*Unaudited except for December 31, 2001.
See Notes to Consolidated Financial Statements (unaudited).

(Unaudited)

(Dollars in millions)

See Notes to Consolidated Financial Statements (unaudited).

(Dollars in millions)

Nine Months Ended

See Notes to Consolidated Financial Statements (unaudited).

See Notes to Consolidated Financial Statements (unaudited).

(Dollars in millions)

We believe this information reflects all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the consolidated statements of financial position, profit, changes in equity, and cash flows for the periods presented. Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts. Actual results may differ from these estimates and the results for interim periods do not necessarily indicate the results we expect for the year.

Certain amounts for prior periods have been reclassified to conform to the 2002 presentation.

Our segment data is based on disclosure requirements of Statement of Financial Accounting Standard No. 131, which requires that financial information be reported on the basis that is used internally for measuring segment performance. Internally, we report information for operating segments based on management responsibility. We segregate information as follows:

Supplemental segment data for the three months ended September 30,

In managing foreign currency, our objective is to minimize (offset) earnings volatility resulting from the remeasurement of net foreign currency balance sheet positions. Our policy allows the use of foreign currency forward contracts to offset the risk of currency mismatch between our receivable and debt portfolio. All such foreign currency forward contracts are undesignated. Other income included gains of $2 and losses of $61 on the undesignated contracts substantially offset by balance sheet remeasurement gains for the three and nine months ended September 30, 2002, respectively.

Due to the long-term nature of our net investments in foreign subsidiaries, we generally do not hedge the related currency exposure.

Interest rate movements create a degree of risk by affecting the amount of our interest payments and the value of our fixed rate debt. Our policy is to use interest rate swap agreements to manage our exposure to interest rate changes and lower the cost of borrowed funds.

We have a "match funding" policy, whereby the interest rate profile (fixed rate or floating rate) of our debt portfolio largely matches the interest rate profile of our receivable portfolio within established guidelines. In connection with that policy, we use interest rate derivative instruments to modify the debt structure to match the receivable portfolio. This "match funding" reduces the volatility of margins between interest-bearing assets and interest-bearing liabilities, regardless of which direction interest rates move. We also use these instruments to gain an economic and/or competitive advantage through lower cost of borrowed funds. This is accomplished by changing the characteristics of existing debt instruments or entering into new agreements in combination with the issuance of new debt.

We use floating-to-fixed, fixed-to-floating, and floating-to-floating interest rate swaps to meet our "match funding" policy. To support hedge accounting, we designate fixed-to-floating interest rate swaps as fair value hedges of the fair value of our fixed rate debt at the inception of the contract. Our hedge accounting is further supported by designating most floating-to-fixed interest rate swaps as cash flow hedges of the variability of future cash flows. A portion of our floating-to-fixed interest rate swaps used to establish hedge relationships are undesignated, and thus do not receive hedge accounting treatment.

As our fixed-to-floating interest rate swaps are 100% effective, gains during the quarter ended September 30, 2002 on designated interest rate derivatives of $22 were offset completely by losses on hedged debt of $22 in Other income. Total year-to-date gains of $69 on designated fixed-to-floating interest rate swaps were offset completely by year-to-date losses on hedged debt of $69 in Other income. During the second quarter of 2002, we liquidated four fixed-to-floating interest rate swaps. Deferred gains on these swaps, which were previously designated as fair value hedges, are being amortized to earnings ratably over the remaining life of the hedged debt. Gains of $.5 and $.9 were amortized to Interest expense for the three and nine months ended September 30, 2002, respectively. There were no circumstances where hedge treatment was discontinued during the three or nine months ended September 30, 2002.

For the quarter-to-date and year-to-date, a gain of less than $1 was included in Other income for both the ineffectiveness on our floating-to-fixed interest rate swaps designated as cash flow hedges and our mark-to-market on undesignated floating-to-fixed and floating-to-floating interest rate swaps.

Based on current market conditions, $26 of deferred net losses included in Accumulated other comprehensive loss at September 30, 2002 is expected to be reclassified to Interest expense over the next twelve months as interest expense is accrued on our floating-to-fixed interest rate swaps. No floating-to-fixed interest rate swaps were liquidated during the quarter ended September 30, 2002.

In April 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 145 (SFAS 145), "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS 145 requires that early extinguishments of debt that are normal and an important part of ongoing activities not be accounted for as extraordinary items. This Statement also requires that modifications of capital lease agreements by lessees giving rise to new operating lease agreements be accounted for as sale-leasebacks. As encouraged by SFAS 145, we early adopted this new accounting standard on April 1, 2002. The adoption of SFAS 145 did not have any impact on our financial statements.

In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146 (SFAS 146), "Accounting for Costs Associated with Exit or Disposal Activities." SFAS 146 nullifies the guidance of the Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS 146 requires that a liability for a cost that is associated with an exit or disposal activity be recognized when the liability is incurred. SFAS 146 also establishes that fair value is the objective for the initial measurement of the liability. The provisions of SFAS 146 are required for exit or disposal activities that are initiated after December 31, 2002. At this time we do not believe the adoption of SFAS 146 will have a material impact on our financial statements.

In October 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 147 (SFAS 147), "Acquisitions of Certain Financial Institutions." SFAS 147 provides that the guidance provided by SFAS 141 "Business Combinations", SFAS 142 "Goodwill and Other Intangible Assets", and SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets" will apply to acquisitions of financial institutions (previously covered under special industry guidance). The transition provisions of SFAS 147 are effective on October 1, 2002. At this time we do not believe the adoption of SFAS 147 will have any impact on our financial statements.

During the quarter, we securitized retail installment sale contracts and finance leases into a public asset-backed securitization facility. These finance receivables, which are being held in a securitization trust, are secured by new and used equipment. We retained servicing responsibilities and subordinated interests related to this securitization. Subordinated interests include $9 in subordinated certificates, an interest in future cash flows (excess) with an initial fair value of $11, and a reserve account with an initial fair value of $10. Our retained interests are generally subordinate to the investors' interests. Net proceeds received were $641 and a net gain of $18 was recognized on this transaction. Significant assumptions used to estimate the fair value of the subordinated certificates in this transaction include a 4.83% discount rate, a weighted-average prepayment rate of 14%, and expected credit losses of 1%. Significant assumptions used to estimate the fair value of the excess and the reserve account in this transaction include a 14% discount rate, a weighted-average prepayment rate of 14%, and expected credit losses of 1%. We receive annual servicing fees of approximately 1% of unpaid note value.

The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect reported amounts. The more significant estimates include those related to our residual values for leased assets and for our credit losses. Residual values for leased assets are determined based on the product, specifications, application, and hours of usage. Each product has its own model for evaluation that includes market value cycles and forecasts. Consideration is also given to the number of machines that will be returned from lease during a given time frame. The credit reserve is determined by applying historical credit loss experience to the current receivable portfolio with consideration given to the condition of the economy and trends in past due accounts.

Rental income for the third quarter of 2002 was $140. The increase of $34 from the same period last year was due to the increase in equipment on operating leases.

Other income for the third quarter of 2002 was $27, a decrease of $19 from the same period last year (a decrease of $16 excluding the effect of the recognition of unamortized discounts on trade receivables purchased from Caterpillar that paid before maturity, that is included in gain on sale of receivables below). Significant items included:

Depreciation expense on equipment leased to others was up $28 over the third quarter of 2001 due to the increase in equipment on operating leases.

General, operating and administrative expenses increased $8 during the third quarter of 2002 as compared to the same period last year, primarily due to increased staff-related expenses as a result of portfolio growth and geographical expansion. There were 1,203 employees at September 30, 2002, an increase of 153 from last year's third quarter.

The provision for credit losses increased $3 compared to the third quarter of 2001, resulting primarily from an assessment of the adequacy of the allowance for credit losses considering the larger portfolio, actual write-offs, and a weakened global economy. The allowance for credit losses was 1.50% of finance receivables, net of unearned income, at September 30, 2002, compared to 1.46% at September 30, 2001. The Notes receivable from Caterpillar Inc. are not included in this calculation.

Net profit for the third quarter of 2002 was $56, down $12 from the third quarter of 2001, a $6 decrease excluding the effect of the recognition of unamortized discounts on trade receivables purchased from Caterpillar that paid before maturity. The reduction in profit was due to less gain on securitized receivables and other securitization-related income; increased general, operating, and administrative expense due to growth; and losses on the sale of used equipment returned from lease or repossessed, partially offset by a larger portfolio.

The portfolio was $15,919 at September 30, 2002, an increase of $1,606 over the prior year.

Securitized receivables at September 30, were as follows:

These receivables are not available to pay our creditors.

The following table shows activity related to the Allowance for Credit Losses for the three months ending:

Receivables that were past due over 30 days were 4.2% of the total receivables at September 30, 2002, as compared to 3.4% at September 30, 2001. The increase was primarily related to generally weak economic conditions and certain past due receivables in our Global accounts division and North America segment. Write-offs, net of recoveries, were $21 during the quarter ($16 excluding one customer write-off in Latin America) compared with $13 for the third quarter of 2001. We will continue to monitor the allowance for credit losses to provide for an amount we believe is adequate, after considering the value of any collateral, to cover uncollectible receivables.

Rental income for the first nine months of 2002 was $389. The increase of $96 from the same period last year was due to the increase in equipment on operating leases.

Other income for the first nine months of 2002 was $56, a decrease of $32 from the same period last year (a decrease of $19 excluding the effect - on gain on sale of receivables - of the recognition of unamortized discounts on trade receivables purchased from Caterpillar that paid before maturity). Significant items included:

Depreciation expense on equipment leased to others was up $78 over the first nine months of 2001 due to the increase in equipment on operating leases.

General, operating and administrative expenses increased $20 during the first nine months of 2002 compared to the same period last year. This increase primarily resulted from staff-related expenses due to the larger portfolio and geographical expansion.

The provision for credit losses increased $15 over the first nine months of 2001, resulting from an assessment of the adequacy of the allowance for credit losses considering the larger portfolio, actual write-offs, and a weakened global economy.

Net profit for the first nine months of 2002 was $149, down $16 from the first nine months of 2001, an increase of $2 excluding the effect of the recognition of unamortized discounts on trade receivables purchased from Caterpillar that paid before maturity. The reduction in profit was due to less gain on securitized receivables (pre-tax $12 related to wholesale receivables and pre-tax $3 related to retail receivables) and other securitization-related income and increased general, operating, and administrative expense due to growth. The 2001 gain on securitized wholesale receivables was high due to discounts recognized on prepayments, whereas 2002 was lower due to a lesser amount of receivables sold. The reduction in profit was partially offset by the lower interest rate environment, with interest expense decreasing more rapidly than revenues.

The following table shows activity related to the Allowance for Credit Losses for the nine months ended:

The increase in write-offs was primarily related to generally weak economic conditions in the U.S.

Operations for the first nine months of 2002 were funded with a combination of bank borrowings, commercial paper, medium-term notes, proceeds from sales of receivables, and retained earnings.

Subject to compliance with all debt covenants, we may use up to 90% of the total available facilities while Caterpillar may use up to 100% of the available facilities.

At September 30, 2002, there were no borrowings under these lines, and we were in compliance with all debt covenants.

• $10,165 of medium-term notes
• $ 3,476 of commercial paper
• $ 224 of notes payable to Caterpillar
• $ 181 of bank borrowings
• $ 157 of money market funds
• $ 39 of loans from a company-owned partnership

The aggregate amounts of maturities of long-term debt as of September 30, including that due within one year and classified as current, are expected to be:

We did not have contingent liabilities with more than a remote chance of occurrence at September 30, 2002.

We have established and maintain disclosure controls and procedures and conclude theses controls/procedures are effective based on our evaluation as of the "Evaluation Date", which is a date within 90 days prior to the filing date of this 10-Q. There were no significant changes in our internal controls or in other factors that could significantly affect our internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

(a) Exhibits

2. Reports on Form 8-K

July 8, 2002 - An 8-K was filed containing the Underwriting Agreement, Terms Agreement, and Form of 4.875% Note due 2007 in connection with the registrant's Registration Statement (Form S-3), Registration No. 333-59540.

July 8, 2002 - An 8-K was filed containing the Opinion of Orrick, Herrington & Sutcliffe LLP, as to certain tax matters and the consent of Orrick, Herrington & Sutcliffe LLP in connection with the registrant's Registration Statement (Form S-3), Registration No. 333-59540.

August 16, 2002 - Two 8-K's were filed containing the Opinion of Orrick, Herrington & Sutcliffe LLP, as to certain tax matters and the consent of Orrick, Herrington & Sutcliffe LLP in connection with the registrant's Registration Statement (Form S-3), Registration No. 333-97047.

1. I have reviewed this quarterly report on Form 10-Q of Caterpillar Financial Services Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

1. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
2. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
3. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

1. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons fulfilling the equivalent function):

1. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
2. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

1. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

1. I have reviewed this quarterly report on Form 10-Q of Caterpillar Financial Services Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

1. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
2. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

1. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

1. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons fulfilling the equivalent function):

1. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
2. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

(Unaudited)

(Dollars in millions)

*Those portions of rent expense that are representative of interest cost.