XML 39 R26.htm IDEA: XBRL DOCUMENT
v3.25.1

Fair Value Disclosures | 3 Months Ended
--- | ---
Mar. 31, 2025
Fair Value Disclosures [Abstract] |
Fair Value Disclosures | Fair value disclosures A. Fair value measurements The guidance on fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. This guidance also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with this guidance, fair value measurements are classified under the following hierarchy: •Level 1 — Quoted prices for identical instruments in active markets. •Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets. •Level 3 — Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable. When available, we use quoted market prices to determine fair value, and we classify such measurements within Level 1. In some cases where market prices are not available, we make use of observable market based inputs to calculate fair value, in which case the measurements are classified within Level 2. If quoted or observable market prices are not available, fair value is based upon valuations in which one or more significant inputs are unobservable, including internally developed models that use, where possible, current market-based parameters such as interest rates, yield curves and currency rates. These measurements are classified within Level 3. We classify fair value measurements according to the lowest level input or value-driver that is significant to the valuation. We may therefore classify a measurement within Level 3 even though there may be significant inputs that are readily observable. Fair value measurement includes the consideration of nonperformance risk. Nonperformance risk refers to the risk that an obligation (either by a counterparty or Caterpillar) will not be fulfilled. For financial assets traded in an active market (Level 1 and certain Level 2), the nonperformance risk is included in the market price. For certain other financial assets and liabilities (certain Level 2 and Level 3), our fair value calculations have been adjusted accordingly. Investments in debt and equity securities We have investments in certain debt and equity securities that are recorded at fair value. Fair values for our U.S. treasury bonds and large capitalization value and smaller company growth equity securities are based upon valuations for identical instruments in active markets. Fair values for other government 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. In addition, Insurance Services has an equity investment in a real estate investment trust (REIT) which is recorded at fair value based on the net asset value (NAV) of the investment and is not classified within the fair value hierarchy. See Note 8 for additional information on our investments in debt and equity securities. Derivative financial instruments The fair value of interest rate contracts is primarily based on a standard industry accepted valuation model that utilizes the appropriate market-based forward swap curves and zero-coupon interest rates to determine discounted cash flows. The fair value of foreign currency and commodity forward, option and cross currency contracts is based on standard industry accepted valuation models that discount cash flows resulting from the differential between the contract price and the market-based forward rate. 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 5 for additional information. Assets and liabilities measured on a recurring basis at fair value included in our Consolidated Statement of Financial Position as of March 31, 2025 and December 31, 2024 were as follows:
| March 31, 2025
(Millions of dollars) | Level 1 |  | Level 2 |  | Level 3 |  | Measured at NAV |  | Total Assets / Liabilities, at Fair Value
Assets |  |  |  |  |  |  |  |  |
Debt securities |  |  |  |  |  |  |  |  |
Government debt securities |  |  |  |  |  |  |  |  |
U.S. treasury bonds | $ | 9 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 9 |
Other U.S. and non-U.S. government bonds | — |  |  | 68 |  |  | — |  |  | — |  |  | 68 |
Corporate debt securities |  |  |  |  |  |  |  |  |
Corporate bonds and other debt securities | — |  |  | 2,423 |  |  | — |  |  | — |  |  | 2,423 |
Asset-backed securities | — |  |  | 222 |  |  | — |  |  | — |  |  | 222 |
Mortgage-backed debt securities |  |  |  |  |  |  |  |  |
U.S. governmental agency | — |  |  | 465 |  |  | — |  |  | — |  |  | 465 |
Residential | — |  |  | 2 |  |  | — |  |  | — |  |  | 2 |
Commercial | — |  |  | 127 |  |  | — |  |  | — |  |  | 127 |
Total debt securities | 9 |  |  | 3,307 |  |  | — |  |  | — |  |  | 3,316 |
Equity securities |  |  |  |  |  |  |  |  |
Large capitalization value | 267 |  |  | — |  |  | — |  |  | — |  |  | 267 |
Smaller company growth | 39 |  |  | — |  |  | — |  |  | — |  |  | 39 |
REIT | — |  |  | — |  |  | — |  |  | 168 |  |  | 168 |
Total equity securities | 306 |  |  | — |  |  | — |  |  | 168 |  |  | 474 |
Derivative financial instruments - assets |  |  |  |  |  |  |  |  |
Foreign currency contracts - net | — |  |  | 109 |  |  | — |  |  | — |  |  | 109 |
Commodity contracts - net | — |  |  | 3 |  |  | — |  |  | — |  |  | 3 |
Total assets | $ | 315 |  |  | $ | 3,419 |  |  | $ | — |  |  | $ | 168 |  |  | $ | 3,902 |
Liabilities |  |  |  |  |  |  |  |  |
Derivative financial instruments - liabilities |  |  |  |  |  |  |  |  |
Interest rate contracts - net | $ | — |  |  | $ | 101 |  |  | $ | — |  |  | $ | — |  |  | $ | 101 |
Total return swap contracts - net | — |  |  | 26 |  |  | — |  |  | — |  |  | 26 |
Total liabilities | $ | — |  |  | $ | 127 |  |  | $ | — |  |  | $ | — |  |  | $ | 127 |
| December 31, 2024
(Millions of dollars) | Level 1 |  | Level 2 |  | Level 3 |  | Measured at NAV |  | Total Assets / Liabilities, at Fair Value
Assets |  |  |  |  |  |  |  |  |
Debt securities |  |  |  |  |  |  |  |  |
Government debt securities |  |  |  |  |  |  |  |  |
U.S. treasury bonds | $ | 10 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 10 |
Other U.S. and non-U.S. government bonds | — |  |  | 68 |  |  | — |  |  | — |  |  | 68 |
Corporate debt securities |  |  |  |  |  |  |  |  |
Corporate bonds and other debt securities | — |  |  | 3,170 |  |  | — |  |  | — |  |  | 3,170 |
Asset-backed securities | — |  |  | 219 |  |  | — |  |  | — |  |  | 219 |
Mortgage-backed debt securities |  |  |  |  |  |  |  |  |
U.S. governmental agency | — |  |  | 443 |  |  | — |  |  | — |  |  | 443 |
Residential | — |  |  | 2 |  |  | — |  |  | — |  |  | 2 |
Commercial | — |  |  | 130 |  |  | — |  |  | — |  |  | 130 |
Total debt securities | 10 |  |  | 4,032 |  |  | — |  |  | — |  |  | 4,042 |
Equity securities |  |  |  |  |  |  |  |  |
Large capitalization value | 261 |  |  | — |  |  | — |  |  | — |  |  | 261 |
Smaller company growth | 41 |  |  | — |  |  | — |  |  | — |  |  | 41 |
REIT | — |  |  | — |  |  | — |  |  | 167 |  |  | 167 |
Total equity securities | 302 |  |  | — |  |  | — |  |  | 167 |  |  | 469 |
Derivative financial instruments - assets |  |  |  |  |  |  |  |  |
Foreign currency contracts - net | — |  |  | 117 |  |  | — |  |  | — |  |  | 117 |
Total Assets | $ | 312 |  |  | $ | 4,149 |  |  | $ | — |  |  | $ | 167 |  |  | $ | 4,628 |
Liabilities |  |  |  |  |  |  |  |  |
Derivative financial instruments - liabilities |  |  |  |  |  |  |  |  |
Interest rate contracts - net | $ | — |  |  | $ | 191 |  |  | $ | — |  |  | $ | — |  |  | $ | 191 |
Commodity contracts - net | — |  |  | 2 |  |  | — |  |  | — |  |  | 2 |
Total return swap contracts - net | — |  |  | 33 |  |  | — |  |  | — |  |  | 33 |
Total liabilities | $ | — |  |  | $ | 226 |  |  | $ | — |  |  | $ | — |  |  | $ | 226 |
In addition to the amounts above, certain Cat Financial loans are subject to measurement at fair value on a nonrecurring basis and are classified as Level 3 measurements. A loan is measured at fair value when management determines that collection of contractual amounts due is not probable and the loan is individually evaluated. Generally, the fair value of these receivables is measured using the fair value of collateral less estimated costs to sell. Cat Financial had loans carried at fair value of $70 million and $59 million as of March 31, 2025 and December 31, 2024, respectively. B. Fair values of financial instruments In addition to the methods and assumptions we use to record the fair value of financial instruments as discussed in the Fair value measurements section above, we use the following methods and assumptions to estimate the fair value of our financial instruments: Cash and cash equivalents Carrying amount approximates fair value. We classify cash and cash equivalents as Level 1. See Consolidated Statement of Financial Position. Restricted cash and short-term investments Carrying amount approximates fair value. We include restricted cash and short-term investments in Prepaid expenses and other current assets in the Consolidated Statement of Financial Position. We classify these instruments as Level 1. See Note 8 for additional information. Finance receivables We estimate fair value by discounting the future cash flows using current rates, representative of receivables with similar remaining maturities. Wholesale inventory receivables We estimate fair value by discounting the future cash flows using current rates, representative of receivables with similar remaining maturities. Short-term borrowings Carrying amount approximates fair value. We classify short-term borrowings as Level 1. See Consolidated Statement of Financial Position. Long-term debt We estimate fair value for fixed and floating rate debt based on quoted market prices. Our financial instruments not carried at fair value were as follows:
|  | March 31, 2025 |  | December 31, 2024 |  |  |  |
(Millions of dollars) |  | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value |  | Fair Value Levels |  | Reference
Assets |  |  |  |  |  |  |  |  |  |  |  |
Finance receivables – net (excluding finance leases 1 ) |  | $ | 16,420 |  |  | $ | 16,075 |  |  | $ | 16,180 |  |  | $ | 15,788 |  |  | 3 |  | Note 17
Wholesale inventory receivables – net (excluding finance leases 1) |  | 1,484 |  |  | 1,437 |  |  | 1,568 |  |  | 1,527 |  |  | 3 |  |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt (including amounts due within one year) |  |  |  |  |  |  |  |  |  |
Machinery, Energy & Transportation |  | 8,647 |  |  | 8,101 |  |  | 8,610 |  |  | 7,980 |  |  | 2 |  |
Financial Products |  | 26,487 |  |  | 26,448 |  |  | 25,406 |  |  | 25,304 |  |  | 2 |  |
1 Represents finance leases and failed sale leasebacks of $6,829 million and $6,769 million at March 31, 2025 and December 31, 2024, respectively.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration