turbine-related services; reciprocating engine-powered generator sets; integrated systems used in the electric

power generation industry; reciprocating engines and integrated systems and solutions for the marine and oil and

gas industries; reciprocating engines supplied to the industrial industry as well as Cat machinery; and

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

and leasing. Responsibilities also include the remanufacturing of Caterpillar reciprocating engines and components

and remanufacturing services for other companies; and product support of on-highway vocational trucks for North

America. 5. Financial Products - The company defines Financial Products as our finance and insurance subsidiaries, primarily

Caterpillar Financial Services Corporation (Cat Financial) and Caterpillar Insurance Holdings Inc. (Insurance

Services). Financial Products' information relates to the financing to customers and dealers for the purchase and

lease of Caterpillar and other equipment. 6. Financial Products Segment - Provides financing alternatives to customers and dealers around the world for

Caterpillar products, as well as financing for vehicles, power generation facilities and marine vessels that, in

most cases, incorporate Caterpillar products. Financing plans include operating and finance leases, installment

sale contracts, repair/rebuild financing, working capital loans and wholesale financing plans. The segment also

provides insurance and risk management products and services that help customers and dealers manage their business

risk. Insurance and risk management products offered include physical damage insurance, inventory protection plans,

extended service coverage and maintenance plans for machines and engines, and dealer property and casualty

insurance. 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 Machinery,

Energy & Transportation, 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. 7. Latin America - A geographic region including Central and South American countries and Mexico. 8. Machinery, Energy & Transportation (ME&T) - The company defines ME&T as Caterpillar Inc. and its subsidiaries,

excluding Financial Products. ME&T's information relates to the design, manufacturing and marketing of its

products. 9. Machinery, Energy & Transportation Other Operating (Income) Expenses - Comprised primarily of gains/losses on

disposal of long-lived assets, gains/losses on divestitures and legal settlements, and accruals. 10. Manufacturing Costs - Manufacturing costs exclude the impacts of currency and represent the volume-adjusted change

for variable costs and the absolute dollar change for period manufacturing costs. Variable manufacturing costs are

defined as having a direct relationship with the volume of production. This includes material costs, direct labor

and other costs that vary directly with production volume, such as freight, power to operate machines and supplies

that are consumed in the manufacturing process. Period manufacturing costs support production but are defined as

generally not having a direct relationship to short-term changes in volume. Examples include machinery and

equipment repair, depreciation on manufacturing assets, facility support, procurement, factory scheduling,

manufacturing planning and operations management.

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Table of Contents 18. Mark-to-market gains/losses - Represents the net gain or loss of actual results differing from the company's

assumptions and the effects of changing assumptions for our defined benefit pension and OPEB plans. These gains and

losses are immediately recognized through earnings upon the annual remeasurement in the fourth quarter, or on an

interim basis as triggering events warrant remeasurement. 7. Pension and Other Postemployment Benefit (OPEB) - The company's defined-benefit pension and postretirement benefit

plans. 8. Price Realization - The impact of net price changes excluding currency and new product introductions. Price

realization includes geographic mix of sales, which is the impact of changes in the relative weighting of sales

prices between geographic regions. 9. Resource Industries - A segment primarily responsible for supporting customers using machinery in mining, heavy

construction and quarry and aggregates. Responsibilities include business strategy, product design, product

management and development, manufacturing, marketing and sales and product support. The product portfolio includes

large track-type tractors; large mining trucks; hard rock vehicles; longwall miners; electric rope shovels;

draglines; hydraulic shovels; rotary drills; large wheel loaders; off-highway trucks; articulated trucks; wheel

tractor scrapers; wheel dozers; landfill compactors; soil compactors; select work tools; 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 integrated manufacturing, research and

development for drivetrains, hydraulic systems, electronics and software for Cat machines and engines. 10. Restructuring Costs - May include costs for employee separation, long-lived asset impairments and contract

terminations. These costs are included in Other operating (income) expenses except for defined-benefit plan

curtailment losses and special termination benefits, which are included in Other income (expense). Restructuring

costs also include other exit-related costs, which may consist of accelerated depreciation, inventory write-downs,

building demolition, equipment relocation and project management costs and LIFO inventory decrement benefits from

inventory liquidations at closed facilities, all of which are primarily included in Cost of goods sold. 11. Sales Volume - With respect to sales and revenues, sales volume represents the impact of changes in the quantities

sold for Machinery, Energy & Transportation as well as the incremental sales impact of new product introductions,

including emissions-related product updates. With respect to operating profit, sales volume represents the impact

of changes in the quantities sold for Machinery, Energy & Transportation combined with product mix as well as the

net operating profit impact of new product introductions, including emissions-related product updates. Product mix

represents the net operating profit impact of changes in the relative weighting of Machinery, Energy &

Transportation sales with respect to total sales. The impact of sales volume on segment profit includes

inter-segment sales. 12. Services - Enterprise services include, but are not limited to, aftermarket parts, Financial Products revenues and

other service-related revenues. Machinery, Energy & Transportation segments exclude most Financial Products

revenues.

LIQUIDITY AND CAPITAL RESOURCES Sources of funds

We generate significant capital resources from operating activities, which are the primary source of funding for our ME&T operations. Funding for these businesses is also available from commercial paper and long-term debt issuances. Financial Products' operations are funded primarily from commercial paper, term debt issuances and collections from its existing portfolio. We had positive operating cash flow in the first three months of 2021 within both our ME&T and Financial Products' operations. On a consolidated basis, we ended the first three months of 2021 with USD11.34 billion of cash, an increase of USD1.99 billion from year-end 2020. We intend to maintain a strong cash and liquidity position.

Consolidated operating cash flow for the first three months of 2021 was USD1.93 billion, up USD798 million compared to the same period last year. The increase was primarily due to lower payments for short-term incentive compensation as well as higher profit adjusted for non-cash items, including higher accruals for short-term incentive compensation. Partially offsetting these items were increased working capital requirements during the first three months of 2021 compared to the same period last year. Within working capital, changes in accounts receivable, inventory and customer advances unfavorably impacted cash flow, but were partially offset by favorable changes in accounts payable and accrued expenses.

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Total debt as of March 31, 2021 was USD38.18 billion, an increase of USD1.02 billion from year-end 2020. Debt related to Financial Products increased USD1.14 billion, primarily due to an increase in commercial paper due to short term funding needs. Debt related to ME&T decreased USD127 million in the first three months of 2021 due to the repayment of maturing debt. In addition, during the first quarter of 2021, we issued USD500 million of ten-year bonds at 1.9 percent and utilized the net proceeds to redeem all of our USD500 million 2.6 percent notes due in 2022.

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