Caterpillar CAT · USD

Segment information A. Basis for segment information 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 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. Corporate Services is a cost center primarily responsible for the performance of certain support functions globally and to provide centralized services; it does not meet the definition of an operating segment. One Group President leads one smaller operating segment that is included in the All Other Segment. The Law, Security and Public Policy Division and the Human Resources Organization are cost centers and do not meet the definition of an operating segment.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.B.

Sales and revenue recognitionA. Sales of Machinery, Power & EnergyWe 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; (ii) it is probable we will collect the amount charged to the dealer or end user; and (iii) we have completed our performance obligation whereby the dealer or end user has obtained control of the product. A contract with commercial substance exists once we receive and accept a purchase order under a dealer sales agreement, or once we enter into a contract with an end user. If collectibility is not probable, the sale is deferred and not recognized until collection is probable or payment is received. Control of our products typically transfers when title and risk of ownership of the product has transferred to the dealer or end user. Typically, where product is produced and sold in the same country, title and risk of ownership transfer when we ship the product. Products that are exported from a country for sale typically transfer title and risk of ownership at the border of the destination country. Our remanufacturing operations are primarily focused on the remanufacture of Cat engines and components and rail related products. In this business, we inspect, clean and remanufacture used engines and related components (core). In connection with the sale of our remanufactured product to dealers, we collect a deposit that is repaid if the dealer returns an acceptable core within a specified time period. Caterpillar owns and has title to the cores when they are returned from dealers. 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 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). Upon receipt of an acceptable core, we repay the deposit and relieve the liability. We then transfer the returned core asset into inventory. In the event that the deposit is forfeited (i.e.

Credit commitments December 31, 2025(Millions of dollars)ConsolidatedMachinery,Power & EnergyFinancialProductsCredit lines available: Global credit facilities$11,500 $2,875 $8,625 Other external4,337 896 3,441 Total credit lines available15,837 3,771 12,066 Less: Commercial paper outstanding(5,408)— (5,408)Less: Utilized credit(771)— (771)Available credit$9,658 $3,771 $5,887 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 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 $3.50 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 $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 $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. These committed and uncommitted credit lines, which may be eligible for renewal at various future dates or have no specified expiration date, are used primarily by our subsidiaries for local funding requirements. Caterpillar or Cat Financial may guarantee subsidiary borrowings under these lines.In the event Caterpillar or Cat Financial does not meet one or more of their respective financial covenants under the Credit Facility in the future (and are unable to obtain a consent or waiver), the syndicate of banks may terminate the commitments allocated to the party that does not meet its covenants. Additionally, in such event, certain of Cat Financial’s other lenders under other loan agreements where similar financial covenants or cross default provisions are applicable may, at their election, choose to pursue remedies under those loan agreements, including accelerating the repayment of outstanding borrowings.

Long-term debt December 31,(Millions of dollars)Effective Yield to Maturity 120252024Machinery, Power & Energy: Notes—$759 million of 5.200% due 2041 25.27%$753 $753 Debentures—$193 million of 6.625% due 2028 26.68%193 193 Debentures—$500 million of 2.600% due 2029 22.67%499 498 Debentures—$800 million of 2.600% due 2030 22.72%796 796 Debentures—$500 million of 1.900% due 2031 22.04%497 496 Debentures—$242 million of 7.300% due 2031 27.38%241 241 Debentures—$1,700 million of 5.200% due 2035 25.30%1,688 — Debentures—$307 million of 5.300% due 2035 28.64%241 237 Debentures—$460 million of 6.050% due 2036 26.12%457 457 Debentures—$65 million of 8.250% due 2038 28.38%64 64 Debentures—$160 million of 6.950% due 2042 27.02%158 158 Debentures—$1,722 million of 3.803% due 2042 26.39%1,395 1,375 Debentures—$500 million of 4.300% due 20444.39%494 494 Debentures—$1,000 million of 3.250% due 2049 23.34%985 984 Debentures—$1,200 million of 3.250% due 2050 23.32%1,187 1,186 Debentures—$300 million of 5.500% due 2055 25.74%289 — Debentures—$500 million of 4.750% due 20644.81%494 494 Debentures—$246 million of 7.375% due 2097 27.51%241 241 Finance lease obligations & other 36 (103)Total Machinery, Power & Energy10,678 8,564 Financial Products: Medium-term notes19,675 18,568 Other343 219 Total Financial Products20,018 18,787 Total long-term debt due after one year$30,696 $27,351 1 Effective yield to maturity includes the impact of discounts, premiums and debt issuance costs.2 Redeemable at our option in whole or in part at any time at a redemption price equal to the greater of (i) 100% of the principal amount or (ii) the discounted present value of the notes or debentures, calculated in accordance with the terms of such notes or debentures.3 Includes $(88) million and $(170) million of mark-to-market adjustments related to fair value interest rate swap contracts as of December 31, 2025 and 2024, respectively.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. Medium-term notes due after one year have a weighted average interest rate of 3.

Investments in debt and equity securities We have investments in certain debt and equity securities, which we record at fair value and primarily include in Other assets in Statement 3. Short-term and long-term investments are held with high quality institutions and, by policy, the amount of credit exposure to any one institution is limited.We classify debt securities primarily as available-for-sale. We include the unrealized gains and losses arising from the revaluation of available-for-sale debt securities, net of applicable deferred income taxes, in equity (AOCI in Statement 3). We include the unrealized gains and losses arising from the revaluation of the equity securities in Other income (expense) in Statement 1. We generally determine realized gains and losses on sales of investments using the specific identification method for available-for-sale debt and equity securities and include them in Other income (expense) in Statement 1.The cost basis and fair value of available-for-sale debt securities with unrealized gains and losses included in equity (AOCI in Statement 3) were as follows:Available-for-sale debt securitiesDecember 31, 2025December 31, 2024(Millions of dollars)CostBasisUnrealizedPretax NetGains(Losses)FairValueCostBasisUnrealizedPretax NetGains(Losses)FairValueGovernment debt securities U.S. treasury bonds$10 $— $10 $10 $— $10 Other U.S. and non-U.S. government bonds72 2 74 71 (3)68 Corporate debt securities Corporate bonds and other debt securities2,457 23 2,480 3,199 (29)3,170 Asset-backed securities273 — 273 220 (1)219 Mortgage-backed debt securities U.S. governmental agency580 (8)572 476 (33)443 Residential2 (1)1 2 — 2 Commercial141 (2)139 136 (6)130 Total available-for-sale debt securities$3,535 $14 $3,549 $4,114 $(72)$4,042 Available-for-sale debt securities in an unrealized loss position: December 31, 2025 Less than 12 months 112 months or more 1Total(Millions of dollars)Fair ValueUnrealizedLossesFair ValueUnrealizedLossesFair ValueUnrealizedLossesGovernment debt securities Other U.S. and non-U.S. government bonds$— $— $17 $— $17 $— Corporate debt securitiesCorporate bonds130 — 306 6 436 6 Asset-backed securities38 — 43 1 81 1 Mortgage-backed debt securitiesU.S.

Income taxesAs 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 tax rate to effective tax rate:Year ended December 31,(Millions of dollars)2025Taxes at U.S. statutory tax rate$2,424 21.0 %(Decreases)/increases resulting from:Non-U.S. tax effectsSwitzerlandFederal statutory tax rate difference(310)(2.7)%State and local income taxes, net of federal160 1.4 %Other(27)(0.2)%Other Non-U.S. jurisdictions342 3.0 %Other179 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,(Millions of dollars)20242023Taxes at U.S. statutory rate$2,809 21.0 %$2,740 21.0 %(Decreases) increases resulting from: Non-U.S. subsidiaries taxed at other than the U.S. rate186 1.4 %129 1.0 %U.S. tax incentives(245)(1.8)%(170)(1.3)%Tax law change related to currency translation(224)(1.7)%— — %Other—net103 0.8 %82 0.6 %Provision (benefit) for income taxes$2,629 19.7 %$2,781 21.3 % 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. Included in the line item above labeled “Non-U.S. subsidiaries taxed at other than the U.S. rate” are the effects of local and U.S. taxes related to earnings of non-U.S. subsidiaries, changes in the amount of unrecognized tax benefits associated with these earnings, losses at non-U.S. subsidiaries without local tax benefits due to valuation allowances and other permanent differences between tax and U.S. GAAP results. The components of profit (loss) before taxes were: Years ended December 31,(Millions of dollars)202520242023U.S.$5,407 $6,219 $6,463 Non-U.S.6,134 7,154 6,587 $11,541 $13,373 $13,050 The components of the provision (benefit) for income taxes were: Years ended December 31,(Millions of dollars)202520242023Current tax provision (benefit): U.S. Federal1$804 $1,584 $1,627 Non-U.S.

Stock-based compensation Our stock-based compensation plans primarily provide for the granting of stock options, restricted stock units (RSUs) and performance-based restricted stock units (PRSUs) to Officers and other key employees, as well as non-employee Directors. Stock options permit a holder to buy Caterpillar stock at the stock’s price when the option was granted. RSUs are agreements to issue shares of Caterpillar stock at the time of vesting. PRSUs are similar to RSUs and include performance conditions in the vesting terms of the award. Our long-standing practices and policies specify that the Compensation Committee (the Committee) of the Board of Directors approve all stock-based compensation awards. The award approval process specifies the grant date, value and terms of the award. We consistently apply the same terms and conditions to all employee grants, including Officers. The Committee approves all individual Officer grants. We determine the number of stock-based compensation award units included in an individual’s award based on the methodology approved by the Committee. The exercise price methodology approved by the Committee is the closing price of the Company stock on the date of the grant. In June of 2014, shareholders approved the Caterpillar Inc. 2014 Long-Term Incentive Plan (the 2014 Plan) under which all new stock-based compensation awards were granted. In June of 2023, shareholders approved the Caterpillar Inc. 2023 Long-Term Incentive Plan (the 2023 Plan), which superseded and replaced the 2014 Plan. Common stock issued from Treasury stock under the plans totaled 1,433,723 for 2025, 1,972,037 for 2024 and 2,497,799 for 2023. The total number of shares authorized for equity awards under the 2023 Plan is 42,500,000. As of December 31, 2025, 39,336,515 shares remained available for issuance, which includes shares returned to the 2023 Plan upon cancellation or shares withheld for taxes incurred in connection with issuance or vesting of grants made under the 2014 Plan. Stock option and RSU awards generally vest according to a three-year graded vesting schedule. One-third of the award will become vested on the first anniversary of the grant date, one-third of the award will become vested on the second anniversary of the grant date and one-third of the award will become vested on the third anniversary of the grant date.

Leases A. Lessee arrangementsWe lease certain property, information technology equipment, warehouse equipment, vehicles and other equipment through operating leases. We recognize a lease liability and corresponding right-of-use asset based on the present value of lease payments. To determine the present value of lease payments for most of our leases, we use our incremental borrowing rate based on information available on the lease commencement date. For certain property and information technology equipment leases, we have elected to separate payments for lease components from non-lease components. For all other leases, we have elected not to separate payments for lease and non-lease components. Our lease agreements may include options to extend or terminate the lease. When it is reasonably certain that we will exercise that option, we have included the option in the recognition of right-of-use assets and lease liabilities. We have elected not to recognize right-of-use assets or lease liabilities for leases with a term of twelve months or less.Our finance leases are not significant and therefore are not included in the following disclosures. The components of lease costs were as follows: (Millions of dollars)Years Ended December 31,202520242023Operating lease cost$192 $185 $189 Short-term lease cost$67 $65 $62 We recognize operating lease right-of-use assets in Other assets in Statement 3. We recognize the operating lease liabilities in Other current liabilities and Other liabilities.Supplemental information related to leases was as follows:(Millions of dollars)December 31, 2025December 31, 2024Operating LeasesOther assets$708 $592 Other current liabilities$158 $143 Other liabilities$570 $459 Weighted average remaining lease termOperating leases7 years7 yearsWeighted average discount ratesOperating leases4 %3 %Maturities of operating lease liabilities were as follows:(Millions of dollars)December 31, 2025Amounts Due In2026$183 2027149 2028115 202998 203074 Thereafter223 Total lease payments842 Less: Imputed interest(114)Total$728 Supplemental cash flow information related to leases was as follows:(Millions of dollars)Years ended December 31,202520242023Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases$185 $179 $180 Right-of-use assets obtained in exchange for lease obligations: Operating leases$259 $187 $148 B.