — 14

Latin America 1 3 3 5 2 1 — 15

Mining — 8 6 6 — 1 — 21

Power — — — — — 1 — 1

Total $ 7 $ 37 $ 46 $ 28 $ 13 $ 8 $ 9 $ 148

5 unchanged sentences

Latin America — 3 6 5 3 8 — 25

Power — — — — — 1 — 1

Mining 8 3 3 — — — — 14

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

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In determining past-due status, Cat Financial considers the entire finance receivable past due when any installment is over 30 days past due.

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

The aging analysis of Cat Financial's Customer portfolio segment by origination year was as follows :

(Millions of dollars) December 31, 2025

14 unchanged sentences

91+ days past due 1 1 2 2 — — — 6

Latin America

Current 984 511 212 96 15 1 4 1,823

2 unchanged sentences

91+ days past due 1 10 7 4 1 — — 23

Latin America

Current 765 698 484 278 106 46 — 2,377

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91+ days past due 4 1 2 1 1 — — 9

Latin America

Current 800 363 220 60 8 2 — 1,453

2 unchanged sentences

91+ days past due 2 6 8 4 1 1 — 22

Latin America

Current 924 755 444 206 67 34 21 2,451

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Total Customer $ 9,451 $ 5,892 $ 3,164 $ 1,721 $ 510 $ 202 $ 577 $ 21,517

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.

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.

As of December 31, 2025 and 2024, Cat Financial's total amortized cost of finance receivables within the Dealer portfolio segment was current.

Non-accrual finance receivables

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

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.

Recognition is resumed and previously suspended income is recognized when collection is considered probable.

Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms.

Interest earned but uncollected prior to the receivable being placed on non-accrual status is written off through Provision for credit losses when, in the judgment of management, it is considered uncollectible.

In Cat Financial's Customer portfolio segment, finance receivables which were on non-accrual status and finance receivables over 90 days past due and still accruing income as of December 31, were as follows:

December 31, 2025 December 31, 2024

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(Millions of dollars)

Non-accrual With an Allowance 91+ Still

Accruing Non-accrual With an Allowance 91+ Still

Non-accrual 91+ Still

Accruing Non-accrual 91+ Still

North America $ 90 $ 20 $ 83 $ 20

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Asia/Pacific 4 2 5 5

Mining 29 — 2 —

Latin America 24 1 24 —

Mining 10 — 29 —

Power — — 2 —

Total $ 163 $ 28 $ 176 $ 30

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.

There were no finance receivables in Cat Financial's Dealer portfolio segment on non-accrual status as of December 31, 2025 and 2024.

Modifications

Cat Financial periodically modifies the terms of their finance receivable agreements in response to borrowers’ financial difficulty.

Cat Financial periodically modifies the terms of their finance receivable agreements.

Typically, the types of modifications granted are payment deferrals, interest-only payment periods and/or term extensions.

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During the years ended December 31, 2025 and 2024, 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 ending amortized cost of finance receivables modified with borrowers experiencing financial difficulty in Cat Financial's Customer portfolio segment for the years ended December 31, 2025 and 2024 were as follows:

(Millions of dollars) 2025 2024

Amortized cost of finance receivables modified $ 38 $ 33

Modifications as a percentage of Customer portfolio 0.16 % 0.15 %

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

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December 31, 2025

(Millions of dollars) Gross Carrying Amount Accumulated

Amortization Net

(Millions of dollars) Gross Carrying Amount 1

Amortization 1

Customer relationships $ 2,012 $ ( 1,877 ) $ 135

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Total finite-lived intangible assets $ 2,833 $ ( 2,434 ) $ 399

1 For the year ended December 31, 2025, $ 248 million 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.

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There were no goodwill impairments during 2025, 2024 or 2023.

Our annual impairment tests completed in the fourth quarter of 2022 indicated the fair value of each reporting unit was substantially above its respective carrying value, including goodwill, with the exception of our Rail reporting unit.

The Rail reporting unit is a part of our Energy & Transportation segment.

Rail’s product portfolio includes diesel-electric locomotives and other rail-related products and services.

The annual impairment test completed in the fourth quarter of 2022 indicated that the fair value of Rail was below its carrying value.

Accordingly, we recognized a goodwill impairment charge of $ 925 million, resulting in a full impairment of Rail’s goodwill balance as of October 1, 2022.

There was a $ 36 million tax benefit associated with this impairment charge.

The valuation of the Rail reporting unit was based on estimates of future cash flows, which assumed a reduced demand forecast, lower margins due to continued inflationary cost pressures, and a discount rate approximately 140 basis points higher than utilized in the prior year valuation.

The reduction in the demand forecast in the fourth quarter of 2022 was primarily driven by fourth quarter commercial developments, resulting in a lower outlook for the Company’s locomotive offerings.

The changes in carrying amount of goodwill by reportable segment for the years ended December 31, 2025 and 2024 were as follows:

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Net goodwill 2,949 37 2,986

Energy & Transportation

Power & Energy

Goodwill 2,939 40 2,979

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Net goodwill 2,976 ( 27 ) 2,949

Energy & Transportation

Power & Energy

Goodwill 2,959 ( 20 ) 2,939

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governmental agency 3 — 307 15 310 15

Residential — — 1 1 1 1

Commercial 6 — 89 3 95 3

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Total debt securities – available-for-sale $ 3,535 $ 3,549

Sales of available-for-sale debt securities:

Years Ended December 31,

(Millions of dollars) 2024 2023 2022

Proceeds from the sale of available-for-sale securities $ 1,223 $ 940 $ 767

Gross gains from the sale of available-for-sale securities $ 1 $ — $ —

Gross losses from the sale of available-for-sale securities $ 5 $ 1 $ 5

In addition, we had $ 1,900 million of investments in time deposits classified as held-to-maturity debt securities as of December 31, 2023.

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

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.

For the years ended December 31, 2024 and 2023, the net unrealized gains (losses) for equity securities held at December 31, 2024 and 2023 were $ 25 million and $( 12 ) million, respectively.

For the years ended December 31, 2025, 2024 and 2023 proceeds from available-for-sale debt securities were $ 2,166 million, $ 1,223 million and $ 940 million respectively.

The net unrealized gains (losses) for equity securities held at December 31, 2025, 2024 and 2023 were $ 20 million, $ 25 million and $( 12 ) million respectively.

Postemployment benefit plans

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— — ( 45 ) ( 15 ) — —

Acquisitions, divestitures and other — — — ( 9 ) — —

Benefit obligation, end of year $ 12,066 $ 12,171 $ 3,131 $ 2,989 $ 2,342 $ 2,469

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For 2025 and 2024, these liabilities were $ 861 million and $ 697 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 2025, Actuarial loss (gain) impacting the benefit obligation was primarily due to lower discount rates at the end of 2025 compared to the end of 2024.

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.

Pension Benefits Non-U.S.

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3 The service cost component is included in Operating costs and all other components are included in Other income (expense) in Statement 1.

Our expected long-term rate of return on U.S.

plan assets is based on our estimate of long-term returns for equities and fixed income securities weighted by the fair value of plan asset allocations as of December 31.

Our expected rate of return on U.S.

plan assets is based on our estimate of long-term returns for equities and fixed income securities weighted by the asset allocations as of December 31.

We use a similar process to determine this rate for our non-U.S.

The assumed health care trend rate represents the rate at which health care costs are assumed to increase.

The assumed health care cost trend rate represents the rate at which costs are assumed to increase.

We assumed a weighted-average increase of 6.0 percent in our calculation of 2025 benefit expense.

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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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pension Level 3 assets involved insurance contracts.

During 2025, activity was settlements of $ 58 million and unrealized gains of $ 34 million.

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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(Millions of dollars) 2025 2024

Machinery, Energy & Transportation:

Machinery, Power & Energy:

Notes payable to banks $ — $ —

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(Millions of dollars) Effective Yield to Maturity 1

Machinery, Energy & Transportation:

Machinery, Power & Energy:

Notes—$ 759 million of 5.200 % due 2041 2

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Debentures—$ 460 million of 6.050 % due 2036 2

6.12 % 457 457

Debentures—$ 65 million of 8.250 % due 2038 2

Debentures—$ 160 million of 6.950 % due 2042 2

7.02 % 158 158

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Debentures—$ 300 million of 5.500 % due 2055 2

Debentures—$ 500 million of 4.750 % due 2064

4.81 % 494 494

2 unchanged sentences

Finance lease obligations & other 3

( 103 ) ( 61 )

Total Machinery, Energy & Transportation 8,564 8,579

Total Machinery, Power & Energy 10,678 8,564

Financial Products:

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All outstanding notes and debentures are unsecured and rank equally with one another.

On May 12, 2025, we issued $ 1.7 billion of 5.200 % Senior Notes due 2035 and $ 300 million 5.500 % Senior Notes due 2055.

Interest on each series of notes will be paid semi-annually on May 15 and November 15 of each year, commencing on November 15, 2025.

Cat Financial’s medium-term notes are offered by prospectus and are issued through agents at fixed and floating rates.

2 unchanged sentences

(Millions of dollars) 2026 2027 2028 2029 2030

Machinery, Energy & Transportation $ 46 $ 21 $ 17 $ 203 $ 503

Machinery, Power & Energy $ 35 $ 30 $ 219 $ 522 $ 805

Financial Products 7,085 8,890 7,528 2,590 456

$ 7,120 $ 8,920 $ 7,747 $ 3,112 $ 1,261

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.

Medium-term notes of $ 1.75 billion maturing in the first quarter of 2026 were excluded from the current maturities of long-term debt in Statement 3 as of December 31, 2025 due to a $ 1.75 billion issuance of medium-term notes on January 8, 2026 of which $ 1.25 billion and $ 500 million mature in 2028 and 2031, respectively.

The preceding maturity table reflects the reclassification of $ 1.75 billion from maturities in 2026 to $ 1.25 billion in 2028 and $ 500 million in 2031.

Interest paid on short-term and long-term borrowings for 2025, 2024 and 2023 was $ 1,842 million, $ 1,738 million and $ 1,435 million, respectively.

3 unchanged sentences

(Millions of dollars) Consolidated Machinery,

Transportation Financial

Power & Energy Financial

Credit lines available:

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As of December 31, 2025, we had three global credit facilities with a syndicate of banks totaling $ 11.50 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.

Based on management's allocation decision, which can be revised from time to time, the portion of the Credit Facility available to MP&E as of December 31, 2025 was $ 2.88 billion.

Information on our Credit Facility is as follows:

• In August 2025, we entered into a new 364-day facility.

The 364-day facility of $ 3.15 billion (of which $ 825 million is available to ME&T) expires in August 2025.

The 364-day facility of $ 3.50 billion (of which $ 875 million is available to MP&E) expires in August 2026.

• In August 2025, we amended and extended the three-year facility (as amended and restated, the "three-year facility").

The three-year facility of $ 2.73 billion (of which $ 715 million is available to ME&T) expires in August 2027.

The three-year facility of $ 3.00 billion (of which $ 750 million is available to MP&E) expires in August 2028.

• In August 2025, we amended and extended the five-year facility (as amended and restated, the "five-year facility").

The five-year facility of $ 4.62 billion (of which $ 1.21 billion is available to ME&T) expires in August 2029.

The five-year facility of $ 5.00 billion (of which $ 1.25 billion is available to MP&E) expires in August 2030.

Other consolidated credit lines with banks as of December 31, 2025 totaled $ 4.34 billion.

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For the years ended December 31, 2025, 2024 and 2023, we excluded 0.1 million, 0.3 million and 0.8 million of outstanding stock options, respectively, from the computation of diluted earnings per share because the effect would have been antidilutive.

In July 2018, the Board approved a share repurchase authorization (the 2018 Authorization) of up to $ 10.0 billion of Caterpillar common stock effective January 1, 2019, with no expiration.

In May 2022, the Board approved a new share repurchase authorization (the 2022 Authorization) of up to $ 15.0 billion of Caterpillar common stock effective August 1, 2022, with no expiration.

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

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.

As of March 31, 2025, the 2022 Authorization was fully utilized and as of December 31, 2025, approximately $ 14.9 billion remained available under the 2024 Authorizations.

During 2025, 2024 and 2023, we repurchased 14.1 million, 23.4 million and 19.5 million shares of Caterpillar common stock, respectively, at an aggregate cost of $ 5.2 billion, $ 8.0 billion and $ 4.7 billion, respectively.

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We advanced $ 3.0 billion and received approximately 5.7 million shares of Caterpillar common stock with a value of $ 2.1 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 2025, upon final settlement of the ASRs, we received approximately 2.4 million additional shares.

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Fair values for our U.S.

treasury bonds and large capitalization value and smaller company growth equity securities are based upon valuations for identical instruments in active markets.

treasury bonds and equity securities are based upon valuations for identical instruments in active markets.

Fair values for other government debt securities, corporate debt securities and mortgage-backed debt securities are based upon models that take into consideration such market-based factors as recent sales, risk-free yield curves and prices of similarly rated bonds.

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Foreign currency contracts - net — 204 — — 204

Commodity contracts - net — 8 — — 8

Total assets $ 358 $ 3,751 $ — $ 174 $ 4,283

1 unchanged sentence

Interest rate contracts - net $ — $ 40 $ — $ — $ 40

Commodity contracts - net — 2 — — 2

Total return swap contracts - net — 1 — — 1

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Foreign currency contracts - net — 117 — — 117

Commodity contracts - net — 9 — — 9

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

1 unchanged sentence

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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Long-term debt (including amounts due within one year):

Machinery, Energy & Transportation 8,610 7,980 9,623 9,550 2 Note 14

Machinery, Power & Energy 10,713 10,363 8,610 7,980 2 Note 14

Financial Products 27,103 27,204 25,406 25,304 2 Note 14

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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 $ 936 million and $ 830 million at December 31, 2025 and 2024, respectively.

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

The rollforward of our outstanding obligations confirmed as valid under the Programs for the Years ended December 31, were as follows:

(Millions of dollars) 2025 2024

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No loss has been experienced or is anticipated under this loan purchase agreement.

Cat Financial has commitments to extend credit to customers through lines of credit and other pre-approved credit arrangements.

Cat Financial has commitments to extend credit to customers and Caterpillar dealers through lines of credit and other pre-approved credit arrangements.

Cat Financial applies the same credit policies and approval process for these commitments as we do for other financing.

Collateral is not required, but if credit is extended, collateral is generally required upon funding.

The unused commitments to extend credit to customers that are not unconditionally cancellable was $ 843 million at December 31, 2024.

Cat Financial also has pre-approved lines of credit and other credit arrangements with Caterpillar dealers;

however, we generally have the right to unconditionally cancel, alter, or amend the terms at any time.

If credit is extended, collateral is generally required upon funding.

The unused commitments to extend credit to customers and dealers that are not unconditionally cancellable were $ 901 million and $ 291 million at December 31, 2025, respectively.

Cat Financial also has other pre-approved lines of credit and other credit arrangements with Caterpillar dealers that we generally have the right to unconditionally cancel, alter, or amend the terms for these at any time.

We determine our product warranty liability by applying historical claim rate experience to the current field population and dealer inventory.

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Basis for segment information

Our Executive Office is comprised of a Chief Executive Officer (CEO), Chief Operating Officer (COO), four Group Presidents, a Chief Financial Officer (CFO), a Chief Legal Officer and General Counsel and a Chief Human Resources Officer.

The COO, Group Presidents and CFO are accountable for a related set of end-to-end businesses that they manage.

Our Executive Office is comprised of a Chief Executive Officer (CEO), four Group Presidents, a Chief Financial Officer (CFO), a Chief Legal Officer and General Counsel and a Chief Human Resources Officer.

The Group Presidents and CFO are accountable for a related set of end-to-end businesses that they manage.

The Chief Legal Officer and General Counsel leads the Law, Security and Public Policy Division.

The Chief Human Resources Officer leads the Human Resources Organization.

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

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.

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

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

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

One operating segment, Financial Products, is led by the CFO who also has responsibility for Corporate Services.

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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.

Effective July 1, 2025, we made the following changes to segment reporting.

These changes were made to reflect changes in organizational accountabilities and refinements to our internal reporting.

• Responsibility for business strategy, product design, product management and development, manufacturing, marketing and sales and product support for and sourcing of wear and maintenance components and related parts moved from All Other Segment to Resource Industries.

• Responsibility for business strategy, product design, product management and development, manufacturing and product support for electronics and control systems moved from Resource Industries to All Other Segment.

• Responsibility for research and development for automation, electronics and software for machines and engines moved from Resource Industries to the All Other Segment.

Segment information for 2024 and 2023 has been retrospectively adjusted to conform to the 2025 presentation.

Description of segments

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machinery components;

electronics and control systems and related parts.

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

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

wear and maintenance components and related parts.

In addition to equipment, Resource Industries also 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 component design and manufacturing and research and development for hydraulic systems and cabs.

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

Energy & Transportation :

Power & Energy :

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 as well as product support of on-highway engines.

6 unchanged sentences

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

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

and diesel-electric and hybrid 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.

1 unchanged sentence

Financial Products Segment :

Provides financing alternatives to customers and dealers around the world for Caterpillar products and services, as well as financing for power generation facilities that, in most cases, incorporate Caterpillar products.

Provides financing alternatives to customers and dealers around the world for Caterpillar products and services, as well as financing for power generation facilities that incorporate Caterpillar products.

Financing plans include operating and finance leases, revolving charge accounts, installment sale contracts, repair/rebuild financing, working capital loans and wholesale financing plans.

2 unchanged sentences

The various forms of financing, insurance and risk management products offered to customers and dealers help support the purchase and lease of Caterpillar equipment.

The segment also earns revenues from ME&T, but the related costs are not allocated to operating segments.

The segment also earns revenues from Machinery, Power & Energy, but the related costs are not allocated to operating segments.

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

3 unchanged sentences

product management and development;

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

parts distribution;

integrated logistics solutions;

electronics and control systems;

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

1 unchanged sentence

brand management and marketing strategy;

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

research and development for automation, electronics and software for machines and engines 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 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 the segment profit of Construction Industries, Resource Industries, Power & Energy 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.

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

• 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.

• For Construction Industries, Resource Industries, Power & Energy 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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Resource Industries 4,643 2,292 2,061 3,189 12,185 289 12,474

Energy & Transportation 13,005 1,763 5,787 3,533 24,088 4,766 28,854

Power & Energy 15,558 1,985 5,717 3,883 27,143 5,058 32,201

Financial Products Segment 2,841 442 511 426 4,220 1

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Resource Industries 4,597 2,079 1,809 3,615 12,100 371 12,471

Energy & Transportation 11,982 1,983 5,929 3,461 23,355 4,646 28,001

Power & Energy 13,005 1,763 5,787 3,533 24,088 4,766 28,854

Financial Products Segment 2,702 402 505 444 4,053 1

5 unchanged sentences

Resource Industries 5,292 2,040 2,075 3,922 13,329 340 13,669

Energy & Transportation 9,175 1,784 5,232 3,146 19,337 4,415 23,752

Power & Energy 11,982 1,983 5,929 3,461 23,355 4,646 28,001

Financial Products Segment 2,440 416 491 438 3,785 1

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Total Sales and Revenues $ 34,606 $ 6,665 $ 13,673 $ 12,116 $ 67,060 $ — $ 67,060

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:

Energy & Transportation External Sales

1 Includes revenues from Construction Industries, Resource Industries, Power & Energy and All Other Segment of $ 712 million, $ 711 million and $ 690 million in the years ended December 31, 2025, 2024 and 2023, respectively.

For the years ended December 31, 2025, 2024 and 2023, Power & Energy segment sales by end user application were as follows:

Power & Energy External Sales

(Millions of dollars)

4 unchanged sentences

Transportation 5,295 5,362 5,134

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

Power & Energy External Sales $ 27,143 $ 24,088 $ 23,355

Profit from Reportable Segments

(Millions of dollars)

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

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

Sales and revenues $ 25,060 $ 12,474 $ 32,201 $ 4,220 $ 73,955

21 unchanged sentences

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.

Construction Industries/Resource Industries/Power & Energy – 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.

24 unchanged sentences

Resource Industries 6,087 6,082

Energy & Transportation 11,772 10,555

Power & Energy 11,387 11,772

Financial Products Segment 41,476 36,925

16 unchanged sentences

Resource Industries 252 230 277

Energy & Transportation 578 551 547

Power & Energy 661 578 551

Financial Products Segment 719 740 731

10 unchanged sentences

Resource Industries 353 228 210

Energy & Transportation 1,279 944 756

Power & Energy 1,774 1,279 944

Financial Products Segment 1,341 1,085 1,299

14 unchanged sentences

Total $ 67,589 $ 64,809 $ 67,060 $ 15,140 $ 13,361

1 Sales of ME&T are based on dealer or customer location.

1 Sales of MP&E are based on dealer or customer location.

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

12 unchanged sentences

1 Recognized in Other operating (income) expenses.

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.

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

The restructuring costs in 2025 were related to restructuring actions across the company including write-downs in the value of inventory in the Rail division.

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.

The divestiture closed on February 1, 2023 and resulted in a pre-tax loss of approximately $ 586 million, primarily a non-cash item driven by the release of $ 494 million of accumulated foreign currency translation.

The restructuring costs in 2022 were primarily related to actions across the company, including $ 193 million related to the Rail division that was primarily inventory write-downs, and other strategic actions to address a small number of products.

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

In 2025, 2024 and 2023, all restructuring costs were excluded from segment profit.

Subsequent event

On February 3, 2026, the Federal Court of Australia approved Caterpillar's acquisition of RPMGlobal Holdings Limited, an Australian based software company.

The transaction is expected to close in the final two weeks of February with a purchase price of approximately $ 790 million, excluding cash acquired.

RPMGlobal is a leading provider of mining software solutions with deep domain expertise in mining technology enablement and data-driven software solutions at every stage of the mining lifecycle.

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

1 unchanged sentence

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