(Unaudited)

(Millions of dollars)

See Notes to Consolidated Financial Statements (unaudited).

(Millions of dollars)

See Notes to Consolidated Financial Statements (unaudited).

(Millions of dollars)

Nine months Ended

See Notes to Consolidated Financial Statements (unaudited).

See Notes to Consolidated Financial Statements (unaudited).

(Unaudited; dollars in millions)

1. Use of estimates in the preparation of financial statements

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. 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 the reported amounts. The more significant estimates include residual values for leased assets and the allowance for credit losses. 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 current period presentation.

2. Supplemental segment data

Our segment data is based on disclosure requirements of Statement of Financial Accounting Standards 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.

On January 1, 2003, we reassigned the Marine services division in Europe from the Europe segment to the Diversified Services segment. Prior year information has been reclassified to conform to the new structure. We segregate information as follows:

• North America: We have offices in the United States and Canada that serve local dealers and customers.
• Europe: We have offices in Europe to serve European dealers and customers. This segment also includes our new office in Russia, which serves dealers and customers in the Commonwealth of Independent States.
• Austral-Asia: We have offices in Australia and Asia that serve local dealers and customers.
• Diversified Services: Included is our Global Accounts Division, which primarily provides cross-border financing to customers in countries in which we have no local presence; Marine services, which primarily finances marine vessels with Caterpillar engines for all countries; and our offices in Latin America that serve local dealers and customers. Also included is Cat Power Finance, which finances Cat electrical power generation, gas compression and co-generation systems, as well as non-Cat equipment powered by Cat engines.

Supplemental segment data for the nine months ended September 30,

In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143 (SFAS 143), "Accounting for Asset Retirement Obligations." SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible, long-lived assets and the associated asset retirement costs. This Statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred by capitalizing it as part of the carrying amount of the long-lived assets. As required by SFAS 143, we adopted this new accounting standard on January 1, 2003. The adoption of SFAS 143 did not have any impact on our financial statements.

In November 2002, the Financial Accounting Standards Board issued FASB Interpretation No. 45 (FIN 45), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN 45 elaborates on the disclosures to be made by a guarantor about its obligations under certain guarantees. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. As required by FIN 45, on January 1, 2003, we adopted the initial recognition and measurement provisions on a prospective basis for guarantees issued or modified after December 31, 2002. The adoption of the recognition/measurement provisions did not have any impact on our financial statements.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities - an Interpretation of ARB No. 51." FIN 46 addresses consolidation by business enterprises of variable interest entities that have certain characteristics. Transferors to qualifying special-purpose entities and "grandfathered" qualifying special-purpose entities subject to the reporting requirements of SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," are excluded from the scope of FIN 46. FIN 46 is applicable immediately to variable interest entities created or obtained after January 31, 2003 (none created or obtained in the first nine months of 2003). For variable interest entities, which we acquired before February 1, 2003, FIN 46 is applicable to us as of December 31, 2003. All of our variable interest entities are qualified special purpose entities, which are excluded from the requirements of FIN 46. We early adopted FIN 46 during the third quarter, and it did not have an impact on our financial statements.

In April 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 149 (SFAS 149), "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS 149 amends SFAS 133 to provide clarification on the financial accounting and reporting for derivative instruments and hedging activities and requires similar accounting treatment for contracts with comparable characteristics. The adoption of SFAS 149, effective primarily for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003, had no impact on our financial statements.

In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150 (SFAS 150), "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS 150 addresses financial accounting and reporting for certain financial instruments with characteristics of both liabilities and equity. This statement requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. As required by SFAS 150, we adopted this new accounting standard effective July 1, 2003. The adoption of SFAS 150 did not have an impact on our financial statements.

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 most significant estimates include those related to our residual values for leased assets and for our allowance for credit losses. Actual results may differ from these estimates.

The residual value, which is the estimated future wholesale market value of leased equipment at the time of the expiration of the lease term, represents a careful analysis of historical wholesale market sales prices, projected forward on a level trend line without consideration for inflation or possible future pricing action. At the inception of the lease, the residual value is derived from consideration of the following critical factors: market size and demand, any known significant market/product trends, total expected hours of usage, machine configuration, application, location, model changes, quantities, and past re-marketing experience. Many impact factors are gathered in an application survey that is completed prior to quotation. The application survey also clearly defines applicable return conditions and remedies for non-compliance, thus ensuring the leased equipment will be in good operating condition upon return. Model changes and updates, as well as market strength and product acceptanc e, are continually monitored, and residual adjustments are made in accordance with the significance of any such changes. Remarketing sales staff works closely with customers and dealers to manage the sale of lease returns and the recovery of residual exposure. During the term of the leases, residual amounts are monitored. If estimated market values significantly decline due to economic factors, obsolescence, or other adverse circumstances, the residuals are adjusted to the lower estimated values by a charge to earnings.

As the vast majority of our finance receivables are retail financings, which consist of homogeneous contracts, the allowance for credit losses is evaluated on a regular basis and adjusted based upon management's best estimate of probable losses inherent in the finance receivables at the end of the period. In estimating probable losses, we review accounts that are past due, non-performing, or in bankruptcy. We also review accounts that may be at risk using information available about the customer, such as financial statements, news reports, and published credit ratings. We also use general information regarding industry trends and the general economic environment. Using an estimate of current fair market value of collateral and factoring in credit enhancements, such as additional collateral and third party guarantees, we arrive at an estimated loss for specific accounts and estimate an additional amount for the remainder of the portfolio based upon historical trends.

Wholesale and retail finance revenue for the third quarter of 2003 was $236, a decrease of $13 from the same period last year. The decrease was principally due to an 88 basis point decrease in the average interest rate, partially offset by an 8% increase in the average receivable balance outstanding. The annualized interest rate on finance receivables was 6.20% for the third quarter of 2003 compared with 7.08% for the third quarter of 2002, which includes the annualized interest rate on Notes receivable from Caterpillar. The tax benefits of governmental (non-federal) lease purchase contracts and tax-oriented leases are not included in these computed interest rates.

Operating lease revenue for the third quarter of 2003 was $171, or $31 higher than the same period last year due to the increase in equipment on operating leases that resulted from increased marketing efforts and higher customer demand.

Other revenue for the third quarter of 2003 was $38, an increase of $11 from the same period last year. The increase was primarily due to a favorable change in gain (loss) on sale of equipment returned from lease and interest from Caterpillar Inc. related to the intercompany effects of an audit settlement with the Internal Revenue Service for several prior tax years, partially offset by a decreased gain on securitized receivables. The decreased gain on securitized receivables was related to the timing of the public securitization, which took place in the second quarter this year versus a similar gain in the third quarter last year. Items for the three months ended September 30, included:

Interest expense for the third quarter of 2003 decreased $22 from the same period last year. This decrease was primarily due to the reduction in the average cost of funds of 80 basis points, to 3.06% for the third quarter of 2003 from 3.86% for the third quarter of 2002, partially offset by the impact of a 7% increase in average debt levels that was due to funding increased new retail business.

Depreciation expense on equipment leased to others was up $25 over the third quarter of 2002 due to the increase in equipment on operating leases discussed in the Revenues section above.

General, operating, and administrative expenses increased $6 during the third quarter of 2003 compared to the same period last year. This increase primarily resulted from staff-related expenses due to the increase in total assets and geographical expansion. There were 1,271 employees at September 30, 2003, an increase of 68 from September 30, 2002.

The provision for credit losses increased $4 compared to the third quarter of 2002. The allowance for credit losses was 1.56% of finance receivables, net of unearned income, at September 30, 2003, compared to 1.50% at September 30, 2002. The Notes receivable from Caterpillar are not included in this calculation.

The effective tax rate decreased from the third quarter 2002 rate of 36.4% to a 35.0% rate for third quarter 2003. The decrease from 2002 is attributable to our foreign subsidiaries that are subject to tax rates other than the statutory U.S. rate.

Net profit for the third quarter of 2003 was $67, up $11 from the third quarter of 2002. The increase was primarily due to the growth of finance receivables and leases, the favorable change in gain (loss) on the sale of equipment returned from lease, and the intercompany interest from Caterpillar Inc. related to prior years' tax audit settlements, partially offset by the decreased gain on publicly securitized receivables.

Total assets were $18,531 at September 30, 2003, an increase of $2,010 over September 30, 2002.

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 ended September 30:

Bad debt write-offs, net of recoveries, were $15 during the quarter compared with $21 for the third quarter of 2002. The decrease in net write-offs was principally due to a reduction in net write-offs in our North America and Diversified Services segments. 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.

Finance receivables plus rents receivable for operating leases (included in Other assets) that were past due over 30 days were 3.1% of the total such receivables at September 30, 2003 compared to 4.2% at September 30, 2002. The decrease is primarily in the Europe and Diversified Services segments, where there was a $113 reduction in past due receivables (resulting from restructurings, collateral sales, and write-offs related to certain past due accounts). At the same time, the finance receivables and rents receivable grew $902 in those segments.

Wholesale and retail finance revenue for the first nine months of 2003 were $710, a decrease of $23 from the same period last year. The decrease was principally due to an 85 basis point decrease in the average interest rate, partially offset by a 10% increase in the average receivable balance outstanding. The annualized interest rate on finance receivables was 6.38% for the first nine months of 2003 compared with 7.23% for the first nine months of 2002, which includes the annualized interest rate on Notes receivable from Caterpillar. The tax benefits of governmental (non-federal) lease purchase contracts and tax-oriented leases are not included in these computed interest rates.

Operating lease revenue for the first nine months of 2003 was $486, or $97 higher than the same period last year due to the increase in equipment on operating leases that resulted from increased marketing efforts and higher customer demand.

Other revenue for the first nine months of 2003 was $97, an increase of $41 from the same period last year. The increase was primarily due to interest from Caterpillar Inc. related to the intercompany effects of an audit settlement with the Internal Revenue Service for several prior tax years, increased fees, and increased income related to retained interests in securitized receivables. Items for the nine months ended September 30, included:

Interest expense for the first nine months of 2002 decreased $42 from the same period last year. This decrease was primarily due to the reduction in the average cost of funds of 71 basis points, to 3.25% for the first nine months of 2003 from 3.96% for the first nine months of 2002, partially offset by the impact of a 9% increase in average debt levels that was due to funding increased new retail business.

Depreciation expense on equipment leased to others was up $81 over the first nine months of 2002 due to an increase in operating leases discussed in the Revenues section above.

General, operating, and administrative expenses increased $21 during the first nine months of 2003 compared to the same period last year. This increase primarily resulted from staff-related expenses due to the increase in total assets and geographical expansion.

The provision for credit losses was $78 for the nine months ended September 30, 2003 and 2002.

The effective tax rate decreased from 36.6% for the nine months ended September 30, 2002 to 34.6% for the nine months ended September 30, 2003. The decrease from 2002 is attributable to our foreign subsidiaries that are subject to tax rates other than the statutory U.S. rate.

Net profit for the first nine months of 2003 was $189, up $40 from the first nine months of 2002. The increase was primarily due to a larger portfolio of earning assets and increases in items recorded in Other revenue, as discussed in the Revenues section above.

The following table shows activity related to the Allowance for Credit Losses for the nine months ended September 30:

Operations for the first nine months of 2003 were funded with a combination of borrowings, proceeds from sales of receivables, and retained earnings. We do not generate material funding through structured finance transactions.

Through the third quarter of 2003, we generated $811 and $693 of capital resources from the securitization of trade and finance receivables, respectively.

• $11,739 of medium-term notes
• $ 2,980 of commercial paper
• $ 420 of notes payable to Caterpillar
• $ 354 of money market funds
• $ 155 of short-term bank borrowings
• $ 44 of long-term bank borrowings
• $  7 of loans from a company-owned partnership

An evaluation was performed by the company's management, with the participation of the Principal Executive Officer (PEO) and Principal Financial Officer (PFO), of the effectiveness of the design and operation of the company's disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on that evaluation, the company's management, including the PEO and PFO, concluded that the company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms. There have been no significant changes in the company's internal controls over financial reporting during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting. Although the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote, management's evaluation provided reasonable assurance that these controls will be effective.

(a) Exhibits

2. Reports on Form 8-K

During the quarter ended September 30, 2003, reports on Form 8-K were filed pursuant to Item 5 on July 1 and pursuant to Item 9 on July 17 and July 24. An additional report on Form 8-K was filed on October 16, 2003 pursuant to Item 12. No financial statements were filed as part of those reports.

(Unaudited)

(Millions of Dollars)

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